Loans, Finance, Mortgages, Financial Glossary

Advance :: The total amount borrowed less any deposit paid.
Annual Percentage Rate (APR) :: The total interest amount charged on loans, H.P and mortgages.
Arrangement Fee :: One-off fee paid to a mortgage lender for the arrangement of a mortgage. It is an administration fee.
Accident, Sickness, Unemployment (ASU) cover :: Insurance cover taken out with a mortgage lender to cover mortgage repayments in the event of accident, sickness or unemployment. Some lenders insist on this type of cover before granting a mortgage, but generally this will depend on how much deposit is being paid by the borrower.
Annuity :: Product Offered by life insurance companies. In exchange for a cash lump sum or pension fund that you have accumulated, it then makes regular payments to you for the rest of your life.
Bridging Loan :: Loan/ Second Mortage taken by Home Owners to purchase an additional property.
Buildings Insurance :: Insurance cover to pay for the costs of rebuilding or making structural repairs to your property. Cost often calculated and included in monthly mortgage repayment. This cover is insisted upon by mortgage lenders.
Buy to let :: Mortgage product offered for purchase of a property that will be rented to tenants. These types of mortgage have a lower Loan to Value or (L.T.V) than simple home purchase mortgages, expect to obtain 70%-85% Loan to Value depending on the mortgage lender
Capital & Interest :: Known as a repayment mortgage. Borrowers payments are made up of the monthly mortgage interest plus reducing the total amount of capital borrowed.
Capped rate mortgage :: A mortgage where the interest rate can change but never go ABOVE the maximum capped rate quoted.
Cashback :: A lump sum paid to borrowers for agreeing to take a loan or mortgage. Offer often used by lenders as an incentive to borrowers to switch mortgage providers.
CCJ :: Abbreviation of County Court Judgment, A court order taken out against a borrower who has defaulted on Hire Purchase, credit card, loan or mortgage payments.
Completion :: The date set when the sale of a property has finalised/ completed and ownership of the house is transferred to the purchaser. Also the date that monthly mortgage repayments would be calculated to start from.
Contents Insurance :: Insurance cover for replacement values of household and other possessions in the event of theft or damage.
Contract :: The name given to the legal agreement between owners and the purchasers of a property.
Conveyancing :: Name given to legal processing of sale of a property. Includes Land Registery searches etc etc.
Credit File :: See credit report
Credit Reference Agencies :: Companies who hold credit card, store card, loan payments, mortgage, & hire purchse repayment records of borrowers. Lenders use these companies to help assess the amounts of credit they will offer.
Credit Report :: This is the information that lenders rely upon to assess your credit rating / financial history.
Credit Score :: The assessment made by a lending company to establish the amount of risk in lending to a customer.
Credit Search :: An assesment requested by a lender, then carried out by a credit reference agency to check credit records of applicants. The Records show a clients repayment history of borrowings on credit cards, store cards, loans, hire purchase and mortgage repayments
Critical Illness :: Insurance cover that will payout should a customer be diagnosed with a specific illness. Cover varies depending on the provider.
Daily Interest :: Interest rates calculated on a daily basis.
Debt Consolidation Loan :: A loan to consolidate a clients debt.
Deposit :: The down payment used to purchase a property at the start of the mortgage.
Depreciation :: The decreasing value of an asset e.g: house ,car, motorcycle etc.
Disbursements :: Legal term for solicitors expenses.
Discounted Rate :: A reduced mortgage interest rate that lasts for a fixed period of time.
Early Redemption Fee :: A charge made by a lender if a loan is repaid or moved to another lender before the agreed date. Not applicable to all loans.
Endowment Mortgage :: A savings investment policy to pay off the remaining debt at the end of the mortgage term.
Endowment Policy :: A life assurance savings scheme designed to pay out a lump sum when the policy matures.
Equity :: The value of a property minus any money owed on it.
Equity Release :: A loan to free some of the equity that has built up in a property. Loan secured on the property.
Exchange of Contracts :: A legally binding agreement signed by home buyers and sellers agreeing the terms of a property sale, includes the price of the property, plus agreed fixtures and fittings included, and the completion date.
First time buyer :: A borrowers first property purchase.
Fixed Rate :: Interest rate applied to a loan or mortgage that stays at the same level for an agreed length of time.
Flat Rate:: The interest rate charged and/or the monthly payment fixed throughout the term of the loan.
Flexible Mortgage :: Allows a borrower to both under pay or over pay a mortgage without incurring charges, as agreed in the terms.
Freehold :: Land owned by a homeowner. Most houses are sold FREEHOLD, flats/ apartments are usually leasehold.
Gross Interest :: Interest on savings before income tax deductions.
Ground Rent :: Annual payment made to freehold owner by the leaseholder of a property. Normally applicable to flats/ apartments.
Health Insurance :: Insurance cover for financial protection in the event of accident or sickness.
Homebuyers report :: A professional survey carried out to check the structure of the property, more thorough than a valuation, but less detailed than a full structural survey.
HP:: Hire Purchase, Paying for goods where the buyer makes FIXED cost repayments over an agreed period of time, e.g 24, 36, 48 months. Often used for car purchase, furniture, electrical goods.
IFA :: Independent Financial Adviser, A qualified consultant who gives INDEPENDENT financial advice on financial products, e.g pensions and investments.
Income Multipliers :: Calculation used by mortgage lenders to work out the maximum amount they will lend to borrowers based on income.
Income Protection Insurance :: Insurance policy covering Accident, sickness and unemployment.
Income Tax :: Tax payable to H.M Treasury on income within the financial year. Calculated from April-April.
Inflation :: The percentage increase or decrease in prices each year.
Interest Only Mortgage :: Mortgage that repayments cover interest accrued on the loan ONLY. The balance of the mortgage remains fixed until the end of the term when repayment is due in full. Repayment of the loan is then made using funds built up through an endowment policy or other investments taken at the start of the mortgage.
Investment trust :: Investment made by a listed company into another company, where shares are sold on investors.
IPT :: Tax payable on all general insurance in the UK. (Insurance Premium Tax)
ISA :: Savings account with tax benefits. Savings can be made through cash deposits, stocks, shares or insurance. (Individual Savings Account)
ISA Mortgage :: Interest only mortgage linked to ISA savings fund, designed to repay the mortgage at the end of the term.
Land Registration :: A record held at land registery showing the identity of the registered owner, and any legal chargeds attached to it. e.g outstanding mortgage or loan.
Level Term Assurance :: Life assurance that pays out a cash lump sum if the policy holder dies during the term of cover.
Life Insurance :: Insurance where policyholders next of kin receive a cash lump sum if he or she dies.
Loyalty Bonus :: Special offer schemes designed for existing mortgage customers, offers benefits such as reduced interest rates, low fees, etc.
Managed Fund :: Type of scheme where a number of investors jointly pool their money into one fund which is then invested by an experienced fund manager.
Mortgage :: Loan secured on the borroweres property to purchase homes,land or commercial premises.
Mortgage rate :: The interest rate offered by mortgage lenders. Usually reflects rises or cuts to the Bank of England base rate.
Mortgagee :: The company that lends the money on a mortgage.
Mortgagor :: The borrower taking out the mortgage.
National Insurance :: (N.I) Tax levied on salaries in the UK which is used to finance state benefits and pensions.
Negative Equity :: where the value of a property is worth less than the money owed on it.
PAYE :: Pay As You Earn, Name given to scheme where income tax is automatically deducted from salaries by employers on behalf of the Inland Revenue.
PEP :: Personal Equity Plan, Tax free method of acquiring unit trusts or shares.
Personal Loan :: Loan taken by individuals where interest rates and repayment costs are fixed. Personal Loans are either secured against property (Secured Loan) or Unsecured, (Not Secured On Property). Secured loans are therfore only available to property owners. Unsecured Loans are usually for smaller amounts of less than £20,000.
Remortgage :: New mortgage taken out by a property owner without the mortgagor moving home.
Repayment Mortgage :: Borrowers monthly payments repay both outstanding capital on the mortgage and any interest accumulated.
Savings Bond :: Savings account where a high rate of interest is payable, however the clients money is held in the account for an agreed period of time.
Searches :: Checks made with local authorities that are carried out during the conveyancing of a property. Checks include proposals for planning, boundaries or any other matter that may affect the property value or its sale in the future.
Secured Loan :
Settlement :: Scottish term for the completion of a property.
Stamp duty :: Tax payable by the purchaser of a property, calculated as a percentage of the sale price.
Term :: The length of time over which a loan or mortgage is to be repaid.
Title Deeds :: Documentation proving ownership of a leasehold or freehold property.
Transfer Deeds :: Document that transfers ownership of a property.
Unit Trust :: Stock market linked investment often used as capital to repay an interest only mortgage.
Unsecured Loan :: Loan where no security is needed to guarantee repayment.
Valuation :: Check carried out by a professional surveyor to ensure a property is worth its asking price and is appropriate for a mortgage.
Variable Rate :: The interest rate payable against a loan or mortgage can go up or down.
VAT :: Value Added Tax, Tax that is levied on most purchases.
Vendor :: The seller of a property.