Jargon buster
Here's our jargon busting A-Z of mortgage terms
Speaking plainly, a mortgage is debt. You know you need to
understand the cost of borrowing a large sum of money and think
about the best way to repay it, but that's easier said than done
when the mortgage market is so complex and stuffed with jargon. Our
team will take the time to explain it and give you all the
information you need. Ultimately, we'll help you find the mortgage
that's exactly right for you. Start now by reading our
jargon-busting mortgage alphabet!
A Annual Percentage Rate (APR)
The APR shows the overall annualised cost of a loan, taking into
account the term (i.e. the length of time before the mortgage must
be repaid), interest rate and other costs.
B Buy-to-let Mortgage
A loan which is taken out with the intention of renting to
tenants.
C Cashback Mortgage
A mortgage that comes with a cash sum, which is often a percentage
of the amount borrowed.
D Discounted Mortgage
A mortgage which has a lower variable rate of interest for a set
period, after which it will increase.
E 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 change to another lender.
F Fixed Rate Mortgage
A loan where initial payments, for a length of time, are based on
a specific interest rate. The rate payable will not change during
that period regardless of changes to the lender's standard variable
rate.
G Guarantor Mortgage
With a guarantor mortgage, either a parent or a relative agrees to
guarantee the mortgage in the event that you fail to make the
mortgage repayments. Having a guarantor may also enable you to
borrow more money than your income would usually allow, because
your guarantor's income (less any other financial commitments) is
taken into account.
H Higher Lending Charge
An insurance premium to insure the lender against any loss of
money if, for example, you default on your loan or face
repossession. This usually applies only if you borrow more than
70-75% of the price asked for the property you are buying (this
can, however, differ depending on the lender.) Even though you have
to pay for the insurance premium, it does not mean that you are
covered by the insurance the lender is.
I Interest only Mortgage
A mortgage with which you pay only the interest charges of the
loan each month. You are not reducing any of your capital and so
you must repay this in some other way, e.g. An alternative savings
plan.
J Joint Application
A mortgage application that involves more than one person as the
borrower.
K 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 and the monthly payment figure.
L Loan to value (LTV)
The ratio of the loan amount to the property valuation expressed
as a percentage. For example, if a borrower is seeking a loan of
£100,000 on a property worth £200,000, it has LTV rate of
50%.
M Mortgage
A loan secured on a property.
N Negative Equity
The situation when the amount loaned on a property is more than
the market value of the property.
O Overpayments
Some flexible mortgages offer the borrower an opportunity to pay
more than the standard monthly repayment in order to pay the
mortgage off more quickly.
P Promise
A Mortgage Promise is an initial credit search and affordability
check to ensure you can borrow the amount of money you
require.
R Repayment mortgage
A loan which allows the borrower to make monthly repayments for an
agreed period (the term) until the loan and the interest are paid
back.
S Stamp Duty
A Government tax which home buyers must pay on the purchase of
properties above £125,000. (First time buyers are exempt from this
for properties up to the value of £250,000 until 25 March
2012)
T Tracker Mortgage
Tracker rates are linked to the Bank of England base rate which
means that they will always go up or down in line with changes to
the base rate.
V Variable Rate Mortgages
With a variable rate mortgage payments may go up or down with the
lender's standard interest rate. This may change following Bank of
England base rate changes.
Call 0845 111 1911 or send an email.
__________________________________________________________________________________________
The initial consultation with an adviser is obligation free. Thereafter, ESPC Money Management's charges for mortgage advice are usually £350 (£250 for first-time buyers).
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON
YOUR MORTGAGE.
ESPC,
90a George Street,
Edinburgh,
EH2 3DF