I jointly own a house which currently has no mortgage or loan on it. I have never been in debt and my credit is fine. However I am considering borrowing around £50,000 in order to buy a property abroad, and one way of doing it would be equity release against my UK home, which I would gradually pay back from income.
An equity release mortgage is supposed to be for older retired people who won't pay back the loan, so it may not be appropriate to my needs. What would be a good option for borrowing against your home in such circumstances? Are there particular types of mortgage which are relevant, or particular lenders who specialise in this type of borrowing? I do not want a "personal loan" because they only go up to about £20,000 (I think?) and their interest rates are higher than for a secured mortgage.
Just re-mortgage your property for £50k. If you are wanting to reduce monthly outlay take it pure interest only, although if you do take it that way the capital amount will remain constant and not get paid off.
You said you plan to repay the mortgage so there is no benefit in an equity release mortgage. Normal equity release mortgages you don't make any payments, the interest is rolled up within the account, and then sold when you die.
I know nothing about mortgages. The property is not currently mortgaged so it wouldn't be re-mortgaging it, it would be taking out a first mortgage. Usually people borrow to buy a house, rather than originally owning the house and then borrowing to raise cash. Is the latter generally accepted or do lenders ask questions when you try to do that? Is there someplace on the Web which explains these things with details? I had a look through Yahoo Finance but that doesn't have too much explanation.
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I own a flat which I bought for cash, and I am getting a mortgage on it. The lender seems happy to call this a remortgage, (even though it obviously isn't - just like your case), and I am quite happy for them to call it what they like, just as long as I get the money.
I have done this a few times, and there is no need to get involved in the semantics of it.
Sorry to be pedantic, but a Mortgage is what you get to purchase a property. You already own the property, therefore it is a re-mortgage. Whether or not you have ever had a mortgage on the property, the simple fact that you own it means that it is a re-mortgage.
If you're going to be pedantic, get it right. A mortgage is something you (the borrower) don't get, but give. It is the legal instrument through which the borrower gives the lender security, and which, in the appropriate circumstances, allows the lender to repossess the property.
It is only in common parlance, or wishy-washy-speak, that "loan secured by mortgage" tends to get contracted first to "mortgage loan", and ultimately just to "mortgage". This type of mortgage is something the borrower does *get*, but it is strictly speaking an abuse of the term.
That may be the way some lenders/brokers think of it, and it's a useful distinction to make, but -being pedantic as we are- using the absence or presence of the "re-" prefix is the wrong way to label the distinction.
Pedantically, the re- prefix embraces the "again" concept, and so you can't re-mortgage unless there is already a mortgage in place.
Increasing the borrowing on an existing loan is often incorrectly referred to as re-mortaging when it is really just what is more correctly called a further advance. Re-mortgaging proper involves the transfer of security from one lender to another, by redeeming one loan and canelling the original mortgage deed, and creating a new one. Where a person who owns a house unencumbered by any mortgage (irrespective of whether the house was bought for cash or with the aid of a mortgage loan which has been paid off) wishes to borrow against the house, this is not strictly speaking a re-mortgage but just a plain mortgage, because it simply involves creating a new security without redeeming an existing one.
A remortgage is technically what happens when you mortgage a property that you already own, whether or not you already have a mortgage on it. A mortgage is what you take out when you first buy the property. Don't worry about this small detail, though. Just do it.
While we're at it one might also wonder why we talk about a lender repossessing the property when they didn't posess it before ... in fact they don't really posess it at all, they just have the right to force a sale so they can reclaim their money from the proceeds. Maybe it should be called deposession ...
NO!!!!!!!! A mortgage is when you GIVE a property as security for a loan!!!!! The Lender GETS the mortgage and the borrower GIVES it.!
NO!! A re-mortgage is when you transfer the security of a mortgage to another mortgagee. If you haven't already given a mortgage on the subject property then you cant re-mortgage it.
Having said that, most lenders regard the granting of a loan secured by a first mortgage over a property that is currently without encumbrance as falling into their 're-mortgage' marketing and product category on the grounds that the loan is not being used for the purchase of that property.
Yeah, OK. But if you're trying to explain something to someone who doesn't know his way round the topic it's better to use words of one syllable rather than complicating things with technicalities which don't actually affect the outcome.
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