Adverse Credit:
Peeps with a poor credit record
APR
Annual interest percentage rate – this is interest rate worked out over a year
(25 Year APR)
Annual interest percentage rate – this is the interest rate worked out over 25 years
Note: mortgage providers can bamboozle you by varying the interest rates and working interest rates out over different time periods, so the APR and 25 year APR are very helpful when you need to compare one mortgage with another
Arrangement Fee
Fee charged by the mortgage lenders, when you start a new mortgage
Balloon Payment Mortgage
This is a term coined in the USA to describe a mortgage that does not fully pay for itself over the period of the loan, thus requiring balloon payments
http://en.wikipedia.org/wiki/Balloon_payment_mortgage
Bank of England Base Rate (base rate)
This is the interest rate set by the Bank of England and as you probably know varies all the time, in the past mortgage lenders would follow this rate closely and variable mortgage rates would often be similar to this rate.
Nowadays it’s a different story, the base rate is not followed by the banks because the base rate is at an historic low – the banks would make no money
Banks are more likely to follow the LIBOR rate
Capped Rate Mortgages
Your interest rate is variable and can go down but only up to a predetermined rate (cap) it cannot go over this (cap).
Cash back
Money offered upfront when you sign on the dotted line and get a mortgage
Conveyancing
The legal transfer of property from one person to another, or the legal granting of a mortgage for a property
Credit Score
A record of your spending habits used by banks to see if you are suitable to have a loan
Daily Interest
Interest calculated daily, can save you some money! Ask for it
Discounted Rate Mortgage
This means interest is charged at the variable base rate that applies to the mortgage minus a discount for a short period of time
Equity
The money in your property: worked out by deducting your mortgage from your property value
Example; 100K mortgage, 150k house value = 150-100 = 50K equity
(Negative equity)
The debt in your property: worked out by deducting your mortgage from your property value, but resulting in a negative value
Example: 100k mortgage, 80k house value = 80-100 = -20K negative equity
FSA (Financial Services Authority)
The UK’s (alleged) regulator for financial services and products
Fixed Rate Mortgages
A mortgage that has a guaranteed rate of interest that will not change over a fixed period of time.
Freehold
Legal title of land / property normally means you have absolute rights for ever over your land / property (no time restriction)
http://en.wikipedia.org/wiki/Freehold_(English_law)
Gazumping
Sellers in the UK can accept various offers from different people, so this practice results in the first buyer being outbid by a second buyer, because the second buyer placed a higher offer value.
Interest Only Mortgage
You are only paying interest to your lender, you will not be repaying the loan.
For example, you lend 100K and pay off the interest over 25 years, you then need to find an additional 100K to pay off the loan
Leasehold
A leasehold is a long term rental of a property, normally 99 years
The land on which the property is built is owned by someone else known as the freeholder, you normally have to pay the freeholder a small amount of ground rent each year.
http://en.wikipedia.org/wiki/Leasehold
LIBOR (London Interbank Offered Rate)
This is the interest rate banks lend money to each other, set by the London wholesale money market
LTV (Loan to Value)
The % ratio of your mortgage to house value
Example: 90K mortgage, 100K house value = 90% LTV
Re-mortgaging (Remortgage) (Refinancing)
Formally this is the re-arrangement of a mortgage on your home with a different lender, now often referred to as just the re-arrangement of a mortgage with any lender
http://en.wikipedia.org/wiki/Remortgage
Redemption Penalties
Fees you have to pay, if you pay off (or switch) your mortgage before an agreed period of time
Repayment Mortgages
A mortgage that pays off both the home loan and the interest at the same time
Tracker Rate Mortgages
Tracker rate mortgages are linked to the Bank of England base rate, the interest rate charged will then change in line with the base rate changing
Variable Mortgages
The variable base rate is the basic rate of interest charged on a mortgage and altered by the lender, usually (but not always) in step with the base rate