Mortgages Explained
A mortgage is, in essence, debt and you need to understand the cost of borrowing large sums of money and give consideration to the best way of repaying your debt. We will help you find the mortgage that is exactly right for you.
The mortgage market is really complicated and filled with jargon. But don’t worry. ESPC Money Management will explain it all to you and give you all the information that you need.
You can start now by reading useful Jargon Buster below!
APR: Annual Percentage Rate – this shows the overall cost of a loan taking into account the term, interest rate and other costs.
Buy-to-let-mortgage: A loan you take out to buy a property with the intention of renting to tenants.
Capital: The amount you borrow to help buy your home.
Capped mortgage: A mortgage with a maximum limit on the interest rate you will pay during the deal period.
Cashback mortgage: A mortgage that comes with a cash sum which is often a percentage of the amount being borrowed.
Collared mortgage: A mortgage with a minimum interest rate you will pay during the deal period.
Decision in principle: A certificate that some lenders issue, showing the amount they will probably lend. This isn’t a guarantee, however it will provide an indication of your borrowing capacity.
Deposit: The amount of money you put into buying a home which does not include the amount you are borrowing.
Discounted mortgage: This has a lower variable rate of interest for a set period after which the rate will increase.
Early repayment charge: A charge that you may have to pay if you pay back part or all of your mortgage early even if you move to another lender.
Fixed rate: An interest rate that does not move up or down for a set period of time.
Income multiples: The number by which a lender multiplies your earnings to find out how much you can borrow.
Interest: The charge that lenders make when you borrow their money.
Interest-only mortgage: A mortgage in which you pay only the interest charges of the loan each month. You are not reducing any of your capital and you must repay this in some other way e.g. an alternative savings plan.
Interest rate: The figure that determines how much interest you pay. Usually linked to the Bank of England rates and can move up or down.
Key facts document: This is a standard document that all lenders and advisers must give you. It will explain the services they offer and how much they charge.
Key facts illustration: This is the mortgage illustration that will detail all you need to know about a particular mortgage product including the interest rate you will pay and how much the monthly payments will be.
Loan-to-value: The amount of money that you want to borrow compared as a percentage to the value of the property.
Mortgage: A loan secured on your property.
Remortgaging: Changing your mortgage for another one, without moving home.
Repayment mortgage: A loan in which you repay both interest and capital at the same time.
Secured: If you do not repay your loan, the lender can sell your home in order to get its money back.
Stamp duty land tax: A government tax that home buyers must pay on the purchase of properties above a set amount.
Standard variable rate mortgage: The lender’s normal rate without any discount or deals.
Survey: A report on the condition of the property you are planning to buy.
Tracker mortgage: A mortgage with an interest rate usually linked to the Bank of England base rate, moving up or down.
Term: The length of your mortgage, typically expressed in years.
Valuation: An inspection of your home you hope to buy, so the lender can ensure it is suitable security for the mortgage.
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Find out about the ESPC Money Management approach to financial advice
and how we can help first time buyers.
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Get in touch: Tel: 0845 111 1911
Visit: ESPC Showroom, 85 George Street, Edinburgh
E-mail: fsenquiries@espc.com |
Our charges for mortgage advice are usually just £350
(£250 for first-time buyers).
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON
YOUR MORTGAGE |