Glossary
A
Advance
The actual amount of money we lend you.
Additional advance
Any further or additional borrowing secured against your property, which we lend you in addition to your initial mortgage advance. Sometimes known as a further advance.
APR
This percentage shows the total cost of a loan taking into account all costs with the mortgage. It should allow you to compare mortgages from different companies on a like for like basis.
Administration fee
This is a fee we charge to process your mortgage application. It is usually non-refundable, even if your application is rejected because it does not satisfy our lending criteria.
Arrangement fee
This is a fee we charge for certain types of mortgage products (eg fixed rate products and other special rate mortgages).
Arrears
The term used to describe overdue payments where a borrower has failed to keep up the monthly mortgage payments.
B
Base Rate
The rate of interest shown as the base rate in the offer of advance (we reserve the right to vary the base rate within the Mortgage Conditions).
Bank of England Base Rate
This is the interest rate set by the Bank of England (it is officially called the 'repo rate').
Buy to Let mortgage
A mortgage that lets you buy a property to rent out.
C
Capital
The amount of loan on which interest is calculated.
Capital repayment
Any payment made to your mortgage account that exceeds the normal monthly mortgage payment that we require from you. Also see 'Early Repayment Charge'.
Capped rate
Interest is charged at our standard variable rate, but it is guaranteed not to rise above a certain rate (the capped rate) for a specified period of time.
Cashback mortgage
This is a variable rate mortgage, where you receive a cash lump sum from us when you take out your mortgage (the cash amount is calculated as a specified percentage of the sum that you borrow from us).
Completion
The stage at which legal ownership of your property is transferred to you and/or we release your mortgage advance to you or your solicitor.
Conveyancing
The legal work involved in buying or selling a property.
Current rate
The rate of interest that we will charge you on the amount you owe us. In the absence of any other method of calculation or applicable rate specified in the Offer of Advance, the Current Rate will be calculated by adding together the Base Rate and the Added Rate.
D
Disbursements
These are expenses that your solicitor or licensed conveyancer pays on your behalf.
Discharge fee
This is the fee we charge to attend to the formalities involved in closing your mortgage account following repayment of the advance.
Discounted rate mortgage
A mortgage where you pay a set amount below our standard variable rate for the period of the discount. However, our standard rate can go up or down. See 'SVR'.
E
Early repayment charge
The fee that we will charge you if you make an early repayment of capital before the date detailed in the product leaflet and Offer of Advance. See 'Capital Repayment'.
Endowment plan
This type of investment combines monthly payments into a life assurance policy and an investment plan that is designed to repay the mortgage at the end of the mortgage term, or in the event of the borrower's death.
Equity
The difference between the value of the property and the loans secured against it. Where the value of the property is less than the value of the loans secured against it, this is known as negative equity.
Exchange
The point where the buyer and seller are legally bound to proceed with the sale and purchase.
F
Fixed rate mortgage
A mortgage where the interest rate remains the same for the fixed rate period.
Flexiplan mortgage
A mortgage that allows you to make either regular or lump sum overpayments (capital repayments) as and when you like, without an early repayment charge. This can help reduce the term and total amount of interest you have to pay.
Freehold
You have ownership of the property you purchase and the land it stands on.
G
Gazumping
This is where you agree a price with the person selling a house, only to find out later that someone has put in a higher offer and it has been accepted instead.
Ground rent
Annual charge payable by leaseholders to the freeholder.
H
Higher lending charge
This is a fee sometimes payable by the borrower to the lender, to cover the possibility of the borrower defaulting under the mortgage, and the lender taking possession of the property and being unable to sell it for enough to cover the amount owed by the borrower.
Homebuyers survey and valuation report
This is a much more detailed inspection than a valuation, yet a valuation will still be included. The inspection will look at all reasonably accessible parts of the property internally and externally (from ground level or publicly accessible areas) and the report will comment generally on the state of repair and condition. The roof void will be entered (where practicable) to enable the surveyor to comment on the condition of the roof structure.
An overall impression of the services will be given (but they will not be tested). Outbuildings such as garages will be commented upon but only in respect of serious defects. The site, boundaries, paths etc will be reported upon in relation to special risks, such as large nearby trees. This report is suitable for most properties, but not those which are very large, old or of unusual construction.
I
Initial disclosure document
A document that provides details about our mortgage services. This includes confirmation of whose mortgages we can offer, the fact that you will not receive advice or a recommendation from us, details of who regulates us and how you can make a complaint.
Interest only mortgage
Your monthly payments to your lender are made up of interest on the original loan only. You repay the amount you borrowed at the end of the mortgage term using the proceeds of a separate investment plan, for example an endowment, personal pension or ISA, or from your personal resources.
Introducer/intermediary
This is somebody, other than a lender, who advises you about the choice of your mortgage.
L
Land registry fee
A fee payable to the Land Registry for registering the transfer of ownership of a property/or grant of mortgage.
Leasehold
You have ownership of the property but not the land it stands on. This is common with flats.
LTV
Loan to value. This is the size of the mortgage as a percentage of the value of the property or the price you are paying for the property (a £45,000 mortgage on a house valued at £50,000 would have an LTV of 90%).
M
Mortgage deed
The legal document by which the lender secures the loan against the borrower's property.
Mortgage term
The length of time over which the mortgage loan is repaid.
Mortgage valuation
A simple check of the property that is carried out for the lender to find out how much it is worth and whether it is suitable to lend a mortgage on. This is for the lender's benefit only and may not reveal defects in the property, which would concern you. You should consider organising your own Homebuyers Survey or full structural survey (see 'Homebuyers Survey and Valuation Report and Structural Building Survey').
Mutual
A term for an organisation that is owned by its members, such as building societies, friendly societies and some life assurance companies. Mutuals don't have shareholders like public limited companies, so any profits are used for the benefit of its members only.
O
Offer of advance
If we are happy to accept your application, this is the document that we will send you. It sets out the terms and conditions on which we are prepared to make available to you the advance or further advance.
P
Payment date
The date which we notify to you as being the day in each month on which you must make your mortgage payments.
Personalised illustration
A document that contains a quotation for a particular mortgage and full details of the mortgage, such as whether any early repayment charges apply. This document is in a standard industry format and contains important information that you should read and understand to help you choose a mortgage.
Prospect mortgage
A mortgage product we offer which may be suitable if you have experienced financial difficulties.
Purchaser
An older term for the buyer of a property.
R
Redemption
The point at which the outstanding balance of a mortgage is repaid.
Remortgage
Transferring your mortgage from one lender to another without moving house.
Repayment mortgage
A loan where the monthly payments are made up partly of capital and partly of interest, so that the loan is repaid in full at the end of the mortgage term.
S
Self certification mortgage
Designed especially for the self employed.
Solicitors fees
These are charges you pay for the conveyancing and work that your solicitor does for us.
Stamp duty
This is a Government tax you will have to pay on the price of the property if it exceeds £120,000. The percentage of the tax paid varies according to the price of the property paid.
Structural building survey
This is an in depth report particularly suited to large, old or unusual properties and can be tailored to the needs of the client and type of property. The surveyor will advise on fundamental defects and any legal implications that they may have.
Every aspect of the property is looked at as for the Homebuyer Survey and Valuation report but in greater depth and any additional investigations such as drains tests, will be recommended.
SVR
Standard Variable Rate. This is our standard rate of interest, which is variable and can go either up or down.
V
Valuation
See 'Mortgage valuation'.
Vendor
An older term for the seller of a property.
