0800 458 2978
info@nicholas-hall.com

 

 

Jargon Buster

ASU
Accident/Sickness & Unemployment Insurance provides an income to the insured on occurance of any of the events. Can have deferred (delayed) period of payment and can be bought in blocks' of benefit. Check the small print for exclusions!

APR
Annual Percentage Rate is the true cost of borrowing as it includes any fees (see Fees) with the repayments of the loan.

Assignment
The transfer of ownership of an asset from one person to another.

Base Rate 
The rate of interest set by the Bank of England.

Booking Fee
The lenders fee for reserving a particular rate for a borrower, usually related to a fixed rate

Bridge(ing) Loan
A short term loan usually used to cover a period between selling a property and buying a new one if simultaneous Exchange of Contracts/Completion is not possible. Can be expensive!

Broker Fee
A fee charged by a broker the use their services

Buy to Let 
Simply, this is a mortgage type where-by a borrower intends to let out the new property or property already owned to tenants as a form of investment.

Centralised Lender 
A one office lender. No network of branches, just a HQ in one location.

Commitments
Normal monthly living costs which will include any credit, mortgage   and maintenance payments.

Completion 
The day you pick up your keys' to your new purchase. You are now the legal owner and all  monies have been transferred to the vendor (seller) via the solicitor(s).

Compulsory Insurance 
Some mortgage schemes insist on the borrower having the insurances specified with them as a condition on offering the mortgage. Normally this will be the buildings/contents insurance.

Conveyancing 
The legal work carried out by a solicitor or licensed conveyancer for the transfer of property ownership from seller to buyer.

CCJ (County Court Judgement) 
Bad debt ruling issued by a County Court. This will show on any credit check taken up by a mortgage lender.

Credit Check 
All credit information (whether good or bad) and voters roll information is logged by various agencies used by lenders. The lenders check the details when an application for a loan is received and the information is used, by underwriters, when deciding to lend the money. This information is called your credit history' and you will have a credit rating/score' depending on the details held and a credit report is provided to the applicant, if requested.

Daily Interest charging 
Historically mortgage interest was charged to your account monthly or annually. Any payments made by you between charging dates would not reduce the balance until the end of the month or year. Daily charging means you get the benefit of a reduced balance the day after.

Default
If you fall into arrears with any credit agreement after reminder letters then a lender may register this as a default' on your credit file.

Deposit 
The borrowers down payment' towards the purchase price of a property. The balance is usually financed by a loan (mortgage).

Equity 
The profit' margin in a property, calculated by subtracting any mortgages or other secured loans away from the value. An equity release mortgage or re-mortgage can release this tied-up' capital, to be used for most legal reasons.

Exchange of Contracts 
The buyer and seller confirm legally binding commitments to the sale/purchase & agree to the terms and conditions of this transaction. This happens prior to Completion.

Fees 
Arrangement Fee, the lenders administration fee for a particular mortgage

First Charge 
The holder of the charge (usually a mortgage company) has a legal right to the first call on the property in the event that the borrower defaults on repayments.

Freehold 
Gives the owner ownership of the property and the land on which the property stands (ie. is built).

Guarantor 
A person, other than the borrower, who guarantees the mortgage repayments in the event the borrower defaults. Normally a parent or blood' relative.

Illustration 
A formal quotation of the cost of a particular mortgage scheme, including fees, early redemption charges (see Redemption Charges) and other relevant details.

Income Multiplier
The lenders' formula used to calculate how much they can lend you, based on your income. This can vary from lender to lender.

ISA (Individual Savings Account)
A TAX FREE investment product, available to all. It can held as cash (like a normal building society account), shares, life assurance or a combination of these within certain limits for each. An ISA can be used to repay a mortgage.

Leasehold 
Property ownership only and not the land on which it is built.

Legal Charge 
A document which is held at the Land Registry detailing who has first claim on a property. Usually this is the owner.

LTA (Level Term Assurance)
A life assurance policy that pays out a lump sum, which remain the same throughout the chosen term of the policy, on the death of the named person on the policy documents. (DTA v Decreasing Term Assurance, pays out a reducing lump sum over time).

LTV (Loan To Value) 
This usually expressed as a percentage of the loan/mortgage in place or required against the value/purchase price of the property eg. Value ?100000, mortgage ?70000, therefore LTV is 70%.

Mortgage Code Arbitration Scheme
Allows disputes between borrowers and lenders to be settled without court action. Administered under the Mortgage Code.

Mortgage Deed 
The legal document that confers title or ownership of a property.

MIG (Mortgage Indemnity Insurance) / High Percentage Lending Fee / Additional Security Fee 
An insurance policy taken out by the lender against any loss incurred by them, by the borrower defaulting on their mortgage payments. Usually paid by the borrower above certain LTV's.

Mortgagee 
The mortgage lender

Mortgagor
The mortgage borrower

Negative Equity 
The value of the property is less than any mortgage/loan secured on it.

Overpayments 
See Payment Holiday

Payment Holiday 
An allowable break in mortgage payments, normally when the borrower has a Flexible Mortgage, where overpayments have previously been made. Underpayments can also be made if overpayments have been previously made in this instance.

Portable/Portability 
The ability to transfer your current mortgage scheme to a new property without incurring any mortgage related costs or penalties.

Redemption Fee
See Redemption Penalties

Redemption Penalties/Charges/Early Redemption Fees 
Fees paid by the borrower if the mortgage is paid off or part paid off before the end of the particular scheme with the lender. This is an important area to get clear before you commit to a particular mortgage scheme.

Retention 
The lender keeps back some of the proposed mortgage until certain conditions are met. Usually related to the state of repair of the property revealed by the valuation report.

Self Build 
Funding/mortgage required to build a brand new house. Usually released in staged payments at various stages of the build.

Self Certification 
The borrower confirms his/her income. No income checks are made by the lender.

Shared Equity 
The borrower buys part of the property and the remaining part is still owned by the developer/Housing Association. This part is usually chargeable to rent to the borrower.

Stamp Duty 
A Government Tax paid by the purchaser. Currently no duty is paid on a purchase price up to ?60000 with the rate increasing to 4% for purchase prices over ?500000.

Survey/Valuation 
The inspection of the property, to be bought, by a qualified surveyor. This can be arranged privately, however, generally this arranged through the lender via their authorised panel. There are three levels of survey/valuation that can be arranged; Mortgage Survey/Home Buyers Report/Full Structural Survey and they increase in price the more detailed they become.

Survey/Valuation Fee
The stated cost of the survey, usually related to the proposed purchase price of the property

Timber Framed 
A property where the main construction components are wood rather than brick, stone or concrete. Generally, more difficult to obtain a mortgage on.

Underpayment 
See Payment Holiday

Unencumbered 
A property with no loans/mortgages or any borrowings on it.

Valuation
See Surveys/Valuations

 
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Nicholas Hall is an adviser with Julian Harris Mortgages Limited who are authorised and regulated by the Financial Conduct Authority. Your home may be repossessed if you do not keep up payments on a mortgage or loan secured on it. Written quotations available on request. All loans are subject to status. Some loans may require assignment of life assurance. Residential Mortgage transactions will not incur a broker's commission fee. THE STERLING EQUIVALENT OF YOUR MORTGAGE UNDER A FOREIGN CURRENCY MORTGAGE MAY BE INCREASED BY EXCHANGE RATE MOVEMENTS. Think carefully before securing other debts against your home.A typical APR for Adverse Credit/Credit Impaired mortgages is currently 7.2%.