Mortgage Speak Revealed: The Mortgagesplease Glossary of Terms
Ability to pay
A way of working out how creditworthy a borrower is, by estimating how much they will have left to make payments on a mortgage once other deductions have been made from gross income.
Acceleration clause
Allows the lender to collect the balance of a loan if a borrower misses one or more payments.
Acceptance
A positive response to an offer. Acceptances may be “conditional'” “express”, “implied” or “qualified”, depending on the circumstances of the deal and whether there are any further mitigations, conditions or requirements.
Accident insurance
Insurance that covers you if you suffer certain injuries, such as loss of a limb or vision.
Accident, sickness and unemployment insurance
Insurance cover arranged by the borrower to protect against the inability to meet mortgage repayments. Unemployment cover is restricted to cover certain events only.
Exclusions to this insurance include dismissal due to professional misconduct or taking voluntary redundancy. The accident and sickness cover does not cover any act of self-injury or any injury related to the use of alcohol or drugs.
Additional principal payment
An extra payment each month to help reduce a debt.
Additional security
When a mortgage exceeds a certain loan-to-value, lenders may require additional security. The simplest form of additional security is a single mortgage loan-to-value, however other security such as cash or shares may be accepted as security.
Administration charge
Some lenders will reserve a proportion of the fee charged for the valuation to cover their own costs. If an application does not proceed, this part of the valuation fee may not be refunded, even if the valuation has not taken place. See valuation fee.
Advance
Amount of your mortgage/loan. See also Cash advance.
Advice
A recommendation about the most suitable mortgage for you made by an adviser who is regulated by the FSA.
Annual statement
A statement from your mortgage lender, sent every year, showing among other things what you've paid and what you still owe.
Affidavit swear fee
A fee charged when a mortgage lender is required to swear an affidavit. This is a written legal statement to a solicitor in connection with mortgage arrears.
Agreement in principle
This means you have been accepted for a mortgage or other financial product, but it will depend on issues such as a valuation report and confirmation of employment.
Annualised Percentage Rate (APR)
An explanation to identify the true cost of borrowing and a standard in order to provide a method of comparing costs of different loans. It is a legal requirement that a true APR figure be provided with any loan.
Annuity Mortgage
Another term for a capital & interest repayment mortgage.
Application
The process of applying for credit, or other products. The vast majority of credit applications need to be made in writing, although it may be possible for some services, such as an overdraft extension, to be arranged over the phone. Even internet-based credit applications will usually require you to sign documents before the application is finalised.
Application Fee
Any charges made for an application.
Applied Or Nominal Interest Rate
Rate used to calculate interest due.
APR
See Annualised Percentage Rate.
Arrangement Fee
A fee charged by a lender for setting up the loan. Normally payable upon completion but may sometimes be added to the loan.
Arrears
A late payment, or a payment after the event, for example most salaries are paid "monthly in arrears" – in other words, the first payment is one month after commencement of work.
Arrears Fee
Charges for any late payments. See Late payment fee.
Asking Price
This is the initial starting price for which the property owner is looking to sell their property.
ASU
Income protection cover for loss of earnings caused by accident, sickness, or unemployment.
Auction
The process whereby something is bought at a price that arises from a process of bidding. If you bid for and win a home at an auction you will be legally bound to buy the house.
Audited Figures
These are a set of business accounts that have been ratified by an accountant. Self employed people may need to provide two or three years’ worth of figures checked by an auditor to be able to get a mortgage.
Bankruptcy
The process of declaring an individual bankrupt. Bankruptcy can be discharged within 12 months, but remains on your credit rating for seven years and limits a person's ability to borrow.
Bank or Base Rate
The basic interest rate set by the Monetary Policy Committee of the Bank of England.
Benefit Period
Time frame in which the interest rate of a mortgage is discounted. (See Fixed or Capped).
Booking Fee
A fee charged by a lender to secure mortgage funds, payable at the time the loan application is submitted and normally applies only to special offer loans, such as fixed or capped rates.
Breach Of Contract
Failure to fulfil the term and conditions of a contract.
Breach Of Covenant
Failure to obey a legal agreement.
Bridging Loan
Short-term loan used as coverage when buying a new property before selling an existing one.
Broker
A third party individual or organisation (such as mortgagesplease) whose job is to find the best available financial or other package for the client. Brokers can be affiliated with a larger network in finance or they may be independent.
Broker Fee
A fee charged by an intermediary to the applicant for negotiating a loan. If a loan has not completed within six months of the date of introduction to a lender, the maximum fee that a broker may retain is £300, under the Consumer Credit Act. All fees charged by mortgagesplease are transparent and clearly explained.
BSA
Building Societies Association – the trade organisation for building societies.
Building Society
Building societies are mutual organisations owned by their members and regulated by the Buildings Societies Act.
Buildings Insurance
An essential insurance policy which covers the structure of the building. Where the property is leasehold the buildings insurance will normally be arranged by the freeholder and the cost charged on to the leaseholder within the service charges payable.
Buy To Let Mortgage
A mortgage for a property that the owner intends to rent out privately to tenants. See commercial mortgages.
Capital
The amount you borrow to help buy your home.
Capital-raising
The act of remortgaging a property based on a higher value compared to the original purchase price. The capital raised is the amount left over after repayment of the original loan is deducted from the new loan. Some lenders will also take into account home improvement projects as part of the remortgage, if they are likely to significantly raise the value of the property.
Capped Rates
The mortgage interest rate will not exceed a certain value during a certain period of time, although it will fluctuate above and below the current level. Some capped products will have a ceiling and a floor between which the rate payable may move; such loans may be known as cap and collar mortgages.
Cashback Mortgages
Cashback mortgages provide you with a single lump sum of cash immediately on completion. The amount of cash is usually calculated as a percentage of the overall loan amount, though it can be a set figure. The percentage of the loan that is given as cash back can be as high as 5%, though amounts in the region of 1 to 3% are more common.
Cash Buyer
Person or persons who do not need a mortgage in order to buy a property and who do not have a property to sell.
CAT Standard
These are a set of standards proposed by the government aimed at ensuring a certain level of standard amongst financial products. Whilst they are a sign that a lender or provider is a reputable business and offers products that are of a certain quality, a CAT mark does not ensure that a product is the most suitable one for you.
CCJ
If payments on a financial agreement are not made, a magistrate may issue a County Court Judgement (CCJ) in the name of the individual. This greatly affects your credit rating.
Centralised Lender
A general term applied to mortgage lenders, but not to high street banks and building societies, who mainly operate wholly from a head office location.
Certificate Of Deposit
Certificates from a financial organisation declaring you have the funds available to pay the deposit.
Charge
Security the lender relies on when granting credit.
CML
Council of Mortgage Lenders.
Code Of Practice
A group of principles and procedures individual employees of an organisation are expected to follow. This will cover such issues as client confidentiality, fairness and courtesy towards customers.
Collared mortgage
A mortgage with a minimum interest rate you'll pay during a deal period.
Collection
Steps taken by a lender to bring a person's payments back up to date.
Commercial Mortgage
Where the loan is granted for commercial purposes, and is usually secured against commercial property, though residential property may be used. With a commercial mortgage there is a higher rate of interest, as it is a higher degree of risk for the lender.
Commission
A percentage of the overall sale price that is received by the selling party when acting on someone else's behalf.
Common Law Partner
A partner who cohabits with his or her partner, and who can gain a number of financial benefits from such partner, without actually being legally married.
Comparison Table
A table giving comparisons between leading financial or other products to demonstrate which are the best performers under certain criteria. Remember that many such tables are a "one size fits all" covering a range of scenarios, and that the best way to evaluate your own options may be to draw up your own comparison table.
Completion
The moment at which all the legal formalities of the purchase or mortgage are finalised and the funds are drawn down from the lender, and usually into the solicitors account.
Completion Date
The official date for completion of a sale of a house, when keys are actually transferred.
Compound Interest
Interest on the interest.
Compulsory Products
Aspects of a financial contract that must be adhered to as a condition of the loan. An example of this is income payment protection.
Conclusion Of Missives
A Scottish term for exchanging contracts.
Conditional Insurance
An insurance policy that has to be taken out as a condition of obtaining a loan. It must usually be taken out via the lender's agency. See also Compulsory Products.
Contents Insurance
This is the insurance of property within your home i.e. furniture, clothing, personal possessions etc. Contents cover is a separate type of insurance to buildings insurance, which covers the structure of your property.
Contract Work
Many employers offer employment under fixed-term contracts as they have a greater control over staffing costs and are able to limit their redundancy payment liabilities.
Conveyancing
The legal documentation relating to the transfer of ownership of a property.
Conveyancing Fee
A fee charge by a solicitor or licensed conveyancer for arranging the necessary legal work in transferring the ownership of a property. The total cost of the legal work also includes profit cost, stamp duty, land registry fees and disbursements.
Co-ownership
Shared ownership, a method of purchasing property in partnership with a housing association, where the borrower purchases part of the property and rents the rest from the housing association..
Council Tax
An annual fee paid to a local authority to cover essential services such as road maintenance, rubbish collection and leisure centres. Council tax is based on the value of the property according to set bands.
County Court Fee
Fee for when a lender provides information to solicitors regarding county court rules when payments are in arrears.
County Court judgement (CCJ)
A county court judgement is a judgement for debt in the county court. This debt does not appear in the credit register if this debt is settled within 30 days of the date of the judgement. Very few lenders are willing to offer loans to anyone with an outstanding or unsettled judgement, and even if the judgement has been settled many lenders are likely to refuse a mortgage or other credit application.
Cover
The risk that an insurance policy protects against, such as third party, fire and theft.
Credit Averse
If a borrower has been bankrupt or has outstanding county court judgements they would be described as credit adverse.
Credit Check
Where an enquiry is made on the credit history of an applicant, normally by reference to one of the major credit agencies such as Equifax or Experian.
Credit Checking Agency
A service used by lenders to establish a level of risk involved in leading money.
Credit File
A record held by a credit reference agency on an individual or a company. You can inspect your own credit file by writing to the agencies.
Credit History
The history of a borrowers financial record.
Credit Rating
Rating used to establish risk involved in lending money. This is used in conjunction with credit history and financial status.
Credit Reference Agency
Companies that hold credit information one file.
Credit Scoring
A generalised way of assessing the credit application, carried out by scoring the answers given on an application. It is important that there are no missing answers on an application otherwise the result for the question becomes a negative.
Creditworthy
A description of someone who is deemed by a lending institution to be a low risk to lend to (colloquial term). As with blacklisting, there is no such thing as a "perfect credit score", or someone who is "completely credit worthy", as there is always some element of risk involved when loans are made, and different institutions use different criteria when evaluating such risk.
Creditor
Person or company to whom a debt is owed.
Critical Illness Insurance
Insurance cover for major illness, diseases and other potentially fatal medical conditions.
Daily Interest
Where interest is applied on a daily basis instead of the traditional monthly time frame.
Data Protection Act (1988)
Regulations introduced to protect the transfer of personal data within and between different organisations. Remember that every time you apply for a store loyalty card, credit facility or magazine subscription, you are handing over substantial amounts of personal data for organisations to trade in. Whilst this data may enable them to make special offers which "may be of use to you", it also means more opportunity to sell you products or services you would not otherwise have bought. If you are not the kind of person to say no easily, make sure you always tick the "no marketing material" box.
Debt
Funds owed to lender.
Debt Consolidation
Replacing a number of existing loans with a single loan from a new lender which may reduce your monthly payments by spreading out a larger loan over a longer period of time, and reducing the interest rate being paid.
Debt-To-Income Ratio
A method used by lenders to establish if a person is qualified to receive a mortgage or loan.
Deed
The document that proves you own the property. It will also show any land boundaries.
Deed Of Covenant
The document expressing the terms of a covenant (a binding agreement), which may typically be imposed by a lender to restrict certain activities, such as use of a house for commercial purposes, or sub-letting.
Deed Of Proxy
A document enabling one person to manage the financial and legal affairs of another individual.
Deeds Release Fee
This fee is charged by the lender for releasing the deeds of the mortgaged property and returning them to the owner or his solicitor, usually when the mortgage has been repaid.
Default
When a payment or a series of payments are missed.
Default Notice
A letter served by a creditor to the borrower to say that a credit agreement has been breached, and that action must be taken by the individual to prevent the creditor seeking repayment via a County Court Judgement.
Deferral Period
A time period on a loan during which no repayments need to be made. This is particularly popular with student and graduate loans, to enable young people to finish their studies, or to travel, before having to start making repayments. "Buy now, nothing to pay until next year" type offers in furniture and other stores also operate with deferral periods.
Deferred Interest
A type of loan where some or all of the interest owed by the borrower is added to the amount outstanding which therefore causes the borrower to owe much more than originally borrowed.
Delinquency
Not making payments at the correct time.
Delinquent Loan
A loan whereby the borrower is behind on payments. If payments are not brought up to date within a set time frame the lender may foreclose proceedings.
Dependant
An individual who depends financially on another person.
Despatch Fee
See deeds release fee.
Deposit
The amount of money that you are putting into buying a home (not including the mortgage money you are borrowing).
Direct Debit
A method of making automatic payments electronically from a current account. Direct debits may be at fixed intervals, such as for a monthly credit card or quarterly fuel bill. They may be fixed (such as a monthly membership fee), or variable, (such as for a mobile phone bill). Direct Debits can also be for irregular payments, such as buying shares.
Direct Lenders
Lenders who operate on lower overheads, through use of call centres, mailing houses, or internet based operations, instead of an expensive branch-based network. Although direct lenders.
Disbursements
Search fees, land registration, stamp duties are all examples of disbursement.
Discharged Bankrupt
Person whose period of bankruptcy has ended.
Discharged CCJ
A county court judgement that has been paid.
Disclaimer
Any written notice designed to discharge liability of a company, for providing inaccurate information in a leaflet.
Discount Period
Time period in which reduced payments are offered.
Discount Purchase Price
The price of a property which has been reduced below the open-market value, such as in the case of a right-to-buy purchase or a builder's discount. Under right to buy legislation, properties are not offered at the open market value, but at a discount, and if the property is resold within a three-year period, some or all of the discount will have to be repaid.
Discount Rate
The mortgage interest rate is lower than the current normal standard variable rate, but only for a certain period of time. Usually shown as a fixed percentage reduction to the lender's normal variable rate e.g. 2% discount for two years.
Early Repayment Charge (ERC)
A fee charged it you choose to move or pay off your mortgage before the end of an agreed term and/or move to another lender.
Easement
A right of way giving individuals other than the owner permission to use a property for a specific purpose.
Equity Release scheme
A way older homeowners (typically 55%) can free up some of the value of their homes in exchange for a cash lump sum or income.
Estate agent
A person whose business is the sale or lease of buildings or land on behalf of others. Currently unregulated.
Fee
The amount charged by a lender, broker or other middleman for arranging a mortgage or property purchase.
First Charge
A legal charge used to secure the main mortgage. A lender with a first legal charge over a property has a first call on any funds available from the sale of the property. See also: second charge.
First Time Buyer
A person that is purchasing a property for the first time. Some lenders offer preferential lending terms to first time buyers. A borrower who has owned a property before but has sold this prior to buying again may be offered first time buyer terms by some lenders but this is dependent on the lender.
Fixed Rate
A loan where the initial payments, for a certain period of time, are based on a specific interest rate. The rate payable will not change during that period regardless of changes in the lender's standard variable rate.
Fixtures & Fittings
These are things in the property that are included in the sale, such as carpets, door handles and light fittings.
Flat Over Shop
Residential habitation situated above retail premises. Some lenders will not lend on this type of security because it is seen as having limited appeal to prospective purchasers and therefore have a lower value compared to an otherwise similar property. Any property that is located above commercial property usually takes longer to sell than properties which do not have any commercial element. A flat above a take-away restaurant is more difficult to arrange a loan on than a flat above a book shop.
Forbearance
An action a lender may take to delay foreclosure or legal issues with a delinquent borrower.
Foreclosure
The legal process when a borrower defaults on a loan.
Foreign Currency Mortgage
It is now possible to get a mortgage for your property in the UK in a mortgage denominated in a foreign currency. It sometimes gives you the opportunity to borrow money at a lower rate of interest than is possible in the UK.
Forfeiture
When a delinquent borrower surrenders their property rights.
Freehold
Land or property which is owned outright, as opposed to leasehold where the owner has the right to occupy the land or property for a given period of years only.
Financial Services Authority (FSA).
The body responsible for regulating the mortage market, among others.
Full Status
A loan where complete checks are made on the borrower's credit history and income.
Full Structural Survey
It is essential to have a comprehensive survey carried out if you are thinking of buying an older property. It will reveal if there are any problems or faults.
Gazumping
Where the seller accepts a higher bid after accepting yours.
Gross Income
Total income after tax.
Ground Rent
When you are a leaseholder you will probably have to pay ground rent to the person that owns the land you property stands on.
Guaranteed Earned Income
Is income that you receive along with your basic salary that is not part of your normal basic pay under the terms and conditions of your employment but which you are guaranteed to receive.
Guarantor
Is a person who agrees to guarantee that a loan will be paid. The guarantor is therefore fully liable for the repayment of the borrowed amount should the borrower default.
Higher Lending Charge (HLC)
An insurance premium which insures the lender against any loss of money, e.g. If you default on your loan or get repossessed. This usually applies only if you borrow more than 75% of the price asked for the property you are buying. Even though you have to pay for the insurance premium, it does not mean that you are covered by the insurance, the lender is.
High Street Lenders
Mortgage providers based on the high street. These are mainly banks and building societies.
Holiday Home
A property that will not be your main address or place of residence.
Home Equity Loan
A method releasing capital from people's homes. See Equity Release
Home Improvements
Work carried out to improve your home.
Homebuyer's Report
A less stringent report than a full structural survey.
Homebuyer's Valuation Fee
This is the fee paid for a simple survey of the property you are thinking of buying.
House Or Flat Buyer's Report
A more thorough survey than the simple valuation carried out on the property by the lender. If your lender does not offer this as an alternative to the basic valuation, you can negotiate with the surveyor carrying out the valuation for the fuller inspection and this may cost you less than a separate inspection.
Household Insurance
Insurance cover for your home. The two main types are building and contents insurance.
Housing Association
A body of trustees or company that is established for the purposes of providing, building, improving or managing, or facilitating, or encouraging the construction or improvement of, housing accommodation. It does not trade for profit. Anyone wanting help with housing puts his or her name down on the housing association list which acts in the same manner as council house lists.
Illustration
An illustration gives you an example of the monthly cost of a mortgage and other expenses associated with the loan such as set-up costs.
Impaired Credit
If you have an impaired credit record you will usually need a sub-prime mortgage charged at a higher interest rate than standard.
Income Protection Insurance
Provides protection if you are unable to make payments on an outstanding agreement. Is a way of motivating the people to take out a loan with the lender by offering deals
Individual Saving Accounts (ISA)
A tax-efficient plan launched in April 1999. Permits investment in stocks and shares, cash deposits and insurance.
Inflation
Increase in earnings or prices, which change in accordance with price inflation, and the national average earnings.
Inheritance Tax
Tax payable on your estate when you die, charged at 40% on anything over £285,000 (2006-2007 tax year)
Interest Only
A mortgage where you only pay the interest charges of the loan each month. This means you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way.
Income multiples
The factor by which your earnings are multiplied to find out how much you can borrow.
Interest Rate
Percentage of your loan that a lender charges each year for lending you money.
Intermediary
Broker or person who attempts to sort and arrange financial packages for you.
Introducer
Person who introduces a loan to a lender.
IPT
Insurance premium tax.
Joint Application
A mortgage application that involves more than one person as the borrower.
Joint Liability
Two people who are responsible for a loan or debt.
Land Registry
A record of property, ownership and the mortgage is registered in a central register at HM land registry.
Land Registry Fees
A fee payable to the land registry to change an entry in their records following a transaction involving registered land. This can be following a change of ownership or just a change of mortgage.
Landlord's Reference
This is a reference from the previous landlord regarding the general conduct of the tenant and whether rent has been paid promptly.
Late Charge
A fee the lender imposes for receiving payments late.
Late Payment
A payment a lender receives after the due date has passed.
Leasehold
The land on which the property is built is not owned directly by the property purchaser and is held under a lease for a fixed period.
Legal Charge
The means by which lenders enforce their rights to a property. It is recorded at the Land Registry. There are various different types of legal charge and the type used will vary from lender to lender. A primary mortgage will normally be secured by a first charge.
Legal Mortgage Fee
The fee charged by the solicitors acting for the lender in creating their legal charge over the property.
Lender
An organisation which offers mortgage products.
Lender's Arrangement Fee
Fee for arranging a loan passed on by the buyer to the lender.
Lessee
Person to whom the lease is granted.
Lessor
An individual or company who grant a lease.
Liabilities
Debts and outgoing payments that you are legally responsible to pay.
Libor
TheLondon interbank offered rate is the rate at which banks notionally buy and sell money to each other. It varies from day to day and is closely linked to base rate.
Life Company
A life assurance company.
Life Insurance
A policy payable upon the death of the insured, usually referred to as assurance.
Loan
The amount to be borrowed.
Loan Application
Form you fill out to apply for a loan.
Loan Application Fee
Lenders fee for a loan application.
Loan Authority Search Fee
This is the fee payable for the local authority search.
Loan Consolidation
A large loan is taken to help pay for smaller loans held elsewhere.
Loan Illustration
Is the example of the monthly cost of a mortgage and other expenses associated with the loan such as set-up costs.
Loan To Value Ratio
The ratio of the loan amount to the property valuation expressed as a percentage. So if a borrower is seeking a loan of £100,000 on a property worth £200,000 the loan has a 50% loan to value rate.
Local Authority Search
A search of local authority records to confirm the status of the property. Local authority searches should reveal any proposed changes in the area, the details of the planning permission for the subject property and whether any enforcement notices have been served by the local authority.
Loyalty Bonus
A concessionary bonus (usually by way of a temporary reduction in interest) payable for maintaining a satisfactory account with a lender for a period of years. Alternatively, loyalty bonuses may be offered to existing customers who return to the lender for a new mortgage. In which case the bonus may be dealt with by way of a reduction in the set-up costs of the new loan or a lump sum payable upon completion.
Monthly Repayment
This is the amount you pay our lender each month toward the cost of the credit they have given you.
Mortgage
The name given to credit used to buy property or loan secured by land.
Mortgage Code
The regulations that mortgage provider have to stick to.
Mortgage Deed
Legal document establishing a loan on property.
Mortgage Indemnity Guarantee See Higher Lending Charge.
Mortgage Term
Is the length of time before the mortgage loan must be repaid.
Mortgage Payment Protection Insurance (MPPI)
This is an insurance cover to protect your mortgage payments.
Negative Equity
A situation that occurs when the amount loaned against a property is in excess of the market value of the property.
Net Profit
The income of a company or self employed business after making full allowance for the expenses of running the business. This should be the amount available to the owners of the business for their own benefit. It is the figure that can be used to calculate their ability to service a mortgage.
New Build
Refers to new properties developed on green field sites. Can refer to a single property or whole estates.
Non Status
A loan granted without making enquiries as to the borrower's income or credit history.
Notice Of Default
A lender's initial contact when you have fallen behind on your credit repayments.
Open Market Value
The value of a property on the basis of a willing buyer and willing seller in the open market allowing for a reasonable period for sale.
Outgoings
This includes existing liabilities and, or your debts, other than an existing mortgage such as hire purchase, personal loans, school fees etc.
Outstanding Balance
The amount that is outstanding on your credit.
Overpayments
Flexible mortgage alow you to pay more than the standard monthly repayment, in order to pay off your mortgage more quickly and potentially save a lot of time and money.
Payment Default
If you default on your credit repayments, the lender is entitled to reposes your house to recover the debt.
Payment Method
A means by which the mortgage capital is eventually repaid.
Payment Protection Insurance
See ASU accident, sickness and unemployment insurance.
Payment Schedule
A schedule of monthly payments under a loan.
Payment Shock
If you have taken out a mortgage on a low rate, the low rate end and the payment jump up the standard variable rate.
Pension Mortgage
An interest-only mortgage where the capital will be repaid from the tax-free cash sum that can be received from the pension fund at maturity.
Portable
Describes a mortgage that can be transferred from one property to another.
Previous Lender's Reference
A reference from a lender who has previously lent money to a prospective borrower regarding the conduct of the loan account.
Prime Rate
The best interest rate possible to the lender's most valuable customers.
Principal
The amount of credit still outstanding - the amount on which interest is calculated.
Product
A mortgage deal offered by a lender.
Purchase
The acquisition of a property.
Redemption
This is paying off the mortgage, either to move to another property or at the end of the mortgage term.
Redemption Charges
These are any charge levied by the lender when the mortgage loan is repaid before the end of the full term. Now known as Early Repayment Charges.
Refinancing
This is where borrowings are rearranging with a different lender, usually to receive more attractive terms or to raise fresh capital.
Remortgage
The arranging of a loan on a property in which the borrower already resides. Normally this involves redeeming an existing loan on the property and taking out a new loan on improved terms, usually from a different lender.
Remortgaging
Switching your mortgage and/or mortgage lender.
Repayment
This is payment made to cover interest or reduction in principal of a loan.
Repayment Plan
If you fall behind on your payments a lender may try to renegotiate your repayment plan.
Restructured Loan
When a lender offers renegotiated terms.
Right To Buy
This is an option for council tenants to purchase the property in which they live in. The property price is often at a discount, proportional to the length of occupancy.
Royal Institute Of Chartered Surveyors
The professional body for surveyors which sets a code of practice for its members.
Search Fee
Before you buy your property you have to check with your local authority that there are no plans that will effect the value of your property.
Second Charge
A legal charge that ranks behind a first charge, possibly to secure a second mortgage, or a guarantee given to secure other borrowings.
Second Home
An alternative to your main residence which is subject to capital gains tax!
Second Mortgage
A further loan on a property which ranks after the first charge mortgage.
Secured Loan
A loan that is secured using your property. Should you fail to repay the loan, your lender may be able to sell your home to get its money back.
Self Build
A property, the construction of which is controlled by the borrower; not a finished unit. Loans on self build properties will normally be advanced in stage payments and are subject to strict limits on loan to value. A qualified architect will need to be involved.
Self Certification
A mortgage loan where the borrower makes a statement of his or her income and the lender makes fewer checks than normal on the accuracy of this statement.
Self Employed
An individual working on own account. For mortgage purposes this will include partners in unlimited liability businesses and professional practices.
Semi Commercial
A property that has at least part commercial use. A semi-commercial mortgage is a loan on security that is not entirely used for residential purposes, e.g. A shop.
Shared Ownership
A method of property purchase in partnership with a housing association. The borrower purchases part of the property and rents the remainder from the housing association. Also known as co-ownership, this arrangement is designed for people who could not otherwise become homeowners. Under most arrangements, the minimum purchase amount is 25% of the property value with the remainder available to be purchased in blocks of 25%.
Simple Valuation
This just tells you the value of the property, it does not tell you if it is structurally sound.
Sitting Tenant
A person having a legal right of occupation, even if the property changes ownership, and who is able to apply to the local authority to set a fair rent. Properties with sitting tenants are generally worth at least 30% - 40% less than their open market value with vacant possession.
Sole Occupancy
A property that is occupied by the borrower and his or her immediate family only. No paying tenants are in residence.
Special Conditions
Specific terms, usually outlined on the mortgage offer document, that apply to a particular loan offer.
Stamp Duty
A tax payable on property purchase, charged at 1% on properties costing £125,000 to £249,999 ; 3% on properties from £250,000 to £499,999, and 4% on properties over £500,000.
Standard variable rate mortgage
A loan at the lender's normal mortgage rate - ie without any discounts or deals.
Structural Survey
The most comprehensivet form of inspection that can be undertaken by a chartered surveyor. In the case of properties with movement, lenders may require a structural engineer's report. This is a different type of survey carried out by a chartered building engineer and should not be confused with a structural survey.
Survey
An inspection carried out for the benefit of the mortgage lender to make sure that the property forms a good security for a loan. This inspection and should not be relied upon on when deciding whether to purchase a property or not. Purchasers should be advised to obtain either a house or flat buyer's report or a full structural survey before proceeding with a purchase.
Term
The mortgage term is the length of time before the mortgage loan must be repaid.
Term Assurance
This is the simplest form of life assurance. The insured person is covered against death within a fixed period depending up on the payment of the premiums. If an insured person dies within the policy term the sum assured is paid out. If the insured person survives the term the premium has been spent and the insurance ends with nothing being paid to the policyholders.
Tied Agents
Most advisers and agents have access to mortgages that you would not normally find on the high street. They may be part of a particular financial organisation or estate agent. Therefore they are not fully independent.
Top Up Loan
A form of second mortgage, used to provide an overall loan in excess of the loan to value ratio allowed by the primary lender. Top up loans will invariably be charged at a higher rate than the first mortgage.
Trackermortgage
A mortgage with an interest rate that is usually linked to a particular rate that is set independently from the lender and moves up or down with it.
A process of following the progress of a loan application. This information should be fed back from the lender or packager to the introducer.
Valuation
A basic survey carried out by a surveyor to establish the value of your property. It is a brief inspection, for the benefit of your lender, of the home you hope to buy. It is to make sure the lender is not lending more than the property is worth and that the property is suitable security for the mortgage. It will not tell you if it is a good or bad buy. For your own peace of mind, you may want your own survey.
Valuation Fee
A fee paid by the borrower for the lender's inspection of the property. This is normally paid on application.
