Warning: THE MORTGAGED PROPERTY (WHICH MAY BE YOUR HOME) MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Also known as a Further Advance (FA). Additional borrowing lets homeowners borrow more money against their property. This money is often used to make repairs or improvements to the property. You'll have to prove you can afford the additional borrowing, and it will increase your mortgage amount.
Annual interest (also known as annual rest)
This is where interest for the next year is calculated on the last day of the current year, based on the outstanding balance at that point. Payments must be made monthly, which will repay this interest as well as the balance.
Annual percentage rate of charge (APRC)
This is the yearly cost of your mortgage and includes interest, certain fees associated with the mortgage plus any other costs. The APRC can be used to compare the cost of different mortgages.
Annual review scheme
If your mortgage operates on the annual review scheme, your monthly mortgage payments are reviewed once a year, with any changes usually coming into effect from March. We look at your balance at the end of the current year, along with any interest rate changes over the previous 12 months, to work out your payments for the coming year. We’ll tell you about your new payments when we send you your annual mortgage statement, usually in February.
This is a one-off fee that’s charged when you apply for a mortgage. It's not normally refundable, even if the mortgage doesn’t complete.
This refers to any outstanding payments on the mortgage account, such as where a payment has been missed or underpaid.
Bank base rate (BBR)
This is the interest rate set by the Bank of England (BoE).
This is the length of time that a discounted, fixed, tracker or capped rate applies to a mortgage. For example, a mortgage with a two-year fixed rate would have a benefit period of two years.
A mortgage broker is an intermediary who helps you find and apply for a mortgage.
Buildings insurance must be taken out as a requirement of a mortgage. It should cover the full cost of rebuilding the property.
Buy to Let
A type of mortgage used to buy a property for the sole use of renting to a third party.
Any sum of money lent to you by a lender, usually to purchase or remortgage a property.
Capital and interest
A type of repayment method where you make regular payments of both interest and capital over a fixed term. This should ensure the full balance is repaid over this term.
This type of mortgage sets an upper limit on how much the interest rate can rise during a selected period.
The final stage of the conveyancing process after exchange of contracts. This is when keys change hands (on a sale or purchase), and your mortgage is set up. It’s also when the funds will be paid to the seller.
Conveyancing is the legal process necessary wherever property or land is bought or sold. This is most often carried out by solicitors or licensed conveyancers on behalf of buyers and sellers.
Daily interest (also known as daily rest)
This is where interest is calculated based on the amount owed on your mortgage at the end of each day. The interest is charged to your account daily, increasing the balance by the amount of interest. Payments must be made monthly, reducing the balance on which interest is charged from the day each payment is received.
If you have a discounted rate mortgage, for a set period you’ll be charged an interest rate that’s lower than the Standard Variable Rate (SVR), but will rise or fall in line with it. Once the discount period ends, you’ll often be charged the SVR.
Early repayment charge (ERC)
Many products are offered with incentives at the start of a mortgage term. These products can only be offered on the assumption that you keep your mortgage for a set period. Therefore, an early repayment charge may be incurred if you repay (or in some cases, partly repay) the mortgage within the early repayment period.
An endowment policy is a savings plan you can take out to repay your mortgage if you have an interest only (or part and part) mortgage.
This is the difference between the current market value of your property and your outstanding mortgage balance held against that property. For example, if your home was valued at £200,000 and your mortgage balance was at £150,000, your equity would be £50,000.
Exchange of contracts
This is the process where parties legally agree to the sale and purchase of a property, and set a completion date. Normally this is arranged through a solicitor or licensed conveyancer.
First time buyer
Someone who’s buying a property for the first time. There are sometimes special deals available for first time buyers.
This type of mortgage fixes the interest rate on a mortgage for a set amount of time. This is typically between two and ten years.
This is when you own the property and the land it’s on.
This is someone who makes an official agreement to be responsible for money that someone else owes. For example, a parent could act as a guarantor for their child buying a home.
A report on the condition of the property, helping you to make an informed decision on whether to purchase a house or not. This survey will highlight any problems that are visible to the surveyor.
This refers to personalised product information that helps you to compare, and make an informed decision about, different mortgage products.
If a local search of the property and nearby area hasn’t taken place (this is often the case when remortgaging), an insurance policy called indemnity can be put in place to cover against any of the risks that the search may have revealed.
Initial interest payment
Any payment due for the period from the day the mortgage starts until the first full monthly payment.
As well as paying back the amount you borrow, you’ll also have to pay interest on the mortgage. This may be calculated on a daily or annual basis, depending on the specific terms and conditions of the mortgage.
A type of repayment method where you only make regular payments towards the interest on the mortgage and not the capital. You’ll owe the full balance of the money you borrowed when the mortgage ends.
An adviser who helps you choose the mortgage that's right for you and make your application.
This is a mortgage you take out with another person, such as your spouse, partner or friend.
This means you own the property but someone else owns the land it’s on. This is usually the case with flats, but it may occur with other types of properties. There’s usually a ground rent to be paid to the freeholder, and there may also be other charges such as service charge and insurance.
These are charged by a solicitor or another qualified individual to carry out the legal work associated with buying or selling a property.
Loan to value (LTV)
The LTV is a percentage figure used to show the loan amount as a proportion of the property's value. For example, if a property is valued at £100,000 and you have a deposit of £10,000, you’ll need to borrow £90,000, resulting in an LTV of 90%. Different mortgage products can have different maximum LTVs, meaning the minimum deposit or equity required can vary.
This is a request for a variety of information from the local authority, including information on planning matters and the maintenance of roads near the property. Local searches are usually carried out by your legal representative.
This is a mortgage specialist who’ll help you arrange your mortgage.
Mortgage exit fee
If you pay off your mortgage before the end of the term, you may be charged a fee. This may be in addition to other charges, depending on the product terms and conditions, such as an early repayment charge.
If the market value of your home is less than your mortgage, you’ll be in negative equity. For example, if your mortgage is £75,000 but your home is only worth £65,000 you’ll have negative equity of £10,000.
This describes a property that was first occupied less than six months ago.
A 10-year guarantee, provided by the National House Building Council, that the builder will correct any serious defects on a newly built property.
Non annual review
If your mortgage doesn’t operate on the annual review scheme, your monthly payment will be immediately amended when interest rates change (unless stated otherwise in the product terms and conditions).
Non-standard construction property
A home that doesn't have brick or stone walls, or doesn't have a roof made of tile or slate.
Any additional payment made to your mortgage account above your required monthly mortgage repayment.
Part and part
A type of repayment method that is a mixture of interest only and capital and interest. You’ll pay off some capital through your monthly payments (alongside paying for the interest), but a sum will still be owed when the mortgage ends.
This means you can transfer your current mortgage to another property.
This is the fee charged for providing a mortgage product. This usually applies to loans where a special interest rate applies, such as fixed, discounted and tracker, and should be paid by completion. It may be refundable if the mortgage doesn’t complete.
A product transfer is when you move onto a new mortgage product with your current lender when your deal is ending or has already ended. We often refer to this as 'switching to a new deal' or a 'rate switch'.
This is when you repay your mortgage in full, including interest and costs. A redemption statement shows the amount you still need to pay to redeem your mortgage.
We’ll need to check these before making a formal mortgage offer. The checks may include confirming your income with your employer and contacting credit reference agencies.
This is the process of changing from one mortgage to another, possibly with a new lender.
A tax that you may need to pay if you buy a property. It’s charged as a percentage of the purchase price. The percentage can also vary based on the purchase price.
Standard variable rate (SVR)
SVR is our base lending rate and is the interest rate you’ll usually be charged once your initial period on a fixed or tracker rate comes to an end (unless otherwise stated in the product terms and conditions). On SVR, mortgage payments are subject to change and payments may go up or down depending on the rate.
Completion funds can be sent by telegraphic transfer, which is a way of quickly transferring money on completion. The funds should be received the same day, and a fee may be charged for this service.
This is the length of time you wish to repay your mortgage over, for example 25 years.
This is a type of mortgage where the interest rate charged will be set at a fixed percentage above, below or at the BBR. If the BBR increases or decreases, the interest rate for a tracker mortgage will change in accordance with the mortgage terms and conditions.
Transfer of equity
This is when a person is added or removed from the property ownership. This may be requested due to a change in personal circumstances. A transfer of equity is the legal process required to make this change.
Before agreeing to provide a mortgage, we’ll instruct a valuer to establish a property’s worth and its suitability for mortgage purposes. A valuation isn’t the same as a survey, which gives you a more detailed evaluation of the property.
This is how much your property is worth in the current housing market, which may not be the same as the amount you initially bought it for.
If you have a variable rate mortgage, your payments will go up and down alongside any changes to specified interest rates.