GLOSSARY

The yearly cost of credit, including not just the rate of interest, but also associated costs. These rates are used to compare the cost of borrowing money from different lenders.

The charge placed by the lender for the arranging of the mortgage. Most, but not all, lenders charge a Valuation Fee.

Overdue debt payments that should have been made and are building up over time.

Finance raised against business assets and equipment. The finance can be secured against existing assets and equipment or the value of new ones purchased with the funding.

An interest rate set monthly by the Bank of England. Financial companies use the Base Rate to set the interest rates they charge on debts.

A temporary loan. Often advanced to help someone buy a new property before they have sold their existing one. Also referred to as Gap Finance or Swing loans.

Finance gained in order to help a struggling company.

Finance gained in order to start a new company.

A mortgage intended for people who buy a property to rent out.

The type of mortgage where both the you capital (the amount of money borrowed) and some of the interest is paid off each month. Often also referred to as a repayment mortgage.

When a company sells its accounts receivable invoices to a third party in exchange for funding. Often referred to as Factoring.

The legal processes involved in buying and selling property.

Enforceable conditions contained within deeds that the buyer must comply with. Positive covenants require that something like build on or maintain the property be undertaken. Negative (Often called Restrictive) covenants prevent the buyer from doing something, such as not building or not changing the facia of a house.

Given to a mortgage buyer by a lender before they start the formal loan application process. The decision in principle lets the buyer know the amount they can afford before they start looking for properties. Also referred to as Offer of Advance.

A rate of interest that is reduced during the initial period of the loan.

A charge payable on certain loans and mortgages if they are repaid before a set time, usually before the end of the incentive period. Also known as a Settlement Charge.

When a house is worth more than the mortgage on it the difference is known as the Equity. For example, if an outstanding mortgage is £100,000 and the property is worth £150,000, there is an equity of £50,000.

When a company sells its accounts receivable invoices to a third party in exchange for funding. Often referred to as Cash Flow Funding.

A type of mortgage where the repayment rate is fixed for a set period of time.

A type of mortgage that contains features such as the ability for borrowers to make overpayments when they have spare cash, the option to reduce or miss payments inn the short-term, and to re-borrow any overpayments.

Legal title that gives the freeholder absolute ownership of the land their property is on.

A temporary loan. Often advanced to help someone buy a new property before they have sold their existing one. Also referred to as a Bridging or Swing Loan.

A report by a surveyor on the condition of a property being considered for purchase. This is more detailed than a valuation but less detailed than a structural survey.

A type of mortgage where only the interest is paid-off every month, not the capital.

An individual or company that recommends a client uses a certain lender or broker. Introducers usually receive commission for any business resulting from the introduction.

A loan where there is more than one named individual responsible for repayments.

A person who owns a property but leases it to others.

This means a person has rights over a property for a set period of time but not the land the property is on. After this period, ownership of the property reverts to the freeholder.

This is the amount of interest banks in the City of London pay each other for loans.

The mortgage amount expressed as a percentage of the property value. For example, if you borrow £85,000 and your property costs £100,000, then the loan to value is 85%.

A top-up loan offered over and above the loan from a bank. Often used by property developers to secure 100% funding.

A type of loan used to buy a property. The loan is secured against the property as security for the lender in case the buyer fails to repay the loan.

When the value of the outstanding mortgage is more than the market value of the property.

Given to a mortgage buyer by a lender before they start the formal loan application process. The offer lets the buyer know the amount they can afford before they start looking for properties. Also referred to as Decision in Principle.

The amount of the loan on which interest is calculated.

A loan taken in order to develop residential or commercial property through renovation, extension or construction.

Charges included in a loan agreement that will be imposed on the customer if they repay the loan early.

A mortgage loan which replaces another mortgage. The mortgage is moved but the property stays the same.

The type of mortgage where both the you capital (the amount of money borrowed) and some of the interest is paid off each month. Often also referred to as a Capital and Interest mortgage.

Where a lender takes possession of the property because they have failed to make numerous mortgage repayments.

A type of mortgage aimed for people building their own property. The loan is paid out in stages as the construction advances

A type of pension plan selected personally by most investment industry insiders. SIPPs normally provide access to a wider range of investments than a typical personal pension.

A charge payable on certain loans and mortgages if they are repaid before a set time, usually before the end of the incentive period. Also known as an Early Repayment Charge.

A self-administered pension scheme which is defined as one having less than 12 members.

A tax payable upon the purchase of a property. Some properties are exempt from Stamp Duty due to their value and/or location. For further information see the HM Revenues & Custom site here.

A full survey carried out on a property by a surveyor. This is the most extensive check of the property, both on the outside and inside and should detect most faults. This service is optional and costs more than the Homebuyers survey but provides greater protection for the potential buyer.

A type of mortgage aimed at people with adverse credit. Sub prime borrowers have either missed or been late with payments in the past.

A temporary loan. Often advanced to help someone buy a new property before they have sold their existing one. Also referred to as a Bridging Loan or Gap Finance.

The legal documents which prove the ownership of a property or land.

A type of mortgage where the rate tracks the Bank of England base rate by a set percentage for a set period of time.

A term applied to a property where the seller has provisionally accepted the buyer’s offer.

An undertaking is a condition of mortgage where the borrower must carry out certain works within a set time period.

The figure that a Surveyor will decide upon regarding the price of a property. A valuation is undertaken to ensure that the property is worth the amount requested for a mortgage.

The charge for the valuation of the property. Most, but not all, lenders charge a Valuation Fee.

A type of mortgage where the rate payable against it can go up or down over time depending on variables such as the Base rate.

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