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Glossary

Advance
The mortgage loan.
Advice
A recommendation about the most suitable mortgage for your individual circumstances, given by a firm who is regulated by the Financial Services Authority.
APR (Annual Percentage Rate)
The total cost of a loan, including interest charges and product fees, shown as a percentage rate. The calculation assumes that you keep the mortgage for the full term. APR is the industry standard calculation and allows you to directly compare mortgages from all lenders.
Approval in Principle
A certificate that some lenders issue, showing the amount that they will potentially be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents.
Arrangement fee
When you apply for your mortgage there may be a fee. This is to reserve the mortgage and to cover administration costs.
Arrears
Mortgage payments, which have not been paid as requested and have become overdue.
Automated Valuation Model (AVM)
An AVM is an automated valuation. In these instances a surveyor does not visit the property and a valuation report will not be available. This type of valuation is purely for lenders information only.
Balance outstanding
The amount of your loan still owed at a particular time.
Bank of England Base Rate
The Bank of England set a rate each month known as the 'Base Rate' or 'BBR'. Banks and Building Societies use the Bank of England Base Rate to set the interest rates they pay on deposits, or charge on debts.
Base Rate Tracker
These variable rate mortgages track above the Bank of England Base Rate, with rates moving up or down as the base rate changes.
Buildings insurance
Insurance against the cost of repairing or rebuilding your property and any permanent fixtures and fittings (such as bathroom suites) following structural damage, such as by fire or flood.
Building regulations
The health and safety requirements that any new construction must meet.
Building survey
A professional review that will give you a comprehensive account of the property's condition. You'll receive a technical report describing any defects or issues discovered.
Buy to Let mortgage
Mortgages specifically designed for investors who are buying property for the purpose of letting it to tenants.
Capital
The amount of money you borrow to finance the purchase of your home.
Capital and Interest mortgage
Also called a repayment mortgage; your monthly payment covers the interest we charge for the loan and also repays part of the money borrowed. In the early years of your mortgage term, the bulk of your monthly payment is interest. However, in time, as the mortgage balance reduces so does the proportion of interest. Assuming that you maintain the payments, the mortgage will be repaid at the end of the mortgage term.
Capital repayment
A lump sum payment to your mortgage account, made in addition to your normal monthly payment.
Cashback
An amount of money which you'll receive with some mortgages on completion. This can be either a fixed sum or a proportion of the loan.
Chain
The commonly used term for the series of properties linked to your sale or purchase by your buyer and your seller.
Completion
After you exchange contracts on a property, you'll agree a date for completion with everyone involved. Completion is achieved when property ownership is legally passed to the buyer and when the seller hands over the keys.
Contents insurance
See Home Contents Insurance.
Contract
A document that describes the agreement under which the property will change hands.
Conveyancer
A legal practitioner who specialises in property ownership transfer. An alternative to using a Solicitor.
Conveyancing
The legal and administrative requirements involved in buying a home.
Conveyance fees
The fees incurred and charged by your solicitor or conveyancer for managing the sale or purchase of your home; including the fee for their time plus any additional charges incurred such as Land Registry or Local Authority Searches.
Council of Mortgage Lenders
The Council of Mortgage Lenders is a trade association for the mortgage lending industry.
County Court Judgement (CCJ)
A decision made in the County Court, usually for non-payment of a debt. A CCJ will be registered on your credit file and may affect your credit rating. Once the debt has been repaid, this will also be noted on your file.
Credit score
Credit scoring is used by most mortgage lenders to decide whether to give a loan. Your credit score will be based on your credit history - your past reliability in repaying loans/mortgages/credit cards etc.
Debt consolidation
The process of combining a number of outstanding debts such as loans and credit cards into one loan.
Deeds
Legal documents that demonstrate ownership of a property or piece of land.
Deposit
A percentage of the purchase price which the buyer puts down to secure the mortgage loan at the exchange of contracts.
Direct Debit
An instruction that authorises your bank or building society to make regular collections direct from your account.
Disbursements
All the various costs for carrying out the legal work related to buying or remortgaging your home.
Disclosure Document
See Initial Disclosure Document (IDD)
Discount Rate mortgage
For an agreed period, discount mortgages give you a discount off our Standard Variable Rate (SVR). The discounted rate follows any movement in our SVR for an agreed period, so the level of your payments can go up as well as down.
Early repayment charge
A charge payable on some mortgages if they are repaid early, during an Early Repayment Charge period. The amount depends on the mortgage outstanding and the terms of the mortgage.
Essential repairs
Work required to be carried out on the property before we'll issue part or all of the mortgage loan.
Equity
How much of the value of the property that you own outright. That is, how much would be left for you after selling the property and paying off any outstanding mortgages or charges.
Equity Release
A way of releasing money from the value of your home without having to move out of it. Normally open to people of 55 and older, it's usually done to raise capital either for income or lump sum purchases.
Exchange of contracts
The point at which both buyer and seller sign their copies of the contract. These are exchanged by their respective legal representatives. The buyer usually pays a deposit at this point and the date of completion is agreed. In England and Wales, but not in Scotland, this is when everybody is legally bound to the transaction and when the buyer should take out buildings insurance.
Financial Ombudsman Service
An independent ombudsman which is set up by Parliament to help settle individual disputes between consumers and businesses providing financial services such as estate agents, solicitors and insurance companies.
Financial Services Authority (FSA)
The regulatory authority for the UK financial services industry, including mortgages. All lenders and mortgage intermediaries must be directly authorised and regulated by the FSA, or must be an appointed representative of an authorised firm.
Fixed Rate mortgage
These mortgages fix the interest rate you pay for an agreed period, before reverting to our Standard Variable Rate or Bank Base Rate + 2.25%.
Fixtures and fittings
All non-structural items included in the purchase of a property.
Flexible mortgage
Allows you to overpay, and with the overpayments that have been built up, borrow money back, take payment holidays or pay less in some months.
Freehold
A freehold property means you own the land the property is built on, as well as the property itself.
Full structural survey
A review that looks at all the main features of the property, including walls, roof, foundations, plumbing, joinery, electrical wiring, drains and garden.
Fund Transfers
The transfer of money from one financial institution to another; usually occurs at completion when the money for your purchase or sale is transferred to your buyer or seller.
Further advance or Home Owners Loan
An additional loan to your existing mortgage taken after the main mortgage has completed which is also secured against the property.
Gazumping
When the seller accepts a higher offer from someone else, after already agreeing a price with a buyer.
Gazundering
When the buyer offers less than the agreed price before the exchange of contracts.
Ground rent
The annual fee which a leaseholder pays to a freeholder.
Higher Lending Charge
A fee which may be charged by a mortgage lender when the amount borrowed is more than a given percentage of the value of the property. The lender will use the fee to purchase an insurance policy to protect them against financial loss in the event of a borrower not meeting their mortgage payments. The fee is usually payable in full up front. You may be liable for any mortgage shortfall debt if after possession the sale proceeds are not enough to repay your outstanding debt.
Homebuyer's Survey
An intermediate-level survey usually offered by the mortgage lender and prepared by their own surveyor. It comments on the structural condition of most parts of the property that are readily accessible, but is not an in-depth investigation or a test of water, drainage or heating systems and will only report on obvious problems.
Home contents insurance
A policy insuring household contents against theft, damage and accident.
Illustration
This tells you about the most important features of a mortgage, to help you work out if you can afford it, and compare it with other lenders' mortgages.
Income multiplier
The way a lender normally works out how much you can borrow. In most cases they multiply your gross annual salary by their income multiplier.
Initial Disclosure Document (IDD)
An industry wide requirement, the Initial Disclosure Document confirms the type of mortgage service a lender provides, and is designed to help you compare the services, fees and charges made by lenders. This is also referred to as the Disclosure Document, or when the product is a Buy to Let, the Status Disclosure Document.
Initial interest
Any payment due for the period from the day the mortgage began up to the first payment date.
Interest
The charge made by lenders when you borrow their money.
Interest rate
The figure that determines how much interest you pay. Usually linked to the Bank of England's rates and can move up or down.
Interest Only mortgage
With this you only pay the interest on your mortgage every month. If you choose an interest only mortgage it will be your responsibility to ensure that you have adequate means as to repay the capital at the end of the mortgage term. This could be via such methods an investment plan (e.g. an ISA), existing shares, an inheritance, sale of the property, or the sale of a Buy to Let property. We recommend you consult an Independent Financial Adviser (IFA) to discuss the repayment method right for you.
Investment product
If you choose an interest only mortgage you will also need to arrange a repayment method to pay back the capital at the end of the mortgage term. There are a number of different options available, including an endowment or a pension or an ISA. We recommend you consult an Independent Financial Adviser (IFA) to discuss repayment products.
Joint mortgage
A mortgage with more than one named individual responsible for the contract.
Joint Tennancy
A form of ownership frequently used by couples so that when one dies, the property passes automatically to the other. The alternative is Tenancy in Common.
Key Facts Illustration (KFI)
This tells you about the most important features of a mortgage, to help you work out if you can afford it, and compare it with other lenders' mortgages.
Land Registry
A government department responsible for the keeping and maintaining of the Land Register for England and Wales.
Land Registry Fee
A fee charged to register your details in the Land Registry records once you've bought a property or changed lenders.
Leasehold
If you are a leaseholder, you own the rights to live in a property for a specific period, but someone else owns the land it is built on. You'll usually pay a nominal annual rent to the freeholder.
Lender
The bank or building society where you have your mortgage.
Lender's Valuation Report
The main purpose of this report is to ensure that the property is worth the amount that you are borrowing. We need to determine whether it's sufficient security for your mortgage. You need to be aware that this type of report does not go into great detail about the property's condition and in some cases we may instruct an automated valuation which will not include a site visit and you will not receive a written report. You may want to get a more detailed report so you are fully aware of any structural issues for your own purposes.
Lender's Valuation
See Standard Mortgage Valuation.
Life insurance cover
Insurance which pays out on the death of the policy holder. Policies can run alongside your mortgage and will pay off all or part of the outstanding debt if you die.
LMS
LMS (Legal Marketing Services), a Bank of Ireland Mortgages approved legal services provider.
Local Authority Search
A search of the local area to highlight anything that may affect the property or surrounding area, such as planned road building and planning permissions.
Loan to Value (LTV)
The amount of mortgage expressed as a percentage of the value of the property or purchase price, whichever is lower. For example, a mortgage of £90,000 on a purchase price of £100,000 would be 90% LTV. If the valuation of the property is lower than the price you've agreed, the LTV will be based on the valuation.
Monthly interest
A method of calculating mortgage interest on a monthly basis.
Mortgage
A mortgage is a method of using property as security for the payment of a debt.
Mortgage deed
A legal document relating to the mortgage lender's interest in the property.
Mortgage indemnity guarantee
Now called the Higher Lending Charge (HLC).
Mortgage offer
The amount of money that a lender offers to lend you for the purchase of a property, including the terms & conditions for repayment of the mortgage.
Mortgage Payment Protection Insurance
An insurance policy designed to provide a regular income to pay your mortgage, if you become unemployed or unable to work due to an accident or sickness.
Mortgage term
The length of time over which the mortgage is to be repaid. Often this is 25 years but it can be shorter, or in some cases longer.
Negative equity
When the value of the mortgage still left to pay is more than the market value of the property.
Offer of Loan
Otherwise known as the Mortgage Offer.
Overpayments
When you pay more than your normal monthly payment, so you can pay off your mortgage earlier, or reduce your monthly payments.
Part repayment and part interest only
A repayment method which allows you to pay off the capital and interest on one part of the mortgage, and only the interest on the other part. On the interest only part of the mortgage it will be your responsibility to ensure that you have adequate means to repay the capital at the end of the mortgage term.
Payment holiday
On some mortgages you can arrange to stop making payments altogether for a limited period agreed with the lender and up to your agreed borrowing limit. Note you'll continue to pay interest on your loan during this period.
Portability
Allowing you to transfer your mortgage without penalty if you move house during the promotional period of your mortgage.
Property Purchase Survey
See Homebuyers survey.
Purchaser
The term used by estate agents, solicitors and lenders for the buyer of a property.
Redemption
This has a strict legal definition and is the right of the mortgagor to recover mortgaged property on repayment of the loan and any interest due.
This means that, once you, as the borrower, have finished repaying the loan you took out, the property is yours and the lender has no further claim on it.
Remortgage
When you move your mortgage to another mortgage lender without moving home.
Repayment mortgage
See capital and interest only mortgage.
Solicitor
An expert in handling legal matters including property ownership transfers.
Solicitor's Searches
Checks carried out during conveyancing to discover any planning proposals or anything else which might affect the future saleability of the property. Another search is carried out after the exchange of contracts to check that the borrower is not bankrupt.
Stamp Duty
A Government tax you will have to pay if the price of the property you are buying is more than £175,000. The percentage you pay varies according to the value of the property. If it's more than £175,000, you pay between one and four per cent of the whole purchase price, on a sliding scale.
Residential property - purchase price Rate of Stamp Duty Land Tax
up to £175,000 0%
£175,001 - £250,000 1%
£250,001 - £500,000 3%
£500,001 or more 4%
Standard Valuation Fee
Also referred to as a Lender's Valuation fee. This is the fee payable for the basic assessment carried out on a property, so a lender can decide whether to lend on the property by assessing its condition and likely value.
Standard Mortgage Valuation
Also referred to as a Lender's Valuation, the basic assessment carried out on a property, so a lender can decide whether to lend on the property by assessing its condition and likely value.
Standard Variable Rate (SVR)
A mortgage where the interest rate is not fixed and which is dependent on influences such as the Bank of England Base Rate rises and falls.
Status Disclosure Document
See Initial Disclosure Document (IDD)
Structural Survey
See Building Survey.
Survey
A report on the condition of the property you are planning to buy. See Lender's Valuation, Homebuyers Survey and Building Survey.
Tenancy in Common
Joint ownership of a property where each tenant owns a separate share in the property. Should one of the joint owners die, their share passes to their beneficiaries by their will or intestacy. The alternative is Joint Tennancy.
Tenants
People living in a property who do not own it.
Term
The length of time over which you pay back your mortgage, normally 25 years.
Title deeds
Documents to prove you own your property.
Tracker mortgage
These variable rate mortgages track at a percentage above the Bank of England Base Rate (BBR), with rates moving up or down as the base rate changes.
Transfer Deeds
The Land Registry document that transfers legal ownership from seller to buyer.
Transfer of Equity
Adding someone to a mortgage or removing them from it.
Under offer
When the seller has provisionally accepted the buyer's offer.
Underpayments
On some mortgages you can arrange to pay less than your normal monthly subscriptions for a limited time, up to your agreed borrowing limit. Note you'll continue to pay interest on your loan during this period.
Valuation fee
The charge for the Standard Mortgage Valuation.
Variable Interest Rate
Rate of interest payment that fluctuates over time with general interest rates.
Vendor
The seller of a property or piece of land.