The glossary below will help you understand commonly used financial words and phrases:
Annual Percentage Rate of charge. This is the true rate of interest that is charged on a loan, it takes into account the total cost of interest and any other charges e.g. brokers fees/legal fees.
Assurance - Life
A specific type of life insurance policy that can be linked with a mortgage or loan.
Broker - Mortgage/Finance
An intermediary who finds and places customers who need a loan or mortgage with the lender most suitable to provide it. The broker normally carries out all administration and paperwork to do with processing the loan.
Type of loan where the borrower is given back a sum of money (usually a percentage of the loan). Commonly used by lenders as an incentive to promote their products.
County Court Judgement. A court order against a debtor to pay money owed.
A discounted rate gives you a reduction of, for example, 2% off the standard variable rate (SVR) for a specific period. So, during this period should the SVR rise and fall, you will still qualify for the discount and therefore pay a lower rate.
The rate is fixed for a specific number of years, so you know exactly what your payments will be over that period. Following this period, the rate will usually return to the lender's standard variable rate.
Independent Financial Advisor.
A life insurance policy that is often linked with a mortgage or loan. The premium goes towards insuring your life, and will pay off the loan in the event of your death.
Interest Only Loan
The monthly repayment covers only the interest element of the loan leaving the capital outstanding at the end of the loan terms.
The actual company that provides the finance to meet with a request for a loan or mortgage.
Loan - Secured
The equity in the property is used as security against the loan not being repaid.
Loan To Value. This is the size of the loan or mortgage as a percentage of the value of the property or price being paid for the property e.g. A property valued at £60,000 with a mortgage of £54,000 would have an LTV of 90%.
A situation where the amount owed on a mortgage exceeds the value of the property.
Rate - Capped
Usually a rate for a set number of months/years where the interest rate can go up and down but there is a maximum (capped) interest rate which it can not go above.
Rate - Variable
A rate of interest which may vary up or down during the period of a loan.
When taking a secured loan or mortgage, the security address is the address of the property which is being offered as collateral for the loan.
Self - Certified
Lenders that operate this type of scheme allow the applicant to confirm how much they earn by "Self-certifying" their income.
The credit-worthiness or otherwise of a potential borrower.
A detailed survey of the structure of a building carried out by a Structural Engineer or Chartered Building Surveyor.
Period of a loan expressed in months or years.
The process by which the ability of a prospective borrower to repay a loan is assessed (this is also the name of the department that undertakes this work). The process takes into account various factors including employment history, financial status, previous credit history and current earnings.
A brief inspection of a property for mortgage purposes confirming the suitability of a property to secure money against and its value.