Acceptance
Fee: This is charged by some banks and building societies
when they give you a mortgage. does not charge an acceptance
fee.
Annualised
Percentage Rate (APR): this is a financial tool to help
you identify the true cost of borrowing and to give you
a way of comparing the true cost of different types of loan.
Annuity
Mortgage: This is another term for a capital and interest
repayment mortgage. As the mortgage progresses over time
the interest element of the repayment decreases while the
capital element increases. Thus allowing the mortgage to
be paid in full at the end of the term.
Base
Rate: This is commonly used to refer to the mortgage
lenders' standard variable rate.
Building Insurance: The insurance covering the structure
of the building. Any mortgage lender will need their interest
in your home to be noted on the policy.
Buy
to Let Loan to Value Ratio: The loan to value ratio
is the percentage of the loan that you are borrowing relative
to the value of the property that you are buying.
Capital:
The main part of the loan, in other words the original amount
borrowed.
CAR
(Compound Annual Rate): CAR (Compound Annual Rate) Interest
rates are expressed as compound annual rate (CAR) in order
to make a comparison of different returns for different
periods or interest rates. CAR is the equivalent rate per
annum and assumes that for periods of longer than one year,
the interest is compounded on an annual basis. In simple
terms CAR is what the interest rate would be if interest
was paid or credited each year.
Completion:
The
point at which the legal formalities of buying a property
or mortgage are finalised and you receive the money.
Contract:
A written legal agreement between the seller and the buyer.
Conveyancing
Fee: A fee charged by a Solicitor for arranging the
necessary legal work in transferring the ownership of a
property.
Deeds:
The documents that show the owner is legally entitled to
the property.
Disbursements
(conveyancing and outlay): The costs your solicitor
has to pay to carry out their work such as searches, Land
Registry fee, photocopying, postage and couriers. They in
turn, will charge you.
Endowment
Mortgage: Interest on the mortgage is paid each month
to a financial institution and repays the capital from the
proceeds of an endowment policy at the end of the loan term.
Equity:
The value of the property less the mortgage.
First Charge: Normal legal charge used to secure the main
(first) mortgage. A lender with a first legal charge over
a property has first call on any funds available when the
property is sold.
Fixed
Rate Loan: A loan where the initial payments are based
on a standard interest rate for a set period and the rate
you pay will not change during that period.
Freehold:
Owning the property and the site on which it sits with
no charges or other interests in the property.
Gazumping:
When the person selling the property cancels their agreement
on an offer from one buyer, in order to accept the offer
of a higher price.
Gross
Interest Rate: The rate of interest earned on a savings
account without the deduction of tax.
Ground
Rent: This is rent you pay each year on long lease.
HomeBond: This is a service provided by the National
Housing Building Guarantee Scheme, through registered builders,
to people buying new privately built houses and apartments.
It provides a:
HB47:
This is the certificate issued by HomeBond confirming
that the property address on the certificate has been registered
and is covered under their HomeBond Guarantee Scheme.
Land
Registry Fee: A fee you must pay to the Land Registry
to change an entry in their records after you buy your home.
Leasehold:
A property that is leased by the owner to a leasehold
or tenant for a fixed term. Unless the period of the lease
lasts for at least 30 years, it will be difficult to get
a mortgage on the property.
Legal
Searches: Searches are carried out by your solicitor
on all properties to check the person selling the property
has a legal right to it and that there is no other interest
shown on the title.
Loan
Approval Certificate: A certificate issued by to
a customer before they select a specific property. It confirms
the specific amount of loan the customer can borrow. However,
must be satisfied with the selected property before
a full loan application can be approved.
Loan
to Value (LTV):The amount you wish to borrow expressed
as a percentage of the value of the property.
Mortgage
Indemnity Bond: An insurance policy to cover the mortgage
amount over the maximum amount the lender would otherwise
have loaned you. pays the cost of this.
Mortgage
Protection: This refers to any life cover you need to
pay off the loan if you die.
Negative
Equity: This means that the value of the property is
less than the mortgage owed. This can arise if property
prices fall significantly.
Net
Interest Rate: The rate of interest earned on a savings
account after the deduction of tax.
NHGBS:
The National Housing Building Guarantee Scheme was established
to ensure that proper building standards are maintained
and protects purchasers by underwriting any major structural
defects. Under the scheme builders and developers register
properties with the scheme and pay a fee for each of them.
The buildings are inspected by officials during construction
and when everything is completed satisfactorily, a certificate
is issued guaranteeing the property against structural faults
for a up to 10 years. Should a fault or defect occur, the
builder or developer is responsible for rectifying it.
Pension
Mortgage: An interest-only loan where the capital will
be repaid from the tax-free cash that you can receive from
the pension fund when the policy comes to an end.
Professional
Indemnity Insurance: Insurance that a professional must
take out to provide cover in the event of professional negligence.
Redemption:
Paying off the mortgage, either to move to another property
or at the end of the mortgage term.
Refinancing:
Refinancing refers to the transferal of borrowings to a
different lender, usually to get more attractive terms or
to raise more capital.
Searches:
Searches are carried out by your solicitor on all properties
to check the person selling the property has a legal right
to it and that there is no other interest shown on the title.
Security/Collateral:
The mortgage is secured against your home. A mortgage lender
is entitled to sell the house if repayments are not maintained.
Special
Conditions: Specific terms of the mortgage, usually
shown in the loan offer letter.
Specified
All Risks Items: Specified All Risks covers specified
items such as jewellery, sports equipment, bicycles for
loss or theft both inside and outside of the home.
Split
Loans: This is a loan where part is on a fixed rate
and part is on a variable rate. In order to do this the
loan has to be split accordingly and two separate account
numbers are generated to represent each portion of the split.
Stage
Payments: This term refers to a loan cheque issued in
several stages. They are used, for example, when applicants
are building their own home by direct labour and cheques
are normally issued at foundation stage, wall plate stage,
roofing and completion stage.
Stamp Duty (on the purchase deed): A government tax which
is charged on second hand properties and new houses if the
floor area is greater than 125sq metres (1345 sq.ft).
Survey:
A full inspection of a property to check that it is structurally
sound.
Term:
The agreed length of time over which the mortgage is
to be repaid.
Title:
The legal right to ownership of a property.
Top
Up Loan: A type of second mortgage loan on a property.
Unspecified
All Risks Items: Unspecified All Risks covers unspecified
items such as jewellery, sports equipment, bicycles for
loss or theft both inside and outside of the home.
Valuation:
An inspection carried out for the benefit of the mortgage
lender to see if the property will provide good security
for a loan. This is not a structural survey - see "survey"
above.
Valuation
Fee: A fee you must pay to the lender to arrange an
inspection of the property. The cost is calculated at EUR
1.30 per EUR 1,000 of the purchase price subject to a minimum
fee of EUR 50 and a maximum fee of EUR 127.00. You will
normally pay this when you make your full application.
Variable
Rate Loan: A loan where interest rates can increase
or decrease throughout the term of a loan.
