Mortgage Jargon

Click on a link below to find the terminology you need explained.

| APR | Adverse Credit | Broker | Credit Rating | CCJs | Default | Equity | Loan Advance | Negative Equity | Right to Buy | Secured Loan | Settlement Figure | Sub Prime | Advance | Arrears | Cooling off period | Credit Scoring | Debts | Deeds Case | Fixed Rate | LTV | Non Status | Redemption Penalty | Self Declaration | Shared Ownership | Variable Rate |

APR (Annual Percentage Rate.) [ TOP ]

This allows you to compare the true cost of borrowing between different loan products.

Advance [ TOP ]

The amount of money being lent under a loan agreement.

Adverse Credit [ TOP ]

Credit or a loan that has not been paid well by the borrower in accordance with either a loan or credit agreement.

Arrears [ TOP ]

Payments on a loan or credit agreement which have been missed or are overdue by more than 30 days.

Broker [ TOP ]

A company or individual which/who searches a range of lenders for available loan products and matches against the borrower's circumstances. | A broker introduces a borrower to a lender who is able to help with the loan that is required.

Cooling off period - Consideration Period [ TOP ]

Amount of time given by law to allow a borrower time to consider a loan offer made to them, in which time the borrower is able to cancel their application if they so wish.

Credit Rating [ TOP ]

A term used to assess a borrower's credit worthiness based on their previous repayment history.

Credit Scoring [ TOP ]

Used by many banks and high street lenders to associate a number to certain elements of a loan application and credit search which added together give what is known as a "Credit Score". In order for the borrower to be approved by the lender for a loan, they must reach a minimum score set by a particular lender.

CCJ's - County Court Judgements [ TOP ]

A county court judgement is registered against a person or company who owes money to another, if the person owed money has asked the court to recover the debt and it has ordered so.

Debts [ TOP ]

Amount of money owing.

Default [ TOP ]

Where a borrower is in arrears on payments, they have defaulted on their credit or loan agreement. It is known as an account in 'default' if the lender has issued a 'Notice of Default' to the borrower. This is usually the stage before a CCJ (see above) and often seen as a 'Final Demand' for payment.

Deeds Case [ TOP ]

Where a property is owned outright and there is no mortgage remaining or any other secured loans owing, which are by way of a security against the property.

Equity [ TOP ]

The difference between the amount of money secured on a property in the way of a mortgage, and the current value of that property. | i.e. Value of property - Amount of mortgage = EQUITY

Fixed rate [ TOP ]

A rate of interest which is fixed for the entire term of the loan or mortgage for a specific period from the date when the loan is taken out. More common on mortgage products.

Loan Advance [ TOP ]

Amount of money being lent under a loan agreement.

LTV (Loan To Value) [ TOP ]

Similar to the equity calculation, but also includes the loan advance amount. The mortgage balance is added to the loan advance, then divided by the property value to give the LTV. | i.e. mortgage balance (£75,000)+loan advance ( £20,000 ) = £95,000 | This, divided by a property value of for example £135,000 gives an LTV of 74%. | The closer the margin is between the two values the higher the LTV.

Negative Equity [ TOP ]

This is where your mortgage balance is higher than the current value of your property.

Non Status [ TOP ]

This is a term usually associated with mortgage companies who are not a recognised and well known high street lender, and the mortgage products they offer are classed as non status mortgages or loans.

RTB ( Right To Buy) [ TOP ]

This is the term used when a council tenant is able to buy the property they live in from the council, or have already done so in the past. The purchaser will have a discount from the council and be able to buy at a value less than its current sale value.

Redemption Penalty [ TOP ]

Most lenders charge a redemption penalty when a loan or other finance agreement is settled early. The amount of the penalty varies between lenders, and is usually calculated in a number of months interest forward, that you would have paid if you had chosen not to settle the loan.

Secured Loan [ TOP ]

A loan secured on property by way of a legal charge until all Monies owing on the loan agreement are paid in full. Secured loans are lower risk for lenders so rates a much lower than unsecured loans.

Self Declaration - Self Certified Income [ TOP ]

This is used when a person or persons cannot provide proof of how much they earn. It is mainly used in instances of people who are self employed, sole traders, or even partnerships or directors of limited companies cannot provide accounts, proof of earning, or it is difficult to assess, or in cases where a person does not have an accountant.

Settlement Figure [ TOP ]

This is an amount that is calculated by a lender in accordance with the terms of the consumer credit act which is the amount required for you to pay in order for you to settle your loan in full. All lenders must send you this promptly following you making a request to them.

Shared Ownership [ TOP ]

A shared ownership property means you own a certain percentage of it, and another person or company owns the remaining percentage which could be more or less than the percentage of the property you own or have a mortgage on. Shared ownership properties are usually owned partly by a housing association, and partly by you.

Sub - Prime [ TOP ]

This term is associated with lenders who offer finance to people who have had credit problems in the past.

Variable Rate [ TOP ]

With a variable rate of interest, this means the rate can go up or down in relation to the Bank of England base rate. Slight increases or decreases in the Bank of England base rate will not normally effect your loan payments. Lenders use variable rate agreements as a safeguard in case the Bank of England base rate increases by large amount.