| A brief list of some of the most common Mortgage | | | | Liability |
| terms. | | | | This relates more to commercial mortgages. With a |
| Adverse Credit | | | | commercial mortgage liability for the repayment of |
| The term used if the borrower has a poor credit | | | | the loan depends on the legal structure of the |
| history. This could include previous mortgage or loan | | | | business: |
| arrears, bankruptcy or CCJ's. Other terms used to | | | | A sole trader will be personally liable for the mortgage |
| describe an adverse credit mortgage include: | | | | debt. Personal assets could be seized if the business |
| Bad credit mortgage | | | | defaults. |
| Poor credit mortgage | | | | Partners are jointly liable for the debts of the |
| Non status mortgage | | | | partnership and their personal assets are at risk |
| Credit impaired mortgage | | | | With a limited-liability partnership and a limited |
| No credit mortgage | | | | company, the liability falls firstly on the business |
| Low credit score mortgage | | | | rather than on the individual partners and directors. |
| APR (Annual Percentage Rate) | | | | The lender may take a floating charge on business |
| The interest rate reflecting the cost of a mortgage | | | | assets in general, rather than simply on the current |
| as a yearly rate. The APR provides home buyers | | | | property being purchased. |
| with the ability to compare different types of | | | | The lender may also insist on personal guarantees as |
| mortgages based on the annual cost of each. | | | | a condition of granting the loan, in which case the |
| Arrangement Fee | | | | partners and directors may be held personally liable |
| The fee you pay your Lender in return for them | | | | anyway. |
| providing you with a mortgage. Usually paid on | | | | Life insurance |
| completion or with your application, these fees usually | | | | If you have a joint mortgage, life insurance can be |
| apply when you take out a fixed rate, discount or | | | | acquired that will see the mortgage paid of should |
| cashback mortgage. | | | | one of you pass on. |
| AST (Assured Shorthold Tenancy) | | | | LTV (Loan to Value) |
| A form of tenancy that gives the landlord the right | | | | The size of the mortgage as a percentage of the |
| to repossess their property after a set amount of | | | | value of the property i.e. A £90k mortgage on a |
| time laid out in the tenancy agreement. New | | | | house valued at £100k would mean an LTV of |
| tenancies are automatically ASTs unless otherwise | | | | 90%. |
| stated. | | | | MIG (Mortgage Indemnity Guarantee) |
| Assured tenancy | | | | A one off payment made when you set up a |
| The landlord can charge a market rent (the current | | | | mortgage a kind of insurance policy for the lender. |
| rate for similar property in that area) and take back | | | | Thisoffers them protection against the value of the |
| the property under certain conditions, as set out in | | | | home falling to less than the mortgage. It is generally |
| the Housing Acts of 1988 and 1996. | | | | only charged to borrowers with a less than 10% |
| Bridging Loan/Finance | | | | deposit, but this can vary. |
| Short term loan to enable the purchase of one | | | | Mortgage |
| property before the sale of another essentially | | | | A loan to buy a property where the property is used |
| releasing funds that are required for the purchase. | | | | as security against you paying back the loan. |
| You should always consult a professional before | | | | Mortgagee |
| considering any bridging finance as it could be a | | | | The company or organisation that lends you the |
| solution that is worse than the problem. | | | | money. |
| Brokers Fee | | | | Mortgagor |
| A fee charged by an intermediary or advisor for | | | | The person taking out the mortgage. |
| locating the most appropriate mortgage for the | | | | Non-Status |
| borrower. | | | | Where a lender may not require income details from |
| Buildings insurance | | | | you or may accept some previous poor credit history |
| Insurance you can take out when you buy a | | | | i.e. CCJ's or previous mortgage arrears. |
| property that will cover the cost of any damage to | | | | Payment Holiday |
| the house and or contents.. | | | | A period during which the borrower makes no |
| Buy to Let | | | | mortgage payments. |
| A mortgage meant for those who wish to purchase | | | | Regulated tenancy |
| a property to rent out to others. The decision on | | | | A legal right to live in your accommodation for a |
| whether you are able to repay this type of | | | | period of time. Your tenancy might be for a set |
| mortgage is often based up on the future rental | | | | period such as a year (this is known as a fixed term |
| income from the property rather than the personal | | | | tenancy) or it might roll on a week-to-week or |
| income of you the borrower. | | | | month-to-month basis (this is known as a periodic |
| CCJ (County Court Judgment) | | | | tenancy).You are a regulated tenant if you moved in |
| A judgement reached in the County Court generally | | | | before 15 January 1989, you pay rent to a private |
| realted to non payment of a loan, mortgage etc debt | | | | landlord and your landlord does not live in the same |
| in general. If you pay off the debt, the CCJ will be | | | | building as you. |
| satisfied and a note is put on your records that | | | | Remortgage |
| states this. | | | | The taking on of a second mortgage to pay off the |
| Chain | | | | first. The most common reasons for doing this are |
| A housing 'chain' made up of a number of buyers and | | | | that another mortgage is available at a better rate or |
| sellers, essentially the line of buyers and sellers | | | | that the value of the property has gone up allowing |
| involved in each house move. | | | | for the opportunity to borrow more money against |
| Charge | | | | the property. |
| Any right or interest, especially with a mortgage, to | | | | Right to Buy |
| which a freehold or leasehold property may be held. | | | | For example, a tenant in a council owned property |
| Basically a charge is the claim the lender has on the | | | | may purchase the property at a discount depending |
| property until the mortgage or loan is satisfied. | | | | on length of their tenancy. |
| Completion | | | | Self Certified |
| The term used when the seller and buyer exchange | | | | Generally when a borrower applies for a mortgage he |
| the finances required to buy a property through their | | | | or she will be asked to provide pay slips or company |
| respective solicitors. At exchange of contracts a | | | | accounts to prove their income. If it is difficult or |
| deposit, usually 10%, will have been paid. At this point | | | | inconvenient for you to provide this evidence, you |
| the buyer becomes legal owner of the property. | | | | can choose to self-certify your income. This involves |
| Conveyance | | | | signing a declaration which states your income |
| The legal process in which ownership of the property | | | | sources and amounts. Lenders will charge you higher |
| is transferred from the seller to the buyer. Generally | | | | rates than average and offer you a more limited |
| undertaken by a solicitor, or licensed conveyancer. | | | | range of mortgages if you choose to self-certify |
| Early redemption fee | | | | your income, in general it's not a good idea to |
| If you decide that you want to sell your property or | | | | self-certify just to avoid some paperwork. |
| remortgage then you will be redeeming you | | | | Stamp Duty |
| mortgage early. Most lenders charge a penalty fee, | | | | Tax paid by the buyer of a property set at 1% for |
| especially during any period of a fixed, capped or | | | | properties over £60k, 3% for properties over |
| discounted rate. Be sure you are clear about any | | | | £250k and 4% for properties over £500k. |
| potential penalties when you are about to take on a | | | | Structural survey |
| mortgage. | | | | The most wide ranging check of the structure of a |
| Equity and negative equity | | | | property. This is carried out by professional surveyor |
| The amount of value in a property that isn't covered | | | | and should uncover any defects or faults with the |
| by a mortgage - simply take the amount of the | | | | building. |
| mortgage from the valuation to work out the equity. | | | | Tenancy |
| vThis is where the money you owe on the | | | | A legal written agreement between a landlord and |
| mortgage is greater than the value of your property. | | | | tenant that sets out the terms of the rental. |
| Exchange of contracts | | | | Term |
| The contract is a written agreement that lays out | | | | The period of years over which you take the |
| the terms between the buyer and the seller. When | | | | mortgage and repay it. |
| both parties exchange contracts, usually weeks | | | | Term Assurance |
| before completion, the deal becomes legally binding. | | | | An insurance policy designed to repay the mortgage |
| Often a deposit of around 10%, is paid at this stage. | | | | on the death of the insured person. Level Term |
| Fixed Rate | | | | Assurance covers a principal sum throughout the |
| A set interest rate on a mortgage fixed for a period | | | | policy term and pays out the full amount on death. |
| of time. This varies from lender to lender. | | | | Reducing Term Assurance is designed to repay the |
| Freehold | | | | balance outstanding on a repayment type mortgage |
| If you are the property owner outright then your | | | | upon death. Term Assurance may also pay out early |
| property is freehold. Most houses are freehold | | | | on the diagnosis of a terminal illness. |
| wheres many flats are leasehold, since you are not | | | | Underwriting |
| the owner of the whole building containing the flats. | | | | The process of evaluating a loan application to |
| Gazumping | | | | determine the risk involved for the lender. This |
| If you are in the process of purchasing a property | | | | involves an analysis of the borrower's |
| and your offer has been accepted but the seller gets | | | | creditworthiness and the quality of the property |
| a better offer, before you complete, and takes it | | | | itself. |
| then, you've just been 'Gazumped'. | | | | Unencumbered |
| Interest Only Mortgage | | | | Where the property is owned outright and no |
| A mortgage whereby the borrower is only required | | | | mortgages or loans are secured against it. |
| to pay inerest on the amount borrowed during the | | | | Valuation |
| mortgage term. It is the borrowers responsibility to | | | | A simple check of the property in order to find out |
| ensure that enough funds will exist (either through an | | | | how much it is worth and whether it is suitable to |
| investment policy or other means) to repay the full | | | | secure a mortgage against. |
| mortgage at the end of the term. | | | | Valuation Fee |
| Intermediary | | | | The fee paid by a borrower to cover the cost of |
| A mortgage broker or advisor who finds the most | | | | the lender checking that the property is suitable |
| suitable mortgage for a borrower and arranges the | | | | security for the mortgage. |
| mortgage on their behalf. | | | | Variable Rate |
| Leasehold | | | | A type of interest rate the lender can charge. It |
| If you buy a leasehold property you don't own the | | | | goes up and down and your repayments change |
| property rather the right to live there for a specified | | | | accordingly. |
| period of time, however much time remains on the | | | | Vendor |
| lease. The owner of the property is called the | | | | The person selling the property. |
| freeholder or landlord. | | | | |