| Adjustment Date
Date on which interest rates change for variable rate mortgages.
Administration Charge
Some lenders will reserve a proportion of the fee charged for the valuation to cover their own costs. If an application does not proceed, this part of the valuation fee may not be refunded, even if the valuation has not taken place.
Advance
Amount of your mortgage/loan.
Agreement In Principle
This means you have been accepted for a mortgage or other financial product, but it will depend on issues such as a valuation report and confirmation of employment.
Annuity Mortgage
Another term for a capital & interest repayment mortgage.
Arrangement Fee
A fee charged by a lender for setting up the loan. Normally payable upon completion but may sometimes be added to the loan.
Base Rate Tracker
A mortgage that tracks the base rate at an agreed level for a set period of time.
Bridging Loan
A loan which is taken to solve a temporary cashflow problem when buying property or renovating.
Bad Credit Mortgage
The market is so competitive that even if you have bad credit there is usually a mortgage out there for you, however the interest charged will be above average.
Buy to Let
A specialist mortgage product designed for people who are purchasing a property to rent rather than live in.
Cancellation Clause
A clause in a loan agreement that allows a lender to ask for the outstanding balance at any time.
Capped Rates
The mortgage interest rate will not exceed a certain value during a certain period of time, although it will fluctuate above and below the current level.
Cashback Mortgages
In addition to the loan you will also receive a certain amount of cash. However nothing comes for free so check the smallprint!
Completion Date
The official date for completion of a sale of a house, when keys are actually transferred.
Discount Rate
The mortgage interest rate is lower than the current normal standard variable rate, but only for a certain period of time. Usually shown as a fixed percentage reduction to the lender's normal variable rate e.g. 2.00% discount for 2 years.
Early Redemption Payment
Penalty charged by a lender for withdrawing from a mortgage before the date specified in the mortgage conditions. These penalties are usually associated with fixed or discounted loans.
Equity Release Mortgage
This is a means of retrieving some of the profit equity) locked in your home. You will usually be able to access up to 95% of the equity in your property and receive it in a cash lump sum.
Expatriate Mortgage
A specialist mortgage product designed for individuals working overseas who want to purchase a UK property or vice versa.
Flexible Mortgages
A mortgage which allows you to be flexible (eg. take payment holidays etc.) without having to pay penalties.
Group Mortgage
A mortgage taken up by 2-4 people based on their joint income. The property would be owned in equal shares.
IFA
Independent financial advisor is an advisor who has no affiliation with other financial companies.
Interest Only Mortgage
A loan where only payments of interest are paid to the lender during the term of the loan. All mortgages other than capital and interest repayment loans are a form of interest only loan. Some lenders will allow loans to be set up without any specific provision to repay the capital at the end of the period this is known as a pure interest only loan.
ISA Mortgage
Interest only mortgage where the capital required to pay off the loan at the end of term is paid into an ISA, this product is relatively new and has sparked much controversy.
ISA
A tax free saving scheme, which allows investors to save up to £7,000 a year in shares, cash, or insurance policies, without having to pay any capital gains tax when the portfolio value rises.
Legal Charge
The means by which lenders enforce their rights to a property, and is recorded at the land registry. There are various different types of legal charge and the type used will vary from lender to lender. Building societies tend to use a charge for the specific amount that they have lent
Loan Illustration
Is the example of the monthly cost of a mortgage and other expenses associated with the loan such as set-up costs.
Local Authority Search
A search of local authority records to confirm the status of the property. Local authority searches should reveal any proposed changes in the area, the details of the planning permission for the subject property and whether any enforcement notices have been served by the local authority.
Mortgage in Principle
This is a document provided by a mortgage lender specifying that they will give you a loan up to a certain value 'in principal'. This will give greater leverage when pursuing a property. It is a good idea to get a mortgage offer in principal before you start looking, this way you will know your budget too.
Muslim Mortgages
This type of mortgage is compliant with the laws of Islam, it is quite easy to obtain a mortgage of this type on the high street.
Negative Equity
A situation that occurs when the amount loaned against a property is in excess of the market value of the property.
Offset Mortgage
Your mortgage account effectively becomes your bank account. You get a chequebook, direct debit facility, credit & cash card and regular statements etc. Your earnings are paid straight into this "mortgage/bank account". Theoretically you pay less as your earnings are used to pay back the loan.
Redemption
This is paying off the mortgage, either to move to another property or at the end of the mortgage term.
Redemption Charges
These are any charge levied by the lender when the mortgage loan is repaid before the end of the full term. See also early redemption penalty.
Remortgage
Taken in order to raise cash or when you switch lenders to save money.
Self Certification
This type of mortgage provides a solution to those who have the problem where income cannot be guaranteed or documented. They are exactly the same as a regular mortgage except you dontt have to prove your income.
Term
The mortgage term is the length of time before the mortgage loan must be repaid
Valuation Fee
A fee paid by the borrower for the lender's inspection of the property. This is normally paid on application.
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