Frequently Asked Questions

What is a remortgage?

This is when the terms of the original mortgage are renegotiated, or the borrower switches to a different lender. This is possible when the value of a property increases. A remortgage allows the homeowner to consolidate debts such as personal loans or credit cards , or it can be used to pay for home improvements such as an extension or a loft conversion.

What is the usual length of a remortgage?

The maximum length of the remortgage is usually 20 years for newer properties and 15 years for older properties.

How much can I borrow?

Different factors affect how much you can borrow. The main one is how the sum will be repaid. The amount is dependent on your income and the equity available in your property.

Over what period of time can I spread my loan?

Most repayment periods are between 3 and 25 years, but what you can afford each month will also be a factor.

How much can I reduce my monthly payments by?

This depends on the amount you are currently repaying and how long you want to make repayments for. However, reductions can be as much as 75%.

Can my repayments be protected if I cannot work?

Payment Protection Plans are optional and cover repayments if you can't work due to accident, sickness or involuntary unemployment.

What if I want to move house?

Request an early settlement figure from the lender so you know what the outstanding balance is to pay. Or, you may be able to use your new home as security, providing there is sufficient equity available. Read the small print and watch out for any early settlement penalties.

If I'm a discharged bankrupt can I get a remortgage?

Even though you have been bankrupt in the past, there are many lenders who will look favourably on your current circumstances. They may consider you providing you are in employment and can afford the monthly repayments.

What benefits are there of remortgaging in an IVA?

The main benefit is that you can negotiate a full and final settlement with your creditors so that your IVA is finalised before its full term.

What benefits are there of remortgaging as a bankrupt?

The main benefit is that by using the funds raised to discharge your bankruptcy you will retain possession of your property which may otherwise have to be sold.

What is the difference between fixed, discounted, capped, and variable interest rate mortgages?

Variable interest rate mortgages

The interest rate on your mortgage will vary, unrestricted, up and down over the period of your loan in line with the performance of the economy.

Fixed interest rate mortgages

The lender guarantees a set interest rate on your loan, for a specified period. Once this period has expired, your interest rate reverts back to the normal variable interest rate.

Capped interest rate mortgages

The lender guarantees that your rate of interest will not rise above a set interest rate. If the normal interest rate falls, the interest rate charged by the lender, may also fall.

Discounted interest rate mortgages

The lender guarantees a discounted amount normally up to five per cent, off your interest rate. The interest you pay will vary but at a lower rate than the general interest rate. It is normally set for a number of years. When this period has finished, your mortgage reverts to the normal variable interest rate.

What are the different ways you can repay a mortgage?

Repayment Mortgages

Repayments are made to the lender each month. The repayment amount is made up partly by the capital and partly by the interest to be paid off the total amount of the loan.

Endowment Mortgages

The monthly repayments on an endowment mortgage are split in two ways. One part goes to your lender and the other part goes to an investment fund (unit trusts). The monthly repayment to your lender pays only the interest charged on the mortgage and not the capital. At the end of your mortgage term, you still owe the mortgage company the same amount as you initially borrowed.

The payments into the investment fund, build up over the duration of the mortgage. This is then used to pay off your mortgage at the end of the term. The return from your investment fund depends on how your policy performs over the years. The problem is that there is no guarantee there will be enough money to pay off your mortgage. If the fund performs well you should receive a cash lump sum as well as being able to repay your mortgage, or you may be able to repay your mortgage early, saving you interest payments.

ISA Mortgages

Individual Savings Account mortgages allow individuals to invest in shares and bonds up to a certain amount without paying tax on the profits. This mortgage works in the same way as an endowment mortgage, see above. The main difference between them is that your investment fund is based purely on shares and bonds rather than units.

Pension Mortgages

When you retire, you are currently allowed to take a proportion of your pension as a tax free sum. A pension mortgage works in the same way as an endowment mortgage (see above). The difference between them is that a pension mortgage is linked to your pension, using this tax free sum to pay off your mortgage. This mortgage enables you to take advantage of the pension tax benefits.