This is the term used if the borrower has suffered a poor credit history. This could include previous mortgage or loan arrears, CCJ's or bankruptcy. Other terms used to describe an adverse credit mortgage include:
- Credit impaired mortgage
- Bad credit mortgage
- Poor credit mortgage
- No credit check mortgage
- No credit mortgage
- Low credit score mortgage
An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the advertised rate on the mortgage, because it represents the total cost of the loan. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan.
This is a fee you pay to your Lender in return for providing you with a mortgage. Usually paid on completion or with application , these fees usually apply when you take out a fixed rate, discount or cash back mortgage.
Document transferring rights of ownership from one person to another, such as an endowment policy to the building society in connection with a mortgage. Can also be the document transferring the lease on a property.
Accident, Sickness and Unemployment insurance (See also MPPI). This insurance is designed to cover the borrowers mortgage payments in case of accident, sickness or involuntary unemployment.
Public sale of a property to the highest bidder. The purchaser must immediately sign a binding contract and should ensure that all valuations, searches etc are carried out prior to the sale.
A method of payment of funds which has all the appearances of a cheque, but in effect is a cash payment.
Base Rate Tracker
The newest type of mortgage. The interest rate is variable but set at a premium (above) the Bank of England Base Rate for a period or even the term of the mortgage. The biggest advantage of this type of mortgage is that, usually there is little or no early repayment charge. This also means that interest can be saved on the mortgage without penalty, by overpayments, and these savings can be quite significant.
Arrangement fees, are charged in connection with some mortgages, often they are charged in connection with a fixed or capped rate loans. The fee is normally non-refundable if charged upfront, some times it is added to the mortgage debt on completion.
A fee charged by an intermediary or advisor for locating the most appropriate mortgage for the borrower.
Mutual organisation specialising in lending money to individuals to purchase or remortgage residential properties. Most of this money comes from individual saving members who are paid interest. A proportion of building society funds is also raised on the commercial money markets. Since the early eighties there has been a progressive relaxation of the rules governing the allowable sources of building society funds for lending to allow societies to compete more effectively with banks and there is now no restrictions as between the allowable proportions of 'retail' and 'wholesale funding'.
This is the most wide ranging check of the outside and inside of a property. This is carried out by professional surveyor and it should pick up all but the most hidden faults.
This is a mortgage designed for people who wish to purchase a property to rent out to others. The ability to repay this type of mortgage is often based on the projected rental income from the property as opposed to the personal income of the borrowers.
Your monthly payments are partly to pay the interest on the amount you borrowed and partly to pay the outstanding mortgage and ongoing costs involved in a mortgage.
An interest rate charged on a mortgage where there is a guarantee from the mortgagee that the rate will not exceed a certain amount usually for a set period of 1 - 5 years but which will reduce if the standard variable rate falls below the capped rate.
A payment you receive when you take out a mortgage. It may be a fixed amount, or a percentage of the amount of the mortgage.
County Court Judgment. A decision reached in the County Court which can be for not paying debts. If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this.
Any right or interest, especially a mortgage, to which a freehold or leasehold property may be held.
Moveable items such as furniture or personal possessions.
When the sale and purchase of the property are finalised and you become the owner of your new house.
Legally binding agreement for sale. In two identical parts, one signed by seller and one by purchaser. When the two parts are exchanged (exchange of contracts) both parties are committed to the transaction.
The deed by which freehold, unregistered title changes hands. If the property is leasehold and unregistered it is called an assignment. If the title is registered the deed is called a transfer.
The legal process involved in buying and selling property.
This is a way in which a lenders assess whether you are a good risk to offer a mortgage to.
A check the lender makes with a specialist company to find out whether you have any CCJs or a bad credit record.
This is a means to repay high interest debts (such as credit cards and personal loans) by incorporating them into a new mortgage.
The amount of money you put towards buying your property.
A solicitors expenses for example: land registry fees, searches, faxes etc.
An interest rate which is set at a set margin below standard variable rate usually for a period of 1 - 5 years. Used as an incentive to attract potential new borrowers.
This a fee charged by a lender if you pay off part or all of your mortgage before the agreed date, or you move your mortgage to another lender. These charges mainly apply to fixed rate, discounted rate and cashback mortgages.
A life assurance policy that is designed to produce a lump sum to pay off an interest-only mortgage. There are various different types of endowments.
The amount of value in a property that isn't covered by a mortgage - simply take the amount of the mortgage from the valuation to work out the equity.
Exchange of Contracts
This is the point at which you and the person selling the property sign and swap identical contracts that show the price and which fixtures and fittings are being sold, as well as the date on which everything is to be completed. When contracts are signed, everything becomes legally binding and if you or the seller pull out before completion you or they will have to pay compensation.
The interest charged on a mortgage is set for an agreed period.
Any item that is attached to a property and so legally is part of the property.
This type of mortgage is relatively new. The interest rate is variable but has the big advantage that it is calculated daily instead of annually. This means that any capital repayment of the loan will affect the interest charged on the outstanding balance immediately. By making regular overpayments, the interest saved on the mortgage over the term can be quite significant. Also, most lenders will allow funds to be drawn from the account up to the original mortgage balance or even allow payment holidays.
This is where you own the property and the land that it is on.
This is when the person selling the property accepts an offer and then accepts a new, higher offer from another buyer before exchange of contracts.
Gross monthly repayment
This is the monthly amount you must repay to the lender.
A fee that a leaseholder has to pay the freeholder every year.
This is the person liable for the repayment of a mortgage if a borrower fails to maintain their mortgage payments. This is usually a parent or close family relative.
This is a property survey which lies between a mortgage valuation and a full survey. It is a multi-page report which gives the buyer some peace of mind about the property they are purchasing.
Higher Lending Charge
A Higher Lending Charge is paid to take out an insurance policy designed to indemnify the mortgagee (lender) against loss in the event of default on the mortgage repayment. It is normally taken out by the lender at the start of the mortgage and the mortgagor (borrower) is made to pay the premium! The premium is normally calculated as a percentage (5.8% is typical) of that part of the loan above a certain percentage of the property value, normally 70 - 75%. It is charged as a lump sum to the borrower and can usually be added to the mortgage advance. It should be understood that such policies are for the protection of the lender and NOT the borrower.
Income protection insurance
Income Protection Benefit provides a monthly benefit should you to be unable to work due to incapacity caused by accident or illness, resulting in a loss of earnings.
This is confirmation from your employer that you earn the amount you stated when you made your mortgage application. If you are self employed, the lender may require confirmation from your accountant.
Interest Only Mortgage
With this type of mortgage, the borrower is only required to pay inerest on the amount borrowed during the mortgage term. It is the borrowers responsibility to ensure that enough funds will exist (either through an investment policy or other means) to repay the mortgage at the end of the term.
A mortgage broker or advisor who locates the most appropriate mortgage for borrowers and arranges the mortgage on their behalf.
If you buy a leasehold property, you own the property for a set number of years but not the land on which the property is built, as opposed to freehold where you own both the property and the land indefinitely.
An alternative to using a solicitor. This people specialise in the legal side of buying and selling property.
Loan to Value. This refers to the size of the mortgage as a percentage of the value of the property i.e. A £45,000 mortgage on a house valued at £50,000 would mean that the LTV would be 90%.
A loan to buy a property where you put up the property as security against you paying back the loan.
The Company or Organisation that lends you the money.
The person taking out the mortgage.
This insurance provides a monthly benefit to help you pay your mortgage for up to 12 months if you are unable to work due to accident, sickness and/or involuntary unemployment.
When monthly payments to a mortgage are increased so that the mortgage is repaid before the end of the mortgage term. Flexible mortgages allow overpayments to be made without penalty allowing significant interest savings over the mortgage term.
A period during which the borrower makes no mortgage payments. Normally only available to borrowers with a flexible mortgage who have previously overpaid their monthly repayments.
A term used to describe a mortgage that can be transferred between properties when you move house.
Penalties levied by the lender when a borrower pays off the mortgage before the end of the agreed repayment period. These are often charged on fixed, capped or discounted rate mortgages.
The process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.
Your monthly payments are partly to repay the amount you borrowed and partly to pay the interest on the outstanding mortgage. This is also known as a capital and interest mortgage.
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.
Right to Buy
A tenant in a council owned property may purchase the property at a discount depending on length of their tenancy.
These are checks carried out during the conveyancing process. These checks are made with local authorities and other official organisations to check planning proposals and other matters that may affect the value of the property and it's saleability in the future before making a loan.
A scheme operated by a developer where the developer retains a percentage equity of around 10% in the property. Thus the developer holds a second charge over the property. The 10% owing may be interest free or may incur interest and be added to the total amount owing on the property.
A scheme operated by a housing association where a person owns part of the property and pays a mortgage on this, while the housing association owns the rest of the property and the person pays rent on this.
This is a tax payable on the purchase of a property by the purchaser. For properties with a purchase price of up to £125,000, no stamp duty is charged. For properties between £125,000 and £250,000, 1% stamp duty is payable on the purchase price. For properties between £250,000 and £500,000 it is 3% and for properties over £500,000 it is 4%. Please note for First Time Buyers properties with a purchase price of up to £250,000, no stamp duty is charged.
Standard Variable Rate. This is the interest rate that the lender charges. The rate goes up and down and your repayments are adjusted accordingly.
The period of years over which you take the mortgage and when you have to repay it.
This is an insurance policy designed to help repay the mortgage on the death of the insured person during the policy term. Level Term Assurance covers a lump sum throughout the policy term and pays out the full amount on death. Mortgage Decreasing term Assurance is designed to help repay the balance outstanding upon death during the policy term. Term Assurance may also pay out early on the diagnosis of a terminal illness.
As a condition of a special mortgage deal, you may have to agree to stay with the lender for a period of months or years after the deal has ended. If you move your mortgage elsewhere during this period, you may have to pay an early repayment charge.
Documents that show proof of who owns the freehold and leasehold property.
This is where the property is owned outright and no mortgages or loans are secured against it.
A simple check of the property in order to find out how much it is worth and whether it is suitable to lend a mortgage on.
A fee paid by a borrower to cover the cost of the lender checking that the property is suitable security for the mortgage loan.
The interest rate the lender charges. it goes up and down and your repayments change accordingly.
The person selling the property.