A

ADVANCE

The amount you borrow from the lender

ANNUAL PERCENTAGE RATE (APR)

The Annual Percentage Rate (APR) of charge takes into account not just the interest on the loan, but also other charges you to pay. For example, any arrangement fee. You can use this to compare different loan offers from different lenders as they all have the APR in the same way.

APPLIED or NOMINAL INTEREST RATE

The rate is used to calculate the interest due.

ARREARS

Mortgage payments that have not been paid as requested and have become overdue.

B

BALANCE

the amount you owe, after taking payments(credits) and any debts into the account.

BANK OF ENGLAND BASE RATE

This is also known as the base rate and is a major factor influencing interest rates charged by the lenders.

BUILDINGS INSURANCE

Protects the structure of your home from events such as fire, vandalism, storm or flood. It is an essential part of your mortgage agreement to ensure that you have a minimum level of buildings insurance. Once you have exchanged contracts, you are responsible for the property's building insurance.

C

CLOSING ADMINISTRATION CHARGE

A charge is made by the lender to cover administration costs when a mortgage is repaid.

COLLATERAL/SECURITY

These are the rights you give to your lender over the things you own, allowing the lender to sell the property if you do not keep up with your obligations under the agreement. For a mortgage, this is the property you are buying. The bank has a right to sell this property if you do not keep to your obligations under the agreement.

COMBINED INSURANCE

Means combining buildings and contents insurance into a single policy. This makes it simpler to manage, with one direct debit and only one insurer to deal with if you need to make a claim.

COMPLETION

The final legal transfer of ownership of the property - when the property becomes yours.

CONVEYANCER

Solicitor or conveyancer who deals with the legal aspects of buying or selling land or property.

CONVEYANCING

The legal work involved in the sale and purchase of land or property.

D

DAILY INTEREST

Interest is calculated on the balance outstanding at the end of each day. So, when you make payment. Interest is calculated on the new balance straightaway.

DEFECTIVE TITLE POLICY

An insurance policy is taken where a defect in the title to the property has been discovered. where a defect has been discovered, lenders will insist on the policy to protect our security.

DEPOSIT

Two deposits may be payable by the buyer;

1. A reservation charge. The buyer pays this as a sign of commitment when they initially agree to buy the property.

2. The deposit. A percentage of the price of the property, paid when contracts are exchanged.

E

EARLY REPAYMENT CHARGE (ERC)

A charge is payable on certain types of loans if it is repaid within a certain period E.G. during a fixed-term rate period or while a discount applies.

EQUITY

The difference between the value of the property and the amount of any loans secured against it.

EXCHANGE OR CONTRACTS

In England and Wales (not Scotland), the point when both buyer and seller are legally bound to the transaction and at which point the buyer should take out buildings insurance on the property.

F

FINAL REMINDER

A letter requesting payment and sent to a customer who is in arrears. Before legal proceedings start.

FREEHOLD

Outright ownership of the property and the land on which it stands.

FURTHER ADVANCE

An additional loan by the lender to the borrower, which may be for any purpose and secured by the existing mortgage deed. Also known as additional borrowing.

G

GAZUMPING

When the seller, having already accepted an offer but before contracts are exchanged accepts another, higher offer from someone else.

GROUND RENT

An annual charge is payable by the leaseholders to the freeholder.

GUARANTOUR

A person who promises they will pay the borrowers debt, usually if the borrower fails to.

H

HOMEBUYER'S SURVEY

A surveyors report on a property which is less than a building survey ad is paid for by the purchaser.

I

INITIAL INTEREST

The amount of interest charged on your loan from the day that the money is sent to your conveyancer to the end of that month.

INTEREST ONLY MORTGAGE

You only repay the interest each month. The original loan amount and any unpaid costs and charges that have been added to the loan will remain outstanding at the end of the mortgage term.

L

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 is paid to the land registry to register ownership of a property.

LEASEHOLD

The right to possession, but not ownership. of a property for an agreed period. Ultimate ownership remains with the freeholder.

LENDER

The bank/building society where you have your mortgage.

LESSEE

The person to whom a lease is granted - the tenant.

LESSOR

The person who grants a lease - The landlord

LIFE COVER

Pays out a lump sum on death. It's often taken out with a mortgage to provide money for the loan to be repaid if the borrower dies during the term. There are two types of life cover; decreasing or level term. decreasing term assurance is designed to protect a repayment mortgage. with decreasing cover, the benefit amount goes down each month in line with the amount outstanding on the mortgage. this type of cover tends to be cheaper than level term assurance. Level term life assurance is ideal for where the mortgage balance remains the same over the mortgage term, for example, if you have an interest-only mortgage.

LOAN TO VALUE (LTV)

The size of a mortgage is a percentage of the lower 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 mains sewer etc.

M

MORTGAGE

Has a specific meaning in law, but has come to mean a loan with the property as security.

MORTGAGEE

The mortgagee is the lender who lends the money in return for the mortgage granted by the borrower, who is the mortgagor.

MORTGAGE TERM

The term over which you agree to repay the loan.

N

NEGATIVE EQUITY

When the value of the property has fallen and is less than the loan secured on it.

R

REMORTGAGE

Repaying one mortgage by taking out another mortgage secured on the same property, possibly to take advantage of a particular mortgage product or better interest rate from a different lender.

REPAYMENT MORTGAGE

You pay the interest and part of the amount borrowed each month, so your mortgage will be paid off completely at the end of the mortgage term.

S

STANDARD VARIABLE MORTGAGE RATE

In most cases, if you have applied for a mortgage, the standard variable rate is the rate you'll automatically switch to at the end of your deal. at that time, it could be higher or lower than the rate you will have been paying and may vary over the remaining term of the mortgage. this rate is guaranteed to be no more than 2% above the base rate.

T

TITLE DEED / TITLE DOCUMENTS

The legal documents provide proof of ownership of a property.

TRANSFER DEED

A form that provides details of the transfer of ownership to be entered on the land registry register.

V

VALUATION

An inspection of the property to ascertain its acceptability to the lender as security against the mortgage loan, for which the borrower may have to pay.

VENDOR

The person(s) you are buying your new home from.