84 Mortgage Terms to Know: A Glossary of Mortgage Terms
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| 84 Mortgage Terms to Know: Glossary of Mortgage Terms |
As a house buyer, your mortgage is tailored to your position and lifestyle. First Home Mortgage specializes in a wide range of loans that can match your requirements. Your loan officer will go through your alternatives with you and provide you with the best loan terms available.
1. Additional Security Fee
An extra security fee (mortgage indemnity guarantee policy) is the charge paid to get an insurance policy that will protect your lender in the event of a payment default. Together with your mortgage advance, you must pay the additional security charge and the premium. Although you are paying the premium, keep in mind that this coverage is for your lender's protection, not yours.
2. Administration Fee
Your lender will charge you an administrative fee to begin working on the documentation portion of your mortgage application. It also includes the house-value fee. Even if your valuation is not completed or your application is refused, the administrative charge will not be returned.
3. Adverse Credit
If you have a history of negative credit, bankruptcy, CCJs, or loan defaults, you have bad credit. Adverse credit can also be referred to as terrible credit, poor credit, or having a low credit score.
4. Agricultural Restriction
An agricultural restriction is a rule that prevents you from owning property if your occupation is connected to agriculture in any way.
5. Annual Percentage Rate
The APR is the interest rate at which you borrow money from a lender. It covers all of the upfront and continuing expenses that you will incur during the length of your mortgage. The annual percentage rate, or APR, is the cost of a mortgage expressed as a yearly rate. Based on the yearly cost of each loan, the annual percentage rate is a handy approach to evaluating offers from different lenders.
6. Apportionment
Apportionment, also known as sharing out, is a feature that allows you to split the liability for utilities, property taxes, and so on with the buyer or seller of the property when selling or purchasing it.
7. Arrears
Arrears occur when you miss a mortgage payment or any other sort of debt obligation. If you have arrears on your existing mortgage's record, you will have difficulty remortgaging or securing a new mortgage.
8. Arrangement Fee
An arrangement fee is an amount you must pay your lender to access specific mortgage options. You will pay this charge when you submit your application for a fixed-rate, cash-back, or reduced-rate mortgage; it must be added to the loan after the term, or it will be taken from the loan upon completion.
9. Assignment
An assignment is a document transferring a parcel of property or rights of power from a dealer to a buyer. It may be a talent policy for the structure of society in connection with a mortgage.
10. ASU
ASU is Accident, Sickness, and Severance Insurance, which covers your mortgage payments in case of an accident, sickness, or involuntary severance.
11. Auction
An auction is the public sale of a property to the person who quotes the loftiest shot. The loftiest endeavor has to subscribe to a listing contract that ensures that he does all valuations, searches, etc. before the sale of the property.
12. Authority to Inspect the Register
An authority to check the registration document is a document from the legal or listed proprietor of a property allowing the solicitor of the purchaser to get information concerning the property.
13. Banker Draft
A banker draft is a type of payment. In appearance, it's the same as a check, but in effect, it's a cash payment. The plutocrat is given to the bank, and they issue a check that's certified to be good for the given quantum.
14. Base Rate Tracker
Base rate shamus is a type of mortgage in which the interest rate is variable, but it's set at a decoration over the Bank of England base rate for a period or the full term of the mortgage. The stylish part about this type of mortgage is that it has little or no redemption penalty. This means that by making prepayments, you'll be able to save money on interest by paying off your mortgage earlier than the agreed-upon date on the original mortgage contract.
15. Booking Fee
A booking figure or arrangement figure is charged when applying for a fixed or a limited-rate loan. Reserving freight is typically non-refundable if charged outspoken, but occasionally the booking figure is added to your final mortgage payment.
16. Bridging Loan
A bridging loan is useful when you want to buy a property, but your capability to do so is contingent upon the sale of your old property. This is a veritably short-term loan that's paid off as soon as your old property sells. Speak with a loan counselor before taking out a bridging loan to be sure it's the right option for you.
17. Broker Fee
A broker fee is paid to your debt counsel or another conciliator that assists you in changing the stylish mortgage or loan deal for your circumstances. BSA The Building Societies Association, or BSA, is an organization that works on behalf of its member societies.
18. Building Societies Commission
The Building Societies Commission is a non-supervisory association for building societies. This commission makes recommendations to the Treasury Ministers.
19. Building Society
A building society is a collective association that gives plutocrats the right to buy or remortgage domestic parcels. This plutocracy comes from individual investors who are paid interest on their finances. A portion of erecting society's finances is also raised through marketable plutocrat requests.
20. Buy-to-Let
When you buy a property for the sole purpose of renting it out, you can apply for a steal-to-let mortgage. The payments for this type of mortgage are calculated based on your projected rental income rather than your particular income.
21. Capital and Interest
Your yearly mortgage payments correspond to two corridors: interest and capital. The interest payment is a payment made on the loan's interest balance. The capital payment is a payment on the quantum that you espoused.
22. Capital Raising
Capital raising generally means remortgaging for an advanced quantum, and then you need to pay off your mortgage to use the redundant plutocrat for other particular fiscal uses.
23. Capped Rate
A limited interest rate is an interest rate that won't exceed the standard variable interest rate for a set period (from 1 to 5 times) that's decided by you and your lender. However, your interest rate will drop accordingly if the standard variable rate falls below your limited rate.
24. Cash Back
Cash reverse is the amount you admit when you take out a mortgage; the amount may be fixed or a chance of your mortgage quantum.
25. CCJ
CCJ stands for County Court Judgment. This is a resolution passed by a county court against you when you have defaulted on your debt payments. However, a satisfactory note will be set on your credence report to signify that the debt is taken care of. If you free the debt in question in a set amount of time,.
26. Centralized Lender
A centralized lender is a mortgage lender that doesn't calculate on a branch network for division. Consolidated lending is now handled by several structure associations. These associations operate independently from their branch networks, and they simply calculate mortgages from central sources.
27. Charge
A charge is any interest on a mortgage to which a freehold or leasehold property can be held.
28. Charge Certificate
A charge certificate is an instrument issued by the HM Land Registry to you with your name as the registered compensation for a given-away property. This instrument contains details of circumscriptions, mortgages, and other interests. It has three nonidentical corridor charge registers, a property register, and a procurement register. However, it's called a land certificate, and it's issued to the registered owner if there's no mortgage on the property.
29. Chattels
Movables are portable particulars in your house, similar to cabinetwork or your particular effects. The chief rent is paid by the proprietor of a freehold property. This is the same as the ground laceration that's paid by a leaseholder.
30. CML
The Council of Mortgage Lenders.
31. Completion
Completion is a tenure that explains that you have come to the proprietor of your house after finishing the amenities of the trade and the clinch of the property.
32. Conditional Insurance
When you take out a fixed- or blinked-rate mortgage, your lender may try to convert you to take out an insurance procedure that will cover any missed disbursements due to an illness, an accident, or severance.
33. Contract
A deal is a fairly shackling trade consensus. There are two identical clones inked by both the buyer and the dealer, and each party keeps a dupe for their commentaries. Once both parties have inked the deal, they're immured to the tour of the consensus.
34. Conveyance
A vehicle is a trick by which freehold, unrecorded compellation is transferred. The trick is called an assignment if your property is unrecorded or leasehold. However, the trick is called a transfer if the property is registered.
35. Conveyancing
Conveyancing is the legitimate process by which the buying and selling of a property take place.
36. Covenant
A covenant is confidence given away in addition. Credit Scoring Credit scoring is the procedure by which a lender evaluates your paying capacity before offering a loan or mortgage.
37. Credit Search
A credence hunt is done by a lender and a credence office to probe your commentaries for CCJs and other points of bad credence.
38. Debt Consolidation
Debt connection is the process by which you take out a loan or mortgage to pay off many high-interest debts. By doing this, you'll only need to make one payment each month, and you'll save significantly on interest charges.
39. Deed
A trick is a legit document that denotes the proprietor of a given-away property. You can transfer a commission to both freehold and leasehold with a trick.
40. Deposit
A precipitate is the number of plutocrats you set down toward buying a property.
41. Disbursements
Charges are any amount you pay to solicitors against land roll freights, quests, faxes, etc.
42. Discounted Rate
Discounted classes are exercised to attract new borrowers to lenders by setting the interest rate below the standard-issue variable rate for a guaranteed time. However, your lender may charge you early redemption penalties if you repay the exclusive fixed-rate mortgage many times.
43. Early Redemption Penalty
An early redemption penalty is charged by your lender if you make a portion or full payment of your mortgage quantum before the completion of your mortgage tenure. These penalties will also be charged if you decide to remortgage and transfer your mortgage to a new lender. Beforehand redemption penalties substantially apply to fixed rates, blinked rates, and cash-ago mortgages.
44. Easement
An easement is a right held by one property proprietor to make use of the land of another for a restricted purpose, like a birthright of passage.
45. Endowment Mortgage
An endowment mortgage is an interest-only mortgage supported by a talent procedure. During the tenure of the mortgage, you'll pay only interest to the lender, and your decorations are alternatively paid into a talent procedure that will develop over the tenure of your mortgage. The talent procedure is aimed at paying off your mortgage as well as acting as life insurance. Still, you cannot hinge on this amount to be sufficient to pay all of your debt.
46. Endowment
There are nonidentical manners and bents, but talent is a life insurance policy that will pay off your interest-only mortgage.
47. Equity
Equity is the quantum of value in your home. It's the value of your home less the amount left to be repaid on your mortgage.
48. Equity Release
An impartiality release is a means of releasing money from the value of your home, either in a lump sum or at yearly inaugurations. This money may be exercised for home advancements, debt connections, or other voluminous charges.
49. Exchange of Contracts
A trade of contracts occurs when the buyer and the dealer of a property gesture and exchange the contracts that detail the property, the freight, the assignment, and the terms of the arrangement. When the contracts are inked, they come fairly shackled, and legit action can be taken against anyone who breaks the deal.
50. Existing Liabilities
Existing liabilities are all fiscal commitments outside of your mortgage. Arrears may include bank loans, credit card debt, conservation disbursements, etc.
51. First-Time Buyers( FTB or FTP)
A first-time buyer has never possessed property before.
52. Fixed Rate
A fixed rate is when you pay a fixed quantum of interest on a loan for a fixed period. Lenders give fixed-rate loans for shortages of time (three-six months) all the way up to 25 times. Beforehand redemption penalties apply if you pay off the mortgage before the end of the fixed-rate tenure.
53. Flexible Schemes
The adjustable gambit is a new expressway for calculating mortgage interest charges. Lenders calculate interest on a diurnal basis rather than on a periodic basis. The new interest classes will only affect the remaining balance of the mortgage. By making regular prepayments, you can repay the loan quickly, thereby saving a lot on interest charges.
54. Fixture
An institution is an item attached to your property, and thus it's a fair portion of the property.
55. Freehold
Freehold means that you have the power over a property for an indefinite period. This is a discrepancy from leasehold, which means that the property is only under your control for a restricted period.
56. Farther Advance
A further advance is an add-on loan to your mortgage from your lender. The plutocrat's farther advance may be exercised for home advancements, to buy a freehold property, or for particular purposes similar to debt connection.
57. Guarantor
A patron is a person who guarantees the lender that the borrower is eligible for a loan or mortgage. However, the patron will make them if the borrower fails to make disbursements.
58. Gazumping
Gazumping occurs when a dealer agrees to vend a property to one person, and they decline that offer in the indulgence of an advanced one.
59. Ground Rent
Ground laceration is the amount that a leaseholder needs to pay to the freeholder each time.
60. Home Buyer Report
A home buyer report is made by a lender after a mortgage estimation has been done and before the full check takes place to give the borrower a comprehensive understanding of the property they're allowed to buy.
61. Income Multipliers
An income multiplier is a formula that a lender will use to determine how much money a borrower may obtain. Three times a single income, or two and a half times a joint income, is the most prevalent income multiplier. The lender will select the one with the highest yield. Lenders are more willing to work with you if your LTV ratio is low.
62. Income Protection Insurance
Income protection insurance protects your monthly payments in the event of illness, injury, or unemployment.
63. Intermediary
An intermediary is a middleman who seeks the best mortgage for you and arranges the loan on your behalf.
64. Land Registry Fee
When you wish to register your ownership of a property or amend the registered title of a property, you must pay a land registry fee.
65. Leasehold
In contrast to freehold, which is when a property is owned, leasehold is when a property is owned but the ground on which it is built is not held by the leaseholder. Their ownership of the property is only for a limited time.
66. Licensed Conveyancer
A licensed conveyancer, like a solicitor, specializes in the laws of purchasing and selling real estate.
67. Local Authority Search
The solicitor for the person who wants to buy your house does a local authority search. They make certain that no planned projects, such as roads or buildings, exist on the site. They will search your property for any planning approvals or enforcement notifications.
68. LTV
LTV, or loan to value, is a percentage calculated by dividing the value of your home by the amount of your mortgage. Lenders are far less risky with a low LTV than with a 100% LTV.
69. Loan Consolidation
When a loan is taken out to repay another loan with a higher interest rate or to settle a lot of high-interest loans, this is referred to as loan consolidation. Debt consolidation is frequently accomplished by remortgaging.
70. MIG
A MIG, or mortgage indemnity guarantee, is insurance purchased to protect the lender if the borrower's property is repossessed and the lender is unable to recover their money. A MIG is paid for after a mortgage is completed.
71. MIRAS
MIRAS, or mortgage interest relief at source, was a tax break offered to homeowners; however, it was eliminated by the government in April of 2000.
72. Mortgage
A mortgage is a loan that permits someone to purchase a home. The loan is secured by the property itself.
73. Mortgagee
The firm or organization that finances your mortgage is known as the mortgagee.
74. Mortgagor
The mortgagor is the individual who obtains a mortgage to purchase a home.
75. MPPI
MPPI, or mortgage payment protection insurance, is coverage purchased in the event of an accident, sickness, or involuntary unemployment that renders a person unable to make their monthly mortgage payment.
76. MRP
MRP, or mortgage repayment protection, is insurance purchased via your lender and paid for over the life of your loan.
77. Negative Equity
Negative equity happens when the amount owed to your mortgage lender exceeds the value of your home. When people take out 100% LTV mortgages, they end up with negative equity.
78. Overpayment
An overpayment occurs when you pay more than the standard monthly payment on your mortgage to pay off the loan before the term expires. Overpayments can save you money on interest, but they may also result in an early redemption penalty. Payment Exemption A payment holiday is a period in which you do not make mortgage payments. This is usually only possible with flexible mortgages.
79. PEP
A personal equity plan, or PEP, allows you to hold stocks or unit trusts without paying taxes.
80. Personal Pension
A personal pension covers your financial needs once you retire. During your working years, you make regular contributions to your pension funds. Some of this money is frequently taken out to pay down your mortgage responsibilities.
81. Portability
The term "portability" refers to a mortgage that may be moved from one property to another when you relocate.
82. Redemption
Redemption occurs when you pay off your mortgage, refinance, or move to a new home.
83. Remittance Fee
A lender will charge you a remittance fee for transferring the amount of your mortgage to your solicitor.
84. Remortgage
A remortgage is a loan obtained from a new lender or a loan renegotiated with your current lender to pay off your existing mortgage. This is done to lower your interest rate or to raise additional funds.