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A

Advance
A mortgage loan.

APR (Annual Percentage Rate)
The total cost of a loan which includes interest charges and arrangement fees, shown as a percentage rate. This calculation assumes that you maintain the mortgage for the full term. APR is an industry standard calculation and enables direct comparison of mortgages from all lenders.

Arrangement Fee
This is the amount charged by the lender to cover the costs of administering and reserving the funds for certain types of mortgage. You have the option to add this to the loan or to paid it upfront.

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

B

Balance Outstanding
The total amount of loan owed at a particular point in time.

Bank of England Base Rate
The Bank of England set a rate each month known as the ‘Base Rate’. Banks and Building Societies use this rate to set their internal interest rates which that they pay on deposits or charge on debts.

Bridging Loan / Bridging Finance
A short term loan granted to assist in the purchase of a new property until till the existing property has been sold.

Buildings Insurance
This is the insurance bought against a property where the value is assumed to be the total cost of rebuilding the property from scratch following structural damage, for example by flood, fire or storm.

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

Building Society
A building society is a financial institution owned by its members. Building societies provide a wide range of financial services, especially savings and mortgage lending.

C

Capital and Interest Mortgage
These are mortgages where the mortgage payments you make go towards the repayments of the outstanding capital and the rest would comprise of the interest charged on the loan. At the end of the term the entire debt will be repaid. The capital repayment portion will increase as time goes by.

Cashback Mortgage
This is an incentive that the lender provides you in terms of a lump sum or as a percentage of your borrowing when you complete your mortgage.

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

Completion (Date of Entry in Scotland)
This is where the seller moves out of the property and the buyer moves in at the end of the purchase of a property.

Conclusion of Missives
The final part of the contract process in Scotland.

Contents Insurance
This is the insurance obtained against moveable contents such as furniture and appliances. This includes theft and damage caused due to accidents.

Contract
A legal document that describes the agreement between the buyer and seller regarding the transfer of ownership of the property.

Conveyancer
A lawyer who specializes in the legal aspects of buying and selling real property.

Conveyancing
The process of transferring property from the seller to the buyer managed by a conveyancer.

Covenant
A condition or a clause that is within the Title Deeds, that the buyer or any future buyer must comply with. A restrictive covenant is one that prohibits the owner from doing something.

Credit Scoring
A credit score is a system used by lenders to assess your financial situation to help determine whether you qualify for a particular credit card, loan, mortgage or service. Lenders will use your credit score information to help decide whether to accept or reject your application.

D

Debt Consolidation
The process of obtaining funds against your property to pay off your outstanding debts such as personal loans, credit cards etc..

Deeds
Legal documents that show who owns a property or piece of land.

Deposit
The amount of money contributed by the buyer to secure the property. This has to be paid at the time of exchange of contracts.

Direct Debit
A Direct Debit is an instruction from a customer to an originator authorizing their bank or building society to make regular collections direct from their account.

Disbursements
These are the costs that the conveyancer incurs for the standard legal work that has to be carried out in relation to buying or remortgaging your home.

Discharge
Paying off a mortgage.

Discount Mortgage
A reduction in the monthly mortgage amount, offered by mortgage lenders to borrowers, usually  for the first two or three years of the loan period.

E

Early Repayment Charge
A charge which is imposed when you repay your mortgage early. This depends on the amount repaid, time period and the lender’s terms.

Easement
A legal right over land, for example, the right to access a specified area of land, such as a right of way.

Equity
The difference between the value of a property and the amount of mortgage

Exchange of Contracts
The point at which both the buyer and seller exchange their signed copies of the contract in the presence of their respective legal representatives. The date of completion is agreed at this point.

F

Financial Conduct Authority (FCA)
The regulatory authority for the UK financial services industry. The FCA has taken over the regulation of mortgages and all lenders and mortgage intermediaries must be directly authorized and regulated by the FCA or must be an appointed representative of an authorized firm.

Fixed-rate Mortgage
A mortgage where the interest rate payment is fixed for a specific time. Once the fixed period is over the borrower will start paying the mortgage at the bank’s variable rate.

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

Flexible Mortgage
An arrangement enabling the mortgage borrower to overpay, and with the overpayments that have been built up, borrow money back, take payment holidays or pay less in some months.

Freehold
A legal title that gives you absolute ownership of the land that your property is on.

Full Structural Survey
A full structural survey looks at all the main features of the property, including walls, roof, foundations, plumbing, joinery, electrical wiring, drains, and garden.

Further Advance
An additional borrowing obtained against your property with your existing lender/bank.

G

Gazumping
When a seller pulls out of a sale after accepting a higher offer.

Gazundering
The buyer offering a value less than the agreed amount just before exchange of contracts.

Ground Rent
The annual fee which a leaseholder pays to a freeholder.

Guarantor
A guarantor is someone who guarantees to pay your mortgage if you can’t keep up with your payments.

H

Higher Lending Charge
This charge is payable (usually added on to your loan) if you borrow more, for example, than 90% of the valuation or purchase price of your property.

Home Buyer Report
This is an intermediate-level survey which is usually offered by the mortgage lender and prepared by their own surveyor. The homebuyer’s report comments on the structural condition of most parts of the property that are readily accessible, but it does not involve in-depth investigation or the testing of water, drainage or heating systems.

Home Contents Insurance
A policy insuring household contents against theft and damage.

Home Envirosearch
A report on detailed flood, subsidence and land contamination history for each UK neighbourhood.

Home Information Pack (HIP)
This is a set of documents providing important information about a property, such as its energy efficiency, boundary ownership, evidence of title and planning permissions. For more information visit Home Information Packs.

I

IDD / Initial Disclosure Document
This document is designed by the FCA to be given to consumers considering buying certain financial products. This is an important document which explains the service you are being offered and how you will pay for it.

Interest Only Mortgage
This is where you only pay the interest on your mortgage debt each month. In such a payment method you will have to keep funds aside (an investment vehicle) which will grow into the amount that will be required to pay off the mortgage. You are responsible for the repayment of the capital when the mortgage reaches the end of its term. You may want to seek professional advice on the investment vehicle.

J

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

Joint Tenants
A form of ownership of a property where when one person named on the mortgage dies the other party automatically inherits the property. The alternative is Tenancy in Common.

K

Key Facts Illustration (KFI)
This document contains the main information about a mortgage such as its costs and features, that helps you to compare it with costs and features of different mortgages from one or more lenders.

L

Land Certificate
A Land Registry certificate proving ownership of a property.

Land Registry
A government organization that holds records of all registered properties in England and Wales.

Land Registry Fee
A fee paid to the Land Registry to register your details if you have bought a property or changed mortgage lenders.

Leasehold
To be given ownership of a property but not the land it is built on. This normally requires payment of ground rent to the landlord.

Life Assurance
Insurance which pays out on the death of the policy holder. Policies can run alongside your mortgage and will pay off all or part of the outstanding debt in the event of your death.

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..

Loan to Value (LTV)
The amount of mortgage depicted as a percentage of the property value. For example, if your mortgage amount was £50,000 and your property is valued at £100,000 your loan to value, or LTV, is 50%.

M

Monthly Interest
A method of calculating mortgage interest on a monthly basis.

Mortgage Deed
A legal document relating to the mortgage lender’s interest in the property.

Mortgage Indemnity Guarantee
Also known as a mortgage indemnity guarantee policy (MIG). This is an insurance policy that the lender will set up if you borrow more than a set percentage of the property value.

Mortgage Offer
The document which states the agreement to lend you the amount of money against the property.

Mortgage Payment Cover (MPC)
This is insurance designed to pay your monthly mortgage payment for a limited period, usually a year, if you are unable to work through illness, accident or redundancy.

Mortgage Term
The period after which the mortgage had to be paid off.

N

Negative Equity
When the value of the mortgage which is outstanding on the property is more than the market value of the property.

NHBC
The National House Building Council (NHBC) is a warranty scheme for new properties providing cover against major structural defects for 10 years.

O

Ombudsman
An ombudsman is a person who has been appointed to look into complaints about companies and organisations. The Financial Ombudsman Service settles individual disputes between consumers and businesses that provide financial services.

Originator
An originator is any party who ‘originates’ a Direct Debit, i.e. the Direct Debit comes from that party. For example, if you pay your Council Tax by Direct Debit, your Council would be the originator of the Direct Debit.

P

Planning Permission
The permission granted by the local planning authority (usually the local council) for any new building or engineering operations or change of use of a building if it meets the public’s interest.

Premium
The amount you pay regularly, monthly or annually, to an insurer for an insurance policy.

Private Sale
Sale of a property without the use of an estate agent.

Product Fee
This is a fee that may be applied when you apply for a mortgage. This covers the cost to reserve the mortgage and the administration costs.

R

Remortgage
The process of moving your mortgage to another lender and paying off your existing lender.

Repayment Mortgage
With a repayment mortgage, also known as a Capital and Interest mortgage, every month you pay back both the interest on your mortgage and some of the loan itself. By the end of the mortgage term you will have paid off the entire debt.

Retention
Holding back part of a mortgage loan until any repairs to the property are satisfactorily completed.

S

Sole Agency
The choice of a single estate agent to act on the seller’s behalf.

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

Stamp Duty Land Tax
A tax you must pay on a property when you buy it. The duty must be paid at the point of completion.

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

Survey
A thorough report on the property you are planning to buy

Surveyor
A person who conducts a survey on a property.

T

Tenants
People living in a property on a non-ownership basis.

Tenancy in Common
A form of ownership by two or more people in which, if one dies, their share of the property forms part of their estate and does not automatically pass to the other(s).

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.

Tracker Mortgages
Tracker mortgages track the Bank of England Base rate. The interest is set at a fixed rate above the Base rate and the tracker rate will rise and fall in line with any changes that happen to the base rate.  This means that if the base rate falls, the amount you pay falls. Likewise, if the base rate goes up, so will your payments. Tracker mortgages tend to be for a set period of time, say two or five years, after which you usually transfer to a new tracker rate, or to a different type of rate altogether.

Transfer Deeds
The Land Registry document that transfers legal ownership from seller to buyer.

Transfer of Equity
Adding or removing a party to/from a mortgage.

U

Under Offer
A term applied to a property for which the seller has provisionally accepted the buyer’s offer.

V

Valuation
A valuation of the property for mortgage purposes to ensure that the property is worth the amount requested for a mortgage.

Valuation Fee
The charge for the valuation of the property.

Variable Interest Rate
Rate of interest payment that fluctuates over time with general interest rates.

Vendor
The seller of a property or piece of land.A credit score is a system used by lenders to assess your financial situation to help determine whether you qualify for a particular credit card, loan, mortgage or service.An ombudsman is a person who has been appointed to look into complaints about companies and organisations.

The Financial Ombudsman Service settles individual disputes between consumers and businesses that provide financial services.