questionAdvance

The mortgage supplied by the mortgage provider.

Adverse Credit

A borrower or application that has past problems with bad credit, for instance late payment, bankruptcy or County Court Judgement.

Adverse Credit Lender

A mortgage provider who lends to applicants with adverse or bad credit.

Adverse Credit Mortgage

An adverse credit mortgage for borrowers who have had credit problems.

Advice

A recommendation about the most suitable mortgage for the applicant made by the Mortgage Adviser.

Adviser

See Mortgage Adviser

Adviser Fee

The fee charged by a mortgage adviser for locating and processing the most appropriate mortgage, can be paid either up front, on successful offer or on mortgage completion.

Affordability

An applicants ability to repay the mortgage.

Affordability Calculation

A mortgage provider may use this method to calculate whether an applicants income is sufficient to service the new mortgage and their existing debts.

Agreement In Principle

See Decision In Principle

Annual Percentage Rate (APR)

APR is an industry standard calculation that enables direct comparison of mortgage products. The calculation reflects the total cost of a loan including interest rate charges and product fees, with the result being shown as a percentage.

Applicants

The term used to describe the person or persons applying for the mortgage.

Application Fee

A fee charged by the mortgage provider to process the mortgage application, normally charged upfront.

Arrangement Fee

A product fee charged by the mortgage provider. The arrangement fee is normally paid on successful arrangement of the mortgage, or can sometimes be added to the loan.

Assignment

The transfer of ownership of an insurance policy or a lease.

Bad Credit

A term applied to a borrower or application that has problems with credit, for instance – late payment, bankruptcy or County Court Judgment (CCJ).

Bad Credit Mortgage

A bad credit mortgage allows an applicant that has bad credit such as defaults and CCJs to borrow mortgage funds.

Balance Outstanding

The amount of the mortgage still owed at a particular moment in time.

Bank Legal Fee

A fee charged by the mortgage provider to cover the legal costs which they may incur.

Bank of England Base Rate (BOE)

The rate of interest set by the Bank of England.

Bankrupt

A debtor (person, company, organisation) whose assets are administered by a court appointed trustee for the purpose of redistribution to the debtors creditors.

Bankruptcy

The legal process by which a debtor who owes more than their assets has these assets transferred to a court appointed administrator.

Base Rate

This is a generic term used to describe the basic rate of interest set by governments or financial institutions. Base rates are usually applied to tracker products, as the total rate of interest paid is calculated by combining a base rate plus a margin rate set by the mortgage lender.

Bonuses

Any income that an applicant uses that is not part of their regular salary, often performance related.

Booking Fee

A fee charged by a mortgage provider to reserve funds for a particular mortgage product.

Bridging loan

A short-term loan used to purchase a property. Often used as a temporary solution until a long term lending option becomes available.

Broker

See Mortgage Adviser

Broker Fee

See Adviser Fee

Building Regulations

The health and safety requirements that any new construction must meet.

Building Society

A mutual institution owned by its investors and borrowers that provides a range of savings and mortgages.

Buildings Insurance

Insurance against the cost of rebuilding a property from scratch following structural damage, for example flood or fire.

Buy-To-Let

A mortgage used to buy or remortgage a property which the applicant intends to rent to tenants.

Capital

The mortgage amount you borrow from the mortgage provider

Capital and Interest

A mortgage where the monthly mortgage payment will consist of 2 elements. The first element is to pay the cost of the mortgage interest, the second is to repay the capital borrowed over the mortgage period. Also known as a Repayment Mortgage

Capped Mortgage

A mortgage that has a maximum limit on the interest rate the borrower will have to pay during a specified period.

Cashback Mortgage

A mortgage that comes with a cash sum incentive.

Charge

An interest in the ownership of a property, usually a mortgage or some other debt secured against the property.

Charging Order

A charge registered through the courts on a piece of property or land by a party to whom you are in arrears.

Collar Mortgage

A mortgage that has a minimum limit on the interest rate the borrower will have to pay during a specified period.

Commission

See Procuration Fee

Company applications

Some lenders insist that the mortgage is set up in the name of a limited company. The client will need to ensure they already have or will set up a company that will meet the requirements of the lender. The lender may insist on this for legal reasons or it may just been an option for the client which in some cases, can favour the clients tax position.

Completion

The completion date is the date your solicitor transfers the money from your lender to the vendors solicitor or, in the case of a remortgage the date the new lenders funds are transferred to the borrowers existing lender to repay their existing mortgage.

Completion Fee

This is a fee charged by the mortgage provider on successful drawdown of the mortgage funds.

Contents Insurance

Insurance against accidental damage or theft of all movable contents, inside the property.

Contract

A document that describes the agreement under which the property will change hands.

Conveyance Fee

The charge paid – usually to a solicitor for transferring property ownership.

Conveyancer

See Solicitor

Conveyancing

The process of transferring property from one party to another, usually managed by a solicitor or a licensed conveyancer.

County Court Judgment (CCJ)

A ruling of bad debt issued by the courts, that will be recorded on an individuals credit file.

Covenant

A condition, contained within the Title Deeds or lease, that the purchaser must comply with.

Credit Check

The process where a check is made on an applicants credit history.

Credit History

A history of a persons debts. Checking a credit history allows a lender to make an assessment as to whether a prospective client will maintain their mortgage repayments.

Credit Rating

See Credit Scoring

Credit Report

A report which details the credit history of an individual.

Credit Scoring

Mortgage Providers often use a system called credit scoring to help them decide whether or not to offer a mortgage to an applicant.

Currency

The currency that the mortgage must be repaid in.

Daily Interest Mortgage

A mortgage in which interest is calculated daily.

Debt

An amount owed by one party to another.

Debt Consolidation

The process of combining outstanding debts e.g. loans, credit cards etc, into one loan.

Decision in Principal (DIP)

A lender agrees to advance monies conditional upon the verification of the borrowers details.

Deeds

Legal documents that show property or land ownership.

Default

The failure to keep up with repayments on a credit agreement (such as a mortgage) – see what is bad credit

Deposit

The amount of money a provided by the borrower towards the property purchase or remortgage.

Direct Debit

An instruction from an individual to their bank or building society to make regular payments from their bank account.

Disbursements

Costs for legal work carried out in relation to the purchasing or remortgaging of a property

Discharge

This happens once a mortgage has been repaid.

Discharge Fee

An admin fee charged by a mortgage provider to cover the cost of transferring the property ownership documents at the end of the mortgage term. Also known as a Deeds Release Fee.

Discount Mortgage

Where the initial rate of interest charged by the mortgage provider is less than the standard rate charged.

Discount Period

The length of time a discount or special rate of interest will apply.

Disposable Income

The amount of money left from a persons income after the deduction of regular debts and living costs.

Early repayment charge

A charge imposed by a mortgage provider should the borrower repay the mortgage earlier than the product terms allow.

Easement

A legal right over land.

Equity

The difference between the mortgage amount and the property value.

Equity Release

When an individual wishes to raise finance against the available equity in a property.

Equity Release – Home Improvements

Where a mortgage provider will allow equity release, but only for improvements on the mortgaged property.

Euribor

The term used to describe the base rate that applies to Europes Euro interest rates.

European Central Bank

The rate of interest set by the European Central Bank.

Exchange of Contracts

The point of the property purchase where contracts are exchanged and the terms become legally binding for both parties.

Financial Services Authority (FSA)

The Financial Services Authority – the regulator of financial services in the UK. Currently Overseas mortgages are not regulated by this authority.

First Charge

The first (or main) mortgage held on a property.

Fixed Rate Mortgage

A mortgage where the interest rate will remain the same for a specified period.

Fixtures and Fittings

All non-structural items included in the purchase of a property.

Freehold

Legal title that gives you absolute ownership of the land your property is on.

Further Advance

An additional loan to an existing mortgage which is already secured against the property.

Guarantor

Someone who guarantees to meet mortgage payments in the event the borrower does not do so.

Higher Lending Charge (HLC)

A fee that is sometimes charged by a mortgage provider when the loan to value ratio is above a certain limit.

Income Multiples

A method sometimes used by a mortgage provider to calculate how much an individual can borrow.

Individual Voluntary Arrangement (IVA)

A formal arrangement between a debtor and their creditors

Individuals

Where an application is processed in the name of a private individual/s rather than in the name of a company.

Interest Only

A mortgage payment method where no capital is being repaid to the mortgage provider as you are only making monthly payments to cover the mortgage interest.

Interest Rate

The charge levied by mortgage providers in exchange for them lending money.

Joint Mortgage

A mortgage where there is more than one named individual responsible for the contract.

Land Purchase

This is a mortgage available for the purchase of land rather than property.

Leaseback

A purchase where the property is bought by an individual from a developer, and the property is then leased back to the developer for a guaranteed rent over a specified period.

Leasehold

Where the land that the property is built on is owned by separate freeholder and not the property owner. This normally requires the property owner pays ground rent to the freeholder.

Lender

See Mortgage Provider

Life Insurance

Insurance which pays out on the death of the policy holder. This is a compulsory requirement with some mortgage providers.

Like for Like

A remortgage arranged on a the same loan amount as the existing mortgage. Normally used by borrowers looking for a better rate of interest.

Loan to Value (LTV)

This is the amount of mortgage expressed as a percentage of the total value of the property.

Local Authority Search

A search of the local area to highlight anything that may impact on the property or surrounding area, e.g. planned road building, planning permissions etc

Local Companies

A company set in the same country as the property, so to provide ownership rights.

London Inter Bank Offered Rate (LIBOR)

A base rate of exchange that banks traditionally use to lend money to each other. LIBOR applies not only to the Pound Sterling, but also to major currencies such as the US Dollar, Swiss Franc, Japanese Yen and Canadian Dollar.

Margin

The additional rate of interest charged by a mortgage provider over and above the base rate.

Maximum Loan

The maximum amount of money the mortgage provider is prepared to lend.

Maximum Term

The maximum period the mortgage can be taken for.

Minimum Loan

The minimum amount of money the mortgage provider is prepared to advance.

Monthly Interest

A mortgage where the interest is calculated on a monthly basis.

Mortgage

A loan which is secured against land or property.

Mortgage Adviser

A Mortgage Adviser helps you understand the various mortgage types and deals available to you. A Mortgage Adviser may recommend a mortgage to you or they may provide you with information to enable you to make your own choice.

Mortgage Broker

See Mortgage Adviser

Mortgage Deed

A legal document relating to the mortgage providers interest in the property.

Mortgage Fees

A general description of all fees charged by a mortgage provider.

Mortgage Indemnity Guarantee (MIG)

See Higher Lending Charge

Mortgage Lender

See Mortgage Provider

Mortgage Offer

A formal offer to lend money to the applicants so they can buy or remortgage the property.

Mortgage Provider

This is the name of the mortgage company who will provide the mortgage funds to complete the purchase or remortgage. Also known as a Mortgage Lender.

Mortgage Term

The length of time over which the mortgage is to be repaid.

Negative Equity

Where a mortgage and other loans secured against a property is greater than the actual property value.

Non-resident nationals

A person with the same nationality as the country in which they wish to purchase or remortgage, but who doesn’t currently live in that country, for example a Polish applicant living in the UK wanting to buy in Poland.

Open Market Value

The value of a property based on current market values.

Overtime

Additional income earned by an applicant based on extra hours worked.

Planning Permission

The permission granted by the local planning authority to change or build new properties.

Processing Fee

A fee charged by the lender just to process the application, normally charged upfront.

Procuration Fee

A payment received by a Mortgage Adviser from the mortgage provider for introducing business to them.

Product Overview

A general description of the mortgage product.

Purchase Price

The actual price paid for the property.

Quotation

An illustration to show a breakdown of costs for a particular mortgage.

Redemption Charge

See Early Repayment Charge

Reduced Documentation

Where the lender will consider applicants that do not have all the normal documentation such as proof of income.

Remortgage

The process of changing your mortgage for a different one, without moving home.

Renovation

A property that needs some work.

Rental Calculation

A method used by mortgage providers to calculate the amount of rental income required to qualify for a particular mortgage amount.

Repayment Method

The method chosen to repay the capital borrowed on the mortgage.

Repayment Mortgage

See Capital and Interest

Repossession

The Legal process by which a defaulting borrower is relieved of their ownership of a particular property, usually via a forced sale.

Retention

Where a mortgage provider holds back part of the mortgage amount until certain conditions are met.

Self Build

Where an applicant wishes to buy a plot of land and build their own property to live in.

Solicitor

Legal expert handling all documentation for the sale and purchase of a property.

Stage Payments

Where a mortgage provider agrees to disclosure mortgage funds at agreed stages, typically used in development properties.

Subject to Contract

Words to indicate that an agreement is not yet legally binding.

Survey

See Valuation.

Tenants

Residents who live in a property but do not own it.

Tenure

Used to describe property ownership. An overseas property must be either freehold or leasehold.

Title

The record of ownership of a property, the evidence of which is found in the title deeds.

Total Amount Payable

The total cost of repaying a mortgage.

Total Rate

The total rate payable by the applicant.

Tracker Mortgage

A mortgage where the interest rate is linked to a particular base rate plus a lending margin.

Transfer of Equity

Adding or removing a party to or from a mortgage.

Unencumbered

An unmortgaged property that is already owned by an applicant.

Valuation

A survey carried on a property to determine its general condition and market value.

Valuation Fee

A fee charged by a mortgage provider or property valuer so to carry out a property valuation.