Understanding the jargon.
credit to a consumer, expressed as an annual percentage of the total amount of credit.
Cover which protects the holder against damage to the property itself (although it can be linked with contents insurance in a combined policy). Buildings insurance covers the cost of repairing damage to the structure of your property. Garages, sheds and fences are also covered, as well as the cost of replacing items such as pipes, cables and drains. Buildings insurance usually covers loss or damage caused by fire, explosion, storms, floods, earthquakes. The amount insured may vary from the purchase price/valuation of the property depending on the type of location of the property. The valuer will usually provide a rebuild cost for insurance purposes.
Business Buy to Let
Capital and interest
In the context of mortgages, a capital and interest mortgage is also known as a repayment mortgage. It involves paying all of the interest plus repayment of a little of the capital each month until at the end of the term the entire loan is repaid. In contrast, an interest-only mortgage involves only paying off the interest.
for the first few years of the loan.
contract) as an incentive to enter into a mortgage contract with the mortgage lender.
Consumer Buy to let:
the loans secured on it are discharged, establishing its legal boundaries and searching local planning information for upcoming developments which could affect the property’s value.
County Court Judgement (CCJ)
Credit Reference Agency
records are held centrally by credit reference agencies and contain information from many
different aspects of your life.
Decision in principle
This is the first step in a lender confirming that they may be prepared to give you a
mortgage, based on the initial information received from your broker. This is only an indication; more details are required when you’re ready to go ahead with the full mortgage application.
You may hear this also referred to as an ‘Agreement in Principle’ or a ‘Mortgage in Principle’. AIP or DIP.
difference between the mortgage you have applied for and the property’s purchase price.
For example, if the total property price is £175,000 and you have £17,500 to put towards it, this would be a 10% deposit.
Debt management plan
Base Rate or Libor rate, typically for the first few months or years of the loan. The rate
payable may move up and down, but the discount on SVR remains constant.
Early Repayment Charges (ERC's)
in full or in part before a date specified in the contract. Fixed-rate, capped-rate, cashback
and discount rate mortgages commonly carry early repayment charges.
value of your property.
you’ll need to pay.
Exchange of Contracts
are exchanged. The buyer is then committed to buying, and the seller to selling. As a buyer,
you should normally ensure that you are covered by building insurance from this date.
Fixed rate mortgage
Other features could include the option to reduce or miss payments altogether when times are tight, and to reborrow any overpayments. Not all flexible mortgages offer all of these features. Often useful for self-employed people whose income varies from one month to the
Help to buy
move; the Government lend you up to 20% of the cost of a new build property.
You can find out more about Help to Buy here: https://www.helptobuy.gov.uk/
Higher Lending Charge
Loan To Value is higher than a certain figure. It protects the lender to some extent if you
default on the mortgage for any reason. It is important to understand that although you
have to pay the premium, the lender benefits from any payout, and that if the payout
doesn’t cover their costs, they may seek further money from you. With many mortgages, you can add the Higher Lender Charge to the loan, unless this takes your Loan To Value over a certain figure. The insurer may pursue the defaulter for reimbursement of any monies which
have been paid out in respect of lenders claim.
income from the investment to fund day-to-day spending (often used by retired people).
Let to buy
it involves having two mortgages at the same time. You convert your existing mortgage to a
buy-to-let mortgage so you can let out your current home, and then take out a standard
residential mortgage on the home you’re buying.
Loan To Value
For example, if you have a deposit that will cover 25% of the property price, then you will
need a mortgage that is 75% of the property price, meaning the loan is 75% of the value of
the property. If you had a 5% deposit, the LTV would be 95%.
London Inter-Bank Offered Rate (LIBOR)
alternative to base rate in setting the benchmark for a tracker mortgage. There are separate LIBOR rates for different periods up to a year but either “1” or “3” months LIBOR is what is normally used in setting mortgage rates.
with the property purchase or remortgage, based on the terms of your mortgage offer.
With interest-only paid on the balance between savings and mortgage debt you achieve the same effect as overpaying a home loan: but you retain the ability to get the money back if you need it.
mortgages. This can sometimes be a useful feature for self-employed people or others with irregular income. Very commonly used during Covid 19.
directly or indirectly, in connection with providing applications from customers to enter into regulated mortgage contracts with the mortgage lender
a new house.
interest usually over a term of 25 years (less or more if preferred).
policies, ISAs, and personal pensions.
Standard Variable Rate (SVR)
when the special offer period expires. Conversely, tracker mortgages switch to a fixed percentage above Bank of England Base rate (or LIBOR)
structural flaws or repairs needed which you may have failed to notice yourself.
The rate you pay moves up and down in line with the benchmark selected.
Get in contact
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