Administration Fee
The administration fee is the amount charged by your lender to start working on the documentation part of your mortgage application. It includes the home valuation fee as well. The administration fee will not be refunded even if your valuation is not done or if your application has been rejected.
Adverse Credit
Adverse credit occurs when you have a history of bad credit,
bankruptcy, CCJ, or loan arrears. Adverse credit also be called as bad credit, poor credit, or it can be said that you have a low credit score.
Additional Security Fee
An Additional Security Fee (Mortgage Indemnity Guarantee policy) is the fee taken to get an insurance policy that will cover your lender so that if you default on payments, he will not suffer any loss. You have to pay the Additional Security Fee and the premium along with your mortgage advance. Although you are paying the premium, remember that this policy is for the protection of your lender and not for you.
Annual Percentage Rate
The Annual Percentage Rate is the rate at which you borrow money from lender. It includes all the initial fees and ongoing costs that you will pay throughout the mortgage term. As the name suggests, annual percentage
rate, or APR, is the cost of a mortgage quoted in a yearly rate. The annual percentage rate is a good way to compare the offers from different lenders based on the annual cost of each loan.
ASU
ASU is Accident, Sickness, and Unemployment insurance which covers your mortgage payments in case of an accident, a sickness, or involuntary unemployment.
Banker Draft
A banker draft is a way to make a payment. In appearance, it is the same as a cheque, but in effect it is a cash payment. The money is given to the bank, and they issue a cheque that is certified to be good for the given amount.
Bridging Loan
A bridging loan is useful when you want to purchase a property, but your ability to do so is contingent upon the sale of your old property. This is a very short term loan that is paid off as soon as your old property sells.Speak with a loan adviser before taking out a bridging loan to be sure it is the best option for you.
Broker Fee
A broker fee is paid to your debt advisor or other intermediary that assists you in finding the best mortgage or deal for your circumstances. BSA The BSA, or the Building Societies Association, is a group that works
in the interest of member societies.
Buy-to-Let
When you purchase a property for the sole purpose of renting it out, you can apply for a buy-to-let mortgage.
The payments for this type of mortgage are calculated based on your projected rental income instead of your personal income.
Capital and Interest
Your monthly mortgage payments consist of two parts: the interest and the capital. The interest payment is a payment on the interest balance of your loan. The capital payment is a payment on the amount that you borrowed.
Capital Raising
Capital raising generally means remortgaging for a higher amount than you need to pay off your existing mortgage in order to use the excess money for other personal financial uses.
Cash Back
Cash back is the amount you receive when you take out a mortgage, the amount may be fixed or a percentage of your mortgage amount.
Charge
A charge is any interest on a mortgage to which a freehold or leasehold property can be held.
Chattels
Chattels are moveable items in your house such as furniture or your personal possessions. Chief Rent Chief rent is paid by the owner of a freehold property. This is the same as the ground rent that is paid by a
leaseholder.
Conditional Insurance
When you take out a fixed or discounted rate mortgage, your lender may try to persuade you to take out an insurance policy that will cover any missed payments due to an illness, an accident, or unemployment.
Contract
A contract is a legally binding sale agreement. There are two identical copies signed by both the buyer and the seller, and each party keeps a copy for their records. Once both parties have signed the contract, they are committed to the terms of the agreement.
Covenant
A covenant is an assurance given in a deed. Credit Scoring Credit scoring is the procedure by which a lender evaluates your paying capacity before offering a loan or mortgage.
Credit Search
A credit search is done by a lender and a credit bureau to search your records for CCJs and other indicators
of bad credit.
Debt Consolidation
Debt consolidation is the process by which you take out a loan or mortgage in order to pay off a number of
high interest debts. By doing this, you will only need to make one payment each month, and you will save significantly on interest charges.
Deed
A deed is a legal document that denotes the owner of a given property. You can transfer a title to both freehold and leasehold with a deed.
Disbursements
Disbursements are any amount you pay to solicitors against land registry fees, searches, faxes etc.
Discounted Rate
Discounted rates are used to attract new borrowers to lenders by setting the interest rate below the standard variable rate for a guaranteed period of time. If you repay the entire discounted rate mortgage within the first few years, your lender may charge you early redemption penalties.
Early Redemption Penalty
An early redemption penalty is charged by your lender if you do a part or full payment of your mortgage amount before the completion of your mortgage term. These penalties will also be charged if you decide to remortgage and move your mortgage to a new lender. Early redemption penalties mainly apply to fixed rate, discounted rate, and cash back mortgages.
Easement
Easement is the right held by one property owner to make use of the land of another for a limited purpose, like a right of passage.
Endowment Mortgage
An endowment mortgage is an interest only mortgage supported by an endowment policy. During the term of the mortgage you will pay only interest to the lender, and your premiums are alternately paid into an endowment policy which will mature over the term of your mortgage. The endowment policy is designed to
pay off your mortgage as well as act as life insurance. However, you cannot depend on this amount to be sufficient to pay all of your debt.
Endowment
There are different types of endowments, but here an endowment is a life insurance policy that will pay off your interest only mortgage.
Equity
Equity is the amount of value in your home. It is the value of your home less the amount left to be repaid on your mortgage.
Equity Release
Equity release is a means of releasing money from the value of your home either in a lump sum or in monthly installments. This money may be used for home improvements, debt consolidation, or other large expenses.
Existing Liabilities
Existing liabilities are all financial commitments outside of your mortgage. Existing liabilities may include bank loans, credit card debt, maintenance payments, etc.
First Time Buyers (FTB or FTP)
A first time buyer is one who has never owned property before.
Fixed Rate
A fixed rate is when you pay a fixed amount of interest on a loan for a fixed period of time. Lenders provide fixed rate loans for short periods of time (three-six months) all the way up to 25 years. Early redemption penalties apply if you pay off the mortgage before the end of the fixed rate term.
Freehold
Freehold means that you have ownership of a property for an indefinite period of time. This is in contrast to leasehold which means that the property is only under your control for a limited period of time.
Guarantor
A guarantor is a person who guarantees the lender that the borrower is eligible for a loan or mortgage. If the borrower fails to make payments, the guarantor will make them.
Income Multipliers
An income multiplier is a type of calculation that a lender will use to calculate the amount a borrower can receive. The most common income multiplier is three times a single income or two and a half times joint income. The lender will choose the one that yields the higher figure. Lenders are more flexible if your LTV ratio is low.
Income Protection Insurance
With income protection insurance, your monthly payments will be covered in the case of illness, accident, or unemployment.
Land Registry Fee
A land registry fee is paid when you want to register your ownership of a property or when you want to change the registered title of a property.
Leasehold
Unlike freehold in which a property is owned, leasehold is when a property is owned, but the land that it is built on is not owned by the leaseholder. Their control of the property is only for a set number of years.
Local Authority Search
A local authority search is made by the solicitor of the people that plan to buy your property. They check to make sure there are no planned developments on the property such as roads or buildings. They will check for any planning permissions or enforcement notices posted on your property.
LTV
LTV, or loan to value, is the percentage derived from dividing the value of your property by the amount of your mortgage. A low LTV is much less risky for lenders than a 100% LTV.
Loan Consolidation
Loan consolidation happens when a loan is taken out to repay another loan with a higher interest rate or to repay a number of high interest debts. Loan consolidation is often achieved through remortgaging.
MIG
A MIG, or mortgage indemnity guarantee, is insurance one takes out to cover their lender in the case that their property is repossessed, and the lender is unable to get their money back. A MIG is paid for upon
completion of a mortgage.
MIRAS
MIRAS, or mortgage interest relief at source, was a tax relief given to those with mortgages, but this relief was abolished by the government in April of 2000.
Mortgage
A mortgage is a loan that allows someone to buy a property. The property itself is the security for the loan.
Mortgagee
The mortgagee is the company or organization that finances your mortgage.
Mortgagor
The mortgagor is the person taking out the mortgage to buy a property.
MPPI
MPPI, or mortgage payment protection insurance, is insurance one takes out in the case of an accident, an illness, or involuntary unemployment that would render them incapable of making their monthly mortgage payment.
MRP
MRP, or mortgage repayment protection, is insurance taken out through your lender during the term of your loan.
Negative Equity
Negative equity occurs when the money you owe to your mortgage lender is greater than the value of your property. People find themselves in negative equity situations when they take out 100% LTV mortgages.
Overpayment
Overpayment happens when you pay more than the regular monthly payment on your mortgage so that the mortgage is repaid before the end of the mortgage term. With overpayment, you can save money on
interest, but you may also be charged an early redemption penalty. Payment Holiday payment holiday is a period during which you make no mortgage payments. This is normally available with flexible mortgages only.
Portability
Portability is a term used to describe a mortgage that can be transferred between properties when you move from one house to another.
Redemption
Redemption is when you pay off your mortgage, when you remortgage, or when you move to a new house.
Remittance Fee
A remittance fee is charged by a lender for sending the amount of a mortgage to your solicitor.
Remortgage
A remortgage is a loan taken out from a new lender or a loan renegotiated with your existing lender to pay off your existing mortgage. This is done to decrease the interest rate you are paying or to raise extra capital.
Repayment Mortgages
A repayment mortgage is when part of your monthly payment goes toward the interest and another part of the
payment goes toward the principal. This is also known as a capital and interest mortgage. If payments are made regularly, the entire sum of the loan will be repaid by the end of the term.
Retention
Retention is the amount that your lender keeps pending until certain conditions of your mortgage are met.
Repossession
Repossession is a legal process by which your mortgaged property comes under the control of your lender due to incomplete repayment. Your property may then be sold at public auction.
Right to Buy
Right to buy means that you are legally able to purchase the property at a discounted rate if you have been a tenant for a long enough period of time.
Solicitors
Solicitors are the people who give legal advice and carry out all the legal work for mortgage and remortgage transactions. Stamp Duty Stamp duty is a tax paid to the government on the purchase of a property.
SVR
The SVR, or standard variable rate, is the base rate of the lender. It is subject to change at any time depending on the lender. The SVR will fluctuate based on the Bank of England Base Rate.
Structural Survey
A structural survey is the thorough inspection of a property carried out by a professional surveyor.
Tenure
Tenure means the type of rights a person has over a property or the land it stands on. Tenure could be Freehold or leasehold, for example.
Term
The term of a mortgage is the number of years over which you plan to pay your mortgage off.
Tie-in Period
A tie-in period is an amount of time for which you are bound to a lender. Tie-in periods often exist with special
mortgage deals like fixed, capped, or discounted rates. If you move your mortgage to a different lender during this period, you are subject to an early redemption fee.
Title Deeds
A title deed is a legal document that validates the ownership of your property. A title deed proves your true and legal right to your property.
Valuation
A property valuation is a survey conducted on a property by a qualified surveyor in order to assess the value of the property. This valuation is done on behalf of your lender so that they are able to confirm the value of your property.
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