What is a redemption penalty?

A redemption penalty is a charge levied by a mortgage lender when a mortgage is repaid by the borrower before the agreed term. This happens when a house is remortgaged or sold off. The redemption penalty is a way that ensures the lender a profit if the mortgage is redeemed early.

Can I get a mortgage inspite of bad credit rating?

Yes, you surely can. A bad credit rating does not prevent you from getting a mortgage. A number of specialists provide mortgage loans to people who have faced County Court Judgements (CCJs) against their names or having poor credit history. Generally, a higher interest rate is charged in these cases. But any mortgage lender will be more than willing to offer you competitive interest rate if you intend to put collateral as a security.

How the borrowing amount is determined?

Your borrowings are determined in accordance with your income and the worth of the property you intend to purchase. Also, different lenders may offer you different amounts. Usually it is three to three and a half times of your annual income.
Lenders will give you a loan up to 75 per cent of the property's value (Loan to Value ratio) but some may go to 95 per cent. Some creditors will even offer you up to 100 per cent but in that case you may end up paying abnormal rates and will probably also be forced to buy mortgage indemnity insurance.
Before granting a loan, the lender needs to ensure that the borrower’s repaying capacity is commensurate with the loan amount. The amount of borrowing also depends on your own circumstances. A married person having young children will have lower repaying capacity as compared to an unmarried person with same income. However, either advertently or inadvertently, a borrower may be able to get more than his repaying capacity. It is advisable that one should borrow only that much amount which he can comfortably pay back.

What is a remortgage?

Remortgage is a process by which borrower repays existing mortgage with the proceeds of a new mortgage using the same property as security. Remortgage can take place with the same lender or a different lender. People usually remortgage when their existing mortgage comes out of a discount or special rate period. Remortgage may or may not exceed the existing mortgage amount. If remortgage exceeds the existing mortgage amount, it is called Cash Out Remortgage. These days several remortgage products with different options are available in the market.

What is a mortgage?

A mortgage is a long term secured loan taken by a borrower from a mortgage lender in order to purchase a house. The house that is being purchased works as collateral. In case you make defaults in repayment of the mortgage, your house can be repossessed by the creditor and sold to repay the loan.

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