Mortgage Glossary

All the common terms concerned with Mortgages

• Arrangement Fee
• Bad Credit Mortgage
• Base Rate
• Base Rate Tracker
• Booking Fee
• Buy to Let (BTL)
• Buy to Let Investor
• Buy to Let Mortgage
• Capital
• Capital and Interest Mortgage
• Capital Outstanding
• Capped Rate
• Cashback
• Chaps Fee
• Credit Rating
• Deposit
• Discounted Rate
• Early Repayment Charge
• Early Repayment Penalty
• Early Redemption Charge
• Early Redemption Penalty
• Endowment Policy
• Exit Fee
• First Time Buyer
• Fixed Rate
• Flexible Mortgage
• Graduate Mortgage
• Higher Lending Charge (HLC)
• Home Insurance
• Income Multiple
• Individual Savings Account (ISA)
• Insurance Fee
• Interest
• Interest Only Mortgage
• Interest Rate
• Legal Fees
• Letting Agent
• Life Insurance
• Lifetime Tracker
• Loan to Value (LTV)
• Mortgage
• Mortgage Broker
• Mortgage Exit Administration Fee
• Mortgage Indemnity Guarantee
• Mortgage Payment
• Mortgage Payment Protection Insurance (MPPI)
• Offset Mortgage
• Overpayment
• Payment Holiday
• Pension
• Product Fee
• Re-mortgage
• Repayment Mortgage
• Repayment Vehicle
• Reservation Fee
• Self Certification Mortgage (Self Cert)
• Stamp Duty
• Standard Variable Rate (SVR)
• Tie In
• Tracker
• Transfer Fee
• Underpayment
• Valuation Fee
• Variable Rate

Arrangement Fee

The fee charged to secure a particular deal. Can also be called product fee, reservation fee or booking fee. Top of Page.

Bad Credit Mortgage

See Sub Prime. Top of Page.

Base Rate

The rate of interest set by the Bank of England which banks and building societies use as a starting point in calculating Interest Rates. Top of Page.

Base Rate Tracker

A mortgage which follows the Bank of England Base Rate. Top of Page.

Booking Fee

See Arrangement Fee. Top of Page.

Buy to Let (BTL)

Where a property is bought with the intention of renting out. Top of Page.

Buy to Let Investor

Someone who buys a property with the intention of renting it out. Top of Page.

Buy to Let Mortgage

A mortgage for someone who is buying a property with the intention of renting it out. Top of Page.

Capital

The amount borrowed. Top of Page.

Capital and Interest Mortgage

See Repayment Mortgage. Top of Page.

Capital Outstanding

The amount borrowed which has yet to be repaid. Top of Page.

Capped Rate

A rate above which the Interest Rate charged will not go. Top of Page.

Cashback

A payment made by the lender to the borrower following completion of the property purchase. Top of Page.

Chaps Fee

A bank fee incurred by the lender for electronically transferring the funds to a solicitor. Top of Page.

Credit Rating

An assessment of a borrower's creditworthiness or risk profile. Top of Page.

Deposit

Contribution made by the borrower towards the property purchase. Top of Page.

Discounted Rate

The Standard Variable Rate less a fixed amount for a set period. Top of Page.

Early Repayment Charge

A charge which will apply in the event that a borrower wishes to exit a deal within the set period agreed at outset. . Top of Page.

Early Repayment Penalty

See Early Repayment Charge. Top of Page.

Early Redemption Charge

See Early Repayment Charge. Top of Page.

Early Redemption Penalty

See Early Repayment Charge. Top of Page.

Endowment Policy

An investment plan which will provide a lump sum at a future date as well as providing life insurance up until the same future date. Top of Page.

Exit Fee

An administration charge levied by the lender when a mortgage is repaid. Also called a Mortgage Exit Administration Fee. Top of Page.

First Time Buyer

Borrowers that have not previously owned a property. Top of Page.

Fixed Rate

An Interest Rate which will remain the same for a set period. Top of Page.

Flexible Mortgage

A mortgage which gives the borrower the ability to make Overpayments, Underpayments and take Payment Holidays. Top of Page.

Graduate Mortgage

Mortgages on special terms which are made available to graduates in certain professions such as trainee solicitors or accountants. Top of Page.

Higher Lending Charge (HLC)

An insurance taken out by the lender to protect against falling property prices which lead to a property being worth less than the outstanding loan. . Top of Page.

Home Insurance

Insurance to protect the home and its contents against damage, fire, theft or loss. Top of Page.

Income Multiple

One of a lender's criteria in assessing a loan, the number of times gross income that a lender will be prepared lend. Top of Page.

Individual Savings Account (ISA)

An investment plan designed to provide a lump sum with which an interest only mortgage could be repaid at the end of its term. Top of Page.

Insurance Fee

A fee levied where a borrower decides to take out mortgage related insurances with a third party rather than with the lender. Top of Page.

Interest

The amount charged by a lender to a borrower for the funds borrowed. Top of Page.

Interest Only Mortgage

A mortgage where the monthly payments are in respect of Interest with no monthly repayment towards Capital. Top of Page.

Interest Rate

The percentage rate used to calculate Interest due to the lender. Top of Page.

Legal Fees

Solicitor costs and related costs associated with the purchase of a property. . Top of Page.

Letting Agent

A firm which specialise in finding tenants and managing properties on behalf of Buy to Let Investors. Top of Page.

Life Insurance

Insurance that will ensure a mortgage is repaid in the event of the death of the borrower. Top of Page.

Lifetime Tracker

A mortgage linked to the Bank of England base rate for the entire term of the mortgage. Top of Page.

Loan to Value (LTV)

The amount of the mortgage compared to the value of the property expressed as a percentage. Top of Page.

Mortgage

Money borrowed by an individual from a bank or building society where the money lent is secured by a property. Top of Page.

Mortgage Broker

A mortgage adviser that is able to offer mortgages from numerous different lenders. Top of Page.

Mortgage Exit Administration Fee

See Exit Fee. Top of Page.

Mortgage Indemnity Guarantee

See Higher Lending Charge. Top of Page.

Mortgage Payment

The amount paid by the borrower to the lender each month. Top of Page.

Mortgage Payment Protection Insurance (MPPI)

Insurance that will ensure mortgage and mortgage related payments are made in the event of inability to work due to accident, sickness and/or unemployment. Top of Page.

Offset Mortgage

A mortgage where current and savings account balances are deducted from the outstanding mortgage before Interest is calculated. Top of Page.

Overpayment

Paying more than is required to cover the monthly Interest and Capital bill. Top of Page.

Payment Holiday

A complete break from making mortgage payments. Top of Page.

Pension

An investment which provides income in retirement that can also provide a lump sum which could be used to repay an Interest Only mortgage. Top of Page.

Product Fee

See Arrangement Fee. Top of Page.

Re-mortgage

The process of moving a mortgage from one lender to another when not moving house. Top of Page.

Repayment Mortgage

A mortgage where the Mortgage Payment pays Interest and an element of Capital so that the amount borrowed will be repaid in full at the end of the mortgage term. Top of Page.

Repayment Vehicle

The arrangement in place for repayment of Capital at the end of the term of an Interest Only Mortgage. Top of Page.

Reservation Fee

See Arrangement Fee. Top of Page.

Self Certification Mortgage (Self Cert)

A mortgage for the self-employed or someone who has difficulty in providing proof of income. Top of Page.

Stamp Duty

A government tax imposed on property purchases above a certain threshold. Top of Page.

Standard Variable Rate (SVR)

The default rate set by lenders applicable to borrowers who do not have a special Interest Rate deal. Top of Page.

Tie In

The period after the end of a fixed or discounted rate period during which the borrower is required to keep their mortgage with the lender. Top of Page.

Tracker

See Base Rate Tracker. Top of Page.

Transfer Fee

See Chaps fee. Top of Page.

Underpayment

Paying less than is required to cover the monthly Interest and Capital bill. Top of Page.

Valuation Fee

The cost involved for the lender asking a surveyor to value the property. Top of Page.

Variable Rate

An Interest Rate which will rise and fall broadly in line with general interest rates and base rate. Top of Page.

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