What is a regulated mortgage

what is a regulated mortgage

What does Regulated Mortgage Contract mean?

In order to know what a regulated mortgage contract is, one has to fulfill the following conditions:
  • You are an individual/trustee eligible to contract a mortgage/loan; within UK only
  • First legal charge is being in force (which simply means that if you default on your loan, the regulated mortgage contract lender is first in line of repossession)
  • The minimum area of the property which must be occupied is 40%.
  • For example an Equity Release loan if meeting the above enumerated conditions is such a regulated mortgage contract. This option supposes that you take out a loan on the remaining equity in your home, which will be repaid upon

    the decease of the rightful owner. For example, the equity left in your home is £90,000, and your home is worth £210,000.

    Upon your death, the house is sold, the lender gets back his amount £90,000 + interests and other charges, and the remainder of the amount goes to the surviving family members (children, grandchildren). Furthermore, a secured credit card loan can also be a regulated mortgage contract, and certain home reversion schemes go under the same umbrella as well.

    Total exceptions to this rule are constituted certainly by any unsecured loan, second legal charges (where actually the lender is only second in line of getting paid in case you default on your mortgage payments), and in general any transactions that represent high risk to the lender.

    Source: www.mortgageplansonline.com

    Category: Credit

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