The credit crunch means there are fewer mortgages on the market
The credit crunch has had a huge impact
on the cost and availability of mortgages.
News of the mortgage squeeze means
that homeowners can't get away from talk of Libor or loan-to-value ratios. But what does all this
Here is a quick guide to some of the more common phrases thrown around by analysts
in recent weeks that might have mystified householders:
Variable Rate (SVR)
The SVR - or standard variable rate - is the normal interest
rate at which lenders offer a home loan, without any discounts or deals. This is the rate that you naturally transfer onto
when your current fixed rate or tracker rate finishes. You are no longer tied under contract to the lender when you reach
A lot of borrowers are finding that by allowing their mortgages to expire onto the SVR
they are now paying less than when they were tied into their lender
Repayment Charge (ERC)
This is a financial penlty that the lender will place
against an applicant if they try to redeem their mortgage whilst still tied to their current products. This penalty phase
normally coincides with their 2/3/5 year rate end or it could be applied if the applicants tried to over pay too much from
their mortgage balance (normally more thahn 10% of the loan balance per annum).
Many people have recently found themselves
on high rates that were taken from 2008 - 2009 and as a result did not gain the benefits when the Bank of England base rate
fell. Many feel they should remortgage to take advantage of the lower rates but it is always wise to check how the ERC
will penalise you before making such a move.