A glossary of terms and words used in the mortgage industry.

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Phrase or WordDefinition
AdvanceThe mortgage supplied by the mortgage provider.
Adverse CreditA borrower or application that has past problems with bad credit, for instance late payment, bankruptcy or County Court Judgement.
Adverse Credit LenderA mortgage provider who lends to applicants with adverse or bad credit.
Adverse Credit MortgageAn adverse credit mortgage for borrowers who have had credit problems.
AdviceA recommendation about the most suitable mortgage for the applicant made by the Mortgage Adviser.
AdviserSee Mortgage Adviser
Adviser FeeThe fee charged by a mortgage adviser for locating and processing the most appropriate mortgage, can be paid either up front, on successful offer or on mortgage completion.
AffordabilityAn applicants ability to repay the mortgage.
Affordability CalculationA mortgage provider may use this method to calculate whether an applicants income is sufficient to service the new mortgage and their existing debts.
Agreement In PrincipleSee Decision In Principle
Annual Percentage Rate (APR)APR is an industry standard calculation that enables direct comparison of mortgage products. The calculation reflects the total cost of a loan including interest rate charges and product fees, with the result being shown as a percentage.
ApplicantsThe term used to describe the person or persons applying for the mortgage.
Application FeeA fee charged by the mortgage provider to process the mortgage application, normally charged upfront.
Arrangement FeeA product fee charged by the mortgage provider. The arrangement fee is normally paid on successful arrangement of the mortgage, or can sometimes be added to the loan.
AssignmentThe transfer of ownership of an insurance policy or a lease.
Bad CreditA term applied to a borrower or application that has problems with credit, for instance – late payment, bankruptcy or County Court Judgment (CCJ).
Bad Credit MortgageA bad credit mortgage allows an applicant that has bad credit such as defaults and CCJs to borrow mortgage funds.
Balance OutstandingThe amount of the mortgage still owed at a particular moment in time.
Bank Legal FeeA fee charged by the mortgage provider to cover the legal costs which they may incur.
Bank of England Base Rate (BOE)The rate of interest set by the Bank of England.
BankruptA debtor (person, company, organisation) whose assets are administered by a court appointed trustee for the purpose of redistribution to the debtors creditors.
BankruptcyThe legal process by which a debtor who owes more than their assets has these assets transferred to a court appointed administrator.
Base RateThis is a generic term used to describe the basic rate of interest set by governments or financial institutions. Base rates are usually applied to tracker products, as the total rate of interest paid is calculated by combining a base rate plus a margin rate set by the mortgage lender.
BonusesAny income that an applicant uses that is not part of their regular salary, often performance related.
Booking FeeA fee charged by a mortgage provider to reserve funds for a particular mortgage product.
Bridging loanA short-term loan used to purchase a property. Often used as a temporary solution until a long term lending option becomes available.
BrokerSee Mortgage Adviser
Broker FeeSee Adviser Fee
Building RegulationsThe health and safety requirements that any new construction must meet.
Building SocietyA mutual institution owned by its investors and borrowers that provides a range of savings and mortgages.
Buildings InsuranceInsurance against the cost of rebuilding a property from scratch following structural damage, for example flood or fire.
Buy-To-LetA mortgage used to buy or remortgage a property which the applicant intends to rent to tenants.
CapitalThe mortgage amount you borrow from the mortgage provider
Capital and InterestA mortgage where the monthly mortgage payment will consist of 2 elements. The first element is to pay the cost of the mortgage interest, the second is to repay the capital borrowed over the mortgage period. Also known as a Repayment Mortgage
Capped MortgageA mortgage that has a maximum limit on the interest rate the borrower will have to pay during a specified period.
Cashback MortgageA mortgage that comes with a cash sum incentive.
ChargeAn interest in the ownership of a property, usually a mortgage or some other debt secured against the property.
Charging OrderA charge registered through the courts on a piece of property or land by a party to whom you are in arrears.
Collar MortgageA mortgage that has a minimum limit on the interest rate the borrower will have to pay during a specified period.
CommissionSee Procuration Fee
Company applicationsSome lenders insist that the mortgage is set up in the name of a limited company. The client will need to ensure they already have or will set up a company that will meet the requirements of the lender. The lender may insist on this for legal reasons or it may just been an option for the client which in some cases, can favour the clients tax position.
CompletionThe completion date is the date your solicitor transfers the money from your lender to the vendors solicitor or, in the case of a remortgage the date the new lenders funds are transferred to the borrowers existing lender to repay their existing mortgage.
Completion FeeThis is a fee charged by the mortgage provider on successful drawdown of the mortgage funds.
Contents InsuranceInsurance against accidental damage or theft of all movable contents, inside the property.
ContractA document that describes the agreement under which the property will change hands.
Conveyance FeeThe charge paid – usually to a solicitor for transferring property ownership.
ConveyancerSee Solicitor
ConveyancingThe process of transferring property from one party to another, usually managed by a solicitor or a licensed conveyancer.
County Court Judgment (CCJ)A ruling of bad debt issued by the courts, that will be recorded on an individuals credit file.
CovenantA condition, contained within the Title Deeds or lease, that the purchaser must comply with.
Credit CheckThe process where a check is made on an applicants credit history.
Credit HistoryA history of a persons debts. Checking a credit history allows a lender to make an assessment as to whether a prospective client will maintain their mortgage repayments.
Credit RatingSee Credit Scoring
Credit ReportA report which details the credit history of an individual.
Credit ScoringMortgage Providers often use a system called credit scoring to help them decide whether or not to offer a mortgage to an applicant.
CurrencyThe currency that the mortgage must be repaid in.
Daily Interest MortgageA mortgage in which interest is calculated daily.
DebtAn amount owed by one party to another.
Debt ConsolidationThe process of combining outstanding debts e.g. loans, credit cards etc, into one loan.
Decision in Principal (DIP)A lender agrees to advance monies conditional upon the verification of the borrowers details.
DeedsLegal documents that show property or land ownership.
DefaultThe failure to keep up with repayments on a credit agreement (such as a mortgage) – see what is bad credit
DepositThe amount of money a provided by the borrower towards the property purchase or remortgage.
Direct DebitAn instruction from an individual to their bank or building society to make regular payments from their bank account.
DisbursementsCosts for legal work carried out in relation to the purchasing or remortgaging of a property
DischargeThis happens once a mortgage has been repaid.
Discharge FeeAn admin fee charged by a mortgage provider to cover the cost of transferring the property ownership documents at the end of the mortgage term. Also known as a Deeds Release Fee.
Discount MortgageWhere the initial rate of interest charged by the mortgage provider is less than the standard rate charged.
Discount PeriodThe length of time a discount or special rate of interest will apply.
Disposable IncomeThe amount of money left from a persons income after the deduction of regular debts and living costs.
Early repayment chargeA charge imposed by a mortgage provider should the borrower repay the mortgage earlier than the product terms allow.
EasementA legal right over land.
EquityThe difference between the mortgage amount and the property value.
Equity ReleaseWhen an individual wishes to raise finance against the available equity in a property.
Equity Release – Home ImprovementsWhere a mortgage provider will allow equity release, but only for improvements on the mortgaged property.
EuriborThe term used to describe the base rate that applies to Europes Euro interest rates.
European Central BankThe rate of interest set by the European Central Bank.
Exchange of ContractsThe point of the property purchase where contracts are exchanged and the terms become legally binding for both parties.
Financial Services Authority (FSA)The Financial Services Authority – the regulator of financial services in the UK. Currently Overseas mortgages are not regulated by this authority.
First ChargeThe first (or main) mortgage held on a property.
Fixed Rate MortgageA mortgage where the interest rate will remain the same for a specified period.
Fixtures and FittingsAll non-structural items included in the purchase of a property.
FreeholdLegal title that gives you absolute ownership of the land your property is on.
Further AdvanceAn additional loan to an existing mortgage which is already secured against the property.
GuarantorSomeone who guarantees to meet mortgage payments in the event the borrower does not do so.
Higher Lending Charge (HLC)A fee that is sometimes charged by a mortgage provider when the loan to value ratio is above a certain limit.
Income MultiplesA method sometimes used by a mortgage provider to calculate how much an individual can borrow.
Individual Voluntary Arrangement (IVA)A formal arrangement between a debtor and their creditors
IndividualsWhere an application is processed in the name of a private individual/s rather than in the name of a company.
Interest OnlyA mortgage payment method where no capital is being repaid to the mortgage provider as you are only making monthly payments to cover the mortgage interest.
Interest RateThe charge levied by mortgage providers in exchange for them lending money.
Joint MortgageA mortgage where there is more than one named individual responsible for the contract.
Land PurchaseThis is a mortgage available for the purchase of land rather than property.
LeasebackA purchase where the property is bought by an individual from a developer, and the property is then leased back to the developer for a guaranteed rent over a specified period.
LeaseholdWhere the land that the property is built on is owned by separate freeholder and not the property owner. This normally requires the property owner pays ground rent to the freeholder.
LenderSee Mortgage Provider
Life InsuranceInsurance which pays out on the death of the policy holder. This is a compulsory requirement with some mortgage providers.
Like for LikeA remortgage arranged on a the same loan amount as the existing mortgage. Normally used by borrowers looking for a better rate of interest.
Loan to Value (LTV)This is the amount of mortgage expressed as a percentage of the total value of the property.
Local Authority SearchA search of the local area to highlight anything that may impact on the property or surrounding area, e.g. planned road building, planning permissions etc
Local CompaniesA company set in the same country as the property, so to provide ownership rights.
London Inter Bank Offered Rate (LIBOR)A base rate of exchange that banks traditionally use to lend money to each other. LIBOR applies not only to the Pound Sterling, but also to major currencies such as the US Dollar, Swiss Franc, Japanese Yen and Canadian Dollar.
MarginThe additional rate of interest charged by a mortgage provider over and above the base rate.
Maximum LoanThe maximum amount of money the mortgage provider is prepared to lend.
Maximum TermThe maximum period the mortgage can be taken for.
Minimum LoanThe minimum amount of money the mortgage provider is prepared to advance.
Monthly InterestA mortgage where the interest is calculated on a monthly basis.
MortgageA loan which is secured against land or property.
Mortgage AdviserA Mortgage Adviser helps you understand the various mortgage types and deals available to you. A Mortgage Adviser may recommend a mortgage to you or they may provide you with information to enable you to make your own choice.
Mortgage BrokerSee Mortgage Adviser
Mortgage DeedA legal document relating to the mortgage providers interest in the property.
Mortgage FeesA general description of all fees charged by a mortgage provider.
Mortgage Indemnity Guarantee (MIG)See Higher Lending Charge
Mortgage LenderSee Mortgage Provider
Mortgage OfferA formal offer to lend money to the applicants so they can buy or remortgage the property.
Mortgage ProviderThis is the name of the mortgage company who will provide the mortgage funds to complete the purchase or remortgage. Also known as a Mortgage Lender.
Mortgage TermThe length of time over which the mortgage is to be repaid.
Negative EquityWhere a mortgage and other loans secured against a property is greater than the actual property value.
Non-resident nationalsA person with the same nationality as the country in which they wish to purchase or remortgage, but who doesn't currently live in that country, for example a Polish applicant living in the UK wanting to buy in Poland.
Open Market ValueThe value of a property based on current market values.
OvertimeAdditional income earned by an applicant based on extra hours worked.
Planning PermissionThe permission granted by the local planning authority to change or build new properties.
Processing FeeA fee charged by the lender just to process the application, normally charged upfront.
Procuration FeeA payment received by a Mortgage Adviser from the mortgage provider for introducing business to them.
Product OverviewA general description of the mortgage product.
Purchase PriceThe actual price paid for the property.
QuotationAn illustration to show a breakdown of costs for a particular mortgage.
Redemption ChargeSee Early Repayment Charge
Reduced DocumentationWhere the lender will consider applicants that do not have all the normal documentation such as proof of income.
RemortgageThe process of changing your mortgage for a different one, without moving home.
RenovationA property that needs some work.
Rental CalculationA method used by mortgage providers to calculate the amount of rental income required to qualify for a particular mortgage amount.
Repayment MethodThe method chosen to repay the capital borrowed on the mortgage.
Repayment MortgageSee Capital and Interest
RepossessionThe Legal process by which a defaulting borrower is relieved of their ownership of a particular property, usually via a forced sale.
RetentionWhere a mortgage provider holds back part of the mortgage amount until certain conditions are met.
Self BuildWhere an applicant wishes to buy a plot of land and build their own property to live in.
SolicitorLegal expert handling all documentation for the sale and purchase of a property.
Stage PaymentsWhere a mortgage provider agrees to disclosure mortgage funds at agreed stages, typically used in development properties.
Subject to ContractWords to indicate that an agreement is not yet legally binding.
SurveySee Valuation.
TenantsResidents who live in a property but do not own it.
TenureUsed to describe property ownership. An overseas property must be either freehold or leasehold.
TitleThe record of ownership of a property, the evidence of which is found in the title deeds.
Total Amount PayableThe total cost of repaying a mortgage.
Total RateThe total rate payable by the applicant.
Tracker MortgageA mortgage where the interest rate is linked to a particular base rate plus a lending margin.
Transfer of EquityAdding or removing a party to or from a mortgage.
UnencumberedAn unmortgaged property that is already owned by an applicant.
ValuationA survey carried on a property to determine its general condition and market value.
Valuation FeeA fee charged by a mortgage provider or property valuer so to carry out a property valuation.

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