Types of Remortgage Available in the UK

Search:

Types of Remortgage Available in the UK

From standard variable rates to cashback remortgages there are numerous ways the borrower can go about refinancing the loan on their home. Here is a simple guide to the basic options.

Standard Variable Rate:
The SVR is most basic form of all remortgages that a borrower can arrange. The SVR is generally linked to the Bank of England interest rate or base rate as it is referred to on the News. SVRs do not mirror exactly the Bank of England rate but they follow its direction – a 0.5% fall could mean a 0.4% fall for the mortgage rate. In recent times the SVR has moved far less than any Bank of England rate changes as mortgage lenders are unable to raise funds as cheaply as they were a year ago.

Tracker:
Trackers follow the base rate exactly. Rates tend to be between 0.5% and 1% above the Bank of England’s base rate. It is not uncommon for products to have a collar – this is a minimum level below which the rate will not drop – say 2%. If rates fell to 1.5% the tracker would not fall below the 2% mark.

Discount:
This normally takes the form of a temporary discount off the lender’s SVR. In this situation it is the relation of the discount to the SVR that counts – in effect with different discounts it is possible for the rate to be the same. A massive 2.5% discount off an 8% SVR is the same as a minimal 0.5% discount off a 6% SVR – do not be fooled by the larger discount.

Fixed:
As the name states the interest rate is fixed. There will be absolutely no change for the special rate period (generally 2, 3 or 5 years) and for longer if specifically arranged for. Beware of redemption penalties which will penalise you if you redeem the mortgage before the end of the fixed rate period. You can fix for 10, 15 years or longer and if you are confident interest rates are going to rise dramatically or are sure that the repayments are affordable this is an ideal remortgage option.

Capped:
This is the inverse of a collar. Capped remortgages see the rate move in realation to the Bank of England base rate, but there is an upper limit (cap) which gives protection. These remortgages prove popular when there is a possibility of a rapid increase in rates but the borrower cannot afford a lengthy fix or the increase looks temporary.

Cashback:
The lender will offer you cash in exchange for arranging the remortgage. Sums equivalent to 5 – 10 % are not uncommon but this money will be have to be repaid eventually. As a result cashback remortgages charge higher interest rates than standard loans and will charge repayment or switching penalties if the borrower wants to alter the agreement within a (usually) 5 year time frame.

Article Source: http://articlenexus.com

Aaron Hill has a decade of experience in the financial services industry. His main area of expertise is mortgage advice and writes many articles on mortgages for finance industry, mortgage brokers and the general public alike.

Please Rate this Article

Not yet Rated

Click the XML Icon Above to Receive Mortgages Articles Via RSS!

Additional Articles From - Home | Finance | Mortgages

A primer on buy to let mortgages - By : Richard Heaney
Advertised Mortgage Rate vs. Your Actual Rate - By : Olga Pinsky
Bad Credit Mortgages-UK - By : Kaushik Mukherjee
Bad credit rating mortgages - By : Kaushik Mukherjee
Mortgage company for people with bad credit - By : Kaushik Mukherjee
Mortgage loans for people with bad credit - By : Kaushik Mukherjee
Mortgages for people with bad credit - By : Kaushik Mukherjee
Commercial Mortgages UK - By : Kaushik Mukherjee
Commercial mortgage online - By : Kaushik Mukherjee
Commercial mortgage quote - By : Kaushik Mukherjee

STOP Paying for Your Ads! FREE Pay Per Click!

Everything you need for your website and home business.
	Adsense Site Builder
	Adsense Analyzer Software
	Clip Art
	Domain Names
	Header Graphics
	Make Money Online
	Photo Art
	Resell Rights Products
	SEO Software
	Web Hosting $4.95/mo
	Website Templates
	Web Site Promotion Tools
AdvancedWebsiteTools.com

	Print This Article
	Add To Favorites
	Email to Friends
	Ezine Ready

Submit Articles
Member Login
Top Authors
Most Popular Articles
Submission Guidelines
Ezine Notifications
Article RSS Feeds

(Your 160x160 ad here)
Only $50 a month-click here

Link Exchange
Blog by WordPress
Privacy Policy
Terms of Service
About Us
Contact Us
Banner Advertisements

Have you Victimized by a Business or the Government? File your consumer complaints or business complaints at BusinessReporter.net!

Structured Settlement?
Free information to help you learn more about structured settlements, your rights, and how to select the best company for you.

Affordable Discount Dental Plans
Choose from over 30 top-quality national and regional discount dental plans. Save 10% to 60% on most dental procedures

Classic Autos
Replica Kit Cars

Links

Bad Credit Repair

Hair Loss Remedies

Steiff Bears, Antique Bears

Model Railroading | Model Trains

Fighting Foreclosure

toe nail fungus

Free Diabetic Supplies

Antique Radios | Ham Radios

Crazy Fox Review