A recommendation about the most suitable mortgage for you made by an advisor (such as a mortgage advisor) who is regulated by the FCA or an advisor who is an appointed representative of a directly authorised firm.
A term applied to a borrower or application that has problems with credit, for instance –
late payment, bankruptcy or County Court Judgment (CCJ).
Adverse Credit Mortgage
An adverse credit mortgage allows borrowers who have had credit problems.
Adverse Credit Lender
A lender who lends to applicants with adverse or bad credit.
Similar to manageing debts by debt management but administered by the courts (also called a court administration Order) – only applies if you owe less than £5,000 and have at least 1 CCJ registered against you – like a debt management plan the courts charge for this service.
Ones ability to repay the mortgage or remortgage. Income and affordability calculations are used by mortgage lenders to assess affordability.
Agreement in Principle
A lender agrees to advance monies conditional upon the verification of the borrowers details. This is therefore obtained before mortgage underwriting commences.
A statement from your mortgage lender,sent every year, showing among other things what you’ve
paid and what you still owe.
The person or persons applying for the mortgage.
The process of applying for a mortgage. Like an adverse credit mortgage
A firm which has permissions to deal in regulated activities through a directly authorised firm.
The increase in a property value due to market conditions.
Approval in principle
A certificate which some lenders will give you that shows the amount they will probably be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents.
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term,
interest rate and other costs.
The fee for the lender for arranging a mortgage, to be paid either on application or completion. Can usually be added to the loan amount.
The amount of mortgage payments you have fallen behind with – usually called mortgage arrears – termed in either months missed or pounds outstanding.
A firm that has permission from the FSA to carry out regulated activities. back to top
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 a borrower or mortgage applicant that has bad credit – credit such as defaults and CCJ’s to borrow mortgages funds).
A debtor (person, company, organisation) whose assets are administered by a court appointed trustee for the purpose of redistribution to the debtors creditors.
The legal process by which a debtor who owes more than their assets has these assets transferred to a court appointed administrator.
Bank of England Base Rate
The rate of interest set by the Bank of England.
See ‘Mortgage Broker’
The fee charged by a mortgage broker for locating and processing the most appropriate mortgage, can usually be paid up front or on completion.
A loan (a mortgage type called a buy to let mortgage) you take out to buy a property which you intend to rent to tenants.
The amount you borrow to help buy your home.
A mortgage that has a maximum limit on the interest rate you’ll have to pay during a special deal period.
A capped rate mortgage sets a maximum interest rate – a cap – the lender can charge for a specified period.
Cash Back Mortgage
A mortgage that comes with a cash sum (often a percentage of the amount you’re borrowing).
A ‘Registration of Caution’ is a caution registered on the land registry title of a property which means the property can not be sold or re mortgaged
without the cautioners (the person or organisation who registered the caution) being notified. Usually the caution needs to be repaid upon completion of
any sale or remortgage.
A charge registered through the courts on a piece of property or land by someone (a person or organisation) you are in arrears with – if you remortgage or sell the property the charge will have to be repaid. It is sometimes possible to have a charging order ‘postponed’ in order for a remortgage to proceed (if their is limited equity in the property) by way of a deed of postponement.
A collared mortgage is a mortgage with a set minimum and maximum interest rate you’ll pay during a deal period.
A payment received by a mortgage broker from the lender for introducing business to them.
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 your existing lender to repay your existing mortgage.
A legally binding agreement, either oral or written, to do or not do something.
The process surrounding the transfer of property between a buyer and seller, typically carried out by a licensed conveyancer such as a solicitor.
The charge paid – usually to a solicitor for transferring property ownership.
County Court Judgment – CCJ
A ruling of bad debt issued by the courts – the judgment will be recorded on your credit file.
An agreement under which one party (the borrower) receives money or property on the condition they repay the other party (the lender) at a later date.
The process where a check is made on the credit history of a mortgage applicant – see about credit reference agencies
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.
See ‘Credit Scoring’
Credit Reference Agency
A company or organisation that stores financial and public records dealing with the payment history on a prospective borrower, credit reference agencies hold you credit file.
A report prepared by a Credit Reference Agency which details the credit history of an individual – the credit report will be used by a lender to help assess the application of an individual.
The procedure by which a lender allocates a ‘score’ based on the information held on the credit file and the lenders application – different lenders use different formats for credit scoring – not allmortgage lenders credit score and they may use other factors and criteria when determining to lend.
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Daily Interest Mortgage
A mortgage in which interest is calculated daily.
An amount owed by one person or party to another.
A procedure whereby a number of loans, each with individual interest rates are repaid with another loan – consolidated into one loan with one interest rate.
An informal arrangement between a debtor (borrower) and creditor (lender).
The borrower pays one monthly fee to a third party (usually a debt management company)
and they distribute the one monthly payment around the borrowers creditors on a pro-rata basis. The payment is worked out after the borrowers disposable income has been ascertain, thus ensuring the borrower is able to maintain a reasonable standard of living whilst repaying the creditors. If done through a business, they will typically take a monthly fee from the disposable income to cover administration costs.
Decision in Principal – DIP
‘Approval in Principle’
Deed of Postponement
A document in which one party agrees to postpone their rights to those of another.
The failure to keep up with repayments on a credit agreement (such as a mortgage) – see what is bad credit
A deposit usually refers to the amount of money a borrower pays towards the property purchase.
The decline or reduction of a properties value due to market conditions.
The fee charged by lenders at the end of a mortgage term to cover the administration costs of transferring the property ownership documents, also known as
a deeds release fee.
A bankrupt can be relieved of the status (of being Bankrupt) by a court of residual liability, usually after a certain number of years. The former bankrupt assumes the status of ‘discharged bankrupt’ and is eligible to obtain credit again.
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These mortgages have a discounted rate of interest for a set period, after which the rate will increase.
With a discounted rate mortgage, the discount period is the length of time (usually inyears) the discounted rate will apply.
The money left from a persons income (usually calculated monthly) after living costs and priority debts have bee deducted, money that is deemed disposable income is often used to assess ones ability to repay if normal monthly creditor commitments can not be maintained.
Early Repayment Charge
A charge you may have to pay if you break off a mortgage deal early. Usually applies to special deals such as fixed or discounted rates and usually ends at the end of the special term.
The amount of the property, in monetary terms, that is not taken up by a mortgage or loan secured on a property.
The legal expulsion of an occupant from a property.
Exchange of Contracts
The point at which the buyer and the seller legally exchange contracts and terms of sale are legally binding on both parties.
Financial Ombudsman Service – FOS
An organisation established by law to help settle individual disputes between consumers and financial firms.
Financial Services Authority – FSA
The Financial Services Authority – the UK’s financial services regulator.
The first (or main) mortgage held on a property.
Fixed Rate Mortgage
An interest rate that is fixed (i.e. it doesn’t move up or down) for a set period of time. A fixed rate mortgage can be good for budgeting purposes as your monthly mortgage payment will not change for a set number of years.
Freehold (England & Wales only)
A situation where the owner owns both the property and the land it sits on.
A list of firms that are regulated by the Financial Services Authority to carry out financial services in the UK. You can check online to see whether a firm is regulated by the FSA, see Check the FSA Register.
This is when another potential buyer puts in a higher offer for a property after your offer on the same property has been accepted.
A person, other than the borrower, who guarantees to meet the mortgage payments in the event the borrower defaults.
Higher Lending Charge – HLC
A fee charged by the lender when the loan to value (LTV) ratio is above a certain limit – not all lenders charge a HLC.
See ‘Secured Loan’
Home Buyers Report
A type of property survey that is more comprehensive than a standard mortgage valuation but less extensive than a full structural survey.
Home Information Pack – HIP
A report required on all UK properties, paid for by the seller, the purpose of HIPS is to speed up the mortgage process, it includes information such as a local authority search, drainage search, energy performance certificate.
The factor by which your earnings are multiplied to determine how much you can borrow, as set by the lender. A lender may use an Income Multiple to set a maximum on the amount they will lend.
Initial Disclosure Document
A document giving information about the scope and nature of the services offered by a regulated firm.
The charge made by lenders when you borrow their money.
The figure that determines how much interest you pay. Usually linked to the Bank of England’s rates and can move up or down.
A mortgage where you only pay the interest charges (interest only) 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.
IVA – Individual Voluntary Arrangement
A formal arrangement between the debtor (borrower) and creditors (lenders), it is a legally binding agreement intended to help those with serious debt – An Individual Voluntary Arrangement must be arranged by a licensed Insolvency Practitioner.
The total income of two borrowers in a joint mortgage.
KeyFacts documents – KFI
The KFI document summarises all the important features of the mortgage and must be clear, fair and not misleading. It is set out in a standard way and allows you to check all the costs and benefits of the mortgage offered.
Leasehold (England & Wales only)
A type of ownership whereby a person owns a property but not the land it sits on – the land will typically be owned by the Freeholder.
London Inter Bank Offered Rate – The rate of exchange banks lend money to each other, many sub prime lenders use LIBOR when setting interest rates for consumers.
The percentage of money you want to borrow compared to the cost of the property.
A loan which is secured against your property.
The lender in a mortgage.
A mortgage broker helps you understand the various mortgage types and deals available to you. A mortgage broker may recommend a mortgage to you or they may provide you with information to enable you to make your own choice.
An intermediary between the lender and mortgage broker, they usually have special deals not available through the lender directly and do not deal with the public.
See – ‘Annual Statement’
See – ‘Term’
The borrower in a mortgage.
Where a mortgage and other loans held on a property is more than the property value.
None Status Mortgage
See ‘Self Certification’.
See ‘Financial Ombudsman Service’
Open Market Value
The value of a property based on current market values.
The principle loan or capital.
A term applied to a borrower or application that has problems with credit, for instance – late payment, bankruptcy or County Court Judgment (CCJ).
These are debts which must take priority over normal debts and credit commitments – priority debts are numerous, a few examples would be – council tax arrears, child support
agency arrears, Magistrates’ Court Fines, for a full list please contact the Citizens Advice Bureau.
See ‘Key Facts’
See ‘Early Repayment Charge’
See ‘FSA Register’
The process of changing your mortgage for a different one (re-mortgage), without moving home.
A mortgage that pays off both the home loan and the interest at the same time. Make all the payments over the mortgage term and the mortgage will be fully repaid.
The Legal process by which a defaulting borrower is deprived of their interest in a mortgaged property, typically involving a forced sale of the
property at a property auction.
See – ‘Caution’
The ability by the lender to hold back (retain) part of a mortgage until certain conditions are met.
Right to Buy
Mortgages for public sector tenants who qualify to buy their home under the government’s Right to Buy scheme.
Self Certification Mortgage
A mortgage whereby the borrower does not officially prove their income, rather they ‘ Self Certify’ that their income is as they stated on the application form – also known as a ‘none status’ mortgage.
A tax which home buyers must pay on properties valued above a government set figure. At The moment, Stamp Duty starts on properties valued over £120,000.
Standard Variable Rate
A standard variable rate of interest at the lender’s normal mortgage rate – i.e. without any discounts or deals.
A loan that is secured on your home – also called a ‘second charge’ or ‘second mortgage’.
A report on the condition of the property you are planning to buy.
An industry term used to describe credit impaired lenders, products or clients.
Sub Prime Lender
A lender who lends to applicants with bad credit.
A survey of the construction of a property carried out by a qualified surveyor – this is the most comprehensive and most expensive report available.
The period of time over which the mortgage must be repaid.
The document that confirms the right of possession to an area of land or property.
A tracker mortgage is 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 property that has no mortgages or loans secured on it.
A brief inspection, for the benefit of your lender, of the home you hope to buy or re mortgage. This is to make sure they are not lending more than the property is worth and
that the property is suitable security for the mortgage, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want your own survey.
The fee charged to cover the cost of the lenders valuation, typically paid by the borrower.