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Advance
The mortgage loan itself is called the advance.
Annual interest
The annual percentage rate (apr) represents a measure
of the total cost of borrowing, and its aim is to allow
a fair comparison, between different lenders, of the
overall cost of lending. The apr could be calculated
daily, monthly or on an annual basis.
Annual Percentage Rate (APR)
The total charge for the loan including fees and interest
expressed as a percentage rate.
Applied or Nominal Interest Rate
The rate used to calculate the interest due on your mortgage.
Arrears
Mortgage payments which have not been paid and are overdue.
Bank of England base rate
The Bank of England sets or reviews their interest rate on
a monthly basis and this is the main factor influencing interest
rates charged by mortgage and other lenders.
Buildings insurance
Covers your actual building(bricks and mortar) and is
usually required as soon as you exchange contracts on
your house.
Capital
The amount you owe excluding costs and any interest outstanding.
CAT standard
Stands for Charges, Access and Terms - which have to be low,
easy and fair respectively. The Government introduced these
standards to help borrowers and especially first-time buyers
understand about mortgages.
Closing administration charge
A final charge made by the lender to cover their administration
costs when a mortgage is fully repaid.
Completion
The final legal transfer of ownership of the property - when
the property becomes yours to live in.
Contents insurance
Insurance that covers your personal belongings
Contract
A written agreement between the seller and the buyer of a
property
Conveyance
Solicitor or licensed conveyancer who deals with the legal
aspects of buying or selling land.
Conveyancing
The legal work involved in the sale or purchase of land.
Deposit
The deposit paid towards the total price of the property,
normally payable at exchange of contracts.
Drawdown date
The date when the contracts have been completed and the mortgage
starts.
Equity
The difference between the value of the property and the amount
of any mortgage or home loan secured against it.
Exchange of contracts
In England and Wales (not Scotland), the point when both buyer
and seller are legally bound to the transaction.
Endowment mortgage
Sometimes used to describe an interest only mortgage supported
by an endowment policy.
Endowment policy
A combined life assurance and investment policy often taken
out at the start of a mortgage to run for the same term, which
should cover the borrower for any outstanding mortgage if
they should die and should provide a lump sum at the end of
the policy term to repay all or part of the outstanding mortgage.
Freehold
Outright and full ownership of the property and land.
Gazumping
When before the exchange of contracts a seller accepts a new
offer on their house, having already accepted an initial offer.
Ground rent
An annual charge payable by leaseholders to the freeholder
of the land - normally due for flats or apartments.
Guarantor
A person who promises they will pay the borrower's debts if
the borrower fails to.
Higher Lending Charge
An insurance policy for the lender's benefit to protect themselves should they
need to sell a repossessed property at a loss.
Home-buyer's survey
A surveyor's general report on a property (which is less extensive
than a full structural survey).
Interest only mortgage
A mortgage where only interest is charged during the mortgage
term. The capital will need to be repaid at the end of the
term, usually from the proceeds of an investment plan such
as an endowment policy.
Land Registry Certificate
Provides details of the property including a plan and, if
the property is leasehold, a copy of the lease.
Land Registry fee
A fee paid to the Land Registry to register ownership of a
property.
Leasehold
The right to possession, but not full ownership, of a property
for an agreed period of time (normally for about 99 or even
999 years. The ownership will remain with the freeholder.
Lessee
The tenant that is granted a lease.
Lessor
The landlord that grants the lease.
Life assurance
An insurance policy that pays a lump sum on death, normally
to cover the repayment of a mortgage if the borrower dies
during the term.
Loan to Value (LTV)
The size of a mortgage as a percentage of the value of the
property (or its purchase price)
Local authority search
Questions to the local authority regarding plans for new road
building, planning permission for any building work previously
carried out, connection to the mains sewer, etc.
Mortgage
Generally a home loan with property as security.
Mortgagee
The lender of the loan.
Mortgagor
The borrower of the loan.
Mortgage term
The period of time over which the mortgage loan is to be repaid.
Negative equity
When the value of the property has fallen and is less than
the mortgage or loan secured on it.
NHBC guarantee
Normally a 10-year guarantee from when built, provided by
the National House Building Council.
Payment Protection
Insurance which pays your monthly mortgage payments, should
you lose your income through sickness, injury or unemployment.
Principal
The total amount of the loan on which interest is to be calculated.
Re-mortgage
Repaying one mortgage by taking out another new loan secured
on the same property.
Repayment mortgage
A mortgage where the capital borrowed is gradually repaid
over the agreed term along with the interest.
Stamp duty
A government tax payable on exchange of contracts on properties
of a certain value.
Building survey
A full inspection of the property by a surveyor on behalf
of and normally paid for by the buyer.
Subject to contract
This phrase is used before the exchange of contracts allowing
either party to withdraw without incurring a penalty.
Surveyor
The person qualified by the Royal Institution of Chartered
Surveyors to carry out valuations and surveys of properties.
Tie in Term
The period of time you would need to remain on certain mortgage
terms to avoid an early repayment charge.
Title deeds/title documents
The legal documents that proves of ownership of a property.
Vendor
The person(s) you are buying your new home from.
Your home may be repossessed if you do not keep up repayments on your mortgage
For Mortgages, we can be paid a fee, usually £500 or by commission
The FSA do not regulate loans and some forms of mortgage
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