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A B
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D E
F G
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N O
P Q R
S T
U V W X Y Z
APR
Stands for 'Annual Percentage Rate' which helps you compare the
cost of different mortgage deals. It takes into account the amount
of interest you will pay, the length of the term of the mortgage,
and certain other charges such as any arrangement fee.
Arrangement
fee
Lenders sometimes charge a fee to cover the work involved in
setting up your mortgage or for certain mortgage rates.
Bank of England base rate
This is also known as the Bank of England's repo rate. This is
announced from time to time by the Bank of England's Monetary
Policy Committee.
Buildings
insurance
What you must have to protect your property against hazards such
as fire, flood and subsidence.
Buildings
survey
This is a technical report following an inspection of the
property. It will give you a comprehensive account of the
condition of the property, describing any structural or other
defects.
Capital and interest
mortgage
Also known as a repayment mortgage. Your monthly payments
gradually pay off the money (capital) you've borrowed, and also
cover interest on the amount outstanding.
Capped rate
Your interest rate won't go above a certain level - the 'cap' -
during the capped rate period. This means that you can enjoy any
rate reductions, yet have the comfort of knowing that your rate
won't go above the cap.
Cashback
Certain mortgage products offer cashback, which means you get a
cash lump sum when you enter into the mortgage to spend on
anything you want.
CAT standard
mortgages
The Government has laid down CAT standards - fair Charges, easy
Access and decent Terms - to help people identify mortgages which
meet minimum standards. If a mortgage is described as meeting the
CAT standards it doesn't mean that it is 'Government approved' or
necessarily right for you.
Completion
The day on which a property becomes legally yours.
Conclusion
of Missives
The Scottish equivalent of exchanging contracts.
Contents
insurance
Protection for items in your home, including furniture and
personal possessions - in case they're stolen, lost or damaged.
Conveyancer
A legal practitioner who deals with the conveyancing of land.
Conveyancing
The legal process involved in buying and selling a property.
Credit
scoring
Lenders will assess the suitability of
your application using a technique known as credit scoring.
Current
Account Mortgage
This is still a fairly new type of mortgage but it is becoming
more common. Essentially, you have a mortgage account and a
current account. Any positive balance in the current account is
deducted from the mortgage balance, thus reducing the amount you
owe. This is called offsetting and will reduce the interest
charged on your mortgage.
Daily interest
With this method of calculating mortgage interest, it is charged
on the amount of mortgage outstanding from day to day. This means
lenders take into account any changes in the amount you owe on a
day-to-day basis.
Deposit
The money you pay on exchange of contracts as part of your initial
contribution to the purchase of your home.
Direct
mortgages
A mortgage you can arrange exclusively over the telephone.
Disbursements
All the various costs itemised on your conveyancer's invoice for
carrying out your homebuying legal work.
Discharge
fee
You have to pay this to some lenders for releasing their hold over
a property once you've paid off your loan.
Discounted
rate
This means interest is charged at the variable base rate that
applies to the mortgage, less a discount for a set period.
This means the rate, and your monthly payment, will vary - up or
down - whenever the variable base rate changes, but will remain
below the variable base rate during the discounted rate period.
Equity
The difference between the amount you owe on your mortgage and the
current value of your property.
Exchange of
contracts
The swapping of contracts between a buyer's conveyancer and a
seller's conveyancer. Once you have exchanged contracts you are
both legally bound to the transaction.
Feudal
A form of legal title applicable only in Scotland.
Fast Track
Voluntary Arrangements (FTVA)
An FTVA is a binding agreement with your creditors to pay all or
part of the money you owe them. You can only enter into it after
you have been made bankrupt.
Financial
Services Authority (FSA)
The UK regulator for mortgages
First charge
Most mortgage lenders lending money to enable someone to buy their
home would require a first charge. This means the lender has first
call on any funds available from the sale of the property to clear
the outstanding mortgage debt.
Fixed rate
A rate of interest guaranteed not to change over a fixed period of
time.
Freehold
A form of legal title to land which means you are the absolute
owner of the property and the land it's on.
Further
advance
When you borrow extra funds against the value of your home. The
loan is added to your main mortgage and your payments
recalculated.
Guarantor
Someone who guarantees to repay your mortgage if you can't borrow
enough to buy the home you want. Parents, for instance, may act as
guarantors for their children when they buy their first home.
Higher Lending Charge
Also known as a mortgage indemnity guarantee policy (MIG). This is
basically an insurance policy that the lender will set up if you
borrow more than a set percentage of the property value.
Homebuyer's
Survey & Valuation Report
A property survey that includes a valuation and should reveal any
major faults in the property.
Household
insurance
A way of referring to both buildings and contents insurance.
Key Facts Illustration
(KFI)
The KFI is a mortgage quotation detailing all of the costs and
payments for the mortgage you are applying for. Each broker or
lender must use the same basic format for KFI's.
Income multiplier
The way lenders work out how much you can borrow, usually by
multiplying your gross annual salary. Usually up to 4 times
salary or 3 times combined salaries if buying jointly.
Independent
Mortgage Broker
A mortgage broker who is authorised and regulated by the Financial
Services Authority to conduct mortgage business. Mortgages must be
sourced from the whole mortgage market, not a preferred list. You
must be given a choice of paying a fee only for your mortgage
advice.
Interest-only mortgage
You only pay interest to your lender throughout the mortgage term
and your mortgage balance doesn't reduce. At the same time, you
put money into a separate investment which should grow and pay off
the mortgage as scheduled. You must make sure you keep premiums up
to date on any mortgage investment products.
ISA
Individual Savings Account. A tax efficient shelter
for investments in stocks and shares, life assurance and cash. Can
be used as a way of repaying an interest-only mortgage.
Land Registry Fee
Your conveyancer pays this on your behalf to register your details
in the Land Registry records once you've bought a property or
changed your mortgage lender.
Leasehold
This means you own a property for a set number of years. When the
lease expires, the property returns to the freeholder. Flats are
commonly sold as leasehold.
Life
Assurance
A form of insurance by which someone's life is insured. Life
assurance policies can run parallel with a repayment mortgage, so
the mortgage will be repaid if you die before the end of the term.
Local
authority search
Part of the conveyancing process when you buy a property, carried
out by your conveyancer. It gives details of any matters which,
from the local council's point of view, affect the property. It
reveals any proposed changes to the local area, such as road
improvements, and details any planning permission given for the
property.
LTV
Loan to value is the proportion of the value or price of the
property (whichever is the lower), that you borrow on a mortgage.
For example, a £90,000 mortgage on a house valued at £100,000
would mean a LTV of 90%.
Mortgage deed
A legal document establishing a mortgage on a property.
Mortgage
Offer
A document issued by a lender confirming how much they will lend
including the terms and conditions for the mortgage.
Mortgage
term
The length of time over which you agree to pay back your mortgage
- usually 25 years, but it can be longer or shorter.
Mundic
Mundic can be found in some properties in Cornwall and Devon. It
was used in the making of concrete and can cause serious
structural problems for properties.
Negative equity
This is when the amount you owe on your mortgage is greater than
the value of your property. It particularly becomes a problem if
you want to move house.
Overpayments
When you're allowed to pay more than your normal monthly payment,
so you can pay off your mortgage earlier if you want and save on
interest charges.
Payment holiday
You can stop making mortgage payments altogether for a limited
period agreed with the lender.
Pension
mortgage
An interest-only mortgage where you use a personal pension plan to
not only provide for your retirement, but also to repay your
mortgage on maturity.
Premium
Amount you pay on a regular basis, usually for an insurance
policy.
Remortgaging
When you arrange a new mortgage on your home, with a different
lender and use the new mortgage to pay off the old one.
Early repayment
fees / Redemption penalties
With some mortgages you have to pay a repayment fee if certain
things happen. For example, if you pay off some or all of your
mortgage, or you transfer to a different mortgage product.
Repayment
mortgage
Your monthly payments gradually pay off your mortgage as well as
the interest. See capital and interest mortgage.
Repo rate
See the Bank of England base rate.
Sealing fee
A fee charged by the lender for sealing your deeds.
Second
charge mortgage
Also known as a secured mortgage or
secured personal loan.
Essentially a loan that is secured on your property at the same
time as the main mortgage.
Section 106 agreement
A Local Authority will often use a Section 106 planning
restriction when they want to control how a property can be
used.
Stamp duty
Government tax you have to pay on the purchase price of a property
worth £125,000 or more.
Structural
survey
A specialist report from a structural engineer on the condition of
a property.
Sum assured
The amount paid out on the death of a policy holder.
Tracker rate
Tracker rates vary in line with changes to the Bank of England
base rate. During the tracker rate period, any changes to the Bank
of England base rate are passed on to you in full.
Underpayments
You can under pay up to any previous over payments. You can pay
less than your normal monthly mortgage payments for a limited
period, but you have to build up a fund of overpayments first.
Valuation
Arranged by your lender to find out if the property is worth the
amount you've agreed to pay, and therefore suitable to lend a
mortgage on.
Variable
base rate
The variable base rate is the basic rate of interest charged on a
mortgage. This may change in reaction to market conditions, so
your monthly payments can go
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Mortgage
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