Glossary

We at Remortgage Fast have decided to bring you the common terms you will come across a lot in the mortgage industry – in alphabetical order.

Accident, Sickness and Unemployment Insurance (ASU)

This is an insurance plan a borrower takes up, to cover them against any default in paying the mortgage. The unemployment cover could also be called redundancy cover.

Accountant’s Letter

This is a letter that verifies that the borrower earns money to enable them offset the loan payments in due time. It could be accepted in place of statement of account.

Added to Loan

This involves the extra charges that are added to the loan you collect. But they also come with extra interests.

Additional Security

When the loan being borrowed exceeds a particular amount, the lender may either get additional security – in form of an indemnity cover – to protect them against any probable loss. This security doesn’t cover the borrower. The lender may take property or shares as collateral.

Admin Charge

This is more like a few charged to cover for valuation. It’s usually non-refundable.

Arrangement Fee

When the home loan is set up, an arrangement fee is charged. It can be incorporated into the loan or paid differently.

Arrears

These are payments that are late and doesn’t accord with the due date agreed on the contract.

Base Rate

This is the interest rate set by the Bank of England.

Basic Annual Income

This is the  average amount a borrower is expected to earn yearly, regardless of the performance of the person or the company they work for.

Booking Fee

This is a fee the lender collects to help you get loans. It can be paid when you submit your loan application.

Broker

This is a a link between the borrower and the lender. This intermediary charges their own fees as it handles the processing of the mortgage.

Building Society

This is a collection of organisations that follow the rules and regulations set by the Financial Service Authority and other Acts.

Capital

This is the main amount of money that was borrowed. Also called Principal.

Capital Raising

These are extra funds that are left after (if) you remortgage your property and offset any existing loans.

Centralised Lender

This is just a lender who operates from a centralised location and doesn’t have any retail office.

Completion

This refers to the handing over of the property to the new owner (the borrower), after the legal transactions have been done.

Conditional Insurance

This is any insurance policy plan you take before you can access the mortgage.

Contents Insurance

This is policy plan that covers your belongings. It’s different from building insurance.

Conveyancing Fee (sometimes called Disbursement)

This are fees including land registry costs and stamp duty that a real estate solicitor charges to make ownership transfer legal.

The Council of Mortgage Lenders

This is a union of lenders.

County Court Judgement (CCJ)

This is the verdict on the case of debt.

Credit Check

This involves enquiries made by credit agencies to know about the credit history of the buyer.

Credit History

This is a record of your debt-to-income ratio, your defaults and other factors that help lenders determine if you should be given a loan.

Criteria

These are terms and conditions put up by the lender to inform the borrower of what it takes to access a loan.

Current Service

This has to do with how long you have in your current job.

Debt Consolidation

This involves using a new loan from a lender to offset other loans.

Decision in Principle

This is when a broker tells you they can (or cannot) help you get a mortgage. The decision is based on valuation, referrals, the information you give them and so on.

Default

This is the failure or inability to meet up with payments and other requirements. This also affects credit history.

Deposit

This is the money a borrower pay after contractual agreements have been signed.

Discharge Fee

This is also called sealing or deeds release fee. The lender takes this fee after the mortgage has been redeemed.

Discount Rate

This is an interest rate reduced below the Standard Variable Rate (SVR) – for sometime.

Draw Down Facility

A chance the lender leaves open for the buyer to enable them borrow more money later – without valuations and checks.

DSS Payments

Money which the Department of Social Security pays to the lender to enable them service the loan.

Early Repayment Charge

Money a borrower pays for taking money from a mortgage before the due date.

Earned Income

The borrowers annual income.

Employer’s Reference

A letter from the borrower’s employer recommending them for the loan.

Equity

If you sell your home, the amount you will get is the equity.

Exchange

This is the handover of contracts when deposit has been paid.

Existing Liabilities

Any bills you have to pay – school fees, health bills and so on. Also called outgoings.

First Charge

Legal fee for securing a loan.

Fixed Rates

These are interest rates that doesn’t change regardless of any change in SVR.

Homebuyer’s Valuation Fee

The cost of getting an inspector to look round a property you wish to purchase. A homebuyer’s report can also be gotten.

Housing Association

A society that encourages good housing and helps buyers or sellers work with legitimate companies.

Incentive

What the borrower is offered to persuade them to consider working with a lender or broker.

Individual Saving Accounts (ISA)

Where stocks, life assurance policies and cash deposits are held.

Interest

The money you pay to service the loan – asides the capital.

Joint Application

When more than one person applies for the loan.

Land Registry

A directory of properties in the county. Land registry fees can be paid to change any information already tendered.

Leasehold

The buyer doesn’t own the property immediately. A leasehold stays in charge for a while.

Legal fee

Money paid to a solicitor.

Lender

The institution giving the borrower the money.

Loan

The money borrowed.

Loan Illustration

The monthly mortgage payment given as an example.

Local Authority Search

Going through local records to verify the property’s status.

Mortgage

When the property you want to purchase is used as collateral in case you don’t complete your payment. A deed is legal paperwork binding the agreement.

Office of Fair Trading (OFT)

An office that ensures consumers are not shortchanged and competitors are following due process.

Open Market Value

How much the seller and buyer agree on the property.

Part & Part

Part of the loan and part of the interest.

Port

Transferring mortgage to a new property.

Quotation

A list of items and their costs.

Redeem

Ability to pay off a mortgage.

Refinancing

Getting a loan from a new lender.

Remortgaging

Changing your mortgage without switching houses.

Repayment

Monthly payments.

Right to Buy (RTB)

The right for tenants to buy the house they live in.

Option for council tenants to purchase the property in which they reside, often at a discount proportional to the length of the occupancy.

Security Address

The address of the property the borrower uses as security.

Semi-commercial

A building that will be used for both commercial and residential purposes.

Stamp Duty

Tax paid to the government on sale above £60,000.

Standard Property

A bungalow, terraced, detached or semi-detached house.

Subsidy

Money paid to the

Term

The duration for paying off a loan.

Tracking

Keeping up with a loan application.

Underwriting

Accessing the capabilities of a borrower to pay off a loan.

Valuation

Accessing a property to know it’s value.

Finally, if you’re in Hampshire, you can call Remortgage Fast on the number on top of the page for any terminologies you wish to know more about.