Mortgage A-Z

Term

Description

A

APR

Annual Percentage Rate. The interest payable on what you've borrowed is added up along with other charges (e.g. arrangement fees) and then expressed as an annual rate of charge. The APR helps you compare the true cost of borrowing, for example, across different mortgages and lenders. The APR takes into account all fees and charges applied to the mortgage as well as the monthly payments over the life of the loan.

Arrears

These are any mortgage payments that were due to be paid by you and are now overdue.

B

Booking fee

Mortgage booking fees are charged on some of our products in order to reserve the rate. Some products allow you to add the booking fee to your loan. If you choose to add the fee to your loan, the added fee will attract interest over the term.

Bank of England base rate

This is the Bank of England base rate which lenders will use when calculating their interest rates for some products.

C

Capital repayment

These are the payments, often a lump sum of money, that reduce the capital balance outstanding on your mortgage.

D

Debt

A debt is an amount of money that you owe to a person or company.

E

Early repayment charge

These are charged to customers who pay off their mortgage within an introductory rate period.

Equity

This is the difference between the value of your property and the total amount borrowed on the loans you have secured on it.

F

Fixed-rate interest

An interest rate that stays the same throughout an agreed period.

H

Higher lending charge

You'll have to pay a higher lending charge if you want to borrow 90.0% or more of the property valuation or the purchase price, if that is lower than the valuation.

I

Interest

Interest is the amount you pay when you borrow money. It's expressed as a percentage rate over a period of time.

L

Loan

This is the money you borrow, for example when you buy a new car, on condition that you pay it back.

Loan to value (LTV)

Loan to Value is the proportion of either the value or the price of the property (whichever is lower) that you borrow on a mortgage. For example, a £90,000 mortgage on a house valued at £100,000 would mean an LTV of 90%. You can calculate your loan to value by using this simple calculation: LTV = amount you wish to borrow ÷ property purchase price x 100

M

Mortgage account fee

A mortgage account fee is charged for providing and administrating the mortgage. You pay it on completion but it can also be put off until the end of your mortgage.

O

Overpayment

This is when you make a larger payment than your normal monthly mortgage repayment, usually to reduce your mortgage term

P

Payment holiday

A payment holiday is a period of one or more months when you don't make repayments on your loan, although interest continues to be charged on the loan balance.

R

Remortgage

This is when, without moving home, you replace your existing mortgage with a new one - usually to get a better rate. The money you borrow for the new mortgage is used to repay the old one.

Redemption Statement

This is a statement from your current lender on how much you need to pay them to close your mortgage.

S

Stamp duty

This is a government tax charged when buying a home, which ranges from 1% to 4% on properties valued up to £1 million. This is based on the whole purchase price and depends on the value of the property.

Standard variable rate (SVR)

T

Title deeds

Every property has a document or set of documents called -Title Deeds'. They show who owns the property. Ownership is now also shown electronically at the Land Registry.

U

Underpayment

Underpayment is when you make a mortgage payment that's less than you would normally pay each month.

V

Variable rate interest

This is an interest rate you pay on your loan or mortgage which rises and falls according to a specific index - such as the base rate set by the Bank of England.