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Tag: MORTGAGE
MORTGAGE
Subrogation and how it affects mortgages
Subrogation is a legal concept that is relevant in various financial and insurance contexts, including mortgages in the UK. It refers to the right of a party, usually an insurer or lender, to step into the shoes of another party to assume their legal rights and remedies. This often occurs after the first party has… Read more
What is a deed of postponement?
A Deed of Postponement is a legal document used in the UK mortgage market to change the order of priority of charges secured against a property. This document is typically used when a homeowner has more than one mortgage or secured loan and wants to take out additional financing, such as a further advance or… Read more
Second charge mortgages – the advantages and disadvantages
In the context of UK mortgages, a second charge refers to a type of secured loan that is taken out against a property that already has an existing mortgage. The second charge loan is subordinate to the first (or primary) mortgage, meaning that if the borrower defaults and the property is sold to repay debts,… Read more
Consumer Buy To Let
In the UK mortgage market, “Consumer Buy-to-Let” (CBTL) refers to a specific category of buy-to-let (BTL) mortgages that are regulated differently compared to standard buy-to-let mortgages. The distinction primarily relates to the borrower’s intention and circumstances under which the property is being rented out. Definition and Criteria A Consumer Buy-to-Let mortgage is designed for landlords… Read more
Stress ICR (Interest rate affordability stress test)
The interest rate affordability stress test is a crucial part of the mortgage application process in the UK. It is designed to ensure that borrowers can afford their mortgage repayments not only at the current interest rates but also if rates were to rise significantly in the future. This test is applied by mortgage lenders… Read more
Interest coverage ratio (ICR) explained
The interest coverage ratio (ICR) is a financial metric used to assess a company’s ability to pay interest on its outstanding debt. It is calculated by dividing a company’s earnings before interest and taxes (EBIT) by its interest expenses for the same period. The formula is: Interest Coverage Ratio=EBITInterest Expense\text{Interest Coverage Ratio} = \frac{\text{EBIT}}{\text{Interest Expense}}Interest Coverage Ratio=Interest ExpenseEBIT Importance of the… Read more
Is there a place for day one re-mortgages?
What is a Day One Re-Mortgage? A “day one re-mortgage” refers to the process of re-mortgaging a property immediately after its purchase, sometimes literally from the first day of ownership. This type of re-mortgage allows the new property owner to refinance their property quickly, typically to access better interest rates or to release equity that… Read more
What are the advantages of buying off-plan property?
The Advantages of Buying Off-Plan Property Buying off-plan property, which involves purchasing a property before it has been constructed, offers several potential benefits. Here are some key advantages to consider: 1. Lower Purchase Price One of the primary attractions of buying off-plan is the potential for lower purchase prices compared to completed properties. Developers often… Read more
The disadvantages of buying off-plan properties
Buying off-plan property, which involves purchasing a property before it has been built, can offer attractive benefits such as lower prices and the opportunity to customize certain aspects. However, it also comes with several significant risks and disadvantages. Here are the key drawbacks to consider: 1. Completion Delays One of the most common issues with… Read more
What is meant by unencumbered property?
In the context of the UK mortgage market, the term “unencumbered property” holds significant importance for both homeowners and lenders. It denotes a property that is owned outright, with no existing mortgages, liens, or other financial claims against it. Here, we delve into what unencumbered property means, its benefits, and its implications in the UK… Read more