Jargon Buster

A fee you pay to the lender in return for a mortgage deal. This is usually paid on completion of the mortgage and may be added to the loan.

A term interchangeable with insurance but generally used in connection with life cover as assurance implies the certainty of an event and insurance the probability.

Level Term - a policy that pays out on the event of death of the loan holder. It is level term because it will cover the same amount of loan debt throughout the repayment period. It is suited to interest only loans.

Decreasing Term Assurance - a life assurance policy 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.

BENEFIT PERIOD

A time period over which the interest rate of a loan is discounted, fixed or capped, for example.

A fee paid to the lender to book a rate and secure your mortgage application

A temporary loan providing financial cover to bridge the gap between purchasing and selling a property.

A full inspection of the property, conducted by a chartered surveyor, who then writes a detailed report including any property defects. Suitable for any house, particularly older properties and those which have been poorly maintained. Also for properties which have been extensively altered or extended, or any property you may wish to alter or extend.

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

Insurance to cover any structural damage to your house.

A mortgage designed for people who buy a property with the intention of letting it out.

CAPPED MORTGAGE

Normally agreed for a fixed period of time, many lenders provide mortgages with an upper limit on the interest rate. If the standard interest rate is lower than the upper limit you will be charged the lower rate, but if the standard variable rate is higher you will be charged at the agreed rate.

Many lenders provide a cash incentive to borrowers that they can spend as they wish once the mortgage has completed.

Standing for charges, access and terms, CAT-marked mortgages must comply with benchmarks laid down by the Government. Different CAT marks apply for (discounted) variable rate and fixed or capped rate mortgages. The Government stresses that a CAT mark doesn't mean a mortgage deal is officially endorsed and for many people non-CAT-marked deals will be a better option.

County Court Judgement. 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.

Clearing House Automated Payment System. A Payment Release through which the mortgage advance is sent to the conveyancer.

The term used for the security that the lender relies on when granting a mortgage.

The point when contracts have been exchanged and legal transfer of ownership on the property from seller to buyer is finalised.

The point at which contracts have been exchanged and legal transfer of the property from the seller to the buyer is finalised. The buyer can take possession of the property from this day.

Insurance to cover any loss or damage to your possessions.

Legally binding agreement between the seller and buyer of the property.

A specialist in the legal aspects of buying a house.

This is the legal work required for buying and selling a property. The conveyancing process essentially involves the transfer of "good title" or ownership from one party to another. It is a fairly complicated and longwinded process that involves untangling the legal jargon found in the title deeds, and checking the background of your property with the local authority and title searches.

Rules and regulations governing the property contained in its title deeds or lease.

A lender's way of assessing whether you are a good risk to lend a mortgage to.

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

An individual or institution to whom a debt is owed i.e. the Lender.

Insurance that generally pays out a lump sum if you are diagnosed with a life-threatening illness or disease.

An indication of the likely outcome of a mortgage application. This is not a formal offer but includes a credit check with a credit reference agency and an assessment of the stated information using our lending guidelines.

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.

A prescribed notice to be issued on default by a lender wishing to enforce a regulated loan under the Financial Services Authority.

Costs such as stamp duty, Land Registry fees and search fees charged to the acting conveyancer or solicitor but then paid for by the purchaser.

Many lenders offer discounted rates on the standard variable rate for an agreed period of time.

EARLY REPAYMENT PERIOD

A period of time that applies to certain types of loan during which a charge will be made if the loan is repaid in full or in part or its terms are varied at the borrower's request.

The amount the estate agent charges you for selling your property. This is usually worked out as a percentage of the sale price. If you were to be charged a 1.5% fee on a property value of £200,000 you would pay £3,535.00

On this type of mortgage only interest is paid on the loan to the lender during the term. At the end of its term, the mortgage is paid off with the proceeds of an endowment.

This is the difference between the value of the property and the outstanding loan.

This is the point when both buyer and seller are legally bound to the purchase and sale of the property.

FIXTURES

Any item that is attached to a property, and so is legally part of the property.

Allows you to vary monthly payments to fit temporary changes to your circumstances. You can make additional payments to reduce the loan in months where you have excess cash (for example, as a result of a bonus or extra commission), or you can reduce payments, or even withdraw cash, when you need extra funds. Interest is usually calculated daily, so changes to the loan amount have immediate effect.

Ownership of both the property and the land it stands on.

This is when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but not yet exchanged contracts. Although illegal in Scotland this still happens in England and Wales.

The annual charge levied by the freeholder to the leaseholder.

The lender may sometimes require a borrower to appoint a guarantor. This is someone who promises to pay the borrower's debt if or when necessary.

This is when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but not yet exchanged contracts. Although illegal in Scotland this still happens in England and Wales.

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

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 building survey. The report is optional and you pay the bill; This report should pick up possible problems and may give you the chance to negotiate a lower price. You have more grounds to sue or get compensation from a surveyor for a poor report than you would from a standard valuation.

Independent Financial Adviser - an adviser committed to offering products from the full range of financial products offered in the marketplace.

Where a customer buys a financial product without receiving advice on its suitability

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 PEP and so on.

This is the owning of land by two or more people who are co-owners or 'joint tenants'. When one of the joint tenants dies, the ownership of the property automatically passes to the survivor(s).

Also referred to as a 'KFI'. This is a document given by a lender to a borrower that gives full details of a mortgage, if the mortgage is regulated by the Financial Services Authority.

LEASE

A document which grants possession of a property for a fixed period of time and sets out the obligations of both parties, landlord and tenant, such as payment of rent, repairs and insurance.

Temporary ownership of the property but not the land on which it stands. When the lease expires, ownership of the property reverts back to the freeholder.

Charge passed on to the buyer by lender for arranging a loan.

The fees incurred by the lender when arranging a mortgage. These costs are passed on to the buyer.

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.

Is the London Interbank Offered Rate. This is the rate at which banks buy and sell money to each other. It changes daily and is linked to base rates set by the Bank of England. LIBOR usually changes daily and a LIBOR linked mortgage may be adjusted at fixed intervals, e.g. every three or six months.

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 £85,000 mortgage on a house valued at £100,000 would mean an LTV of 85%.

A search carried out by the Solicitor to find out if there are any Local Authority Notices, with respect to the building itself (e.g. has it been condemned?), and the surrounding area (e.g. have plans gone through to build a motorway next to the house?).

MORTGAGEE

The company or organisation which lends you the money under a mortgage.

The person taking out the mortgage.

The legal charge of the property to the mortgage lender until such time as the loan is repaid.

The period of time that the mortgage loan is to be repaid.

NEW FOR OLD

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

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.

OMBUDSMAN

An impartial commissioner set up to settle complaints made by the public against major industries or institutions; e.g. for the financial sector, the Financial Ombudsman Service.

This is when your insurance cover begins. This may be before you have paid a premium.

PREMIUM

A payment for an insurance policy.

The sum of the loan on which interest is calculated.

Insurance which covers injury or death to anyone on or around your property.