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Home Equity is, in its most basic form, a homeowners financial interest in their property. Equity is the difference between the market value of a property, and the amount that is owed on mortgage and other charges.
Here we explain Home Equity in more detail, how its calculated, and hopefully answer many of the initial questions you may have regarding home equity, and provide further information as to how we might be able to help you.
Table of Contents:
So, as we've already established, Home Equity is simply the difference between the market value of a property, and the amount that is owed on mortgage and other charges.
You might now be wondering exactly how to calculate your home equity. Well, it's fairly easy really. Here's an example...
If the market value of a property is valued at £150,000, and the remaining mortgage amount on that property is £80,000, with an additional on-going secured loan of £25,000, the available equity is £45,000 (i.e. £150,000 less £80,000, less £25,000).
Available home equity for mortgage purposes may be restricted to a loan to value (LTV). For instance, if the maximum borrowings on our example were restricted to 95%, this would equate to £142,500 (i.e. £150,000 x 95%), and thus the available home equity would then be £37,500 (i.e. £142,500 less £80,000, less £25,000).
Not always unfortunately, as lenders must always consider risk.
Nevertheless, many of the traditional high street lenders will consider arranging 100% mortgages provided that the borrower can demonstrate the ability and willingness to pay. This means the mortgage must be affordable, and that as far as the High Street Lender is concerned the borrower should not have any adverse credit history, such as CCJ's, credit defaults or arrears registered against them.
As we all know, including us here at Shire Direct, not everything in life is black and white.
Many borrowers have experienced credit difficulties in the past and have a poor credit score, often through no fault of their own, and find that most traditional high street lenders are often reluctant to help at all.
We can certainly consider it!
Our lender panels have been devised to provide help, even in the trickiest of circumstances. And yes, we do have specialist lenders who will consider advancing the full 100% purchase price of the property, even in instances where the customer may have a County Court Judgement. In instances where there may be more serious adverse credit against the borrower, we can still usually help, although a deposit of 5% - 15% may be required, depending on the extent of the credit history!
Understandably however, the interest rate charged on these specialist schemes may be slightly higher than those charged by high street lenders.
In certain circumstances, yes!
There are a very few mortgage products that will provide borrowing capacity beyond the available home equity against which a lender will secure the mortgage. An example of how this can be achieved is built in to one of the flexible mortgage products currently available. The scheme permits borrowings of up to an additional 25% over and above the property value (known as a 125% mortgage scheme, subject to a maximum of £30,000. As this sum is out of equity, it is funded on an unsecured basis, but at the same rates as the mortgage that is secured.
This product is especially useful for borrowers that may be purchasing a property that requires modernisation or home improvements. Similarly the scheme may be used in order to provide a "clean slate", and can be used to repay existing credit commitments, so there is just one payment per month.
However, it is important that borrowers understand the implications when consolidating unsecured debt into their mortgage borrowings.
Yes and its so easy, simply give one of qualified Mortgage Advisors a call or contact us online. We will carefully assess your circumstances, needs and aspirations, and will then discuss the various options available to you, and explain the benefits and downsides of them. A rapid in principle decision will follow.
So, call us on Freephone 08000 282 281, our lines are open from 8am until 10pm everyday (including weekends!), or alternatively enquire online at any time!
Well, that concludes our look at Home Equity, we hope we were able to answer any initial questions you may have had. Don't forget we're only ever a free call or a couple of mouse clicks away and would love to hear from you!
The overall cost for comparison is 9.8% APR.
The actual rate available will depend upon your circumstances. Ask for a personalised illustration. APR variable and based on a usual case. Most customers are likely to receive a lower rate or the same rate as our overall cost for comparison rate - learn more about APR.
There are no upfront broker fees.
However, a fee may be charged on successful completion. An indication is that on conforming cases (straightforward applications with no or minimal adverse credit) a fee may be charged of up to 1% of the amount advanced, typically £795 and will depend on your circumstances.
For non-conforming cases (where case research and processing may be more complex due to adverse credit or unusual circumstances), a fee may be charged of up to 3% of the amount advanced, typically £1,995.
THINK CAREFULLY BEFORE
SECURING OTHER DEBTS AGAINST YOUR HOME.
YOUR HOME MAY BE REPOSSESSED
IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
Adding existing debt to your mortgage will increase the repayment term and overall cost.
Are you worried and becoming stressed because you are having problems getting a mortgage or remortgage? Worry and stress no more! Here at Shire Direct we provide tailor made mortgage solutions to suit you, and can usually help with all kinds of circumstances including...
Remember, we're here to help, and would love to hear from you!
Over £2,000 worth of Argos Vouchers to be won in the Shire Direct Grand Prize Draw 2008! Terms and conditions apply - please read article for full details.
Shire Direct and Shire Direct Mortgages are trading styles of Shire Processing Centre Limited which is
Authorised and regulated by the Financial Services Authority in respect of regulated mortgage products and general insurances.
Registered No: 302389. Commercial funding and Secured Loans are not regulated by the FSA.
Licensed Credit Brokers. Consumer Credit Licence Number: 349999.
Shire Processing Centre Limited is registered under the provisions of the Data Protection Act by the Information Commissioners Office: Registration No: Z6795249. Registered in England & Wales. Company number: 2732202. Telephone calls may be recorded for training, monitoring and security purposes. All applicants must be aged 18-years or over.
