Understanding the Language of Remortgaging
A major part of the confusion and fear that accompany the mortgage process is caused by a lack of understanding. When sitting in the applicant seat, we tend to make our words plain and simple – the way that normal people talk. Across the desk from you sits a mortgage advisor who makes the remortgage process feel more like a complicated scientific experiment. Deep inside you feel like saying, “Could you repeat that in English?” But before you do, you convince yourself that you’ll understand better as time progresses.
At times, comprehending mortgage lingo can feel like learning a new language. Just as with attorneys, medical doctors and other specialised industries, the mortgage industry has a language all to itself. Before you dive into a remortgage loan, you may want to get up close and personal with these important remortgage terms.
Obligation Free Remortgage Quotations
Get a Quote »- Administration fee – A portion of the valuation charge that some lenders will reserve to offset their own costs.
- Arrangement fee – A lender fee that may be charged separately or added to the loan. It is considered to be the cost for setting up the loan.
- Base rate – The benchmark upon which interest rates for loans and mortgages are based. High street banks tie their base rate to the Bank of England Base Rate. The tracker mortgage is an example of a loan program with an interest rate that rises and falls in line with the Bank of England Base Rate.
- Credit Reference Agency – The credit reference agency is the repository that collects and disseminates information about your use of credit to banks and other credit providers. Experian, Equifax and Call Credit are the primary credit reference agencies in the UK.
- Early repayment charge – Also known as an early redemption penalty, this fee is charged when a homeowner pays off a loan that was discounted at the time of the origination.
- Essential repairs – Before granting a loan approval, your lender wants your home to be in good shape. Depending on the results of the valuation, you may be required to make specific repairs. If you are considering a remortgage, you will want to keep your home in good condition.
- Equity release remortgage – A mortgage obtained to provide regular monthly income or a lump sum cash payment.
- Fixed rate mortgage – A fixed rate mortgage features an interest rate that remains the same for the life of the loan. This gives the borrower the comfort of knowing exactly what their payment will be from month to month.
- Flexible mortgage – A flexible mortgage is a loan that allows you to vary your monthly repayment schedule. Typically, you will have the option to take a payment holiday to under pay or to over pay. You can do this without being penalised.
- Remortgage - Taking out a new mortgage loan to replace the existing one.
This is just the tip of the iceberg for mortgage lingo. You can search online for a mortgage glossary to obtain a more extensive list. Learning the language of the mortgage process will help ease your mind, as well as keep your head in the game on your next remortgage loan.