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Content
* Mortgages
* * * Mortgages
* First time buyer mortgages
* Remortgages
* Buy to let mortgages
* Mortgages for freelancers
* Large mortgage loans
* Buying a home
* Short lease mortgage
* Offshore mortgage
* Foreign currency mortgage
* Help to buy
* New build property mortgage
* * Mortgage Calculators
* Monthly mortgage payment calculator
* How much can I borrow?
* Find your mortgage
* Mortgage best buys
* How much could I save by remortgaging?
* Compare development finance rates
* * Specialist Mortgages
* Insurance
* Protecting yourself
* Home insurance
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* Mortgage Glossary
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* Mortgages
* * * Mortgages
* First time buyer mortgages
* Remortgages
* Buy to let mortgages
* Mortgages for freelancers
* Large mortgage loans
* Buying a home
* Short lease mortgage
* Offshore mortgage
* Foreign currency mortgage
* Help to buy
* New build property mortgage
* * Mortgage Calculators
* Monthly mortgage payment calculator
* How much can I borrow?
* Find your mortgage
* Mortgage best buys
* How much could I save by remortgaging?
* Compare development finance rates
* * Specialist Mortgages
* Insurance
* Protecting yourself
* Home insurance
* Knowledge
* Monty’s Mortgage Blog
* House & Home Blog
* Mortgage Guides
* Financial education services
* Podcasts
* Case Studies
* Ask an expert
* Mortgage Glossary
* About us
* What We Do
* Our Team
* Coreco DNA
* Awards
* Testimonials
* Equality, Diversity & Inclusion
* Accessibility
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MORTGAGE GLOSSARY
CUTTING THROUGH THE JARGON TO GIVE YOU BETTER CLARITY.
MORTGAGE GLOSSARY
MORTGAGES CAN SOMETIMES SEEM LIKE A FOREIGN LANGUAGE WITH ALL THE CONFUSING AND
SPECIALISED LINGO. OUR MORTGAGE GLOSSARY WILL HELP YOU FORM A BETTER
UNDERSTANDING OF THE TERMINOLOGY SO YOU KNOW EXACTLY WHAT YOU’RE GETTING INTO.
GLOSSARY OF MORTGAGE TERMS
* A - D
A
Accident, Sickness & Unemployment Insurance (ASU)
These policies are designed to help you pay a percentage of your normal
monthly mortgage payment for a specified period in the event of accident,
sickness or redundancy. However, ASU doesn’t apply if your injuries are
self-inflicted, or if the redundancy is voluntary or as a result of
misconduct.
Actuary
Actuaries are statisticians who calculate, among other things, insurance
premiums, annuity rates, dividends and risks, usually in relation to
pensions, insurance and investments. With mortgages, the actuary will
calculate what you need to pay for life assurance and any other insurance
policies.
Added to Loan
Many costs arise when arranging a mortgage, such as indemnity and
administration fees. In some cases, these can be added to the amount that a
person borrows, in which case they are known as ‘Added to Loan’.
Adjustment Date
This applies to variable rate mortgages, and is the date on which the
interest rate is changed.
Administration Fee
This is a charge levied by the lender to cover the costs of processing your
mortgage application. If you do not complete your application, the fee may
not be refunded. The administration fee is also sometimes known as an
application fee.
Adverse Credit
If a borrower has adverse credit, he or she has had problems with credit in
the past, usually relating to late payment, county court judgments (CCJs) or
bankruptcy.
Adverse Mortgage
This is a type of mortgage available for buyers who have had credit problems
in the past, such as missed payments, arrears, defaults, and CCJs.
If you think this might apply to you, then you should look to talk to a
broker, as many of the lenders who can consider lending to such applicants do
not offer mortgages directly to consumers.
Agreement in Principle/Decision in Principle
An Agreement in Principle (aka Agreement in Principle) is just a document a
lender can produce confirming how much a lender will lend you for a mortgage.
Buyers can then use this to prove to estate agents and sellers how much they
can afford for their property.
Essentially, it is the first part of a mortgage application where the lender
uses all your personal, income, and expenditure details, performs a credit
search and initially decides how much they can lend.
It is usually valid for up to 30 days, as that is when your credit file
updates. Brokers can get these on your behalf with their access to many
lenders. Learn more about agreement in principle/decision in principle in our
guide.
Amortisation
It might sound quite complex, but amortisation is simply the reduction in the
amount you owe on your mortgage over time as you make regular payments.
Annual Percentage Rate of Charge (APRC)
APRCs are a calculation that allow people to compare the cost of borrowing as
they take into account not only the amount of interest you pay but also any
other fees charged by the provider, e.g. arrangement fees for setting up a
loan. Put simply, the lower the APRC the better.
Applicant
The person applying for a mortgage.
Application
The process of applying for a mortgage and supplying personal and financial
details to the mortgage broker and/or lender.
Appraised Value
A surveyor’s estimation of the value of a property.
Appreciation
The increase in a property’s value due to positive market conditions.
Arrangement Fee
These fees can be added to the loan amount or paid separately. Levied by the
mortgage lender, they cover the administration costs of a mortgage although
are usually only applied to loans with special ‘fixed’ or ‘discounted’
interest rates.
Arrears
This is the amount, usually expressed in pounds or months, which your
mortgage payments are behind schedule.
Asset
A very broad term, comprising any form of property owned by a person, such as
shares, cash and land.
Assignment
The situation whereby an asset, or mortgage, is transferred from one owner to
another.
Auction
At an auction, properties are sold to the highest bidders. Find out how to
arrange a mortgage on an auction property.
B
Balance Sheet
A statement showing the assets and liabilities of a company at a particular
time
Bank Rate/Base Rate
The interest rate set by the Bank of England’s Monetary Policy Committee.
This is what tracker and variable rate mortgages will use to work out the
interest rate you pay with your mortgage.
Basic Earned Income
This is your underlying basic salary, and doesn’t take into account tax and
additional sources of income such as bonuses and overtime.
Beneficiary
This is a person entitled to benefit, usually financially, from a trust or a
will.
Booking Fee
A charge levied for the arrangement of a mortgage and which usually
guarantees funds or guarantees a rate for fixed or capped rate mortgages.
Borrowing Back
Available to flexible mortgage holders only, borrowing back allows you to
borrow back any overpayments you have made if, for whatever reason, you need
additional cash flow.
Bridge Loan
This is the money borrowed to finance a new building or property or some
other project until permanent financing can be obtained. Find out more about
bridging finance.
Broker
A broker is a middleman who brings two or more parties together, in the case
of mortgages, the borrower and the mortgage lender.
Broker’s Fee
The fee a broker charges for finding the borrower the most appropriate
mortgage.
Buildings Insurance
Buildings insurance covers loss or damage to the physical structure of your
home, for example, the roof, walls and floors. Contents insurance, which is
often sold alongside buildings insurance, covers loss of, or damage to the
‘material possessions’ within your home.
Buy to Let Mortgage
This is designed for people who buy a property with the sole intention of
‘letting’ it out to tenants for investment purposes. View our buy-to-let
mortgage offering.
C
Calculating Interest Daily
The interest on most flexible mortgages is calculated daily. The advantage of
this is that, when you make payments or overpayments, you will be paying less
interest almost immediately, as the size of the mortgage will have reduced.
This may not sound much initially, but over a number of years it can add up
to a substantial sum.
Cap
A cap is a ceiling on interest rates, usually for a specified period. For
example, if your mortgage is capped at 5%, you will not pay more than that
even if interest rates rise to 6%.
Cap and Collar
A collar is a floor on interest rates, usually for a specified period. For
example, if your mortgage has a 5% collar, you will not pay less than that,
even if rates fall to 4.5%. A cap and collar mortgage is a combination of the
two.
Capital
In mortgage terms, this is the money, or deposit people put into buying a
property. Sometimes, it is referred to as equity.
Capital Improvement
Everybody wants to improve the capital value of their homes. Capital
improvement is any improvement, such as a loft extension or conservatory,
which permanently increases a property’s value.
Chain
The often protracted situation whereby a buyer is waiting on the completion
of the sale of an existing property in order to complete on the purchase of a
new property.
Clear Title
Legal jargon referring to the clear, unequivocal ownership of a property.
Collateral
An asset, such as a car or an expensive stereo/Plasma TV, which a lender may
seize to ensure the repayment of a loan if the borrower fails to repay the
loan under the terms of the original contract.
Commercial Mortgages
These are for individuals or companies buying commercial property – offices,
bars and retail outlets – with a view to gaining from capital appreciation
and rents. Learn more about commercial mortgages.
Commission
The fee levied by a broker for services relating to the arrangement of a
mortgage or insurance, or the purchase of a property.
Commitment Letter
Every prospective borrower wants one of these! This is a letter from a lender
detailing a formal offer and outlining the terms and conditions of the loan.
It is often referred to as a ‘loan commitment’.
Common Areas
Areas where more than one resident shares access, for example, hallways,
parking areas and gardens.
Comparative Search
Usually carried out by an estate agent, a comparative search analyses the
actual sale values of similar properties in the same area as your own. The
aim is to give a good idea of the sale price of a property.
Completion
Everyone wants to get to completion! The completion date is the date that
your solicitor forwards the money from your lender to the vendor’s solicitor.
In short, it’s the date that you become the legal owner of your new property.
Compound Interest
Compound interest is the interest paid on capital and any previously accrued
interest. For example, £1,000 borrowed for 5 years at 5% p.a. would become
£1050 after 1 year, £1,102.50 after 2 years and so on.
Compulsory Insurance
The insurance required by lenders as a prerequisite of issuing a mortgage,
and which generally covers the physical building itself and the material
contents inside. Sometimes called Conditional Insurance.
Contents Insurance
Insurance that covers the material possessions within your home, for example,
electrical goods such as Plasma TVs and stereo systems, furniture, curtains
and carpets. Certain items, such as expensive computers, may need additional
insurance.
Contract
A legal agreement between the buyer and seller of a property.
Conveyancer
A conveyancer is a professional who deals with the legal aspects of buying
or selling property and land.
They can be:
* A specialist conveyancing solicitor who is fully trained in legal services
but specialises in conveyancing.
* A general solicitor that is trained in conveyancing but not as extensively
as the specialist.
* A licensed conveyancer who is an expert in conveyancing but doesn’t have
any additional legal training for issues further down the line so will
need to refer you to a solicitor if these issues do arise. They often work
within a legal firm.
It is generally recommended to employ a solicitor or conveyancer. In fact,
most mortgage lenders will insist on doing so in order to protect their
interests.
Conveyancing
The legal process relating to the transfer of ownership of a property from a
seller to a buyer, and which is usually carried out by a licensed conveyancer
or solicitor. A Conveyancing Fee is usually charged for this service.
County Court Judgement (CCJ)
CCJs are rulings issued by a County Court or higher court and relate to bad
debt. The judgement against the individual is recorded and will show up
during credit checks. They almost certainly count against people when they
apply for a mortgage.
Covenants
The various regulations governing a property, usually outlined in the title
deeds.
Credit
This is when one party (the borrower) receives money or an asset such as
property on condition that they repay the other party (the lender) at some
agreed point in the future.
Credit Check
The process whereby checks are made on a person’s credit history, often as
part of the mortgage application process. These checks are carried out by
dedicated credit reference agencies on behalf prospective lenders, and
usually examine outstanding debts, arrears, credit card repayments and County
Court Judgements.
Credit History
The full history of a person’s paid and unpaid debts. These help lenders
assess the likelihood that prospective borrowers will be able to meet their
mortgage repayments.
Credit Rating
Normally based on a person’s credit history, this is an assessment of whether
or not they will be able to keep up repayments on a loan.
Credit Reference Agency
A company (for example, Equifax and Experian) that accumulates financial
records relating to the payment history of a prospective borrower. Almost all
lenders will use such an agency during a mortgage application.
Credit Report
The report issued by a Credit Reference Agency that details a person’s credit
history. Used by lenders to assess the quality of a mortgage application.
Credit Score
A credit score is the total number of points a lender awards a mortgage
application based on the answers given to all the questions and the data
received when doing a credit search on the applicants.
It should not be confused with the credit score credit reference agency’s
offer and advertise. Lenders do not actually look at scores from credit
reference agencies. They perform their own credit score and the more points
you are awarded in your application, the greater chance of the lender saying
‘yes’.
Credit Scoring
The process whereby a lender assesses the likelihood of mortgage applicants
being able to maintain their mortgage repayments.
Critical Illness Cover (CIC)
CIC pays out a tax-free lump sum to policyholders if, during the term of the
policy, they are diagnosed with one of a number of specified ‘critical’
illnesses or conditions, such as cancer, Parkinson’s Disease, Multiple
Sclerosis or paralysis following a heart attack or stroke.
Current Account Mortgage
Current Account mortgages (often referred to as ‘CAMs’) have many of the
facilities that apply to a standard current account and, when combined with
flexible mortgage, allow payment holidays and over- and under-payments.
D
Deeds
The legal documents that prove ownership of a property. Deeds are usually
held by the lender.
Deposit
This is the money used as a down payment on, for example, a house or some
other purchasable item.
Defaults
This is when a borrower doesn’t pay their monthly payments for long enough so
the lender puts the contract into a defaulted state.
It is not the same as a CCJ, as the lender has not taken the borrower to
court. If there is no attempt to make up those missed payments then the
lender may well go to court to place a CCJ on the borrower’s credit file.
If payments continue to be missed and the arrears increase in size, a lender
may feel they have no option but to apply to the courts to repossess the
property.
Mainstream lenders are extremely unlikely to lend to people with defaults (or
any adverse credit). There are some lenders who understand that some
applicants may have had difficulties in the past six years but are still
prepared to lend.
Disbursements
These are the fees, such as stamp duty and land registry, paid by the buyer’s
solicitor on the buyer’s behalf.
Discount Rate
Usually relating to the initial period of a mortgage, this is when the
interest rate you pay is discounted by a certain percentage from the standard
variable rate for an agreed period.
* E - H
E
Early Redemption Charge/Early Repayment Charge/Early Repayment Penalty
Lenders charge this charge when borrowers pay off their mortgage before the
agreed date, often because they are moving their mortgage to another lender.
These charges almost always apply to fixed and discounted rate mortgages.
Endowment
A popular savings vehicle designed to generate a sum sufficient to pay off an
interest-only mortgage at the end of its term. As a rule, endowments invest
in a mixture of equities, cash, and (Government) bonds.
Equity
Very simply, the amount of value in a property that isn’t covered by a
mortgage. To work it out, simply subtract the amount of the mortgage from the
valuation of the property.
Equity Release
Equity release is a way for homeowners to convert a proportion of the value
of their homes into cash without having to sell up and move out. This could
be a lump sum, a regular extra income or a combination of the two. It’s often
used to carry out home improvements, to fund a holiday or to improve the
quality of a person’s retirement.
Exchange of Contracts
The exchange of contracts is the point at which the buyer signs the contract
for sale and sends it to the seller who also signs it. Both buyer and seller
are then legally bound to complete the transfer. Once the contract has been
signed, the contract becomes legally binding, meaning that if the buyer or
seller pulls out prior to completion, they may have to pay compensation.
Existing Borrower (Product) Transfer/Rate Switch
When you come to the end of your current mortgage product (or deal) you will
be switched on to the lender’s standard variable rate. As that is more
expensive than other products, you can either move your mortgage to a new
lender with a new product (called remortgaging) or stay with your current
lender and take one of the products they offer to existing borrowers only.
This is called a product transfer or rate switch.
F
Fixed Rate Mortgage
The interest rate on a fixed rate mortgage is set at an agreed rate for an
agreed period, often two or five years but sometimes 25 years. It is
especially favoured by people who want to know exactly what they are paying
each month as it is not vulnerable to changes in the base rate. The downside
is that fixed rate mortgages often come with heavy penalties if they are
redeemed early. And if interest rates are lowered, you run the risk of being
locked into a higher rate.
Fixtures
Any item that is deemed to be ‘attached’ to a property and therefore legally
part of that property.
Flexible Mortgage
A mortgage that allows you to vary your monthly repayments and, for a certain
number of months, even take a payment ‘holiday’. Because of the ability to
overpay, people can pay off their mortgage early and therefore reduce the
interest payable. However, as a result of all this flexibility, flexible
mortgages usually charge a higher interest rate.
Freehold
If you own your property’s freehold, you not only own the property itself but
also the land that it is on.
Foreclosure
Following on from mortgages, let’s look at the complete opposite or when it
goes wrong. This is incredibly rare but still useful to know – repossessions
count for 1% of sales (and these statistics come from 2020). There are other
options before this happens.
Foreclosure happens when you cannot make or stop paying the monthly
repayments (aka going into arrears). It is a legal process in which the
lender attempts to recover the balance of the loan by forcing the sale of the
property.
G
Gazumping
Nobody likes to be gazumped. This is when the person selling a property
accepts an initial offer and then accepts a second, higher offer from a
different buyer prior to the exchange of contracts. Tends to happen in strong
housing markets.
Gazundering
The seller’s nightmare. This is the situation where a buyer makes a reduced
offer to a seller just prior to the exchange of contracts.
Ground rent
The fee payable by a leaseholder to the freeholder. Tends to be paid annually
or six monthly.
Guarantor
A Guarantor is the person liable for the repayment of a mortgage if, for
whatever reason, the borrower fails to keep up their mortgage repayments.
Guarantors are usually parents or close family members.
H
Home Buyer’s Report
A property survey, or report half way between a mortgage valuation and a full
survey, and which is intended to satisfy the buyer that the property they are
purchasing is in a good condition. Find out about the other types of property
surveys.
Help to Buy
The Help to Buy Scheme is a government-funded scheme to help first-time
buyers on the property ladder. The original scheme closed in 2019 but the new
Help to Buy Equity Loan is available until 2023. A new scheme is hoped to be
announced to replace it to aid first time buyers but no announcement has been
made (as of February 2022).
* I - L
I
Income Multiples
When calculating how much they will offer as a mortgage, lenders multiply an
applicant’s income by a set figure, which depends on the person’s salary,
circumstances and ability to keep up payments. As a rule, lenders will accept
3 times the gross salary of a sole applicant plus or 2.5 times on a joint
salary.
Income Reference
Lenders often ask employers to confirm the amount mortgage applicants claim
they earn. For self-employed applicants, lenders may ask for confirmation
from an accountant.
Individual Savings Account (ISA) Mortgage
An interest-only mortgage that relies on the performance of a tax-efficient
Individual Savings Account to pay off the loan at the end of the mortgage
term. An ISA can invest in numerous asset classes, including shares,
(Government) bonds and cash.
Interest
Interest is what lenders charge people for borrowing money. Exactly how much
interest is charged depends upon many factors, including the time period of
as loan and the deemed credit risk. However, in a deposit account, for
instance, interest can also be the return upon a capital sum invested.
Interest-Only Mortgage
With interest-only mortgages, borrowers only have to pay off the interest on
the mortgage and not the capital. However, the onus is upon the borrower to
ensure ¬ via a savings vehicle such as an endowment – that sufficient funds
will be in place at the end of the mortgage term to pay off the mortgage in
full.
Intermediary
A ‘middleman’, or ‘broker’ who searches the market for the most appropriate
mortgage for a borrower.
J
Joint Tenancy
A form of property ownership between two people, whereby if one of the owners
dies, their share of the property will be automatically transferred to the
other party.
Joint Mortgage
A joint mortgage is when a mortgage is taken out by two or more people. You
might decide to buy a house with a partner or friends. A parent can also help
their children buy a property by entering a joint mortgage with them.
One thing to note is if you buy with a partner but they pass away, the
ownership of the mortgage reverts to you, the surviving person.
L
Land Registry Fee
The fee paid to the Land Registry to register the ownership of a specific
area of land.
Leasehold
A common type of home ownership whereby you purchase a house or flat for an
agreed number of years but where the actual land it is on remains the
property of the freeholder. When the leasehold period ends, the freeholder
reclaims ownership of the property, although leases can often be extended.
Licensed Conveyancer
A person specializing in the transfer of the legal ownership of a property.
Often used in place of a solicitor.
Life Assurance
Life assurance policies pay out either a lump sum or a series of payments
when a person dies during the life, or ‘term’ of a policy, usually to his/her
dependants. In most instances, these payments – known as the ‘sum assured’ –
are tax-free.
Listed Building
A building of special historic, or architectural interest, which cannot be
altered by an owner without official (usually Local Government) consent.
Local Authority Search
Carried out by the buyer’s solicitor, and carrying a fee, a local authority
search checks, for example, that there are no proposed developments close to
a property that could make it less attractive. The last thing a new homeowner
wants is a motorway being built at the end of their garden just after they
have bought their dream property. The search also highlights the various
planning permissions for the property and whether any enforcement notices
have been served upon it.
LTV (loan to value)
A mortgage term describing the amount of money a bank or building society
will lend you as a percentage of your property’s value. 95% is a common LTV
although in some cases they will lend the full value of the property, or 100%
LTV.
* M - P
M
Mortgage
A loan where the ‘mortgaged’ property acts as a security for the lender until
the loan is repaid in full — often after 25 years.
Mortgagee
The organisation that lends you the money to buy a property. Usually a
building society or bank.
Mortgage Indemnity Guarantee (MIG)
An insurance policy that covers lenders in the event of a property being
repossessed and the mortgagor (see below) not being able to repay any
payments outstanding. Ironically, while these insurance policies protect the
lender, it is the borrower who has pay for them. MIGs are generally asked
when the LTV (loan to value) is over 75%. Fortunately, MIGs are becoming less
common.
Mortgage Payment Protection Insurance (MPPI)
Also known as Accident, sickness and unemployment insurance (ASU), MPPI pays
a percentage of a person’s mortgage payments if they are unable to work
because of illness, accident or enforced redundancy.
Mortgagor
The person who borrows money from a lender (such as a bank or building
society) under a mortgage agreement.
Monthly Repayments
Monthly repayments refer to the amount you pay your lender each month. The
payment covers a percentage of your mortgage plus interest. This monthly
amount is determined by the percentage of the deposit you initially pay.
N
Negative Equity
The unfortunate situation whereby the money a borrower owes on a mortgage is
greater than the value of the property. It really becomes a problem if a
person wants to sell their home.
New for old
A form of property insurance that replaces damaged or lost items in your home
with new items.
Non-Status Mortgage
With a non-status mortgage, the lender may not require income details from
the borrower. This kind of mortgage is often taken out by people who cannot
prove their income, have unusual employment circumstances or a poor credit
history.
O
Offer
The sum of money that a buyer offers to a seller for a property.
Offshore Mortgage
These are usually for people with complex mortgage needs, such as high net
worth foreign nationals and international sports stars looking to purchase a
UK home. Finance is arranged through any number of trusts and companies in
the various offshore jurisdictions — from the Cayman Islands to the Isle of
Man. Check our our offshore mortgage offering.
Offset Mortgage
An offset mortgage is a combination of a normal mortgage and a savings
account that is linked to the mortgage account. At the end of every day, any
balance in the savings account is deducted from the outstanding mortgage
balance before the amount of interest you will be charged is calculated.
This allows you to use savings to lower your mortgage costs each month, which
means instead of earning interest on your savings, you’ll have less interest
charged on your mortgage. Offset mortgages are extremely flexible, very
tax-efficient, and can be used for many reasons.
They are more complicated than a normal mortgage, however, so talking to a
broker is very much advised.
Open Market Value (OMV)
The price of a property when both buyer and seller are willing.
Overpayment
Generally applies to flexible mortgages, which allow overpayments to be made
by the borrower without incurring a penalty. Over the term of a mortgage,
this can result in significant interest savings.
Overseas Mortgage
These are taken out by investors looking to build a portfolio of properties
abroad, or by people who simply want to buy a holiday home, possibly secured
against the equity in their UK property. Can be either sterling or foreign
currency loans.
P
Payment Holiday/Break
Generally applies to flexible mortgages, and is a period during which
borrowers make no mortgage payments (usually for six months). In some cases,
there is a prerequisite that they have already made ‘overpayments’ on their
mortgage.
Permanent Health Insurance (PHI)
Provides a regular tax-free income for policyholders if they are unable to
work due to accident or sickness. It is available to both the employed and
the self-employed.
Portability
A mortgage that can be transferred between properties when a borrower moves
house is said to be ‘portable’.
Principal
The amount of the loan on which lenders calculate interest.
Purchaser
The person who is buying a property.
* Q - T
R
Redemption
The ‘paying off’ of a mortgage when remortgaging, moving house or simply at
the end of the mortgage term.
Redemption Penalties
Lenders levy redemption penalties when borrowers pay off their mortgage
before the end of the agreed redemption period. They are very common with
fixed rate and discounted mortgages.
Remittance Fee
This is charged by lenders for sending mortgage funds to an individual’s
solicitor prior to the purchase of a property.
Remortgage
When you remortgage a property, you pay it off with the money you receive
from a new mortgage, using the very same property as a security. People often
remortgage to secure a more competitive interest rate. Take a look at our
remortgage service or learn more in our why would you want to remortgage
guide.
Repayment Mortgage
Repayment mortgages, often referred to as capital repayment mortgages,
require borrowers to repay on a monthly basis not just the interest on the
loan but also a slice of the capital borrowed. This kind of mortgage is
usually favoured by more conservative homeowners who want to guarantee that,
at the end of the mortgage term, the property will belong to them.
Repossession
The unfortunate situation whereby a borrower can no longer keep up with
his/her mortgage repayments and the property is legally repossessed by the
lender. In order for the lender to then retrieve any outstanding debt, the
property is usually sold at a public auction.
Retention
The holding back by a lender of a mortgage until certain repairs have been
satisfactorily completed.
Right to Buy Scheme
This scheme provides council tenants to right to buy the council houses they
live in. The scheme is now allowing housing association tenants to do the
same.
The council will give you a discount on the purchase price that is not as
much as it used to be but it can still be a significant amount that has
enabled many council tenants to own their home rather than rent.
There are quite a few conditions that have to be met and rules to follow, so
we advise you to talk to the council early on to check what you are eligible
to receive as a discount and what you can and cannot do with the property.
S
Self Invested Personal Pension (SIPP)
A personal pension where the person investing for his/her retirement makes
the investment decisions rather than a pension fund manager. Favoured by
higher net worth, more investment-savvy individuals.
Sealing Fee
A charge levied by lenders when a mortgage is repaid.
Searches
The checks carried out during the conveyancing process before the offer of a
loan. They are made with local authorities and other organisations and reveal
any planning proposals that could adversely affect the value of a property in
the future.
Self-Certified Mortgage
These are generally for the self-employed and people with more complex forms
of income. As a rule, lenders will charge a higher interest rate, or require
a larger deposit to meet the increased level of risk.
Shared Ownership
With shared ownership, you can buy between 25% and 75% of a property and pay
rent on what’s left. Again, these schemes can really help people get on the
housing ladder but not all lenders offer mortgages for them and there are
considerable terms and conditions that come with them.
Make sure you talk to the shared ownership scheme provider to fully
understand what is involved and what your options are in the future.
Short Lease Loan
Favoured by more speculative borrowers, these can be a cost-effective way to
buy properties in some of London’s most desirable locations and generate
spectacular capital growth and rental yields as a result. Changes in the law
mean that individuals or companies – if they have owned a property for at
least two years – can now apply for a lease extension, which will
theoretically increase a property’s value. Check out our short lease mortgage
offering.
Stamp Duty
If you want to move home, it is important that you establish how much Stamp
Duty you need to pay so that you can budget for this before making an offer.
Stamp Duty is a land tax which applies to any property purchase over
£125,000. Under the new system, the amount of Stamp Duty owed will work in a
way much like income tax. On residential properties, Stamp Duty can range
between 0-12% dependent on the purchase price of the property. Learn more in
our stamp duty guide.
Property Price Band Rate of Stamp Duty
£0 – £125,000 0%
£125,001 – £250,000 2%
£250,001 – £925,000 5%
£925,001 – £1.5m 10%
Over £1.5m 12%
Standard Variable Rate (SVR)
The standard variable rate is a type of interest rate on a mortgage that
often moves in line with the Bank of England base rate. However, unlike a
tracker mortgage, changes are ultimately at the lender’s discretion.
Structural Survey
Sometimes referred to as a Building Survey, this is an in-depth structural
analysis of the inside and outside of a property that should reveal any
hidden, or not obvious faults. Carried out by a chartered surveyor who
proceeds to write an extensive report outlining any defects. Structural
surveys tend to be carried out on older properties, those that have been
poorly maintained or where there are subsidence concerns.
T
Term
The time period – usually in years – over which a mortgage is repaid. The
standard mortgage term in the UK is 25 years, but terms of up to 30 or 40
years are becoming more common. The shortest terms are around 5 years.
Term Insurance
The most common form of insurance, this pays out a lump sum if the
policyholder dies at during the term of a policy. The money is usually used
to pay off a mortgage or to provide financial security for the policyholder’s
dependants.
Tie-in Period
The tie-in period refers to the time you cannot leave your agreed mortgage
term unless you pay an early repayment charge. In the past, there were some
mortgage products where the introductory rate ended before the penalty period
had finished. That type of product is really quite rare nowadays though.
Title Deeds
Important documents that prove ownership of the freehold and leasehold of a
property.
Transfer Deed
Once you have signed the transfer deed, ownership of the property in hand is
transferred to you
* U - Z
U
Under Offer
A property is said to be ‘under offer’ when a seller has accepted an offer
from a buyer but the exchange of contracts has not yet been reached.
Unencumbered
The ideal form of home ownership, i.e. where the property is owned outright
and no mortgage is secured against it.
V
Valuation
A check carried out by the lender that finds out how much a property is worth
and whether it is suitable for a mortgage. The valuation fee is usually paid
by the borrower. We can offer you a free property valuation report!
Variable Rate
On a variable rate mortgage, the interest rate charged by the lender goes up
and down according to base rate movements and your mortgage repayments change
accordingly. The variable rate will always be at a slight premium to the Bank
of England base rate.
Vendor
A person selling a property to a buyer.
W
Waiver of Premium
An option within an insurance policy that allows a policyholder who has
become seriously ill or disabled to not pay the premiums while continuing to
be covered.
Y
Yield
For buy to let investors, this is the income generated from a property and
calculated as a percentage of its value.
IMPORTANT INFORMATION
Your home may be repossessed if you do not keep up repayments on a mortgage or
any debt secured upon it.
A fee of up to 1% of the mortgage amount may be charged depending on individual
circumstances.
A typical fee is £495.
GOT A QUESTION?
Please give us a call if you need to know anything about the mortgage terms or
process, we’re here to help.
Arrange a call
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MORTGAGES A BETTER WAY
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build properties
What mortgage are you interested in?
* What mortgage are you interested in?
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Get Started
Mortgage Type? First time buyers Buy-to-let Remortgages Buying a home Commercial
Short lease mortgage Large mortgage loans Offshore mortgage Foreign currency
mortgage Mortgages for freelancers Help to buy New build properties
Mortgage Type?
* Mortgage Type?
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IMPORTANT
Your home may be repossessed if you do not keep up repayments on a mortgage or
any debt secured upon it. A fee of up to 1% of the mortgage amount may be
charged depending on individual circumstances. A typical fee is £495.
ABOUT
Coreco Partners LLP is an appointed representative of Mortgage Advice Bureau
Limited and Mortgage Advice Bureau (Derby) Limited which are authorised and
regulated by the Financial Conduct Authority.
Coreco Partners LLP. Registered office Suite B Unit 8, 327 Southchurch Road,
Southend-On-Sea, Essex, United Kingdom, SS1 2PE. Registered in England Number
OC371927
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MATTEO VENTURA
We have had an amazing experience with Hannah Lee from Coreco. We have been
impressed by her professionality, the level of the service she provided and her
capacity to work under pressure and find solution when issues arise. My
girlfriend and I are so happy now in our new flat and Hannah has been a big part
of this dream coming true. We super recommend her and we will surely contact her
in the future if we will deal again with house mortgages. Thanks Hannah!
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Excellent experience with very knowledgable, thorough, attentive and friendly
advisers. Sam Warren helped with my mortgage and Pauline Grant with my insurance
protection and I would strongly recommend both.
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JULIAN THATCHER
I cannot rate Liam Creavin highly enough. Really user friendly and pragmatic and
always incredibly responsive. We had a quite nuanced mortgage situation and he
gave really tailored advice and found a product that works for us and again, he
and the team were very hands-on and user-friendly. This can be directly
contrasted with a previous separate mortgage advisor were used to what is the
opposite of that and it made the process extremely painful. Really recommend.
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