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• Agreement/Decision in principle
• Arrangement Fees
• APR
• Buy To Let
• Capped Rate Mortgage
• Capital Repayment
• Cash-flow
• Conveyancing
• Deposit
• Discount Rate
• Due diligence
• Early Repayment Charge
• Equity
• Fixed Rate
• Freehold
• Further Advance
• Ground Rent
• Higher Lending Charge
• HMO
• Interest Charges
• Interest Only
• Leasehold.
• Legal Fees
• Leverage
• Loan to Value (LTV)
• Mortgage
• Mortgage Rate
• Offer of Loan
• Re-mortgaging
• Service Charges
• Snagging
• Stacking
• Stamp Duty
• Survey
• Term
• Valuation
• Variable Rate
• Yield
Agreement/Decision in principle
An indication of the likely outcome of a loan application. This is not a formal offer but includes a credit check with a credit reference agency and an assessment of your ability to repay the loan amount requested. Once you have been given an agreement in principle the lender would make further checks to validate the information you have provided and check that the house you have chosen is suitable for them to lend against. At that stage they would then offer you a formal Offer of Loan.
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Arrangement Fees
Charged to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed or capped rates.
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APR
Annual percentage rate of the total charge for credit: this is the standard way (laid down by the Financial Services Authority Mortgage Conduct of Business rules) of working out the true interest rate. By law, the APR has to be shown by all lenders alongside their quoted interest rates for each mortgage term, to enable potential borrowers to make comparisons between offers made by different lenders.
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Buy To Let
A mortgage used to buy property which is to be used solely for the purposes of renting out to a third party.
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Capped Rate Mortgage
A loan where a maximum rate of interest is set at the start of the mortgage. During the capped rate period the interest rate can fall below the capped rate but will never rise above it.
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Capital Repayment
There are 2 ways of repaying a mortgage - capital repayment or interest only. With a capital repayment mortgage, the capital and interest elements of the loan are paid off with each monthly installment so that the balance reduces over time. At the end of the mortgage term the balance will be nil.
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Cash-flow
The amount of cash being received and spent by an investor during a defined period of time, sometimes tied to a specific project.
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Conveyancing
The legal process involved when buying or selling property.
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Deposit
Monies used as a down-payment on a property.
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Discount Rate
This interest rate is discounted from the published bank standard variable rate, or 100% standard variable rate if applicable, for an agreed period from the start of the mortgage.
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Due diligence
The research process involved in assessing a property deal. This involves getting comparables for both rentals and property values in the area. (Refer to FAQ`s `How do you know the discount offered is genuine?`.
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Early Repayment Charge
A charge payable of some mortgages to cover administration costs in the event of a loan being repaid before the due date.
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Equity
The difference between the value of a property minus any outstanding loan.
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Fixed Rate
A mortgage rate where the interest rate is agreed at the outset and will not change during the term of the fixed rate.
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Freehold
A term which means that you own the property and the land it is situated on.
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Further Advance
A secured loan to release equity in your house or investment property for any purpose.
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Ground rent
Rent payable by the owner of a leasehold property to the freehold owner. (UK specific)
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Higher Lending Charge
The Higher Lending Charge (HLC) is a charge due on a mortgage with a Loan To Value (LTV) greater than 90%.
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HMO (House of Multiple Occupation)
A property occupied by five or more people. Each local council has different licencing requirements and you should consult with the local authority to ensure that your property conforms to their guidelines.
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Interest Charges
The charges that banks make on a loan, calculated as a percentage of the amount borrowed.
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Interest Only
There are 2 types of mortgage, interest only or capital repayment. With an interest only mortgage the balance of the mortgage stays the same throughout the mortgage term. Interest and a premium to an investment vehicle are paid monthly. At the end of the term, the proceeds from the investment vehicle are intended to repay the mortgage. The amount will depend on the performance of the investment vehicle. If you choose an interest only mortgage you will be responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the term.
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Leasehold
A system used mainly in England where you would own the property for a set period before handing back ownership to the freeholder.
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Legal Fees
The fees charged by a solicitor or other qualified individual to carry out the legal work associated with buying a house.
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Leverage
To use a small amount of money to control a large amount of money/asset.
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Loan to Value (LTV)
Loan to Value (LTV) refers to the amount of the mortgage compared to the value of the house (or purchase price or lower) you are considering buying. For example, a £80,000 mortgage on a house worth £100,000 would have an LTV of 80%.
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Mortgage
A loan made against the security of a property.
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Mortgage Rate
The standard variable interest rate quoted by all mortgage lenders which normally varies with the Bank of England base rate. All discounted rates are based on this Mortgage Rate.
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Offer of Loan
A formal document approving the mortgage you have requested and detailing the terms and conditions that will apply.
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Re-mortgaging
Moving mortgage from one lender to another without moving house.
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Service charges
Service Charges are paid by leaseholders and tenants living in blocks of flats. The charges cover the cost of:
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Upkeep and landscaping of shared gardens or other shared areas
Repair and maintenance of the structure, exterior and internal shared areas and shared buildings, including shared lighting, heating or emergency alarm systems.
The service of Estates Officers.
Cleaning of shared areas including shared windows.
Insuring the building if it is a block of flats.
Service charges are based on the actual cost of delivering the service. They are reviewed once a year and may increase or decrease. If costs relate to a number of flats, houses or maisonettes they will be apportioned on a one share per home basis.
You have the right to see our financial records relating to service charges (e.g. invoices) but you need to let us know a reasonable time in advance and we can make a reasonable charge for arranging this.
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Snagging
The process whereby all the small defects in a new property are identified and referred to the developer to be rectified.
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Stacking
The process of assessing a deal by comparing the financial variables within it to see if the deal is financially viable and worthwhile.
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Stamp Duty
A charge levied by the government on house purchases over £125,000.
up to £125,000 0%
£125,001 - £250,000 1%
£250,001 - £500,000 3%
£500,000 or more 4%
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Survey
A more thorough and costly evaluation of the condition and value of a property. Paid for by the customer.
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Term
The length of time you take to repay your mortgage.
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Valuation
An independent assessment of the value of a property carried out by an approved surveyor. Paid for by the customer, the valuation is used by the lender to decide how much they are prepared to lend. Many customers also choose to arrange a more comprehensive survey for their own purposes before they decide to buy a property.
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Variable Rate
This rate can go down as well as up during the course of your mortgage and is normally based on The Bank of England Base Rate.
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Yield
The annual rate of return on an investment, expressed as a percentage.
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