Topic 27: Transferring mortgages Flashcards
What is a Remortgage?
Transferring an existing mortgage to a new lender to take advantage of a better deal or raise further funds. On rare occasions a remortgage may be with the existing lender.
What is a Early repayment charge?
A charge applied by a lender for ending a mortgage arrangement or repaying some of the loan early. Usually calculated as a number of months’ interest on the mortgage or a percentage of the amount repaid. Typically applies during the initial period when the borrower is benefitting from a special deal.
What is Portability?
The facility to transfer an existing mortgage deal to a new property without penalty.
What is Transfer of equity?
Occurs when a new party is added as an owner of the property, or an existing owner transfers their share of the property to someone else. For example, a divorcing couple decide to transfer ownership from a joint basis into one name as part of the divorce settlement. As the mortgage must be on the same basis as property ownership, transferring equity will also require changes to the mortgage and thus the agreement of both borrowers and the lender.
What is Early redemption?
The term used when the mortgage is repaid before the end of its original term.
What is Legal date of redemption?
Contained in the mortgage deed. A date after which both parties have the right to ask for early redemption: typically six months after the start of the mortgage.
What is Clog on the equity of redemption?
Where the mortgage deed contains an unreasonable condition to deliberately discourage or prevent a borrower from repaying a loan. Examples include unreasonably high early redemption charges, or early repayment charges imposed for a long period on a variable-rate mortgage.
What is Early repayment disclosure (MCOB 7 A.3)?
Requirements for lenders to provide information to customers wishing to repay the mortgage early so that the customer can make an informed decision.
