Cap The condition in a capped rate mortgage that sets a maximum interest rate for a specified period.

Cap and Collar A cap is a maximum rate of interest that can be charged for a specified period, while a collar is a minimum rate of interest that can be charged for a specified period.

Capital The amount of money either put into buying a property or the deposit placed on a property. Also known as equity.

Capital and Interest Mortgage Also known as a repayment mortgage. Your monthly payments gradually pay off the money (capital) you've borrowed and also covers interest on the amount outstanding.

Capital Improvement Any improvement, such as new structures or components that permanently increases the value of the property.

Capped Rate Your interest rate won't go above a certain level - the 'cap' - during the capped rate period. This means that you can enjoy any rate reductions, yet have the comfort of knowing that your rate won't go above the cap

Cash Back Certain mortgage products offer cash back, which means you get a cash lump sum when you enter into the mortgage to spend on anything you want.

Cash Back Remortgage A remortgage that is structured so that the borrower receives a sum of money at the start of the new term.

CAT Standard Mortgages The Government has laid down CAT standards - fair Charges, easy Access and decent Terms - to help people identify mortgages which meet minimum standards. If a mortgage is described as meeting the CAT standards it doesn't mean that it is 'Government approved' or necessarily right for you.

Centralised Lender A lender that operates from a central location rather than from a network of branches. Examples would include telephone or Internet banks.

CHAPS Stands for clearing house automated payment system. A telegraphic transfer through which the mortgage advance is sent to the conveyancer.

Charge Certificate If the property is registered with the HM Land Registery, this certificate will prove or transfer ownership of land. The Land Registry issues a Charge Certificate to the mortgagee of the property who has registered title. If there is no mortgage on the property, the Land Registry issues a Land Certificate to the registered proprietor.
The Charge Certificate contains three parts,
•  charges register
•  property register, and
•  proprietorship register.
It will have details of restrictions, mortgages and other interests

Clear Title A legal term that refers to the clear ownership of a property.

Collateral An asset, such as a car or a home, which is used to guarantee the repayment of a loan. Should the borrower fail to repay the loan under the terms of the original contract, the asset may be seized by the lender.

Commission A fee levied by a broker or agent for services relating to either the negotiation of a mortgage or the purchase of a property.

Commitment Letter A letter detailing a formal offer from a lender and setting out the terms and conditions of the prospective loan. Also known as a 'loan commitment'.

Commitments Charges, such as car loan payments, family maintenance and mortgage payments, which a person has contracted to pay.

Common Areas Sections of land or buildings, such as gardens, hallways, recreational facilities and parking areas, where more than one resident shares access.

Company Representative A person with authority to deal for and on behalf of an organization.

Comparative Search A search that looks at the actual sale values of similar properties in the same area as your property. This search is normally carried out by an estate agent and should give an indicative sale price for your property.

Completion The day on which a property becomes legally yours.

Compound Interest An interest payment on both capital and on previously accrued interest. For example, £100 borrowed for 5 years at 5% p.a. would become £105 after 1 year, £110.25 after 2 years and £115.76 after 3 years, and so on.

Compounding The process of adding interest to both the capital borrowed and any previously accrued interest.

Compulsory Insurance Insurance that is required by a lender as a precondition of issuing a mortgage. The insurance will typically cover the building and contents and some mortgage providers may insist that the insurance policy also be taken out with them. Also known as Conditional Insurance.

Conclusion of Missives The Scottish equivalent of exchanging contracts.

Concrete Construction A property that has been built using conventional materials and practices. Some lenders may refuse to lend, or charge higher rates of interest, on properties built using unconventional materials or techniques

Conditional Insurance See Compulsory Insurance.

Contents Insurance Protection for items in your home, including furniture and personal possessions - in case they're stolen, lost or damaged.

Contract A legally binding agreement, either oral or written, to do or not do something.

Converted Flat A flat or apartment that has been created by the subdivision of a larger property.

Conveyance The legal document which transfers ownership of unregistered freehold land.

Conveyancer A legal practitioner who deals with the conveyancing of land.

Conveyancing The legal process involved in buying and selling a property.

Conveyancing Fee The charge made by a solicitor or conveyancer for undertaking the legal procedures necessary for the transfer of ownership of a property.

Corporate Relocation The process by which a company relocates an employee to another district as part of the employer's normal course of business.

County Court Judgment (CCJ) A ruling for bad debt issued by a County Court or higher court. The judgment will be recorded and the record will show up during any credit checks and may count against you in your mortgage application.

Covenant A clause in a mortgage contract or in a contract for the sale of a property that obligates or otherwise restricts one of the parties (buyer/lender or buyer/seller). The contract should detail any penalties, including repossession, which will be incurred if the covenant is broken.

Credit An undertaking or agreement under which one party (the borrower) receives money or property on condition that they repay the other party (the lender) at a later date.

Credit Check The procedure by which a check is made on the credit history of a mortgage applicant, usually conducted by one of the large dedicated credit check agencies on behalf of the prospective lender. The check will include items such as credit card repayments, outstanding debts, arrears and County Court Judgments.

Credit History A history of an individual's open and fully repaid debts. Checking a credit history helps a lender to assess the likelihood that a prospective borrower will maintain their mortgage repayments.

Credit Rating An assessment of a person's likelihood of keeping up - or otherwise - on the repayments on their loan. A credit rating is usually based on a person's credit history.

Credit Reference Agency A company that collects and stores financial and public records dealing with the payment history of a prospective borrower. Most lenders will employ a Credit Reference Agency to check your payment records as part of their assessment of your application.

Credit Report 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 applications of prospective borrowers.

Credit Scoring Lenders will assess the suitability of your application using a technique known as credit scoring.

Current Account Mortgage This is still a fairly new type of mortgage but it is becoming more common. Essentially, you have a mortgage account and a current account. Any positive balance in the current account is deducted from the mortgage balance, thus reducing the amount you owe. This is called offsetting and will reduce the interest charged on your mortgage.

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Debt An amount owed by one person or party to another.

Debt Consolidation A procedure by which a number of loans, each with individual interest rates, are collected together in a single debt and at the lowest of the individual interest rates. For instance, if you had a £2,000 hire purchase debt at an interest rate of 10%, and a £10,000 loan at an interest rate of 5%, consolidating the debt would leave you with a total debt of £12,000 at an interest rate of 5%.

Deed The legal document that sets out your ownership or title to a property.

Deeds Release Fee A fee charged by a lender, usually at the end of a mortgage term, to cover the administration involved in returning the deeds (property ownership documents) to your solicitor.

Default The failure to keep up with mortgage repayments on a regular or adequate level.

Deferred Interest Mortgage A mortgage in which some or all of the interest is not paid for a specified period, usually at the start of the term.

Deflation A situation in which prices are falling. (The opposite situation to inflation).

Dematerialisation Until October 2003, the main title deed for registered land (the land on charge certificate) was held in paper form. The Land Registry have now 'dematerialised' the paper deeds and the evidence of title to the property is held electronically at the Land Registry. Some lenders have opted for full dematerialisation and hold little or no documentation of any kind in paper form any more, with most original documentation being returned to the borrowers.

Deposit In relation to property, deposit usually refers to the amount of money paid by the borrower as part of the purchase. Typically this will be about 10%, with the rest of the purchase funded by a mortgage.

Depreciation The decline or reduction in the value of a property caused by changes in market conditions. (The opposite of appreciation).

Disbursements The fees that your solicitors have to pay to others on your behalf (e.g. Stamp Duty, Land Tax, Land Registry fees, Search fees).

Discharge Fee A fee charged by the lender for releasing the legal charge over your property following repayment of a mortgage.

Discharged Bankrupt A bankrupt can be relieved of the status by a court of residual liability, usually after a certain number of years. The former bankrupt assumes the status of 'discharged bankrupt' and is able to apply for credit again.

Discounted Period With a discounted rate mortgage, the discounted period refers to the length of time that the discounted rate is levied. Typically this will be three years.

Discounted Rate A lower level interest rate, usually levied for a specified period, than the standard variable rate. The discounted rate typically applies at the start of the term of a discounted rate mortgage.

Draw Down Facility The facility by which borrowers may increase the level of their debt up to specified limits and at specified times.

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Early Repayment Charge A charge levied by the lender for withdrawing from the mortgage before a given date as specified in the mortgage conditions.

Easement A Right of Way that allows persons other than the owner to access a property.

Encumbrance Anything that has a limiting or detrimental affect on the ownership of a property, including, for instance, mortgages, leases, rights of way and easements.

Endowment A financial investment product or vehicle that a borrower pays into during the course of a mortgage and the proceeds of which are used to pay off the mortgage loan at the end of its term.

Endowment Mortgage A mortgage in which the borrower only repays the interest on the loan for the term of the mortgage, then repays the loan amount at the end of the term. The borrower pays into an endowment product during the course of the mortgage and then uses the proceeds to pay off the original loan at the end of the term. IT IS STRONGLY ADVISED THAT YOU TAKE INDEPENDENT FINANCIAL ADVICE BEFORE TAKING OUT ANY ENDOWMENT POLICY.

Equity The difference between the amount you owe on your mortgage and the current value of your property.

Equity Release A mortgage taken out on a home that is already fully owned, typically in order to make use of the capital tied up in it.

Essential Repairs Your mortgage lender may insist on certain repairs or renovations being carried out to the property as conditions of the mortgage advance. Bear in mind your lender works on the basis it is also going to be the owner (until you pay off your debt) so it will tend to look at your intended purchase and want to make sure it's in a reasonable condition (so that it's not lending money against a property which is a hopeless wreck).
So, to guard against advancing a loan on a property which is a disaster, it may stipulate as a condition of the mortgage loan that certain essential repairs be undertaken prior to completion.

Estate A legal term referring to the sum total of all the property and personal assets owned by an individual at the time of their death.

Eviction The legal expulsion of an occupant from a property.

Examination of Title The report that details the title of a property, usually taken from the public records or an abstract of the title.

Excess Payments Mortgage repayments that are over and above the standard monthly rate. Some mortgage products impose charges for excess payment and/or set limits to the size and frequency of such payments.

Exchange of Contracts The swapping of contracts between a buyer's conveyancer and a seller's conveyancer. Once you have exchanged contracts you are both legally bound to the transaction.

Existing Liabilities Your financial outgoings, such as loan repayments, regular fees or child maintenance, before taking out a mortgage. Borrowers are obliged to disclose all such outgoings as part of the mortgage application process.

Expatriate A person working in a country that is neither their country of birth nor nationality.

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Fair Market Value The amount paid for a property in a transaction in which neither the buyer nor the seller is being forced into the contract. Typically this value will be set by looking at the sale prices of similar properties in the same area.

Fast Track Voluntary Arrangement (FTVA) An FTVA is a binding agreement with your creditors to pay all or part of the money you owe them. You can only enter into it after you have been made bankrupt.

Fee Simple (Scotland only) A term used in Scotland to refer to property where the owner has the right to decide who inherits the property.

Feudal A form of legal title applicable only in Scotland.

Feuhold A term used in Scotland to refer to the ownership of both a property and the land on which it is built. The closest equivalent in England and Wales is Freehold.

Financial Services Authority (FSA) The UK regulator for mortgages.

First Adjustment The point at which the borrower can expect the first rate adjustment under a variable rate loan.

First Charge Most mortgage lenders who lend money to enable someone to buy their home would require a first charge. This means the lender has first call on any funds available from the sale of the property to clear the outstanding mortgage debt.

First Mortgage A mortgage that is the primary lien or first claim against a property.

First Time Buyer (FTB) A purchaser who is buying a property for the first time. Typically a lender will offer more attractive deals for first time buyers. Also known as First Time Purchaser (FTP).

Fixed Rate A rate of interest guaranteed not to change over a fixed period of time.

Fixed Rate Mortgages A fixed interest rate mortgage offers the borrower certain knowledge of just how much their mortgage payments will be each month for a set period of time. Fixed rate mortgages for the full term of the mortgage remain relatively rare in the UK housing market.
However, a mortgage interest rate that does not vary with base interest rates may be convenient for household budgeting purposes. You do run the risk, if the base rate falls, of paying over the odds while others see their mortgage costs coming down and you also may face a nasty shock at the end of the fixed rate period if interest rates have risen substantially and there is a large jump in the rate your lender wants you to pay.
These risks notwithstanding, fixed rate mortgages have become increasingly popular because of the certainty they deliver (for a period tending to be between 1-10 years). Do bear in mind that these deals tend to have penalties attached if you attempt to redeem the mortgage early.
Other options include mortgages which are : variable rate, capped or discounted.

Fixed Term Under a fixed term mortgage, this is the specified period during which the rate of interest has been fixed.

Flat over Shop A flat or apartment that is located above a retail property. Lenders may view such a property as a higher risk category and adjust their mortgage offer accordingly.

Flexible Drawdown A facility written into a mortgage that allows a borrower to access additional funds.

Flexible Mortgage A mortgage that allows the borrower to make over- or under payment or take a payment holiday.

Flexible Mortgage The term flexible, when used in the context of a mortgage, can mean a variety of things.
In recent years, however, lenders have introduced flexible mortgages into the market that allow you to vary your monthly repayments. Generally speaking you have the option of overpaying, underpaying, or even taking a payment holiday. The obvious advantage of overpaying, for example, is your outstanding loan will reduce more quickly. And this will cut your monthly payments in the long run.
Conversely your financial circumstances may temporarily change and you might have the need to pay less. The advantage of a flexible mortgage is you won't be penalised in these circumstances. But if you wish to make an underpayment you'll only be allowed to do so as long as overpayments have previously been made.
While a dozen banks, building societies and insurance companies currently offer these types of loans it's worth noting that terms and conditions will vary from lender to lender.
From a practical standpoint the flexible mortgage can offer a combination home loan and current account rolled into one. So, if you take out say a £75,000 mortgage, and then you win £10,000 on the premium bonds, you can simply, without penalty, reduce the size of your mortgage.
Flexible mortgages often come with cheque books attached. So conversely, if you suddenly need an extra £5,000, you'll be able to write a cheque and in the process increase the overall size of your homeloan to £80,000.|
A key point to consider is that if the mortgage is truly flexible there should be no early redemption penalties attached it.

Flying Freehold A term used to describe that part of a freehold property which is built above land which is not part of the property freehold, e.g. a bedroom built over a common access passageway. Flying freeholds can cause you difficulties when trying to get a mortgage. At worst, a home lender will decide they're not prepared to lend.

Freehold A form of legal title to land which means you are the absolute owner of the property and the land it's on.

Foreclosure See repossession.

Foreign Currency A mortgage that is taken out in a currency other than sterling. Typically used by people who are paid in foreign currency, this type of mortgage carries a higher risk for the lender (due to foreign currency fluctuations) and the rates may be adjusted accordingly.

Full Status The stage in a mortgage application at which the prospective borrower has provided credit check and other financial information.

Further Advance When you borrow extra funds against the value of your home. The loan is added to your main mortgage and your payments recalculated.

Further advance This is an additional loan by a lender to the borrower.
If you wish to raise money against the value of your home - go see your home lender.
A further advance to release more money on your home, is sometimes referred to as a second mortgage. It will usually be secured by the existing mortgage deed.
You may wish to take out a further advance to pay for property improvement, a new car, school fees, or to buy shares, to invest in a private business etc.
If the equity in your property (i.e. it's worth substantially more than the outstanding mortgage) you'll be able to extend your loan - although not necessarily at the same interest rate as your existing home loan.

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Gazumping This is when the person selling the property accepts an offer and then accepts a new, higher offer from another buyer before exchange of contracts.

Gazundering The practice of withdrawing a price already offered and making a lower offer. This is the other side of the coin to gazumping. When the property market is weak, a buyer may try to reduce his or her bid for a home prior to the exchange of contracts (when the transaction becomes legally enforceable).
The verb to gazunder , first made a widespread appearance in the UK property market in the lat 1980s. It is a blend of gazump and under, denoting the arbitrary reduction of an offered price by a purchaser, usually near to the date of exchange of contracts, putting pressure on the seller to accept a lower value rather than look for another buyer.

General Conditions The standard conditions that apply to a mortgage, as set by the lender.

Geographical Restrictions Lenders may not offer mortgages for the purchase of a property in certain districts or areas, typically those geographical areas that are regarded as high risk. Some smaller lenders may not offer loans for properties that are outside their local area.

Ground Rent A fee that a leaseholder has to pay the freeholder every year.

Gross Annual Income Total income received per year, before taxes are deducted.

Gross Monthly Payment The monthly amount a borrower will have to repay, before deductions for MIRAS (Mortgage Interest Relief at Source) is applied.

Guarantor Someone who guarantees to repay your mortgage if you can't borrow enough to buy the home you want. Parents, for instance, may act as guarantors for their children when they buy their first home.

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Higher Early Repayment Charge This phrase will usually be found in conjunction with fixed rate, capped and discounted mortgages. As the lender has given the borrower an attractive mortgage package they will impose an extra charge over and above the normal early repayment charge if the mortgage is paid off within the period of the special terms.

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

Holiday Home A second property that is used for holidays and weekends rather than as a main residence. Lenders will typically charge a higher rate or demand a larger deposit, on mortgages for a holiday home.

Home Buyer's Report A type of property survey that is more comprehensive than a mortgage valuation but less extensive than a full structural survey.

Homebuyer's Survey & Valuation Report A property survey that includes a valuation and should reveal any major faults in the property.

Home Buyer's Valuation Fee The fee charged by a surveyor for producing a Home Buyer's Report.

Household Insurance A way of referring to both buildings and contents insurance.

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Illustration (KFI) Key Facts Illustration The KFI is a mortgage quotation detailing all of the costs and payments for the mortgage you are applying for. Each broker or lender must use the same basic format for KFI's.

Impaired Credit The credit rating of a person with a less than perfect record of credit usage, for instance due to arrears on other loans, past CCJs or a past bankruptcy.

Income The amount of money a person earns.

Income Multiplier The way lenders work out how much you can borrow, usually by multiplying your gross annual salary. Usually up to 3.25 times salary or 2.5 times combined salaries if buying jointly.

Income Tax A government tax that is levied on an individual's earned income.

Independent Financial Adviser (IFA) A person qualified and regulated to advise on financial products such as mortgages, insurance and investment vehicles

Independent Mortgage Broker A mortgage broker who is authorised and regulated by the Financial Services Authority to conduct mortgage business. Mortgages must be sourced from the whole mortgage market, not a preferred list. A fee is normally levied for the mortgage advice.

Index A published interest rate, such as the Bank of England base rate or the London Inter Bank Offer Rate (LIBOR), which is used to base the interest rate on a variable rate mortgage.

Index Tracker A type of mortgage in which the rate of interest charged follows exactly ('tracks') any changes in a published interest rate, for instance the Bank of England base rate.

Inflation The general rise in prices over time.

Initial Fees An estimate of the total fees payable for arranging a mortgage, including items such as solicitor's fees, survey costs and reservation charges.

Initial Interest As well as being the first interest payment on a mortgage, the Initial Interest is also usually higher than subsequent payments as it covers the period between the date of completion and the date when the first payment is due.

Initial Rate The interest rate that applies between the start and end of any discount period on a mortgage.

Interest-only Mortgage You only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't reduce. At the same time, you put money into a separate investment which should grow and pay off the mortgage as scheduled. You must make sure you keep premiums up to date on any mortgage investment products.

Interest Rate Charge Structure The procedure of offering different mortgage rates depending on factors such as LTV (loan to value), your income history and credit rating.

Intermediary A company which matches borrowers with lenders, as well as undertaking a certain amount of application processing. Typically an intermediary will receive a fee directly from the lender for these services.

Introducer A person or company (broker or adviser) who introduces borrowers to lenders.

Investments Savings that are designed to repay the principal on an interest only mortgage.

ISA (Individual Savings Account) A tax efficient shelter for investments in stocks and shares, life assurance and cash. Can be used as a way of repaying an interest-only mortgage.

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Joint Income The total gross income of the two borrowers in a joint mortgage.

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Land Registration The process of registering your title to an area of land with the Land Registry, typically handled by a solicitor.

Land Registry Fee Your conveyancer pays this on your behalf to register your details in the Land Registry records once you've bought a property or changed your mortgage lender.

Landlord's Reference A reference given by a previous landlord, which confirms an applicant's history of payment of rent and previous conduct as a tenant.

Leasehold This means you own a property for a set number of years. When the lease expires, the property returns to the freeholder. Flats are commonly sold as leasehold.

Legal Charge A document held by the Land Registry detailing who had first claim on your property. Typically the owner will have first claim.

Legal Completion See Completion.

Legal Fee Charges paid by a solicitor.

Lender The party, typically a bank, building society or mortgage company, offering the loan.

Lender's Fee A charge levied by a lender to cover the costs of arranging a mortgage.

Level Term Assurance A life insurance policy that pays out a lump sum should the borrower die during the term of a mortgage. Level term refers to the fact that this sum will remain constant throughout the term of the mortgage.

LIBOR Linked Mortgage A tracker mortgage that tracks LIBOR.

Life Assurance A form of insurance by which someone's life is insured. Life assurance policies can run parallel with a repayment mortgage, so the mortgage will be repaid if you die before the end of the term.

Loan Consolidation See Debt Consolidation.

Loan to Value Ratio (LTV) The proportion of the value of the property that the lender is prepared to loan. This can be up to 100%.

Local Authority Search Part of the conveyancing process when you buy a property, carried out by your conveyancer. It gives details of any matters which, from the local council's point of view, affect the property. It reveals any proposed changes to the local area, such as road improvements, and details any planning permission given for the property.

Local Authority Search Fee The fee payable to the Local Authority for conducting a Local Authority Search.

London Inter Bank Offered Rate (LIBOR) The interest rate at which banks in London buy and sell money from each other.

Low Cost Endowment (LCE) The typical form of endowment.

Low Start Low Cost Endowment (LSLC) An endowment under which the repayments are reduced at the start of the term but increased later on to make up the difference.

LTV Loan to value is the proportion of the value or price of the property (whichever is the lower), that you borrow on a mortgage. For example, a £90,000 mortgage on a house valued at £100,000 would mean a LTV of 90%.

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Main Residence The property in which a person resides for the majority of the time. Also known as the 'principal private residence', it can often be important for tax purposes.

Maintenance Legally enforceable payments made to contribute to the costs of bringing up a dependent, usually following a divorce.

Maisonette A flat or apartment with more than one floor.

Margin The number of percentage points that a lender adds to the index value in order to calculate the variable interest rate payable on a mortgage.

Minor A person under the age of 18.

MIRAS Acronym standing for Mortgage Interest Relief At Source, a tax relief scheme that expired on 1st April 2000.

Mortgage A legal document that pledges a property to the lender as security on a loan.

Mortgage Code Arbitration Scheme A scheme, administered under the Mortgage Code, that allows disputes between borrowers - or prospective borrowers - and lenders to be resolved without court action.

Mortgage Deed A legal document establishing a mortgage on a property.

Mortgage Disability Insurance An insurance policy under which monthly mortgage payments will be maintained for a specified period in the event that the policyholder suffers a covered disability

Mortgage Indemnity Guarantee (MIG) This is an insurance policy designed to protect the lender (the mortgagee) against loss in the event of you defaulting and ceasing to repay your mortgage. The policy may be insisted on by the lender at the start of the loan, but it's usually the borrower (the mortgagor) who pays the premium!

Mortgage Protection Policy A mortgage protection policy is a pure life insurance policy with a decreasing sum assured designed to protect the remaining outstanding capital of a repayment mortgage In other words, it is decreasing term insurance.

Mortgage Offer A document issued by a lender confirming how much they will lend including the terms and conditions for the mortgage.

Mortgage Subsidy Payment made by some employers to employees to help cover the cost of mortgage repayments.

Mortgage Term The length of time over which you agree to pay back your mortgage - usually 25 years, but it can be longer or shorter.

Mortgage Types The type of mortgage may be fixed, variable, capped, discount, tracker or stepped for example.

Mortgage Valuation A survey to assess the value of a property. Usually conducted by a professional surveyor, this is the cheapest and simplest type of property survey and is usually the minimum survey required by a lender.

Mortgagee The lender in a mortgage.

Mortgagor The borrower in a mortgage.

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Negative Equity This is when the amount you owe on your mortgage is greater than the value of your property. It particularly becomes a problem if you want to move house.

Net Monthly Payment The monthly mortgage payment after MIRAS has been deducted but before the addition of any other fees.

Net Profit Relating to a self-employed person, net profit is income after running expenses and taxes have been deducted.

New Build A newly built property.

No/Low Fee Mortgage A mortgage in which the usual fees - arrangement charges, booking fees and valuation fees - are either reimbursed to the borrower or paid by the lender.

Non Capital Raising Term used to describe a remortgage, which is exactly the same size as the mortgage it replaces.

Non Income Verification Situation in which a mortgage is taken out without the need for the borrower to prove income.

Non Contributory Pension A pension scheme normally funded by an employer and into which an employee does not have to pay.

Non Status Mortgage A mortgage that is offered without the need for the borrower to prove their income.

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Occupational Pension A pension scheme run by trustees which may be either fully or partially funded by an employer.

Ombudsman The independent body that has responsibility for investigating complaints about member institutions. In relation to mortgages, this will either be the Banking Ombudsman, the Building Societies Ombudsman or the Financial Ombudsman Service.

Open Market Value See Fair Market Value.

Other Income Income that is in addition to basic salary.

Outgoings See Existing Liabilities.

Outstanding The amount of money remaining to be paid.

Overpayments When you're allowed to pay more than your normal monthly payment, so you can pay off your mortgage earlier if you want and save on interest charges

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Payment Holiday You can stop making mortgage payments altogether for a limited period agreed with the lender

Payment Method The method by which an interest-only mortgage is to be repaid at the end of its term. Typically this will be either an endowment, an ISA or some other investment product.

Part Mortgages Term used to refer to mortgages that combine different mortgage types. For instance, a combination of a part capital and interest mortgage with an ISA mortgage.

Pension Mortgage An interest-only mortgage where you use a personal pension plan to not only provide for your retirement, but also to repay your mortgage on maturity.

PEP (Personal Equity Plan) A tax-free savings plan that has since been replaced with the ISA.

Permanent Health Insurance (PHI) An insurance policy that pays a monthly income if the policyholder becomes ill and cannot work.

Personal Pension Plan A pension plan that allows individuals not covered by a company pension plan to save for a pension.

Portable In relation to a mortgage, this refers to a mortgage that can be transferred between properties when the policyholder moves home.

Previous Lender's Reference A document from a previous lender that confirms a person's previous repayment record.

Premium Amount you pay on a regular basis, usually for an insurance policy.

Principal The amount of debt outstanding (excluding interest). The face value of a note or mortgage.

Principal and Interest Mortgage See Repayment Mortgage.

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Quotations A document outlining the monthly cost of a mortgage and of any other expenses due under the mortgage.

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Rate The annual rate, expressed as a percentage, of interest on a loan.

Rate Cap A limit (cap) on the amount by which the interest rate payable on a mortgage can increase.

Redemption The name given to the full payment of a mortgage at the end of its term.

Redemption Amount The cost of repaying a mortgage.

Redemption Charge A charge levied by the lender when the borrower pays off a mortgage.

Refinancing The paying off of one mortgage with the proceeds from a new mortgage, using the original property as security.

Regional Lender Lenders that restrict the geographical area in which they will lend.

Registered Title The right of ownership (or title) of a property that has been registered at the Land Registry.

Remortgaging When you arrange a new mortgage on your home, with a different lender and use the new mortgage to pay off the old one.

Repayment Fees/Redemption Charge With some mortgages you have to pay a repayment fee if certain things happen. For example, if you pay off some or your entire mortgage or you transfer to a different mortgage product.

Repayment Method The method by which a borrower repays their mortgage, for instance interest-only or interest and capital.|

Repayment Mortgage Your monthly payments gradually pay off your mortgage as well as the interest. See capital and interest mortgage.

Repayment Period The term or number of years, over which the borrower must repay the mortgage.

Repossession The legal procedure by which a defaulting borrower is deprived of their interest in the mortgaged property, typically involving the forced sale of the property at a public auction.

Repo Rate See the Bank of England base rate.

Reservation Fee This is a "front end" charge levied by several home lenders. The idea is you're asked to pay the fee (typically between £100 and £300) to secure the funds you're intending to borrow. It's sometimes described as an Administration Fee or a booking fee.

Restrictive covenant A restrictive covenant is an obligation which may be imposed on the owner of freehold property in the deeds to that property.
Restrictive covenants are also likely to be included if your property is leasehold. Such clauses will prevent certain actions such as running a business or building an extension. You may even be restrained from erecting a TV aerial! The person doing your conveyance, usually a solicitor will inform you of any restrictions before you exchange contracts and complete your purchase.

Retention The ability of a lender to hold back (retain) part of a mortgage until certain conditions are met.

Right to Buy Many local authorities offer tenants the right to buy the public housing they occupy, usually at a discount and usually the scheme will depend on the length of the existing tenancy.

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Sealing Fee A fee charged by the lender for sealing your deeds.

Second Charge The subsequent charge to the First Charge. See First Charge

Second Charge Mortgage Also known as a secured mortgage or secured personal loan. Essentially a loan that is secured on your property which ranks after the first charge mortgage.

Self Build A mortgage that is taken out on a property still under construction. Typically the lender will only pay out the loan in stages, corresponding to the completion of various stages in the construction.

Self Certification A mortgage whereby the borrower provides confirmation themselves of their income, rather than from an employer or company accounts. Typically the lender will charge higher rates of interest or require a larger deposit.

Self Employed A person who operates as a sole trader or in a partnership, such as small retailers or professionals such as accountants or dentists.

Shared Equity A scheme whereby a person purchases part of a property and the other part is held by a developer.

Shared Ownership A scheme similar to shared equity, but in which the second part of the property is owned by a housing association.

Sitting Tenant A person currently renting and occupying a property and who is legally protected against being removed.

Sole Occupancy A property that is occupied (lived in) by only the mortgage applicant(s) and their direct family.

Special Conditions Conditions attached to your mortgage offer that is specific to your application.

Stamp Duty Government tax you have to pay on the purchase price of a property worth £120,000 or more.

Standard Construction A building that has been constructed using conventional techniques and materials, for instance bricks and stone with a tiled or slate roof.

Standard Variable Rates The 'standard' interest rate set by lender and which is subject to rise or fall (vary) at the discretion of the lender. The standard variable rate is the one that applies at the end of any fixed, capped or discounted period.

Start-up Business Any business that does not have accounts dating back three years.

Structural Survey A specialist report from a structural engineer on the condition of a property.

Studio Flat A property that consists of one main room, plus usually a separate bathroom and sometimes a kitchen.

Sum Assured The sum insured is the maximum amount payable under an insurance policy. With reference to life assurance policies, this means the amount payable upon death. For a general insurance policy it is the maximum amount that can be paid out in the event of a claim.

Surrender The conversion into cash of money held in an investment vehicle.

Survey Fee The fee payable to a surveyor for surveying a property.

Surveyor A professional person qualified to estimate the value of land and property.

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Tariff A document detailing the costs and charges for a particular service or services.

Term The period of time between the start and finish of the mortgage loan.

Term Assurance A life insurance policy that provides a lump sum in the event of death to the policyholder during a specified period

Timber Framed A property whose major structural components are constructed from wood, rather than brick, stone or concrete. Typically a lender will charge more for a mortgage on a timber-framed property.

Title The document that confirms the right of possession   to an area of land.

Title Insurance An insurance policy against any loss resulting from defects of title to a specifically described parcel of property.

Title Search An investigation, carried out by a conveyancer or solicitor, into the history of ownership of a property. The search will check for liens, unpaid claims, restrictions or any other problems that may affect ownership.

Tracker A type of mortgage whereby any changes in the rate of interest charged, follow ('track') another specified interest rate. Typically a tracker mortgage will track the Bank of England Base Rate.

Tracker Rate Tracker rates vary in line with changes to the Bank of England base rate. During the tracker rate period, any changes to the Bank of England Base Rate are passed on to you in full.

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Valuation Arranged by your lender to find out if the property is worth the amount you've agreed to pay and therefore suitable to lend a mortgage on.

Valuation Fee A fee charged to cover the cost of a valuation, typically paid by the borrower.

Value The price of a property under normal conditions, i.e. when the buyer is not forced to buy and the seller not forced to sell.

Variable Rate A mortgage in which the rate of interest charged is altered at the discretion of the lender, typically but not necessarily in relation to changes in the Bank of England base rate.

Variable Base Rate The variable base rate is the basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up and down.

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With Profits A policy that is designed to offer a smoother return than other forms of stock market investments. Bonuses are declared at the end of the year and are then guaranteed.