Adverse Credit
The term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears,Guest Posting bankruptcy or CCJ’s. Other terms used to describe an adverse credit mortgage include:
Bad credit mortgage
Poor credit mortgage
Non status mortgage
Credit impaired mortgage
No credit mortgage
Low credit score mortgage
APR (Annual Percentage Rate)
The interest rate reflecting the cost of a mortgage as a yearly rate. The APR provides home buyers with the ability to compare different types of mortgages based on the annual cost of each.
Arrangement Fee
The fee you pay your Lender in return for them providing you with a mortgage. Usually paid on completion or with your application, these fees usually apply when you take out a fixed rate, discount or cashback mortgage.
AST (Assured Shorthold Tenancy)
A form of tenancy that gives the landlord the right to repossess their property after a set amount of time laid out in the tenancy agreement. New tenancies are automatically ASTs unless otherwise stated.
Assured tenancy
The landlord can charge a market rent (the current rate for similar property in that area) and take back the property under certain conditions, as set out in the Housing Acts of 1988 and 1996.
Bridging Loan/Finance
Short term loan to enable the purchase of one property before the sale of another essentially releasing funds that are required for the purchase. You should always consult a professional before considering any bridging finance as it could be a solution that is worse than the problem.
Brokers Fee
A fee charged by an intermediary or advisor for locating the most appropriate mortgage for the borrower.
Buildings insurance
Insurance you can take out when you buy a property that will cover the cost of any damage to the house and or contents..
Buy to Let
A mortgage meant for those who wish to purchase a property to rent out to others. The decision on whether you are able to repay this type of mortgage is often based up on the future rental income from the property rather than the personal income of you the borrower.
CCJ (County Court Judgment)
A judgement reached in the County Court generally realted to non payment of a loan, mortgage etc debt in general. If you pay off the debt, the CCJ will be satisfied and a note is put on your records that states this.
Chain
A housing ‘chain’ made up of a number of buyers and sellers, essentially the line of buyers and sellers involved in each house move.
Charge
Any right or interest, especially with a mortgage, to which a freehold or leasehold property may be held. Basically a charge is the claim the lender has on the property until the mortgage or loan is satisfied.
Completion
The term used when the seller and buyer exchange the finances required to buy a property through their respective solicitors. At exchange of contracts a deposit, usually 10%, will have been paid. At this point the buyer becomes legal owner of the property.
Conveyance
The legal process in which ownership of the property is transferred from the seller to the buyer. Generally undertaken by a solicitor, or licensed conveyancer.
Early redemption fee
If you decide that you want to sell your property or remortgage then you will be redeeming you mortgage early. Most lenders charge a penalty fee, especially during any period of a fixed, capped or discounted rate. Be sure you are clear about any potential penalties when you are about to take on a mortgage.
Equity and negative equity
The amount of value in a property that isn’t covered by a mortgage – simply take the amount of the mortgage from the valuation to work out the equity. vThis is where the money you owe on the mortgage is greater than the value of your property.
Exchange of contracts
The contract is a written agreement that lays out the terms between the buyer and the seller. When both parties exchange contracts, usually weeks before completion, the deal becomes legally binding. Often a deposit of around 10%, is paid at this stage.
Fixed Rate
A set interest rate on a mortgage fixed for a period of time. This varies from lender to lender.
Freehold
If you are the property owner outright then your property is freehold. Most houses are freehold wheres many flats are leasehold, since you are not the owner of the whole building containing the flats.
Gazumping
If you are in the process of purchasing a property and your offer has been accepted but the seller gets a better offer, before you complete, and takes it then, you’ve just been ‘Gazumped’.
Interest Only Mortgage
A mortgage whereby the borrower is only required to pay inerest on the amount borrowed during the mortgage term. It is the borrowers responsibility to ensure that enough funds will exist (either through an investment policy or other means) to repay the full mortgage at the end of the term.
Intermediary
A mortgage broker or advisor who finds the most this mortgage broker suitable mortgage for a borrower and arranges the mortgage on their behalf.
Leasehold
If you buy a leasehold property you don’t own the property rather the right to live there for a specified period of time, however much time remains on the lease. The owner of the property is called the freeholder or landlord.
Liability
This relates more to commercial mortgages. With a commercial mortgage liability for the repayment of the loan depends on the legal structure of the business:
A sole trader will be personally liable for the mortgage debt. Personal assets could be seized if the business defaults.
Partners are jointly liable for the debts of the partnership and their personal assets are at risk
With a limited-liability partnership and a limited company, the liability falls firstly on the business rather than on the individual partners and directors. The lender may take a floating charge on business assets in general, rather than simply on the current property being purchased.
The lender may also insist on personal guarantees as a condition of granting the loan, in which case the partners and directors may be held personally liable anyway.