Financial Glossary

A

Advance
The amount of money you want to borrow. This is your loan advance.

APR (Annual Percentage Rate)
The total cost of a loan, including interest charges and product fees, shown as a percentage rate. The calculation assumes that you maintain the repayments for the full term. APR is an industry standard calculation and enables direct comparison of loans from all lenders.

Arrears
The term 'in arrears' is used to describe a loan or mortgage account owed by the borrower if he/she has failed to keep up the monthly repayments.

B

Balance Outstanding
The amount of loan owed at a particular time.

Bank of England Base Rate
The Bank of England set an interest rate each month known as the 'Base Rate'. Banks, Building Societies and finance companies use the Base Rate to set the interest rates they pay on deposits, or charge on debts.

Bridging Loan / Bridging Finance
A temporary loan advanced to help you buy a new property before you sell your existing one. We do not recommend that a secured homeowner loan is used for short-term bridging finance.

C

Charge
An interest in the ownership of a property; usually a mortgage or a second loan, which is secured against the property.

County Court Judgement (CCJ)
A decision reached in the County Court, which can relate to non-payment of debts. If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this.

Credit Reference Agencies
Organisations licensed under the Consumer Credit Act 1974 to hold information about the credit history of individuals. Lenders refer to these agencies to assist in making decisions about your application.

Credit Scoring
The system many Lenders use to help them decide whether they can lend money to you. They'll ask a series of questions about you and your finances and score your answers. Your score will result in you being accepted or declined a loan.

D

Debt Consolidation
The process of combining outstanding debts e.g. loans, credit cards etc, into one loan. Many customers consolidate their existing debts with a secured homeowner loan.

Direct Debit
A Direct Debit is an instruction from a customer to their bank or building society to make regular payments direct from their account.

Disbursements
All the various costs for carrying out the legal work in relation to buying or remortgaging your home.

Discharge
Paying off a mortgage.

E

Early Repayment or Settlement Charge
A charge payable on some loans and mortgages if they are repaid early. The amount depends on the loan outstanding and its terms.

Equity
If your house is worth more than the mortgage on it, the difference is known as the 'equity'. So for example, if your outstanding mortgage is £50,000 and your home is worth £60,000, you have equity of £10,000.

Equity release
Equity release schemes give home owners a way to turn some of the value of their homes into cash. Either a lump sum, regular extra income, or sometimes both.

F

Freehold
Legal title that gives you absolute ownership of the land your property is on.

H

Homeowner
A homeowner is a person who owns their home with a mortgage and lives at the property. They are an owner occupier.

Homeowner Loan
A homeowner loan is also known as a secured loan.

I

IFA
Independent Financial Advisor.

Interest Rate
The percentage of your loan that a lender charges you each year for lending you money.

J

Joint Loan Agreement
A loan where there is more than one named individual responsible for the contract.

L

Loan to Value (LTV)
The amount of mortgage expressed as a percentage of the property value. For example, if your mortgage amount was £80,000 and your property is valued at £100,000 your loan to value, or LTV, is 80%.

M

Mortgage Term
The amount of time that a mortgage is taken out and has to be repaid within.

N

Negative Equity
When the value of the mortgage, which is outstanding on the property, is more than the market value of the property.

Q

Quotation
A document with complete details itemising costs and fees which are involved when taking out a loan.

R

Remortgage
The process of moving your mortgage without moving home. You take a new mortgage with a different lender to pay off your old mortgage.

S

Secured Loan
A secured loan is underpinned by your property (includes assets such as Title Deeds to your house, life policies, etc). If you don't repay your mortgage or other secured loan, the lender has the right to sell these assets. A secured loan is sometimes also called a homeowner loan.

Self Certification
The borrower makes a statement of their income and the lender makes fewer checks on the accuracy of the statement.

Solicitor
Legal expert handling all documentation for the sale and purchase of a property.

Subject to Contract
Words to indicate that an agreement is not yet legally binding.

T

Tenants
People living in a property on a non-ownership basis. Secured loans are not available to tenants.

Title
The record of ownership of a property, the evidence of which is found in the title deeds.

Total Amount Payable
The total cost of repaying a loan or mortgage.

Transfer of Equity
Adding or removing a party to/from a mortgage or other secured loan.

U

Unsecured Loan
A loan provided to a borrower without them having to provide any security such as a charge over their house. Because the risk to the lender of not getting their money back is higher for unsecured loans than for secured loans, the interest rate charged is often higher. Unsecured loans are also sometimes referred to as personal loans.

V

Valuation
In most instances this is the figure that a surveyor will come to regarding the price of a property. This is done to ensure that the property is worth the amount requested for a mortgage

Variable Interest Rate
Rate of interest payment that fluctuates over time with general interest rates.

W

Writeback arrears
The agreed re-structure of a customer's account where contractual payments have not been maintained.