Mortgage Glossary
Please browse through our glossary to find a short description of each entry.
A
Advice
A recommendation for a client on the most suitable mortgage. The adviser must be regulated by the FSA, or who is an appointed representative of a directly authorised firm.
Adverse Credit
The term for a borrower or application that has problems with credit. Typical examples being; late payments, bankruptcy or County Court Judgment (CCJ).
Affordability
How lenders calculate income in order to base a clients’ ability to afford to repay a mortgage.
Agreement in Principle
A lender agrees to a mortgage based on a client’s circumstance, but subject to verification of references and valuation. A credit score is usually carried out at this stage.
Annual Statement
A statement from your mortgage lender detailing monies paid, current interest rate charged and how much is still owed.
Applicant
The person or persons applying for the mortgage.
Application
The process of applying for a mortgage.
Appointed Representative
A firm which has authorisation to deal in regulated activities through a directly authorised firm.
Approval in principle
A certificate given by some lenders that shows the amount they may lend you, this is not however guaranteed as no checks are carried out.
APR
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs.
Arrangement Fee
The fee charged by the lender for arranging the mortgage. This can be paid either on application or completion, and may be added to the loan amount.
Arrears
The number of mortgage payments a client has missed.
Authorised firm
A firm that has direct authorisation from the FSA to carry out regulated activities.
A recommendation for a client on the most suitable mortgage. The adviser must be regulated by the FSA, or who is an appointed representative of a directly authorised firm.
Adverse Credit
The term for a borrower or application that has problems with credit. Typical examples being; late payments, bankruptcy or County Court Judgment (CCJ).
Affordability
How lenders calculate income in order to base a clients’ ability to afford to repay a mortgage.
Agreement in Principle
A lender agrees to a mortgage based on a client’s circumstance, but subject to verification of references and valuation. A credit score is usually carried out at this stage.
Annual Statement
A statement from your mortgage lender detailing monies paid, current interest rate charged and how much is still owed.
Applicant
The person or persons applying for the mortgage.
Application
The process of applying for a mortgage.
Appointed Representative
A firm which has authorisation to deal in regulated activities through a directly authorised firm.
Approval in principle
A certificate given by some lenders that shows the amount they may lend you, this is not however guaranteed as no checks are carried out.
APR
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs.
Arrangement Fee
The fee charged by the lender for arranging the mortgage. This can be paid either on application or completion, and may be added to the loan amount.
Arrears
The number of mortgage payments a client has missed.
Authorised firm
A firm that has direct authorisation from the FSA to carry out regulated activities.
B
Bank of England Base Rate
The Interest Rate set by the Bank of England.
Broker Fee
The fee charged by a mortgage broker for locating and processing the most appropriate mortgage. This can usually be paid up front or on completion.
We do not charge a Broker Fee
Buy-to-let mortgage
A mortgage designed to buy a property which will be let to tenants.
The Interest Rate set by the Bank of England.
Broker Fee
The fee charged by a mortgage broker for locating and processing the most appropriate mortgage. This can usually be paid up front or on completion.
We do not charge a Broker Fee
Buy-to-let mortgage
A mortgage designed to buy a property which will be let to tenants.
C
Capped Mortgage
A mortgage that has a maximum limit on the interest rate charged during a designated period.
Cashback Mortgage
A mortgage based on a cash back scheme paid on completion (often a percentage of the loan amount borrowed).
Collared Mortgage
A mortgage with a set minimum and maximum interest rate over a designated period.
Commission
A payment received by a mortgage broker from the lender for introducing business to them, paid after completion of the mortgage.
Completion
The date the clients’ solicitor transfers money from their lender to the vendors solicitor or previous mortgage lender.
Conveyancing
Typically carried out by a licensed ‘conveyancer’ such as a solicitor. This is the process of transferring the property between a buyer and seller.
Conveyance Fee
The fee paid to a solicitor for transferring property ownership.
Credit
An agreement to repay a specified amount by a set date between two parties.
Credit Check
A check is made with credit reference agencies on the credit history of a client. This is usually commenced after an affordability fact find.
Credit History
A history of a clients debts held by credit reference agencies.
Credit Rating
See 'Credit Scoring'
Credit Reference Agency
A company or organisation that stores financial records dealing with payment history. Credit reference agencies hold your credit file.
Credit Report
A report prepared by a Credit Reference Agency which details the credit history of an individual - the credit report will be analysed by a lender to assess the application of an individual.
Credit Scoring
Where a lender allocates a 'score' based on the information held between a clients credit file and their credit application.
A mortgage that has a maximum limit on the interest rate charged during a designated period.
Cashback Mortgage
A mortgage based on a cash back scheme paid on completion (often a percentage of the loan amount borrowed).
Collared Mortgage
A mortgage with a set minimum and maximum interest rate over a designated period.
Commission
A payment received by a mortgage broker from the lender for introducing business to them, paid after completion of the mortgage.
Completion
The date the clients’ solicitor transfers money from their lender to the vendors solicitor or previous mortgage lender.
Conveyancing
Typically carried out by a licensed ‘conveyancer’ such as a solicitor. This is the process of transferring the property between a buyer and seller.
Conveyance Fee
The fee paid to a solicitor for transferring property ownership.
Credit
An agreement to repay a specified amount by a set date between two parties.
Credit Check
A check is made with credit reference agencies on the credit history of a client. This is usually commenced after an affordability fact find.
Credit History
A history of a clients debts held by credit reference agencies.
Credit Rating
See 'Credit Scoring'
Credit Reference Agency
A company or organisation that stores financial records dealing with payment history. Credit reference agencies hold your credit file.
Credit Report
A report prepared by a Credit Reference Agency which details the credit history of an individual - the credit report will be analysed by a lender to assess the application of an individual.
Credit Scoring
Where a lender allocates a 'score' based on the information held between a clients credit file and their credit application.
D
Daily Interest Mortgage
The method by which the interest on a mortgage is calculated daily.
Debt
The amount owed by one person or party.
Debt Consolidation
Replacing a number of different loans with a single loan.
Default
Failure to keep up with repayments on a credit agreement.
Deposit
The amount of money a borrower pays towards the property purchase.
Discharge Fee
The fee charged by lenders at the end of a designated mortgage term to cover the administration costs of transferring the property ownership documents, also known as a deeds release fee
Discounted mortgage
A mortgage product that has a discounted variable rate of interest for a designated period.
The method by which the interest on a mortgage is calculated daily.
Debt
The amount owed by one person or party.
Debt Consolidation
Replacing a number of different loans with a single loan.
Default
Failure to keep up with repayments on a credit agreement.
Deposit
The amount of money a borrower pays towards the property purchase.
Discharge Fee
The fee charged by lenders at the end of a designated mortgage term to cover the administration costs of transferring the property ownership documents, also known as a deeds release fee
Discounted mortgage
A mortgage product that has a discounted variable rate of interest for a designated period.
E
Early Repayment Charge (ERC’s)
The charge you pay if a client decides to leave a mortgage deal within its specified period.
Equity
The assets left in a property after the mortgage has been deducted.
Exchange of Contracts
Where the buyer and the seller legally exchange contracts and terms of sale are legally binding for both parties.
The charge you pay if a client decides to leave a mortgage deal within its specified period.
Equity
The assets left in a property after the mortgage has been deducted.
Exchange of Contracts
Where the buyer and the seller legally exchange contracts and terms of sale are legally binding for both parties.
F
Financial Ombudsman Service - FOS
An organisation established by law to help settle individual disputes between consumers and financial firms.
Financial Services Authority - FSA
The financial services regulator in the UK.
First Charge
The first (or main) mortgage held on a property.
Fixed Mortgage
An interest rate fixed for a specified period of time.
Freehold (England & Wales only)
Where the owner owns both the property and the land it sits on.
An organisation established by law to help settle individual disputes between consumers and financial firms.
Financial Services Authority - FSA
The financial services regulator in the UK.
First Charge
The first (or main) mortgage held on a property.
Fixed Mortgage
An interest rate fixed for a specified period of time.
Freehold (England & Wales only)
Where the owner owns both the property and the land it sits on.
G
Guarantor
A person, other than the borrower, who guarantees to meet the mortgage payments in the event the borrower defaults.
A person, other than the borrower, who guarantees to meet the mortgage payments in the event the borrower defaults.
H
Higher Lending Charge - HLC
A fee that maybe charged by the lender when the loan to value (LTV) ratio is above a certain limit
Homeowner Loan
See 'Secured Loan'
Home Buyers Report
A property survey that is more comprehensive than a mortgage valuation, but less extensive than a full structural survey.
Home Information Pack (HIP)
Designed to speed up the house buying and selling process. The HIPS report is required on all UK properties. It includes information such as a local authority search, drainage search and an energy performance certificate.
A fee that maybe charged by the lender when the loan to value (LTV) ratio is above a certain limit
Homeowner Loan
See 'Secured Loan'
Home Buyers Report
A property survey that is more comprehensive than a mortgage valuation, but less extensive than a full structural survey.
Home Information Pack (HIP)
Designed to speed up the house buying and selling process. The HIPS report is required on all UK properties. It includes information such as a local authority search, drainage search and an energy performance certificate.
I
Income multiples
Client’s earnings are multiplied to determine how much they can borrow, as set by the lender.
Initial Disclosure Document
A document giving information about the scope and nature of the services offered by a regulated firm.
Interest
The charge made by lenders when you borrow their money.
Interest Rate
The figure that determines how much interest is charged.
Interest-only mortgage
The monthly mortgage payment consists of interest only, therefore the loan amount does not reduce.
Client’s earnings are multiplied to determine how much they can borrow, as set by the lender.
Initial Disclosure Document
A document giving information about the scope and nature of the services offered by a regulated firm.
Interest
The charge made by lenders when you borrow their money.
Interest Rate
The figure that determines how much interest is charged.
Interest-only mortgage
The monthly mortgage payment consists of interest only, therefore the loan amount does not reduce.
K
Key Facts Illustration
A very important document, the KFI summarises the criteria of the mortgage. It is set out in a standard way which allows a client to check the costs and benefits of the mortgage.
A very important document, the KFI summarises the criteria of the mortgage. It is set out in a standard way which allows a client to check the costs and benefits of the mortgage.
L
Leasehold (England & Wales only)
A type of ownership whereby a person owns a property but not the land it sits on - the land will typically be owned by the Freeholder.
Loan-to-value
LTV, the percentage of the mortgage compared to the value of the property.
A type of ownership whereby a person owns a property but not the land it sits on - the land will typically be owned by the Freeholder.
Loan-to-value
LTV, the percentage of the mortgage compared to the value of the property.
M
Mortgage
A loan which is secured against your property.
A loan which is secured against your property.
N
Negative Equity
Where the property value is less than the loans secured against it.
Where the property value is less than the loans secured against it.
R
Redemption Charge
See 'Early Repayment Charge'
Remortgage
Moving a mortgage from one lender to another, usually when an existing deal comes to an end.
Repayment mortgage
The monthly mortgage payment consists of capital and interest. At the end of the mortgage term the mortgage will be fully repaid if mortgage repayments are kept up to date.
See 'Early Repayment Charge'
Remortgage
Moving a mortgage from one lender to another, usually when an existing deal comes to an end.
Repayment mortgage
The monthly mortgage payment consists of capital and interest. At the end of the mortgage term the mortgage will be fully repaid if mortgage repayments are kept up to date.
S
Stamp duty
A tax which home purchasers must pay on properties valued above a government set figure.
Standard Variable Rate
A rate of interest decided by the lender with no fee’s or fixed terms.
Secured Loan
A loan that is secured secured against a property- also called a 'second charge' or 'second mortgage'.
Survey
A report on the value and condition of a property.
Structural Survey
The most comprehensive survey type available on the value and condition of a property.
A tax which home purchasers must pay on properties valued above a government set figure.
Standard Variable Rate
A rate of interest decided by the lender with no fee’s or fixed terms.
Secured Loan
A loan that is secured secured against a property- also called a 'second charge' or 'second mortgage'.
Survey
A report on the value and condition of a property.
Structural Survey
The most comprehensive survey type available on the value and condition of a property.
T
Term
A specified period of time a mortgage must be repaid.
Tracker mortgage
A mortgage with an interest rate set at a specified percentage above the Bank of England base rate.
A specified period of time a mortgage must be repaid.
Tracker mortgage
A mortgage with an interest rate set at a specified percentage above the Bank of England base rate.
U
Unencumbered
A property that has no mortgages or loans secured against it.
V
Valuation
Carried out by the lender for mortgage purposes to ascertain the property is suitable security for the mortgage.
Valuation Fee
A fee charged by the lender to cover the cost of the valuation.