a
Absolute title
Generally means there are no limits on ownership
Additional borrowing
The term used when an individual increases their borrowing to release some of the equity available in their property
Agreement
An agreement between two or more people to enter into a legal arrangement
Agreement in Principle (AIP)
Same as a Decision in Principle – An agreement to lend based on initial assessment of your income and outgoings
Annual Percentage Rate (APR)
The interest payable on what you have borrowed is added up with all other fees, eg product fees and then expressed as an annual rate of charge
Annual Percentage Rate of Charge (APRC)
The standard interest rate calculation which reflects the total amount of interest that will be paid over the entire term of the loan
Applicant
A person who makes an application for a mortgage
Arrangement fee
The fee charged for the administration of the mortgage
Asking Price
This is the price the seller/vendor wants to get for sale of their property, this can be negotiable
Assured Shorthold Tenancy (AST)
A type of tenancy agreement which entitles the landlord to a possession order immediately after the initial agreed period
Attorney
A person who is given the responsibility to deal with someone else’s financial or other personal affairs through a legal document called a Power of Attorney
b
Balance sheet
It is a statement of a business’s assets and liabilities
Bank
A financial institution licensed to receive deposits and make loans
Bank of England Base rate
This is the variable interest rate set by the Bank of England monetary policy committee (MPC)
Bank rate
The rate at which bank of England lends to other financial institutions
Bankrupt
A person who is insolvent
Bankruptcy
This is a formal process for dealing with personal insolvency
Basic essential expenditure
Spending to meet day to day needs, eg food, heating
Basic quality of life expenditure
Things such as clothing, personal items
Binding Offer
This is a document issued by a lender with no requirements to be met
Booking fee
A non-refundable fee charged on some mortgages to secure a particular mortgage deal
Borrower
A person who takes a loan from a lender under an agreement with an intention to pay it back later typically with interest
Bridging finance / Loan
This is a short term loan taken out by a borrower against their current property to finance the purchase of a new property, can be useful when buying a new property and sale of a previous property will not complete in time
Broker fees
The fees a mortgage broker charges for their service to arrange a mortgage
Building insurance
This covers the cost of repairing damage to the structure of the property, the lender will always expect an individual to have building insurance before completing on the mortgage
Building Regulations
These are designed to set standards for the design and construction of buildings
Building Society
A building society is a financial institution owned by its members as a mutual organisation
Building Survey
This is a thorough and complete inspection of the property carried out by a qualified surveyor
Business Borrowers
Mortgages taken out by individuals for business purposes
Business partnership
This is an arrangement between self employed people to work together
Buyer
The person looking to buy the seller’s property
Buy-to-let
If you are planning to buy a property to rent out then you need a buy to let mortgage
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Capital
Money that you have invested or borrowed to buy a house
Capital Gains Tax (CGT)
This is tax on the profit when you sell a property that has increased in value
Capital Repayment
Your monthly payment is made up of capital, which is the amount you have borrowed and interest, which is what the lender charges you on the amount you have borrowed
Capitalisation
Adding the arrears to the total amount owing on the mortgage, with repayments increased to reflect the additional amount owed
Cash purchase
Buying a property without any form of finance
Chancel Repair Liability
This requires landowners to pay for the repair of the part of the church containing the altar
Commercial borrower
A commercial mortgage secured on a commercial property, for eg on a factory instead of a residential property
Committed expenditure
These are generally credit agreements and other contractual commitments, eg loans, mortgage payments
Commonhold
A form of land tenure of a unit within a multi – occupancy building but with shared responsibilities for common services
Completion date
Completion fee
A fee for electronically transferring the mortgage funds to the acting solicitor, licensed conveyance or existing lender
Concessionary purchase
Its a process of buying a property under the market value
Condition report
This is a type of valuation which is focused mainly on the condition of the property, without providing a market value
Consumer Buy-to-Let (CBTL)
This is where the purpose of arranging a mortgage is not wholly for business purposes, an eg of this could be someone who has tried to sell their property but has been unsuccessful so resorts to a buy to let arrangement
Contents insurance
This covers the cost of repairing or replacing objects within the property
Contract exchange
Final step in house buying, generally this is signed when the solicitor has carried out all necessary searches
Conveyancer
In simple terms this is an individual who carries out all necessary searches in the house buying process, for eg the local authority searches, environmental searches, etc
Conveyancing
The process to transfer a property from one owner to the other
Corporate borrower
Lending to a limited company either for residential or commercial purpose
County Court Judgment (CCJ)
This is a judgment that a county court issues when someone has failed to pay money they owe
Covenants
Restrictions or conditions placed by a landowner on those who subsequently buy or lease the land
Credit Assessment
Review of an individual credit profile by a lender using a number of sources, eg bank statements
Credit Bureau
An organisation with vast database of information on individuals relating to their credit history
Credit rating
This is used by lenders to decide whether to lend you money, how much to lend you, interest rate to charge, etc
Creditor
A person or company to whom money is owning
Critical illness Cover
Lump sum benefit payable if an individual is diagnosed with a specified illness or undergo a surgical procedure
Customer Due Diligence (CDD)
This is the regulatory term for the process of verifying a customer and their identity
d
Debt consolidation
Paying off debts
Debt Relief Order (DRO)
An order granted by the official receiver to an individual with debts less than £20,000 and limited assets who cannot repay their debts
Debtor
A person, country or organisation that owes money
Decision in Principle (DIP)
An agreement to lend based on initial assessment of your income and outgoings
Default
Failure to fulfil an obligation, in particular to repay a loan
Deposit
The amount of your own money available to support your home purchase, generally the more of this you have the less you borrow from the lender
Deputy (Power of Attorney)
Appointed by the Court of Protection to look after the affairs of someone who becomes mentally incapacitated
Designated Land
These are usually areas such as conservation areas, national parks, etc
Desktop Valuation
This is a type of valuation carried out internally by a lender using computer software and does not require an inspection of the property
Detached House
This is a standalone single dwelling house for residential purposes
Discount rate mortgage
The lender normally gives you a discount on your payments for a set period, following which your repayments are placed on another payment method, for example, no payments for first 6 months then variable rate payments for set period
Daily Interest
This is when interest charged takes into account any changes in the mortgage balance from a day to day basis
Disbursements
This is the distribution of various costs to all parties involved in the transaction
Discharge Fee
This is applicable in instances when you have to pay a lender to release their hold over a property once you have settled your mortgage balance in full
Donor (Power of Attorney)
The person granting the powers to their representative
e
Early Repayment Charge (ERC)
If you repay your mortgage before the end of the agreed term or make more than the agreed additional payments allowed then you incur an ERC
Easement
Is a right that one property has over the land of another, eg rights of way
Energy Performance Certificate (EPC)
Tells you how energy efficient a building is and gives it a rating (A being very efficient and G – inefficient)
Equity
This is the difference between how much your property is worth, the balance of your outstanding mortgage and any other debts secured on the property
Equity of Redemption
This is the borrower’s right to settle the mortgage debt in full at any time up to the point of sale
Equity release
A way of releasing extra money by borrowing against the equity in your home
Estate agent
A person, organisation whose role involves selling, renting, and sometimes managing buildings and land for its clients
European Standardised Information Sheet (ESIS)
This is an enhanced version of the Key Facts Illustration (KFI)
Exchanged contracts
This is the swapping of signed contracts between the seller and the buyer
Execution Only
This is where a firm acts on an individual specific instruction and the firm gives no advice
Exit fee
This is usually the closure administration fee payable to service providers when you fully repay your mortgage
Extended tie in period
This is when some lenders add a clause in the mortgage offer that the borrower keeps their mortgage with that lender for a period of time
Equity share
This enables the borrower to buy a share in the property with the remaining share held by the lender, developer or another provider
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Fee Saver
This usually means no application, booking or completion fees are charged
Financial Exclusion
Describes the situation in which people are unable to access financial services because they are unable to produce a type of document required
First charge mortgage
This is the first legal charge secure against the value of the property
First time buyer
An individual who has never owned a property
Fittings
Are items that the vendor would take with them on sale, example, curtains
Fixed Rate mortgage
The payments you make each month are fixed until a particular time and do not change in line with interest rate fluctuations
fixed until
This is normally the date when a fixed rate come to an end
Fixtures
These are generally permanent additions to the fabric of the property, example, fitted kitchen
Flat
This is a residential unit in a high rise building
Flying freehold
The term used when part of a freehold property extends above or below another person’s property but is not next to or touching the ground
Foreclosure
This is the legal process a lender takes control of a property, evicts the homeowner and sells the home after the home owner is unable to make full capital and interest payments on their mortgage
Foreign Currency Mortgage
This is one where the borrower’s income is in a different currency from that applying to the mortgage
Former Feuhold (Scotland)
This is a term used to describe the ownership of both the property and land that it is built on
Fraud
This occurs when a person deliberately sets out to obtain funds from another person or organisation by dishonest means
Freehold
This is an exclusive right to enjoy the possession and use of a parcel of land for an indefinite period
Further Advance
This is a top up to an existing mortgage normally over the remaining term of the existing loan
Financial Conduct Authority
This body regulates the financial services in the UK
g
Gazanging
This happens when a seller pulls out of a property transaction and decides to stay put having already accepted an offer
Gazumping
When an individual makes a higher offer on a house than (someone whose offer has already been accepted by the seller) and in doing so is able to acquire the house
Gazundering
Lowering the amount of an offer that one has made to the seller of a property just before exchange of contracts
Gifted-Equity
This is a sale of a property to a family member at a price below market value and this difference between the full market value and the reduce purchase price is used as the deposit for the purchase
Gifted-Deposit
This is when a borrower’s deposit for a property purchase comes from usually a family member by way of a gift which is non refundable, and the family member has no financial interest in the property to be purchased
Gross Yield
This is expressed as rent as a percentage of purchase price
Guarantee
A formal agreement to accept legal responsibility for the repayment of a loan if the borrower cannot
Guarantor
An individual, company or partnership that provides a guarantee
Ground Rent (mostly on Leasehold Properties)
This is rent paid under the terms of a lease by the owner of a building to the owner of the land on which it is built
h
Heave
This is a situation when underground forces cause the land below the property to rise unevenly
Help to buy
A UK government initiative to help first time buyers get on the property ladder
Help to Buy Equity Loan
This is a home buying scheme where an applicant with minimum 5% deposit can purchase a new build property up to £600,000 and the government provide a further equity loan to help with the purchase
Home Buyers Report
A type of valuation where the professional surveyor carries out a thorough inspection and detailed breakdown of the property condition
Home Information Packs (HIPs)
This is a set of documents that provides the buyer with key information on the property and must be provided by the seller or agent
Home Mover
Moving from one property to another
Home Purchase plan
An arrangement where one person buys a qualifying interest in land
Home Report (Scotland)
This is a report arranged by a seller of a property in Scotland and must be made available to prospective buyers on request
House-Price Inflation
This is increases in the price of houses over a period of time
Houses In Multiple Occupation (HMO)
These are generally properties with a minimum of 3 unconnected tenants sharing parts of a property such as kitchen, bathroom and toilet facilities
Hybrid Mortgage
These are mortgage products containing two difference products, eg part interest only and part repayment
i
In possession
Immediate entitlement to occupation, nobody else has prior claim
Individual Voluntary Arrangement (IVA)
A formal agreement between a debtor and their creditors to make reduced payments towards their total debts over an agreed period of time
Insolvency
Where a person’s liabilities exceed their assets
Interest - Only payment
Your monthly payment only pays the interest you owe. You will still have to pay the capital (the amount you have borrowed) at the end of the mortgage
Interest calculated daily
This is the interest chargeable on the outstanding mortgage balance each day
Interest rate
The rate at which you pay back interest which is generally shown as a percentage of the amount borrowed
Interest type
This may be standard variable or fixed
j
Joint tenancy
A type of property ownership where each joint owner owns 100% of the property
k
Key Facts Illustration (KFI)
This sets out all the details of all associates fees and costs for a mortgage product
Key Worker Mortgages
These are mortgages available to civil servants with a certain annual income threshold
l
Land and Buildings Transaction Tax
This is a tax to be paid if you buy or property or land worth over £145,000 in Scotland
Land and Property Services (Northern Ireland Only)
This is the department that registers ownership of land in Northern Ireland
Land Registry (England & Wales Only)
This is a department that registers the ownership of land in England and Wales
Land Title
This is a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest
Landlord
A person who rents our land, a building or accommodation
Leasehold
A form of land tenure where a person has rights over a land for a specific period only
Lender
An organization or company that lends money, for example a bank, building society
Lender fees
The fees a lender normally charges in arranging a mortgage for an applicant
Lending /Financing
This can be defined as the temporary giving of money or property to another person with the expectation that it will be repaid
Lending Into Retirement (LIR)
This is when the term of the borrowing exceeds an individual’s retirement age
Life cover
A lump sum benefit payable upon death or upon earlier diagnosis of a terminal illness
Lifetime mortgage
Enable older homeowners over a certain age to release some of the equity in their property
Limited Liability Partnership (LLP)
A form of partnership where the business is a separate legal entity from the partners who act as agents of the partnership
Listed Buildings
These are properties that are of significant architectural or historical value
Loan purpose
What the money being borrowed will be used for
Loan to Value (LTV)
It is the amount you need to borrow in relation to the value of your property. For example, if you are borrowing £80,000 to buy a property worth £100,000 then your LTV is 80%
Location
This is generally an area a lender will lend, for some lenders lend in all UK including Scotland & Northern Ireland, whilst other only lend in England & Wales
London Interbank Offered Rate (LIBOR)
The rate at which banks lend to each other
Lump sum payment
This is when an individual makes an agreed one-off payment to reduce the outstanding balance of their mortgage
Local Authority Searches Fees
This is applicable when a local authority charges for answering your conveyancer’s questions about the property you want to buy
m
Maisonette
This is a set of rooms for living in which are usually on two storeys of a larger building and have separate entrances
Maximum age
The highest age a lender will consider when lending
Maximum term
The highest term a lender will lend to, for eg some lenders will lend for a maximum of 25years, others 30years, and some 35
Minimum age
The lowest age you have to be in order to get a mortgage from a lender
Minimum term
The lowest term a lender will lend to, for eg some lenders will lend for a minimum of 5, 8, 10 years, etc
Minor
A person under the age of 18 years
Monthly repayment
This is indication of the monthly mortgage payments at the current stated interest rate
Mortgage
Is a loan taken out to buy a property or a land. The loan is secured against the value of your home until the loan is paid off
Mortgage adviser
A specialist with in-depth knowledge of the market who is able to look through a range of products to meet your needs
Mortgage broker / intermediary
A person, organisation or company that arranges a mortgage between a borrower and a lender
Mortgage calculator
A tool used by lenders to provide an illustration of how much loan you can borrow based on your income, expenditure, number of dependents, etc
Mortgage deed
A legal document which once signed confirms you are happy with the terms of the mortgage offer from the lender
Mortgage offer
Formal document issued by a lender to a borrower that confirms the lender is happy to lend the amount you want to borrow
Mortgage packager
In effect this is a middleman who operate between the lender, the intermediary or customer
Mortgage Packager
These are companies who process mortgage applications on behalf of brokers for submission to a lender
Mortgage term
This is the length of time over which a mortgage is taken
Mortgagee
Sometimes known as the lender
Mortgagor
Sometimes known as the borrower
n
National House Building Council (NHBC)
Provides warranties and insurance protection for new homes in the UK
Negative equity
This is a situation in which the market value of a property falls below the amount of mortgage loan secured on it
Net Yield
Rent minus running costs as a percentage of the purchase price
New build property
This is a property that is yet to be occupied for the first time
Non-Banding Offer
This is a document issued by a lender which sets out certain requirements to be met
Number of applicants
The number of people making the application for the mortgage
o
Offer Price
The price you as a buyer offers to buy the sellers property
Offset mortgage
A type of mortgage where your savings and current account balances are linked to your mortgage
Ordinary Power of Attorney
Enables the attorney to carry out activities relating to the donor’s financial and property affairs
Original House
The house as it was originally built
Outstanding balance
This is the outstanding amount owed to a lender under a mortgage
Overage Deed
This is used to describe a sum of money in addition to the original sale price a seller of a land may be entitled to receive if the buyer complies with certain agreed conditions
Overpayments
You can make additional payments on top of your normal monthly payments without incurring a charge, for example most lenders will allow an additional payment equivalent to 10% of the mortgage balance each year
Part & Part
A combination of both interest only mortgage and a repayment mortgage where you choose the amount of the initial mortgage you would like to be on interest only and the remainder to be repaid over the mortgage term as capital and repayment
Pay Day Loans
Short –term high interest lending designed to be paid off on the borrower’s next pay day
Payment Holiday
A period of one or more months when you don’t make repayments on your mortgage, even though interest continues to accrue during this time
Personal representatives
They act in managing the estate of a deceased person
Planning Permission
This is a permission sought from the local council to extend or build a property according to certain building regulations
Portability
The ability to transfer the existing mortgage to another property
Prefabricated Housing
Using precast concrete panels attached to a steel or timber frame
Prime lending
This is lending to borrowers who meet a lender’s standard criteria and present normal risk
Private borrower
A person who is borrowing to purchase a home for themselves and/or their families
Professional Customer
An individual who has worked in the home finance sector for at least one year
Proof of address (POA)
Generally evidence of where you have lived in the last three years, this can be in the form of original utility bills received in the post
Proof of Identity (POI)
Evidence of who you say you are, for eg a driving licence, passport, etc
Proof of income
Evidence of your income, for eg by way on payslips, bank statements, signed company accounts, etc
Property value
This is the value of a property in the current market conditions
r
Radon Gas
This is a radioactive gas we can’t smell, see, or taste and its present in high concentrations in certain parts of the UK
Rate Period (Buy-To-Let)
This is the period at which a fixed or tracker rate applies
Rate Period (Residential)
The period during which the fixed, tracker, or discounted rate applies
Reflection period
This generally refers to the period the lender provides to an individual to consider the contents of a mortgage offer
Registers of Scotland (Scotland Only)
This is a department that registers ownership of land in Scotland
Reinstatement Value
This is the valuer’s estimate of the cost of rebuilding the property from scratch in the event of destruction by fire or another catastrophe
Reinsurance
This is a process by which an insurer passes on some of the risk to another insurer or company in return for a premium
Remortgage
When a person uses a new mortgage to repay an existing mortgage and transfer from another lender
Rental Cover Ratio
This is the proportion of the mortgage payment covered by the anticipated rental income
Rental income
The rent payments you receive from a tenant when you rent out a property
Rent to Buy
This is a government scheme that has been set up to help individuals own their first home, even if you can’t afford a deposit in current time
Repossession
This is the process in which a lender takes possession of your property when you default on your mortgage payments
Residential
An area primarily used for housing
Retention
This is a situation where a portion of the loan is held back by the lender until the buyer provides evidence that certain repairs have been completed
Right to Buy
This is not a mortgage scheme but gives the tenants of a social housing in the UK the right to buy the property they are renting
Right of way
An example of this could be needing a right of way across someone else’s land in order to access your own property
Right to Acquire
This gives tenants of housing associations the right to buy the existing property they are renting or an alternative property
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Sasines Register (Scotland)
This is a chronological list of land deeds which contain written descriptions of properties
Second – charge Loan
This is a loan secured on a property but registered after a mortgage (first charge)
Second Charge Mortgage
This is a loan that allows an individual to use any equity they have in their property as security, and always ranks behind a first charge mortgage
Securitization
A financial practice where financial institutions sell on sub-prime and prime debts to other institutions to raise capital
Security
The security for the mortgage debt stated in the mortgage offer document which will be first legal charge over the security
Semi-Detached House
This is a single family dwelling home built as one of a pair that share a common wall
Sequestration (Scotland)
This is the formal term of a bankruptcy in Scotland
Shared Ownership (England)
Its an affordable home ownership scheme where the buyer purchases a share in a property and pays rent normally to a housing association for the remaining share
Solicitor
A member of the legal profession to deal with the legal matters of the home buying process
Special Purpose Vehicle (SPV)
This is a way of holding business property through a limited company rather than the individual holding the property in their own names
Staircasing
This is the process where a buyer owning a percentage of a property under the shared ownership scheme purchases additional shares in the property
Stamp Duty Land Tax (SDLT)
The tax you have to pay if you purchase a property or land in England and Wales which is worth over £125,000
Standard Valuation report
Professionally prepared to give an inspection of the property and a market value
Standard Variable rate (SVR) mortgage
The payments you make you each month may go up or down as the lender increases or decreases its own interest rates
Stress Testing
This is a process where lenders increase interest rate on a mortgage product by a certain percentage to determine if an individual will be able to afford the mortgage payments if interest rates did rise in the future
Structural Survey
This is the same as a Building Survey – see Building Survey
Sub-Prime Lending
Lending to borrowers who represent a higher risk than normal
Subsidence
This is a situation where land below a building drops unevenly causing it to shift
Switching
When an individual moves to a new mortgage with the same lender, for example, when their fixed rate period ends and they move onto a variable rate mortgage
Service charge (mostly on Leasehold properties)
These are charges payable by a leaseholder to the landlord for the services the landlord is obliged to provide under the terms of the lease
Solicitors Fees
Paid on completion to cover the legal work carried out during the purchase or home moving process
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Telegraphic Transfer Fee (TTF)
This is a fee which covers the cost of electronically transferring the mortgage funds to the borrower, solicitor, or conveyance
Tenancy In Common
A type of property ownership where each joint owner owns a set share of the property
Tenant (Buy–to-let)
An individual who rents a property
Tenure
Describes the way in which title to a property is held
Terraced House
This is one of a row of similar houses joined together by their side walls
Title burdens (in Scotland)
These are usually conditions attached to owning the property ranging from how the property can be used or altered
Tracker rate mortgage
Similar to the standard variable rate mortgage, but your monthly payments fluctuate in line with increases or decreases in the bank of England base rate
Trustee (s)
This Is/are individual (s) who are appointed in a document called a trust deed to hold specific asset, or assets on behalf of others call the beneficiaries, and to act for the beneficiaries according to the terms set out in the deed
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Undertaking
This is a formal agreement that the buyer will undertake specific remedial work within a specific period of time after taking possessing of the property
Unencumbered Property
This is when you own a property with no mortgage secured on it
Unregistered land
Land which has not been legally transferred since the introduction of compulsory registration
v
Valuation
The process a professional surveyor assesses a property in its current condition against market conditions to give an indicative value of the property
Valuation fees
This is a fees charged by the mortgage lender to instruct a professional surveyor to value a property
Vendor/Seller
The person who is looking to sell their property
Vulnerable customer
Someone who is susceptible to detriment as a result of personal circumstances
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Disclaimer
Please note the content of this website is a guide and for information only and mortwiki.com does not offer loans, broker loans or recommend lenders. We are not mortgage advisers and you will need to consult a qualified professional in that area. Please note these definitions are our own, are not exhaustive and is subject to change.