Common Types of Remortgage in UK
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There are homeowners who aren’t actually happy about their mortgages especially that some are affected by fluctuating interest rates associated with it. With this issue, the best option is to remortgage. This ensure a lower and more manageable interest rate.
Remortgaging is done by taking out another loan on your property such as homes from a different lending institution so that this lender will pay your existing mortgage and granting you a lower monthly payment and interest rates. The common remortgage types are standard variable rate remortgage, discounted variable rate remortgage, fixed-rate remortgage, flexible remortgage and capped-home loans.
Standard Variable Rate Remortgage (SVR) is the common basis of rates for lending provided by the Bank of England and this is the most popular type of remortgage. SVR is usually 2% above Bank of England’s lending rate. If the borrower has a good credit rating, the chance of getting lower rates is relatively high.
For Discounted Variable Rate Remortgage, lenders offer discounts to borrowers in a specific time frame. Once it is over, remortgage rate become the same as SVR. This is the opposite of fixed-rate remortgage wherein the interest rates is fixed for an agreed time period.
Flexible Remortgage, as the name implies, allows borrowers to adjust repayments based on financial situation. And if the lowest rates is taken from fixed rate and variable home loans, it is called the capped-home loans. It offers protection from fluctuating interest rates that is why is sometimes more preferred by homeowners.
Tags: Finance, Real Estate