• Confused by all the jargon surrounding mortgages?

    Our comprehensive Jargon Buster of mortgage terminology can assist you!

    Jargon Buster Bad Credit Mortgage Broker

Bad Credit Mortgage Jargon Buster

Here at Plus Financial Solutions we try to give advice in a language people understand.  Therefore we have put together this Jargon Buster to assist your understanding of some of the terminology used within the industry.  If we ever used terminology you don’t understand, please just ask us and we will be more than happy to explain.

AdvanceLoan from a Lender in the form of a mortgage.
AdviceA recommendation about the most suitable mortgage/protection product for you made by an adviser who is regulated by the FCA.
Annual statementA statement from your mortgage lender, sent every year, showing among other things what you’ve paid and what you still owe.
Approval in principle (AIP) / Decision In Principal (DIP)A certificate which some lenders will give you that shows the amount they will probably be prepared to lend you. This is not a guarantee, but can be helpful when signing up with estate agents. Sometimes also known as Decision In Principal (DIP).
APRAnnual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs, and assumes you keep the mortgage product for the full term of the mortgage, not just the initial special rate term.
Arrangement FeeA 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.
ArrearsIf you go into arrears, it means you have ‘defaulted’ at least once on your mortgage repayments, ie you have missed a month’s payment. Contact your lender as soon as possible if you think you may go into arrears.
Authorised firmA firm that has permission from the FCA to carry out regulated activities.
Bank of England Base RateThe rate of interest set by the Bank of England which affects all interest rates
Booking FeeA fee paid to the lender to book a rate and secure your mortgage application.
Bridging LoanA temporary loan providing financial cover to bridge the gap between purchasing and selling a property.
Building Survey (formerly structual survey)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.
Buildings insuranceInsurance that covers you for damage to the structure of your home. A lender will require you to have this in place when you take out a mortgage.
Buy to LetA mortgage designed for people who buy a property with the intention of letting it out.
CapitalThe amount you borrow.
Capped mortgageA mortgage that has a maximum limit on the interest rate you’ll have to pay during a special deal period.
Cashback mortgage A mortgage that comes with a cash sum (often a percentage of the amount you’re borrowing).
Cat Standard MortgageStanding 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.
CCJCounty 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.
CHAPSClearing House Automated Payment System. A Payment Release through which the mortgage advance is sent to the conveyancer.
ChargeThe term used for the security that the lender relies on when granting a mortgage.
CollarIf your mortgage deal has a collar, your interest rate will not fall any lower than the specified amount. So if rates drop to 3.75% and your deal is collared at 4%, you’ll miss out on the savings that this lower rate would bring.
CompletionThe point when contracts have been exchanged and legal transfer of ownership on the property from seller to buyer is finalised.
Contents InsuranceInsurance to cover any loss or damage to your possessions.
ContractLegally binding agreement between the seller and buyer of the property.
ConvenantsRules and regulations governing the property contained in its title deeds or lease.
ConveyancerA specialist in the legal aspects of buying a house.
ConveyancingThe legal process you must go through when you buy or sell property. This can be done by a solicitor or licensed conveyancer. Read more about conveyancing.
Credit ScoringA lender’s way of assessing whether you are a good risk to lend a mortgage to.
Credit SearchA 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.
Critical Illness coverInsurance that generally pays out a lump sum if you are diagnosed with a life-threatening illness or disease.
Current account mortgage (Cam)Your mortgage, credit card and loan debts and your current and savings account balances are combined into one account. Your credit balances offset your debts, so you only pay interest on the difference. These are usually more expensive than conventional mortgages.
Debt Consolidation Where debts such as credit cards & personal loans are added to a mortgage in order to reduce outgoings. But normally will increase the overall amount paid, as well as the term they are repaid over.
Decreasing Term AssuranceLife 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.
Default NoticeA prescribed notice to be issued on default by a lender wishing to enforce a regulated loan under the Financial Services Authority.
DepositThis is the amount you are required to put down yourself towards the cost of the property. The minimum deposit you will usually need is 5%, but the cheapest deals are available to people who can pay a deposit of at least 40%. Read more about mortgage deposits.
DisbursementsCosts such as stamp duty, Land Registry fees and search fees charged to the acting conveyancer or solicitor but then paid for by the purchaser.
Discounted mortgage This has a discounted variable rate of interest for a set period, after which the rate will increase.
Key Facts Illistration (KFI) Standard documents that all authorised lenders and brokers must give you to explain their services and details about the mortgage you’re interested in.
Early repayment charge (ERC’s)A charge you may have to pay if you break off a mortgage deal – by paying it back early and/or moving to another lender.
Endowment MortgageOn 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.
Equity The value of a property minus any outstanding mortgage and loans secured against it.
Equity release schemeAn equity release scheme allows older homeowners to release the cash tied up in their property. There are two types: lifetime mortgages and home-reversion schemes. These schemes should only be taken out after getting independent financial advice. Read more about equity release schemes.
Estate Agency FeesThe 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.
Exchange of contractsThis is the point when both buyer and seller are legally bound to the purchase and sale of the property.
Family offset mortgageUsed by family members (usually parents) who want to help first-time buyers get onto the property ladder. Your savings are balanced against your child (or family member)’s debt, so the amount they owe and pay in interest is reduced. Find out more about family offset mortgages.
FCAThe Financial Conduct Authority – the UK’s financial watchdog.
Fees Professional fees paid to advisers for locating/advising and lenders product fees. Can be paid upfront or added to the mortgage.
Fixed rate An interest rate that is fixed (i.e. it doesn’t move up or down) for a set period of time.
FixturesAny item that is attached to a property, and so is legally part of the property.
Flexible mortgageA flexible mortgage deal allows you to overpay, underpay or even take a payment holiday from your mortgage. This can help you pay off your mortgage early and save money on interest, but flexible mortgages are usually more expensive than conventional ones. Read more about different types of mortgage deal.
FreeholdYou own the building and the land it stands on. Find out more about buying a freehold property.
GazumpingWhen an offer has been accepted on a property but a different buyer then makes a higher offer, which the seller accepts. Read more about gazumping.
Ground rentThe annual charge levied by the freeholder to the leaseholder.
GuarantorA third party who agrees to meet the monthly mortgage repayments if you are unable to. This is most common with first-time buyers, and the guarantor is usually their parent or guardian. Read more about guarantor mortgages.
Help to BuyThe government has launched a number of different Help to Buy schemes, including equity loans, mortgage guarantees, Isas and specific schemes for Scotland and Wales. They all aim to make home-buying easier. Find out more about the different forms of Help to Buy.
Help To Buy IsaA tax-free savings account, into which the government pays first-time buyers a cash bonus towards the purchase of a property. For every £200 saved, the government will deposit an additional £50, up to a maximum of £3,000. Read more about Help to Buy Isas.
Higher Lending ChargeThe higher lending charge, formerly known as a mortgage indemnity guarantee (MIG), is a fee charged by a mortgage lender where the amount borrowed exceeds a given percentage of the value of the property. This fee may be used by the lender to purchase an insurance policy designed to protect it (the mortgage) against loss in the event of you defaulting and ceasing to repay your mortgage. The fee may be insisted on by the lender at the start of the loan. This fee can usually be added to the mortgage amount.
HM Land RegistryThe official organisation that keeps records of properties in England and Wales. Transfer of ownership has to be registered with the HM Land Registry.
Homebuyer survey and valuationThis 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.
IFAsIndependent Financial Adviser – an adviser committed to offering products from the full range of financial products offered in the marketplace.
Income multiplesThe factor by which your earnings are multiplied to find out how much you can borrow.
Interest rateThe figure that determines the cost of borrowing the money, and can move up or down if it is variable.
Interest-only mortgageAs the name suggests, your monthly payment only pays the interest charges on your loan – you’re not actually reducing the loan itself. This is why it’s very important you regularly review your  circumstances.
Joint mortgageA mortgage taken out by two or more people. This might be used if you buy a house with a partner or friend, and can also be used by parents who want to help their children buy a property. Read more about joint tenancy or how parents can help first-time buyers.
Joint TenantsThis 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).
Land Registration FeeA fee paid to verify legal title and rights over the property and to register ownership of the property with the Land Registry.
Land RegistryThe official body responsible for maintaining details of property ownership.
LeaseA 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.
LeaseholdYou own the building but not the land it stands on, and only for a certain period (anything up to 999 years). You may find it hard to get a mortgage if there are fewer than 70 years left on the lease of the property you want to buy. Find out more about buying a leasehold property.
Level Term AssuranceLife 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 Inter Bank Offered Rate- The rate of exchange at which banks lend money to each other. Some lenders use this rate to set their rates.
Lifetime mortgagesSee ‘equity release schemes’.
Loan-to-value (LTV)The percentage of money you want to borrow compared to the cost/value of the property.  (If you borrowed £90000 against a house valued at £100000, the LTV would be 90%)
Local Authority SearchA 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?).
Monthly repaymentThe amount you pay your mortgage lender each month. If you’re on a repayment mortgage (the most common kind), the payment will cover a percentage of your mortgage plus interest.
Mortgage A loan which is secured against your property.
Mortgage agreement in principle (AIP)See ‘agreement in principle’.
Mortgage brokerA mortgage broker helps you understand the various mortgage types and deals available to you.
Mortgage DeedThe legal charge of the property to the mortgage lender until such time as the loan is repaid.
Mortgage payment protection insurance (MPPI)Insurance that covers your mortgage, usually for a year, if you are unable to work due to accident, sickness or unemployment. It is also know as ASU insurance. Read more about mortgage insurance.
Mortgage TermThe period of time that the mortgage loan is to be repaid.
MortgageeThe company or organisation which lends you the money under a mortgage.
Negative EquityThis is where the money you owe on the mortgage is greater than the value of the property. For example, if you had a £185,000 mortgage on a property valued at £150,000, you would have £35,000 negative equity.
OfferThe letter from a lender offering a customer a mortgage loan and setting out the conditions upon which it is offered.
Offset mortgageAn offset mortgage links your mortgage with your savings and, sometimes, your current account. Your credit balances are offset against your mortgage debt so you only pay interest on the difference, while also paying off the capital. Read more about offset mortgages.
OmbudsmanAn 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.
On RiskThis is when your insurance cover begins. This may be before you have paid a premium.
Part and PartWhere the repayment method is part Repayment and part Interest Only.
PortabilityA portable mortgage allows you to transfer your borrowing from one property to another if you move, without paying arrangement fees. Read more about porting your mortgage.
PremiumA payment for an insurance policy.
PurchaserThe individual/s buying the property.
Rebuild costFor insurance purposes: the cost of rebuilding your home if it is destroyed.
RedemptionFull repayment of the loan.
Redemption Administration FeeA fee charged by the lender for releasing the deeds following repayment of a mortgage.
Redemption PenalitiesPenalties sometimes incurred if paying off a mortgage early. Also known as Early Repayment Charges.
Registered LandLand for which title is registered and recorded at HM Land Registry, the central registry of the title to property in England and Wales.
Reinstatement ValueThe cost of rebuilding your home should it be destroyed.
RemortgageWhen you change your mortgage without moving house. You can do this to save money, to change to a different type of mortgage or to release equity from your home. Read more in Which? Mortgage Advisers’ step-by-step guide to remortgaging.
RemortgagingThe process of changing your current mortgage for a different one, without moving home.
Repayment mortgageA mortgage that pays off both the home loan and the interest at the same time. Make all the payments and the mortgage will be fully repaid at the end of the term. Every month, your payments to the lender go towards reducing the amount you owe as well as paying the interest they charge. So each month you’re paying off a small part of your mortgage.
Repayment vehicleRequired by lenders if you take out an interest-only mortgage, this is the means by which you’re intending to pay off your mortgage at the end of the term – for example, another property, or a stocks and shares portfolio. Read more about interest-only mortgages.
RepossessionWhen the mortgage lender takes away a borrower’s home because he has fallen too far behind on mortgage repayments.
RetentionIf essential repair work to a property is required, the lender may retain a proportion of the mortgage until the remedial work is completed.
Right to Buy schemeOriginally intended to enable tenants of council houses to buy the homes they lived in, this is now being opened up to housing association tenants too. Read more about the Right to Buy scheme.
SearchesEnquiries made at the Land Registry, the Land Charges Register and Local Authorities to ensure there is nothing to cause concern about title to land.
Second ChargeA second lender takes a charge over the property to secure a loan, whilst the first mortgage remains outstanding.
SecuredA mortgage is a secured loan on your home; this means that if you fail to repay it, your lender may be able to repossess and sell your home to get its money back.
SecurityWhen a loan is taken out it can be ‘secured’ on a property. The borrower agrees that in the event of default on repayments, the lender can claim the property.
Self-Build MortgageMortgage for those who wish to build their own home, renovate or convert their existing home. Funds are normally released in stages as work progresses following a satisfactory progress report from an architect.
Self-CertificationYou give full details of your income and sign a declaration it is correct. For people who are unable to prove their income in the normal way, e.g. are self-employed, a company director, a contractor, have several sources of income or fluctuating income.
Service chargeThe fee paid to a managing agent for the ongoing maintenance of a leasehold property. Read more about the costs of home ownership.
Shared ownershipYou buy a share of a property (usually between 25% and 75%) and pay rent on the remaining share, which is owned by the local housing association. Read more about shared ownership.
SolicitorThe person who deals with the conveyancing.
Stamp dutyA tax which home buyers must pay on properties above a government set figure.
Standard variable rate mortgage (SVR)A loan at the lender’s normal mortgage rate – i.e. without any discounts or special deals.
Starter Homes InitiativeA government scheme that promises to build 200,000 new homes for first-time buyers aged under 40. Buyers will be given a minimum discount of 40%. Read more about the Starter Homes Initiative.
Sub Prime MortgagesAn event, or series of events, may have impaired your credit rating and it will be necessary to apply for a Sub Prime mortgage. These normally have a higher interest rate than Prime mortgages and may carry heavier charges.
Subject to ContractQualification of a provisional agreement made between buyer and seller, before exchange of contracts, which allows either side to back out without penalty or liability.
Sub-prime/non-conforming mortgageA sub-prime, or non-conforming, mortgage is geared towards people who have had credit problems.
Sum AssuredHow 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.
SurveyA report on the condition of the property you are planning to buy. More in-depth than a normal mortgage valuation report, and is ordered by the buyer.
SurveyorIndividual that carries out surveys on properties, who must be a member of the Royal Institution of Chartered Surveyors (RICS).
Tenants in CommonA form of ownership by two or more people in which, if one dies, their share of the property forms part of their estate and does not automatically pass to the other(s).
TenureWhether a property is freehold or leasehold.
TermThe length of your mortgage.
TitleThe legal right to ownership of a property.
Title DeedsDocuments stating who has title or right to the ownership of a property, which also show the boundary of the land.
Title SearchesUndertaken by a solicitor or conveyancer to ensure that there are no unusual circumstances governing the ownership or use of a property.
Tracker mortgageA mortgage with an interest rate that is usually linked to a particular rate that is set independently from the lender and moves up or down with it. (Usually tracks the Bank of England base rate by a set differential, but can track other indexes).
Transfer DeedA document that, once you sign it, actually transfers the ownership of the property.
Transfer of EquityA sale or gift of one person’s interest in the property to another, most commonly on divorce or separation where the family home is jointly owned.
Valuation A brief inspection, for the benefit of your lender, of the home you hope to buy or remortgage. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage. It will not tell you if it is a good or bad buy. For your own peace of mind, you may want to order your own survey.
Variable-rate mortgageThe interest rate on your mortgage can go up or down according to your lender’s standard variable rate. Read more about standard variable rate mortgages.
VendorThe person selling the property.

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