5.CONVERTING PROPERTY VALUE TO CAPITAL : REMORTGAGING

Remortgaging is using the value of the house already mortgaged to secure cash. The criteria and document preparation for remortgaging is the same as a request for a new loan. The purpose of remortgaging is to secure money using real estate owned as collateral.

Criteria to apply for this type of mortgage are almost the same as for the first mortgage.

• The amount of the mortgage may not exceed 70 – 80% of the estimated property value.
• The term of the mortgage may not exceed 30 years plus the borrower’s age if not over 65 – 70 years.

The difference between a remortgage and an original mortgage is to apply for a remortgage, one must produce collateral in the property by giving the title deed to the financial institution as assurance while the home owner can live in the house normally and when mortgage payments are completed, the mortgage holder can redeem the title deed from the bank. Eligibility and procedures are the same as for an original mortgage. While remortgage rates vary, most range from 7 – 12%.

Before seeking to remortgage, it is important to know the conditions each bank imposes.