This is an insurance policy which pays an income if you are unable to work for an extended period. Some plans cover against unemployment/redundancy and for the self employed, the “unemployment/redundancy” aspect may be replaced with “hospitalisation” cover. Also known as Mortgage Payment Protection Insurance (MPPI).
Agreement from the lender that the mortgage is approved subject to satisfactory references and a satisfactory valuation report being received. Also known as Decision in Principle (DIP)
See mortgage sourcing system.
The APR is the total charge for credit. It is the standard way (laid down by the Consumer Credit Act 1974) of working out the true interest rate. A way of comparing the cost of credit; includes the interest rate and other costs.
This is a fee that the lender charges an applicant when taking out a mortgage and is charged to cover the administration costs of setting up the loan. Lender’s usually allow this fee to be added to the loan.
Person declared by a court to be unable to repay their debts. The bankruptcy is administered by a Trustee and discharged generally after three (sometimes two) years.
Interest rate set and reviewed by the Monetary Policy Committee on a regular basis. This rate influences the majority of the financial services interest rates.
An individual who assists in arranging funding or negotiating contracts for a client; but who does not loan the money himself. Brokers usually charge a fee or receive a commission for their services.
Base Rate Tracker.
Base Points (i.e. 25 bps=0.25%).
The borrower takes a loan secured on a property as an investment. The property is let out to a tenant who pays the borrower a rental income, making the borrower a landlord.
Current method used to transfer the mortgage advance funds to the solicitor acting in the conveyancing transaction. May also be referred to as Telegraphic Transfer (T/T) which is an historical method of funds transfer.
The Legal Charge is the right to acquire the property. Generally, a mortgage lender has 1st Charge over the property. Other lenders may have a 2nd Charge over the same property. If the borrower defaults on the loan, the holder of the 1st Charge has priority on selling the property to discharge it’s debt.
This is when the mortgage funds have been released by the Lender, and your solicitor/ Licensed Conveyancer has received the signed legal documents, legal completion can then be said to have taken place.
This is an adverse judgement that lasts for a fixed period.
A system used by some lenders to help evaluate the risk of giving a mortgage to a prospective borrower based upon historic and statistical information.
Agreement from the lender that the mortgage is approved subject to satisfactory references and a satisfactory valuation report being received. Also known as Agreement in Principle (AIP)
A legal document, which affects the transfer of ownership of real estate from the seller to the buyer.
The difference between the purchase price and the mortgage amount i.e. the capital that the borrower is putting towards the transaction.
Money spent by the solicitor on behalf of their client (seller/purchaser), in respect of land Registry Fees, Local Authority Searches, Stamp Duty etc.
The lender will give a discount of off their standard variable rate for a set period of time from completion OR until a set date. This means that if the lenders standard variable rate go down your pay rate will fall, but if the standard variable rate increases your pay rate will rise.
A fee charged by the lender if you pay off all or part of your mortgage before an agreed date or you move the loan to another lender. These charges usually apply on fixed, discounted, or cashback mortgages. Also known as Early Redemption Charge (ERC).
An interest only mortgage linked to an endowment policy designed to give a maturity value at the end of the mortgage term sufficient to repay the loan OR pay off the loan on earlier death. Whether there are sufficient funds at the end of the mortgage term to repay the mortgage depends on the investment performance of the endowment policy.
The difference between the value of a property and the loans secured on it.
Both buyer and seller are legally bound to proceed when contracts have been signed and exchanged between the solicitors of all parties (not in Scotland).
This guarantees a fixed rate of interest for a set period of time. After this period the rate will normally revert to the standard variable rate as determined by the lender.
This allows a customer to make under and overpayments on their mortgage account, also payment holidays provided certain criteria have been met.
Outright ownership of land or property.
The person having outright ownership of land or property.
Income stated on an application form must be proven by payslips, P60 and/or employers reference.
This is someone who promises to pay the borrower's debt if or when necessary.
The deposit being used in the transaction is from funds given to the purchaser by a third party. This could be from family/friends and should not result in a 2nd Charge registered over the property being purchased.
Rent paid to the Freeholder by the holder of a lease for the use of the land and/or buildings.
This is a one off fee that the client pays the lender for higher risk mortgages (this can normally be added to the mortgage advance amount). Also known as Mortgage Indemnity Guarantee (MIG)
The amount by which income, after deduction of other significant commitments can be multiplied to calculate the maximum possible loan.
Independent Financial Adviser - an adviser committed to offering products from the full range of financial products offered in the market place.
This is an arrangement (usually monthly) made by a debtor (person in debt) to his/her creditors (person(s) money owed to) for a set period of time. This arrangement is monitored by the Supervisor of the IVA.
The rate of interest used to calculate the client’s initial monthly mortgage payment.
When only the interest payments on the loan are paid during the term of the mortgage. No payments are made to reduce the capital balance outstanding.
The Land Registry holds the ownership records of all registered land and property. Also it holds all information on any mortgages, charges, cautions, restrictions or covenants on all registered land and property.
A fee, which is incurred when the property is registered at the appropriate Land Registry (usually by a solicitor).
These are charged by a solicitor to their clients, for the work carried out in the conveyancing transaction.
A borrower lets out their current residential home to a tenant who pays them rental income, thus turning that into an investment property. The borrower then purchases another property as their residential home.
The ratio of the total mortgages/loans secured on the property against the lower of the purchase price or current market value e.g., if a property is worth £100,000 and has a £70,000 mortgage on it, the LTV is 70%.
This is a one off fee that the client pays the lender for higher risk mortgages (this can normally be added to the mortgage advance amount). This may also be called Higher Loan Fee (HLF) and High Percentage Advance (HPA).
This is an insurance policy, which pays an income if you are unable to work for an extended period. Some plans cover against unemployment / redundancy and for the self employed, the “unemployment / redundancy” aspect may be replaced with “hospitalisation” cover. Also known as Accident, Sickness and Unemployment (ASU) cover.
An electronic platform that can be installed on to any computer and used to obtain mortgage product quotations and illustrations.
The lender.
The borrower.
If a borrower arranges their own buildings insurance, a lender may charge an administration fee and then an annual charge for reviewing the policy.
A company who lends money to borrowers who have a poor credit history/rating. The borrowers may be bankrupt and/or have county court judgements/decrees etc. Also known as sub-prime lending.
Income not required to be declared on an application form by a lender.
Documentation issued by the lender upon receipt of a successful mortgage application; including a satisfactory valuation and references (if applicable).
This is the rate that the lender provides to the borrower for payment of the mortgage, and will be provided for a set period.(e.g BBR + 1% Discount for 3 years or Fixed at 4.99% until 1/1/2010).
A fee paid by the lender to the Broker for the completion of a mortgage case.
A fee charged by the lender if you pay off all or part of your mortgage before an agreed date or you move the loan to another lender. These charges usually apply on fixed, discounted, or cashback mortgages.
Keeping the existing property but either changing lenders for a better rate and/or raise additional funds; or remaining with existing lender to raise additional funds, subject to enough equity.
Where the mortgage payments made to the lender on a monthly basis consist of capital and interest. The capital sum owing slowly decreases over the course of the term until there is a zero balance at the end of the term.
If essential works are still required to be carried out when completion takes place, a lender may retain some of the advance funds until the essential works have been completed; subject to a re-inspection and usually a fee.
The legal process of removing a Charge at the Land Registry.
This usually applies when purchasing a flat. It is an annual maintenance charge for the upkeep of shared property, e.g. stairs and the exterior of the building.
A mortgage where part of what the borrower pays for the loan is linked to the value of their property. The borrower agrees to share part of the growth in the value of their property from the time that completion takes place.
An applicant purchasing a share of a property (min. usually 25%), where rent and a mortgage payment is paid on a monthly basis.
A government tax based on your property value which the purchaser pays via his solicitor on completion of the mortgage. Applicable to all purchases equal to or over £125,000 in value.
A list of all fees and payments due during the mortgage term.
Historical method used to transfer the mortgage advance funds to the solicitor acting in the conveyancing transaction; now known as CHAPS payment.
Insurance against loss resulting from defects of the Title Deeds i.e. missing Landlord/Freeholder, uncertainty over ownership of land and/or buildings etc.
The total of all fees and payments due during the mortgage term.
A mortgage product that tracks/follows the Bank of England Base Rate (BBR). The rate charged may be either BBR plus or minus a given amount.
A promise made to ensure that a stated matter will be carried out. A solicitor’s undertaking is made in writing and is legally binding.
A valuer gives a written report to assess if the property is a suitable risk for mortgage purposes which is for use by the lender only. There are two other types of report which the applicant can request at their own cost; a homebuyers report, or a building survey (formerly structural survey).
The seller (vendor) agrees to sell the property to the buyer for a certain amount. Part of the agreement includes a separate “discount” on the purchase price shown in the contract. This means that the seller is “paying” the deposit. Some lenders view this as a reduction in purchase price.
***Your home may be repossessed if you do not keep up repayments on your mortgage***
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