A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Accident, Sickness & Unemployment Insurance (ASU)
An insurance policy that pays for part of your monthly mortgage payment if you have an accident, become sick or get made redundant.
Added to Loan
The additional costs that are added on for arranging and processing your mortgage.
Adjustment Date
If you have a variable rate mortgage, this is the date on which the interest rate changes.
Administration Fee (or Application Fee)
This is a charged by the mortgage lender to cover the costs of processing your mortgage application.
Adverse Credit
This is another name for poor credit, which could be because of late payments, bankruptcy or County Court Judgements.
Annual Percentage Rate (APR)
APR is really the true price of a mortgage when all the fees and costs are added on.
Applicant
The person or people applying for a mortgage.
Application
The process of applying for a mortgage.
Appraised Value
The value of a property estimated by a surveyor.
Appreciation
The increase in the value of a property.
Arrangement Fee
This is a charge you have to pay to the mortgage lender for processing and administrating your mortgage.
Arrears
What happens when mortgage payments fall behind.
Assignment
The transfer of a property or a mortgage from one owner to another.
Bankrupt
When an individual or company no longer has the means to pay its debts off. Any assets and property owned will then be sold off by a court-appointed trustee to pay off its debtors.
Base Rate
The rate of interest set by the Bank of England.
Basic Earned Income
Your basic salary, before tax, and without any bonuses, overtime or shift allowances.
Booking Fee
A charge, which usually guarantees funds or guarantees a particular rate for a mortgage.
Bridging Loan
A short-term loan commonly used to cover or ‘bridge’ the overlap between the purchase of a new property and the sale of an old one.
Buildings Insurance
An insurance policy to cover the cost of repairing/rebuilding a property if it gets damaged or destroyed.
Buy to Let
A mortgage designed for people who want to buy a property so they can rent it out.
Cap and Collar
A cap is a maximum rate of interest that can be charged for a specified period, while a collar is a minimum rate of interest you will be charged for the same period.
Capital (also known as equity)
This is the amount of money you put into buying a property or the deposit placed on a property.
Cash Back
This is where the person taking out the mortgage gets money back from the lender to help with the costs of moving home.
Clear Title
A legal term that refers to the clear ownership of a property.
Commitments
Charges that a person by contract has to pay. For example, loan payments, family maintenance etc.
Completion
This is the date on which your solicitor forwards the money from your lender to the solicitor of the people selling their house. It is the date that you become the legal owner of your new property.
Compounding
Adding interest to both the capital borrowed and any previous interest you may have.
Concrete Construction
Some lenders may refuse to lend or charge higher rates of interest on properties built using unconventional materials or techniques.
Contents Insurance
Insurance that covers possessions inside your home that are not fixed e.g. furniture, TV, jewellery.
Contract
A contract is a legally enforceable agreement between two or more parties with mutual obligations.
Converted Flat
When a larger or single property has been changed into flats.
Conveyancing
The transfer of the legal title of a property from one person to another, usually carried out by a solicitor or licensed conveyancer.
County Court Judgement (CCJ)
A ruling for bad debt handed down by a County Court or higher court.
Covenant
A set of conditions relating to a property that a person must not break. The contract should detail any penalties, including repossession, which will be applied if the covenant is broken.
Credit Check
When a person’s credit history is examined when they are applying for a mortgage.
Credit Score
This represents your creditworthiness as a person. It is primarily based on credit report information sourced from credit bureaus.
Current Account Mortgage
A mortgage that offers the same facilities as a bank current account.
back to top
D
Daily Interest Mortgages
A mortgage in which interest is calculated on a daily basis.
Debt Consolidation
A procedure by which a number of loans, each with individual interest rates, are collected together in a single debt, often to secure a lower interest rate.
Deed
A legal document that states ownership or title to a property.
Default
The failure to make a scheduled mortgage payment.
Deferred Interest Mortgage
A mortgage in which some or all of the interest is not paid for a specified period.
Deposit
The amount of money a borrower pays upfront as part of a property purchase.
Depreciation
When a property reduces in value.
Disbursements
The expenses related to the conveyancing of a property.
Discharge Fee
This is charged by lenders at the end of a mortgage term for transferring the property ownership documents to the borrower.
Discounted Rate
An interest rate that is lower than the standard variable rate, which lasts for a limited time.
Draw Down Facility
When someone may increase the level of borrowing up to specified limits.
back to top
E
Early Repayment Charge
If you pay off all your mortgage early there may be a penalty fee involved.
Easement
A Right of Way that allows people other than the owner to access a property.
Encumbrance
Anything that affects or limits the title of a property, such as mortgages, leases or restrictions.
Endowment
A financial investment product that someone pays into during the course of a mortgage. The product should increase in value enough to pay off the mortgage at the end.
Endowment Mortgage
The borrower only pays interest on the mortgage, then repays the remaining amount at the end of the term with the money the endowment has earned.
Equity
The amount of money either put into buying a property or the deposit placed on a property.
Equity Release
When a home is already owned outright by someone, they may take out this type of mortgage to release cash locked up in their home.
Exchange of Contracts (excludes Scotland)
The stage in the purchase process when a buyer and seller confirm legally binding commitments to the sale, and agree on the terms and conditions of that sale.
back to top
F
First Charge
A legal right under which the holder has first call on the property in the event that the borrower defaults on repayments.
First Mortgage
A mortgage that is the primary lien or first claim against a property.
First Time Buyer (FTB)
A purchaser who has never owned property before.
Fixed Rate Mortgage
A mortgage in which the rate of interest will not change for a certain period.
Fixed Term
This is the period in which the rate of interest is fixed within a fixed rate mortgage.
Flat over Shop
A flat or apartment that is located above a retail property. These properties may be viewed as a higher risk category.
Flexible Drawdown
A facility within a mortgage that allows a borrower to access additional funds.
Flexible Mortgage
A mortgage that allows the borrower to take payment holidays, (where they stop paying for a while) or increase monthly mortgage payments or decrease them.
Freehold
The owner or ‘freeholder’ owns both the property and the land on which the property is built.
Further Advance
A further loan provided by the lender included within the first charge of the property.
back to top
G
General Conditions
The rules that apply to a mortgage set by the lender.
Guarantor
A person who guarantees to make the mortgage repayments if the borrower cannot do so.
back to top
H
Higher Lending Charge
A fee charged by lenders when the loan-to-value (LTV) on a borrower’s property is above a certain level, usually 90%.
Home Buyer’s Report
A survey you can have carried out on a property you wish to buy. It is more in-depth than a mortgage valuation but less detailed than a full structural survey.
back to top
I
Initial Fees
An estimate of the fees payable for arranging a mortgage such as solicitors costs and survey fees.
Initial Interest
Initial Interest is usually higher than later scheduled payments as it covers the period between the date of completion and the date when the first payment is due.
Interest Only Mortgage
A mortgage where borrower only repays the interest on the loan for its duration. The loan amount is repaid at the end of the mortgage period.
ISA (Individual Savings Account)
A tax-free investment product.
ISA Mortgage
An interest-only mortgage that uses an ISA to repay the loan at the end of its duration.
back to top
J
Joint Income
The total gross income of two people in a joint mortgage.
back to top
L
Land Registration
The process of registering your name to an area of land with the Land Registry. This is usually carried out by a solicitor.
Landlord’s Reference
A reference given by a previous landlord, which confirms someone’s conduct and payment history.
Leasehold (England & Wales only)
A type of ownership in which a person owns a property, but not the land on which it is built.
Legal Charge
The borrower remains the legal owner of the property, but the creditor has rights over it to enable them to enforce their security, such as a right to take possession of the property or sell it.
Level Term Assurance
A life insurance policy that pays out a fixed lump sum referred to as ‘level’, should the borrower die during the term of a mortgage.
Life Insurance
An insurance policy that pays a lump sum in the event of the death of the policyholder.
Loan to Value Ratio (LTV)
The proportion of the value of the property as a percentage that the lender is prepared to loan.
Local Authority Search
Checks carried out by a purchaser’s solicitor to ensure that the prospective property is not subject to any local authority issues.
back to top
M
Main Residence
The property in which a person resides for the majority of the time.
Maisonette
A flat or apartment with more than one floor.
Minor
A person under the age of 18.
Mortgage
A legal document that pledges a property to the lender as security on a loan.
Mortgage Deed
The legal contract that confers ownership or title to a property. A mortgage deed is a document that gives a lender legal right and interest in a property.
Mortgage Indemnity Guarantee (MIG)
An insurance policy taken out by a mortgage lender to protect them if the borrower is unable to make payments. MIGs are typically required for loans with an LTV of 90% or higher.
Mortgage Term
The period of time over which a mortgage loan must be repaid.
Mortgage Valuation
A survey to assess the value of a property conducted by a surveyor.
Mortgagee
The lender in a mortgage.
Mortgagor
The borrower in a mortgage.
back to top
N
Negative Equity
When the value of a home has dropped so that it is worth less than the mortgage taken out on it.
New Build
A newly built property.
Non Status Mortgage
A mortgage that is offered without the need for the borrower to prove their income.
back to top
O
Ombudsman
An independent government body that has responsibility for investigating complaints about other institutions.
Other Income
Income in addition to basic salary.
Overpayment
The ability to increase monthly mortgage payments resulting in the mortgage being paid off early.
back to top
P
Part Mortgages
A mortgage that combines different repayment types. For example, part interest only, part capital and interest.
Payment Holiday
Under a flexible mortgage, borrowers can stop paying their mortgage repayments for a specified period.
Payment Method
The method by which an interest-only mortgage is repaid at the end of its duration.
Pension Mortgage
An interest-only mortgage that uses a pension to repay the loan at the end of its duration.
Permanent Health Insurance (PHI)
An insurance policy that pays a monthly income if the policyholder becomes ill and cannot work.
Portable
This refers to a mortgage that can be transferred between properties when the borrower moves home.
back to top
R
Rate
The annual interest rate of a loan expressed as a percentage.
Rate Cap
The limit (cap) of an interest rate on a variable rate loan.
Redemption
The full payment of a mortgage at the end of its duration.
Redemption Amount
The cost of repaying a mortgage.
Redemption Charges
A fee payable by the borrower on redemption of a mortgage.
Redemption Penalty
A penalty a borrower has to pay if their mortgage is paid off early.
Remortgaging
The process whereby a new mortgage replaces an old one.
Repayment Method
The method by which a borrower repays their mortgage, for example, interest only or capital and interest.
Repayment Mortgage
A mortgage in which the monthly repayments include the capital amount borrowed as well as the accrued interest.
Repayment Period
The term or number of years over which the borrower must repay the mortgage.
Repossession
When a person is continually unable to make repayments on their mortgage, the lender may take the property away from them.
Retention
The lender may hold back or retain part of the mortgage funds until certain conditions are met.
Right to Buy
When a local authority offers a tenant the right to buy the home they are renting.
back to top
S
Second Charge
The subsequent charge to the First Charge. See First Charge.
Self Build
A mortgage that is taken out on a property under construction. The lender will only pay out the loan following the completion of various stages of the property construction.
Self Certification
A mortgage whereby the borrower provides confirmation of their income.
Shared Ownership
When you buy part of a home and pay rent on the part you do not own.
Sole Occupancy
A property that is lived in by only the mortgage applicant(s) and their direct family.
Special Conditions
Specific conditions that are unique to your mortgage application.
Stamp Duty
A government tax payable by the purchaser when a property is bought.
Standard Construction
A property that has been built using conventional techniques and materials such as bricks and a slate roof.
Standard Variable Rates
The ’standard’ interest rate set by lenders, which may rise or fall.
Structural Survey
When considering buying a property, a structural survey is the most detailed report you can have.
Studio Flat
A property with one main room and an adjoining kitchen and bathroom.
Surveyor
A person qualified to estimate the value of land and property.
back to top
T
Term
The time between the start and finish of a mortgage.
Term Assurance
Life insurance that provides a lump some in the event of death of the policyholder for a specified period.
Title
The document that confirms someone’s right to possess an area of land.
Title Insurance
Covers the loss of an interest in a property due to legal defects required if a property is mortgaged.
Title Search
An investigation to establish any issues that may affect someone owning a property. Conducted by a surveyor the search will check for liens, unpaid claims, restrictions or any other problems.
Tracker
A mortgage where the interest rate charged exactly follows (tracks) another interest rate. Typically a tracker mortgage will track the Bank of England base rate.
back to top
U
Underpayment
When a monthly mortgage payment is less than it should be.
Unencumbered
A property that has no loans or borrowings secured on it.
back to top
V
Valuation
A basic survey conducted on a property by a surveyor for the mortgage lender.
Valuation Fee
A fee to cover the cost of a valuation.
Value
The price of a property under normal conditions.
Variable Rate
A mortgage where the interest rate charged can change.
