A

Accountants certificate
A reference giving confirmation of income for the self-employed, contractors or directors from their accountant.  The requested information varies between lenders, but includes how long the individual has been trading, tax office details and verification of audited income.

Advance
The mortgage loan. 

APR
Annual percentage rate.  A term defined in consumer credit legislation with the intention of providing a standard basis for comparing different forms of credit.

Arrangement fee
This is a fee you pay to your Lender in return for providing you with a mortgage. Usually paid on completion or with application, these fees usually apply when you take out a fixed rate, discount or cashback mortgage.

ASU Insurance
This covers accident, sickness and unemployment.  It provides a monthly payment if you cannot work for an extended period due to an accident, sickness or unemployment. 

Auction
Public sale of a property to the highest bidder. The purchaser must immediately sign a binding contract and should ensure that all valuations, searches etc are carried out prior to the sale.

B

BBA
British Bankers Association.  This is the trade organisation of the banks. 

Booking fee
A fee charged on application by a lender to cover administration cost and other costs. 

Bridging Loan
Short term loan to facilitate the purchase of one property prior to the sale of another releasing funds that are required for the purchase.  Professional advice should always be taken prior to considering any bridging finance as it can be a solution which is worse than the problem!

Brokers Fee
A fee charged by an intermediary or advisor for locating the most appropriate mortgage for the borrower. 

BSA
Building Societies' Association.  This is the trade organisation of the building societies.
 
Buildings insurance
This covers the cost of rebuilding or repairing the structure of the property.  Lenders insist you have enough buildings insurance before they give you a mortgage.  With leasehold properties, it is the freeholder's responsibility to arrange buildings insurance, although the freeholder will usually pass on the charges to the leaseholder. 

Buildings and contents insurance
This is combined insurance, which may be cheaper than one policy for buildings insurance and another separate policy for contents insurance. 

Buy-to-let
This is a mortgage designed for people who wish to purchase a property to rent out to others.  The ability to repay this type of mortgage is often based on the projected rental income from the property as opposed to the personal income of the borrowers. 

C

Capital and interest
Your monthly payments are partly to pay the interest on the amount you borrowed and partly to repay the outstanding mortgage. Also known as a repayment mortgage. 

Capped rate
An interest rate charged for a set period of months or years which can go up and down with the variable rate, but there is a maximum (capped) interest rate which it cannot go above. 

Cashback
A payment you receive when you take out a mortgage.  It may be a fixed amount, or a percentage of the amount of the mortgage. 

CCJ
County Court Judgment.  A decision reached in the County Court, which can be for not paying debts.  If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this. 

Charge
Any right or interest, especially a mortgage, to which a freehold or leasehold property may be held. 

Charge Certificate
The certificate issued by HM Land Registry to the mortgagee of a property with registered title.  Contains three parts - charges register, property register and proprietorship register.  Contains details of restrictions, mortgages and other interests.  Where there is no mortgage it is called the Land Certificate and issued to the registered proprietor.

CML
Council of Mortgage Lenders. Building societies and most banks and other lenders are members of this trade organisation. 

Completion
When the sale and purchase of the property are finalised, and you become the owner of the property

Conclusion of missives
In Scotland, this is the same as exchanging contracts.

Contents insurance
Insurance cover for your possessions.  This may include cover against loss or damage away from the home. 

Contracts
The legal documents under which you and the person selling the property agree to buy and sell the property.

Conveyance
The deed by which freehold, unregistered title changes hands.  If the property is leasehold and unregistered it is called an assignment.  If the title is registered the deed is called a transfer.

Conveyancing
The legal process involved in buying and selling property.

Covenant
A promise contained in a deed.

Credit search
A check the lender makes with a specialist company to find out whether you have any County Court Judgments or a record of not paying loans, credit-card bills and so on.

Credit scoring
A lender's way of assessing whether you are a good risk to lend a mortgage to, normally the result from a credit search.

Critical Illness
Insurance that generally pays out a lump sum if you are diagnosed with a life-threatening illness or disease.  See our Protection section for more information.

D

Date of entry
In Scotland, this is the same as exchanging contracts. 

Debt Consolidation
This is a means to repay high interest debts (such as credit cards and personal loans) by incorporating them into a new mortgage to benefit from lower interest rates and lower monthly payments.
Think carefully before securing other debts against your home. Your home may repossessed if you do not keep up repayments on your mortgage.

Decreasing term assurance
Life assurance that pays out an amount if you die during an agreed period or the term of the policy.  The amount of cover reduces each year.  So, this makes it ideal to cover repayment mortgages where the amount you owe the lender reduces each year. Decreasing term assurance is usually cheaper than level term assurance.

Deed
A legal document which is 'signed, sealed and delivered' not just signed. This has special significance in law.  Title to both freehold and leasehold property can only be transferred by deed.

Deposit
The amount of money you put towards buying your property.

Direct lender
A lender that arranges mortgages over the phone, through the post, or even on the Internet.  For example, IF Intelligent Finance

Disbursements
A solicitor's expenses - for example, for stamp duty, HM Land Registry fees, searches, faxes and so on. 

Discount term
The time that a discounted rate applies to a variable-rate mortgage.  This term may be for a guaranteed number of months or years, or it could be until a set date in the future; for example, 30 June 2010. 

Discounted rate
An interest rate which is set at a set margin below standard variable rate normally for a period of between 1 - 5 years.  This is often used as an incentive to attract potential new borrowers.

E

Early Repayment charges
A fee charged by the lender if you pay off all or part of your mortgage before an agreed date or you move the loan to another lender.  These charges usually apply on fixed, discounted, or cashback mortgages. 

Endowment
A life assurance policy that is designed to produce a lump sum to pay off an interest only mortgage.  There are different types of endowments, for example, 'with-profits', 'unit-linked' and 'unitised with-profits'. 

Equity
The amount of value in a property that isn't covered by a mortgage - simply take the amount of the mortgage from the valuation to work out the equity.

Equity release
You take a new, larger mortgage, or increase a mortgage you already have and use some or all of the extra money you have raised for say, home improvements. 

Estate agency fees
The amount the estate agent charges the person selling the property.  This is usually worked out as a percentage of the sale price, and may be negotiable.  On a 3% fee, the estate agent selling a property for £60,000 would receive £1,800. I n our experience estate agents charge between 1 and 3 per cent.

Exchange of contracts
The point where you and the person selling the property sign and swap identical contracts that show the price and what fixtures and fittings are being sold, as well as a date when everything will be finalised.  When you exchange contracts the deal becomes legally binding, and if you or the seller pull out before completion, you or they will have to pay compensation to the other side. 

Execution only
The company selling or arranging an investment product like a pension or PEP cannot and does not give any advice on the benefits of the scheme - they simply sell the product. 

Extra cover or accidental cover
This is insurance against damage to the structure of your property and its contents - for instance, putting your foot through the ceiling or spilling paint on the carpet.

F

Fixed rate
The interest charged on the mortgage is for a set amount for an agreed period of months or years. 

Fixtures
Any item that is attached to a property, and so is legally part of the property.  Often included in the agreement as Fixtures and Fittings which are included as part of the sale.

Flexible mortgage
A type of mortgage where you can make extra payments and even under payments without paying a charge or penalty.

Freehold
This is when you own the property and the land it is on.  This is more common in properties located in metropolitan centres

Freeholder
Someone who owns the freehold of the property. 

Full status
Describes a borrower who can produce proof of income by way of pay slips, P60 or certified accounts to support a mortgage application 

G

Gazumping
This is when the person selling the property accepts an offer from a potential buyer, and then accepts a new, higher offer from another buyer before exchange of contracts. 

Gazundering
This is when the person selling the property accepts an offer, and then the buyer puts in a new, lower offer just before exchange of contracts.

Ground rent
A fee that a leaseholder has to pay the freeholder every year - this will be set out in the leasehold agreement for the property.

Guaranteed death benefit
On certain policies, there is a guarantee that the company will pay out a certain amount when you die.

H

Higher Lending Charge or HLC 

The mortgage borrower(s) may be required to pay this additional charge (or the lender may allow it to be advanced with the mortgage and added to the debt) if the mortgage loan represents a high percentage value of the price or valuation of the property.  Some or all of this fee may be used by the lender, at its' discretion, to purchase insurance to act as extra security for its' money and for its' sole benefit.  This insurance covers the lender against financial loss in the event of repossession and subsequent re-sale for an amount lower than the outstanding mortgage debt.

HM Land Registry
The official organisation that keeps records of properties in England and Wales. Transfer of ownership has to be registered with the HM Land Registry. 

Homebuyer's report
This is when a professional surveyor checks the structural state of a property.  This is more detailed than a valuation but less detailed than the structural survey.  The report is optional and you have to pay for it; but this report should pick up possible problems and may give you the chance to negotiate a lower price.  And, you have more grounds to sue or get compensation from a surveyor for a poor report than you would from a simple valuation. 

I

IFAs
Independent Financial Advisers.  These advisers can give you information on and recommend investment products (endowments, pensions, ISAs) from the whole range of life assurance and investment companies. 

Income multipliers or multiples
The size of mortgage that lenders will offer will often be worked out by multiplying your income each year by a set figure.  If you are the only person taking out the mortgage, the usual common maximum income multiple is four times your yearly income.  So someone earning £15,000 could borrow four times this amount, or £60,000.  If you are taking out a mortgage with someone else, the multipliers might be four times the main income plus one times the second income.  Or it could be three times the two incomes added together.  Lenders may consider including all or part of any regular bonuses or commission you receive as part of your income - please get in touch with Think for more information.

Income protection insurance
This covers accident, sickness and unemployment.  It provides a monthly payment if you cannot work for an extended period due to an accident, sickness or unemployment. 

Income references
This is confirmation from your employer that you earn the amount you claim in your mortgage application.  If you are self employed, the lender may require confirmation from your accountant.

Interest only Mortgage
Your monthly payments to your lender are simply made up of interest.  You do not pay off any of the mortgage during the term of the mortgage.  You pay off the mortgage finally using the proceeds of a separate investment plan for example, an endowment, personal pension or ISA and so on. 

IPT
Insurance premium tax.  A tax on all UK general insurance. 

L

Land Registry Fee
This is the fee paid to the Land Registry to register ownership of an area of land.

Leasehold
This is when you own the property for a set number of years, after which it goes back to the freeholder.  Most flats in England are leasehold, and although most lenders will lend on leasehold properties, they will often demand that there is a minimum number of years left on the lease before making a loan.

Leaseholder
Someone who owns a leasehold property. 

Let to Buy
Moving from your home but retaining the property to let to tenants  

Level term assurance
Life assurance which pays out a lump amount if you die during the term.  The amount of cover stays the same throughout the term, which makes the cover suitable for interest-only loans because the amount you owe on the mortgage stays the same until the end of the mortgage. 

LIBOR
London InterBank Offer Rate - the interest rate banks set for lending money to each other.  The rate can be 7-Day and set weekly or 3-Month and set in line with the financial year quarters i.e. April\June\September and January.

Licensed conveyancer
An alternative to solicitors, these people specialise in the legal side of buying and selling property. 

Local Authority Search
A check carried out by the buyer's solicitor to check that there are no proposed developments in the area of the property such as roads, railways or other buildings. The check also includes details of the planning permission for the property and whether the council has served any enforcement notices on the property.  A fee is charged for this service.

Loyalty bonus
These are special schemes if you already have a mortgage that may provide reduced interest rates or fees, and even services like removals. 

LTV
Loan to value. This is the size of the mortgage as a percentage of the value of the property or the price you are paying for the property.  A £45,000 mortgage on a house valued at £50,000 would mean an LTV of 90 per cent.

M

MIRAS
Mortgage Interest Relief at Source.  This is tax relief on your mortgage interest payment but was abolished by the government with effect from April 2000.

Mortgage
A loan to buy a home where you put up the property as security against you paying back the loan.

Mortgagee
The company or organisation, which lends you the money under a mortgage.  Often called the Lender.

Mortgagor
The person(s) taking out the mortgage.  

Multiple agency
A number of estate agents agree to try to sell the property.

Mutuals
Organisations owned by and for the benefit of their members (savers and borrowers), with no outside shareholders.  Building societies are mutuals, and so are some insurance and investment companies. 

N

Negative equity
This is where the money you owe on the mortgage is greater than the value of the property.  For example, if you had a £60,000 mortgage on a property valued at £50,000, you would have £10,000 negative equity. 

New for old
This is insurance cover, which will pay the full cost of replacing damaged or lost property with a similar, new item. 

No-claims bonus
This is similar to motor insurance.  You will be given a discount on buildings and contents insurance if you haven't made a claim for a number of years.

Non-status
This means the lender does not need employment or income references from you.  This type of loan is often offered to self-employed people.

P

Payment Holiday
A period during which the borrower makes no mortgage payments.  Normally only available to borrowers with a flexible mortgage who have previously overpaid their monthly repayments.

Percentage advance
The size of the mortgage worked out as a percentage of the price you are paying for the property or valuation.  For example, If your property was valued at £80,000, a £60,000 mortgage would be a 75 percent advance. 

Personal pension
This is a structured personal savings and investment plan to provide for your financial needs after you retire.  You can use some or all of the proceeds from a personal pension to pay off an interest-only mortgage.  You will need to arrange life assurance separately. 

PHI
Permanent Health Insurance.  This pays a regular monthly amount until you retire or return to work if you cannot work because of illness or an accident.

Policy excess
The amount you will have to pay when you make a claim for an insured loss.  For example, this may be the first £50 of a £500 claim for damage to your property caused by a storm. 

Policy schedule
This gives policy details of how much cover you have (the sum insured), the discount you qualify for (if any), and the premiums you have to pay.  With some policies you may get a new schedule when you renew the policy or whenever you want to change your policy. 

Portability
A term used to describe a mortgage that can be transferred between properties when you move house.

Possession
The lenders' term for repossessing your property. 

Private medical insurance
Private medical insurance is designed to cover the costs of private medical treatment for illness or injury.  Most people take out this kind of insurance to gain the reassurance of knowing that treatment is available promptly, if they become ill or are injured.

R

Redemption
The process of paying off your mortgage either when moving house, remortgaging or at the end of the mortgage term.

Rebuilding cost
This is the recommended amount (from your property valuation) that you should take out buildings insurance cover for.  This may be higher or lower than the market value of your property. 

Remittance fee
A charge made by the lender for sending the mortgage funds to your solicitor when the purchase is just about to be completed.

Remortgage
A new mortgage although you are not moving home. 

Removal expenses
The cost of hiring a removal firm.  This may depend on the total amount and size of your possessions, the distance travelled , the number of stairs and so on. 

Repayment
Your monthly payments are partly to pay the interest on the amount you borrowed and partly to repay the outstanding mortgage.  Also known as a capital and interest mortgage. 

Replacement value
This is the cost of buying the same or similar items as new if you have to replace them in the event of a claim. 

Repossession
The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property.  This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

S

Sealing fee
A charge made by lenders when you repay the mortgage.

Searches
Checks carried out during the conveyance phase.  These checks are made with local authorities and other official organisations to check planning proposals and other matters that may affect the value of the property, and if it can be sold in the future. 

Self-certified
You confirm how much you earn, and the lender does not need any references. 
Normally when you apply for a mortgage you will be asked to provide pay slips or company accounts to prove your income.  If it is difficult or extremely inconvenient for you to provide this documentation, you can choose to self-certify your income.  This involves signing a declaration which states your income sources and amounts.  Lenders will often charge you higher rates than average and offer you a more limited range of mortgages if you choose to self-certify your income, so it's not a good idea to self-certify just to avoid some paperwork.  Please call us to discuss this further.

Settlement
In Scotland, this is the same as completion. 

Shared Ownership
A scheme operated by a housing association where a person owns part of the property and pays a mortgage on this, while the housing association owns the rest of the property and the person pays rent on this.

Sole agent
A single estate agent agrees to sell the property.

Solicitor
The person who deals with the conveyancing. 

Stamp duty
This is a tax payable on the purchase of a property by the purchaser.  For properties with a purchase price of up to £175,000 no stamp duty is charged at present.  For properties between £175,001 and £250,000, 1% stamp duty is payable on the purchase price.  For properties between £250,000 and £500,000 it is 3% and for properties over £500,000 it is 4%.

Structural survey
This is the most wide-ranging check of the outside and inside of a property.  A professional surveyor carries this out, and it should pick up all but the most hidden faults.  The structural survey is optional and you must pay the bill, but it provides the greatest protection for the potential buyer in terms of the information it provides.  It also gives you cover against negligence by the surveyor. 

Sum assured
How much the life assurance or investment company guarantees to pay you, if you have an endowment policy and you die. This figure may be less than the mortgage amount unless the policy is specifically designed to match the mortgage amount. 

SVR
Standard variable rate. The interest rate the lender charges goes up and down, with your interest payments changing accordingly.

T

Tie-in period
As a condition of a special mortgage deal (discount or fixed rate, for example) you may have to agree to stay with the lender for a period of months or years after the deal has ended.  If you move your mortgage elsewhere during this period, you may have to pay an early redemption charge. 

Term
The period of years over which you take the mortgage and when you have to repay it. Most new mortgages are taken on a 25-year term. 

Third party buildings insurance
A charge a lender may make if you decide to take buildings insurance from someone other than the lender. 

Title deeds
Documents to show proof of who owns the freehold and leasehold property. 

Transfer deed
A document that, once you sign it, actually transfers the ownership of the property to you.

U

Unit trust
A popular type of stock market-linked investment that you may use to repay an interest-only mortgage.  Your monthly premiums buy units in a fund of stocks and shares that is run by a professional manager.  The value of units can go down as well as up, and a unit trust doesn't include life assurance. 

Unit-linked endowment
Your monthly premiums are used to buy units in a fund or funds run by professional managers.  Like unit trusts, the price of these units can go up and down, so the value of the endowment can constantly change. 

Unitised with-profits endowment
A mixture of the unit-linked and with-profits endowments.  Like the unit-linked endowment your monthly premiums are used to buy units in a fund, or funds.  Unlike the unit-linked endowment, the value of the units cannot fall, once an increase has been made.

V

Valuation
A simple check of the property in order to find out how much it is worth and whether it is suitable to lend a mortgage on.  A professional surveyor for the lender carries this out.  You usually pay the bill and will usually get a copy of the report.

Variable rate
The interest rate the lender charges goes up and down, with your interest payments changing accordingly.

Vendor
The person selling the property.