Mortgage
Miracle
Mortgage Types
Other Information
Jargon Buster
A list of TLF's and similar ...
A list of what?!!! Yes, I know, it really is a pain when someone starts to use industry related buzz-words and abbreviations, presumably in the mistaken belief that this makes it sound as if he actually does know what he is talking about! Here is a list of various terms and abbreviations you may come across, throw a couple in if someone starts to use them, could be amusing! Confusing clients isn’t clever, it’s dangerous.
OK, TLF means, simply Triple-Lettered-Acronym, beloved by the US military and similar types. Most of those listed below make sense and are not in any way pretentious but I must tell you my favourite, originating in the US Marines, a great source of unintelligible jargon, so here goes:
An essential part of every Marine's equipment was a CED, which actually stood for Combat Emplacement Displacer; any wiser? I thought not! A CED, was, wait for it .... a shovel, a thing with which to dig a hole, a combat emplacement, no less. Well, I though it was funny.
So, here we go.
Advance
The mortgage loan
APR
Annual Percentage Rate. A calculated rate of interest, including all associated costs, which is intended to allow direct comparison with different lenders, normally presented as %APR
Arrangement Fee
A fee charged by lenders for arranging your loan.
ASU
Accident, Sickness or Unemployment. An insurance policy designed to provide a regular income for a specified period in the event of accident, sickness or unemployment.
Bank of England Base Rate
The benchmark interest rate set by the Bank of England. In the past, mortgage lenders interest rates have closely followed any change in this rate, but the recent (and ongoing) credit crunch has resulted in the two becoming somewhat divorced. Recently, the Bank of England reduced rates, whilst, in response, the lenders increased theirs.
Booking Fee
Non-refundable booking fee that may be charged even if you are unable to complete your purchase. Typically, this could be £150 (Abbey) or £99 (Lloyds); expect other lenders to follow suit.
Capital and Interest
With a repayment mortgage your monthly repayments consist of both interest on the loan, plus a portion of the capital itself.
Capped Rate
A form of mortgage where your lender agrees that, for a specified time, the interest rate you pay will not exceed a specified % rate.
Cash-back
A form of mortgage where you receive a lump-sum of cash when you start your mortgage - watch out for claw-backs.
CCJ
County Court Judgement. Generally given for the non-payment of debts, this is registered on your credit file and will adversely affect your ability to receive favourable mortgage terms.
Completion
The day you actually become the owner of your new house and can move - pack the kettle on top, you will need it!.
Contracts
Legal documentation detailing terms and extent of sale.
Conveyancing
Legal means by which property is transferred from seller to buyer.
Credit search
Your lender will carry out a credit search to ensure that you represent an acceptable risk.
Credit scoring
Having carried out a search, many lenders then score the results to determine your credit risk.
Critical Illness Cover
An insurance policy designed to pay put a lump sum in the event of you being diagnosed with a specified illness, normally intended to cover the amount of your mortgage loan.
Deposit
Money you put down towards the purchase of the property.
Disbursements
Costs, other than solicitors fees, that you will have to pay as part of the purchase process, e.g. land registry, search fees etc.
Discount Rate
Discount off standard variable rate that lender agrees to, for an agreed, limited time period. Generally, the longer the period, the lower the discount.
Early Repayment Charge
Repay your mortgage early and this is the charge you may need to pay; particularly applicable to fixed, discounted,tracker, capped and cash-back mortgages.
Endowment
Extremely popular in the 80's, now largely discredited following miss-selling scandal, endowment policies are saving pans incorporating built-in life assurance. Intended to repay 'interest-only' mortgage upon maturity.
Exchange of contracts
The point in time at which seller and buyer formally agree, through their solicitors, the transfer of the property from one to the other. The purchase is then legally binding. Note that you, the buyer, are now responsible for your future home's property insurance.
Extended tie-ins
The lender will, if offering particularly attractive scheme, particularly fixed interest or similar, will require you to keep your mortgage with them, for a further period, even after the scheme has ended.
Fees
See Arrangement Fees above
Fixed rate
The interest rate is fixed for an agreed period of time.
Flexible mortgages
A relatively new type of mortgage type that allows some flexibility of repayments. Options may include the ability to overpay, underpay or take payment holidays. As some lenders calculate interest on a daily basis any overpayments have an immediate effect on the outstanding mortgage balance.
Gazumping
Generally, applicable only in a sellers market, this is the practice of the seller reneging on an agreement with one buyer, only to accept a higher offer from another, before exchange of contracts.
Homebuyer's Report
Government required report concerning the condition of your property, summerising findings and recommendations for future action.
Higher Lending Charge
An additional charge you will pay if your deposit is less than a percentage determined by your lender.
Income Multipliers
Often used to determine how much you can borrow. Typically, three times the gross income of the first applicant plus one times the second, determined by the lender..
Income Reference
The lender will usually request written confirmation of income from your employer.
ISA
Individual Savings Accounts are investments in the stockmarket in a tax efficient way. Using an ISA to pay off your mortgage could make a lot of sense but you must remember that anything to do with the stockmarket involves risk.
Leasehold
A form of land tenure where a person has rights over a piece of land for a specific period. Most residential leases have long terms and are usually set initially at 99 years or 999 years.
Licensed Conveyancer
As an alternative to using a solicitor for conveyer your property it is possible to use a Licensed Conveyancer, a practitioner who specialises in property ownership transfer.
Life assurance
A policy taken out by most borrowers to help repay the outstanding mortgage debt in the event of death.
LTV
Loan To Value. This refers to the size of the mortgage in relation to the value of the property. For instance a mortgage of £75,000 on a property of £100,000 value is said to be 75% LTV. The lower the LTV, the easier will be your search for a competitive mortgage.
MPI
Mortgage Payment Insurance. A plan which is designed to provide you with a monthly benefit to help pay your mortgage if, due to illness, accident or unemployment (if selected), you are unable to work resulting in a loss of earnings.
Negative equity
Where the property has a value which is lower than the loans secured against it.
Non status
A mortgage arranged under Non Status terms where evidence of income is not necessarily a requirement.
Offset Mortgages
A form of mortgage where you can link your savings and/or current account , and, instead of earning interest on them, use that “positive” to reduce the “negative” of your mortgage debt. This can reduce your monthly payment and significantly shorten the term of your mortgage
PEP
Personal Equity Plan. The forerunner of ISA's, PEP's are no longer available.
Personal Pension
This is a structured savings and investment plan designed to provide you with an income on retirement. As you can take some of the plan as cash it could be used to help repay an interest-only mortgage.
Remortgage
A new mortgage which might be with a different lender, or the same lender at the end of a fixed interest period, even though you are not moving home. It can be of the same size, bigger or smaller.
Repayment mortgage
Sometimes called a Capital and Interest mortgage, with a repayment mortgage your monthly repayments consist of both interest on the loan, plus a portion of the capital itself.
Sealing fee
A fee paid to your "old" lender upon closure of your mortgage account.
Searches
These are checks carried out during the Conveyancing process to determine any planning proposals or other matters which might affect the purchase or future salability of the property.
Self certification
Designed primarily for the self-employed, this is a special arrangement that allows the borrower to certify their own income. However, don’t think for one minute that just because you’re self-employed, you have to have a self-certified mortgage. Our brokers can discuss this with you.
Standard variable rate
The interest rate applied to the mortgage account when no other overriding scheme such as a fixed rate is in force. It fluctuates and used to follow the Bank of England base rate. In recent times the link between base rate and standard variable rate has loosened to the extent that variable rates have increased even when base rates have been lowered.
Structural Survey
A detailed inspection and report of the property, identifying areas of concern; expensive but particularly recommended for older or unusual properties, where hidden faults could be horribly expensive to rectify. Not performing a full structural survey is often a false economy.
Term
The period of years over which you take the mortgage.
Title deeds
Documents that show proof of ownership, now also recorded at the Land Registry,
Tracker mortgage
The lender agrees a rate linked to the Bank of England base rate in the form of either a loading or discount for a set period.
Transfer deed
The document that transfers ownership from the seller to the buyer.
Valuation Survey
All lenders will require a basic survey to be undertaken on the property before issuing the mortgage offer. The lender will want to know that the property is worth what you think i’s worth and is therefore adequate security for the amount of the mortgage. It’s purely for the lender’s benefit but you get to pay for it unless a particular product throws it in for you for free.
Vendor
The seller.
Just complete the form and we will do the rest.