High Loan To Value Mortgages And Remortgages Are Now A Thing Of The Past.
Remortgages and mortgages are both types of home loans.
Home loans clearly have something to do with a home and what we are referring to when considering mortgages and remortgages are homes that are owner occupied.
The property must have equity unlike in the past when remortgages and mortgages were available up to 100% of the value of the property.
For those uncertain about what equity means, all it means in simple lay mans terms is the amount left when the mortgage balance on any particular property is deducted from what the property is worth.
If for example a property whether it is a house or a flat has a value of 230,000 and the mortgage balance is 140,000, the equity on the property would be 90,000.
The Northern Rock Building Society even advanced both mortgages and remortgages at 125% of equity meaning that the home buyer or the remortgage applicant could obtain remortgages and mortgages at 25% more than the property was valued.
The Northern Rock even gave out mortgages and remortgages of 125% of what a property was worth which looking back sounds pretty crazy and verging on the irresponsible.
Now things in the mortgage nd remortgage market are very different and it is impossible to get a 100% mortgage or remortgage.
Now when applying for either a mortgage or remortgage the borrower must have money to put down.
This is very sensible as it gives the borrower the necessity of taking the mortgage or remortgage seriously as he has money of his own invested and the whole borrowings on his property are not simply money belonging to the bank or building society.
It was not a good thing to arrange a 100% or even more than that loan to value mortgage or remortgage as people did not have any real incentive to make any great effort to repay his mortgage as he had none of his own savings invested.
The doing away with such mortgages and remortgages has not come one moment too soon.
Therefore we should shed no tears regarding the passing of these high LTV mortgages and remortgages.
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