Whether you’re looking to purchase your first home, remortgage or move to a dream home mortgage Jargon will always be there. This guide is there to help you understand the different terms used so that you make them large financial decisions with confidence when using The Mortgage Bubbles turnkey mortgage & protection service.
If all else fails then please contact us and we will be happy to help.
A
Increasing borrowing by releasing some of the equity available in a property.
An assessment to find out whether your mortgage would be affordable based on your income, credit commitments and essential household spending. For buy-to-let mortgages an affordability check will also take into account rental income.
The overall cost of the mortgage including interest and fees.
A fee charged by your lender for setting up your mortgage.
If you are in arrears it means you have missed one or more monthly mortgage payments. Getting a mortgage with mortgage arrears could limit who will lend to you. A specialist Lender may be needed so contact us to get the crucial advice
An Assured Shorthold Tenancy offers the landlord a guaranteed right to repossess his/her property at the end of the term stated in the tenancy agreement.
B
The interest rate set by the Bank of England.
A fee you have to pay your bank for either going into an un-authorised overdraft, or for unpaid Direct Debits, cheques or standing orders because you don’t have sufficient funds in your account.
A loan to purchase or refinance a residential property which is intended to let to tenants rather than to be lived in by the mortgage borrower.
Insurance that covers you for damage to the structure of your property. Your lender will require that you have buildings insurance in place when you take out a mortgage.
C
A tax you pay on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that has increased in value. It’s the gain you make that is taxed, not the amount of money you receive.
A capped rate mortgage means the interest rate charged by your lender will never go over its ‘capped’ limit even if the Bank of England changes the base rate.
A request to change the name of the parties named on your mortgage account.
A property let to a company. It may also be referred to as a corporate let.
A request to let out a property on which a residential owner-occupied mortgage is currently held.
The legal process you go through when buying or selling a property. Normally undertaken by a licensed conveyance or solicitor.
A County Court Judgment is made against you for non-payment of debt and an application to the County Court is made for a Judgement against you to claim back the money. If the Court then decides the debt is to be paid, they will issue a CCJ which will set out how the debt should be repaid. Having a CCJ may make it harder for you to obtain a mortgage.
A statistical number based on analysis of a person’s credit files, to evaluate the creditworthiness of the person
A person or business that money is owed to.
D
A person or business that owes money to another party.
Sometimes known as an Agreement in Principle. This is a document from your lender confirming that you can borrow a certain amount and can be used as proof that you can afford to buy a property. Contact us to receive your decision in principle certificate.
The amount you are required to put towards purchasing a property.
E
A fee you will have to pay if you redeem your mortgage during a specified period. This is usually the period of the initial deal.
A type of interest only mortgage where you also pay money into an investment called an endowment to pay off the mortgage at the end of the term.
If a lender requests mortgage details from your existing mortgage lender, the existing lender may charge an enquiry fee.
The amount of property that you own outright. It is calculated as the difference between the property’s actual value and the mortgage held against the property.
F
The mortgage interest rate of your mortgage stays the same for an initial fixed rate period.
Is a financial regulatory body in the United Kingdom.
G
H
A property rented to at least 3 people who are not living in one household but who share facilities such as the bathroom or kitchen. It is sometimes called a ‘house share’.
I
J
K
L
The official body responsible for maintaining details of property ownership.
LTV or loan-to-value is the value of the mortgage compared to the value of the property expressed as a percentage.
M
The amount you pay your mortgage lender each month under the terms of your mortgage contract.
The formal contract between a borrower and a lender which outlines the legal obligations of the borrower and the rights of the lender if the borrower fails to make repayments.
N
You are in negative equity if the amount you owe to your mortgage lenders is more than the value of your home.
O
The amount owed to your lender on your current mortgage.
A person who owns a property and who will be living in the property as his sole or principle residence.
P
A form to report end-of-year expenses and benefits for employees who earned £8,500 or more.
An annual summary of all your payslips. Your employer gives you one at the end of each tax year, if you still work for the employer.
Per calendar month.
The purchase price or the conservative market value of the property being used as security for a mortgage.
One of two bodies responsible for regulating financial services in the UK working alongside the Financial Conduct Authority (FCA)
Q
R
A Changing your mortgage without moving home. You could remortgage if you want to save money, change to a different type of mortgage or release equity from your property.
to report end-of-year expenses and benefits for employees who earned £8,500 or more.
The amount of money collected by a landlord from a tenant or group of tenants for using a particular property.
Also known as a capital and interest mortgage, your monthly payments will cover both the interest and reduce the outstanding balance.
Sometimes referred to as a repayment plan, this is the means you will use to pay off the capital at the end of an interest only mortgage term.
S
A form showing your proof of earnings issued by HMRC.
Sometimes referred to as second mortgages they have secondary priority behind your main (or first charge) mortgage.
A system HM Revenue and Customs (HMRC) uses to collect Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a tax return.
A tax you pay when you buy a property for more than £125,000.
An agreement is not yet legally binding.
T
U
A reduction in mortgage repayments that is agreed with your lender.
V
A check carried out by the lender to find out whether the property is worth the amount you’re paying for it. You should always have your own survey done too, to check for any structural problems.
The mortgage interest rate may move in line with market conditions and therefore your repayments could go up or down.
W
X
Y
The rental income from a property calculated as a percentage of its value.
Z
Your home can be repossessed if you do not keep up the repayments on your mortgage
Some Buy to Let mortgages are not regulated by the Financial Conduct Authority
