Advice
A recommendation about the most suitable mortgage for you made by an adviser who is regulated by the FSA.
Annual statement
A statement from your mortgage lender, sent every year, showing among other things what you've paid and what you still owe.
Approval in principle
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.
APR
Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs.
Authorised firm
A firm that has permission from the FSA to carry out regulated activities.
Buy-to-let mortgage
A loan you take out to buy a property which you intend to rent to tenants.
Capital
The amount you borrow to help buy your home.
Capped mortgage
A 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).
Collared mortgage
A mortgage with a minimum interest rate you'll pay during a deal period.
Deposit
The amount of money that you're putting into buying a home (not including the mortgage money you're borrowing).
Discounted mortgage
This has a discounted variable rate of interest for a set period, after which the rate will increase.
Early repayment charge
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.
Fixed rate
An interest rate that is fixed (ie it doesn't move up or down) for a set period of time.
FSA
The Financial Services Authority - the UK's financial services regulator.
Income multiples
The factor by which your earnings are multiplied to find out how much you can borrow.
Interest
The charge made by lenders when you borrow their money.
Interest rate
The figure that determines how much interest you pay. Usually linked to the Bank of England's rates and can move up or down.
Interest-only mortgage
A mortgage where you only pay the interest charges of the loan each month. This means that you are not reducing the loan amount (or capital) itself, and this will need to be repaid in some other way.
Key facts documents
Standard documents that all authorised lenders and brokers must give you to explain their services
and details about the mortgage you're interested in.
Loan-to-value
The percentage of money you want to borrow compared to the cost of the property.
Mortgage
A loan which is secured against your property.
Mortgage broker
A mortgage broker helps you understand the various mortgage types and deals available to them. A mortgage broker may recommend a mortgage for you or they may provide you with information to enable you to make your own choice.
Remortgaging
The process of changing your mortgage for a different one, without moving home.
Repayment mortgage
A 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.
Stamp duty
A tax which home buyers must pay on properties above a government set figure.
Standard variable rate mortgage
A loan at the lender's normal mortgage rate - ie without any discounts or deals.
Secured
A mortgage is a secured loan on your home; this means that if you fail to repay it, your lender may be able to sell your home to get its money back.
Survey
A report on the condition of the property you are planning to buy.
Tracker mortgage
A 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.
Term
The length of your mortgage.
Valuation
A brief inspection, for the benefit of your lender, of the home you hope to buy. 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, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want your own survey.
Accident, sickness and unemployment insurance
See mortgage protection insurance and payment protection insurance.
Buildings insurance
Pays the cost of repairing or rebuilding your home if it is damaged by unforeseen events (as detailed in the insurance policy).
Contents insurance
Covers the cost of replacing possessions lost or damaged due to unforeseen events (as detailed in the insurance policy).
Cover
The protection given by insurance.
Critical illness cover
Insurance that pays a lump sum if you're diagnosed with a specified critical illness covered by your policy.
Excess
The amount you agree to pay before your insurer pays the rest of the bill (for example, the first £100 of a claim).
Exclusions
Things that your insurance will not cover.
Income protection (or permanent health insurance)
Insurance that pays you a monthly income if you're unable to work due to illness or injury, until you are able to return to work, or retirement, whichever is the sooner.
Investment-backed life insurance
Life insurance which has two roles: to protect you, and to act as an investment. These include Whole-of-Life insurance, With-profits bonds, Income and growth bonds, Endowment policies and Maximum Investment plans.
Joint life
Typically, life-cover to protect a family in the event of either or both parents dying.
Mortgage protection insurance
Accident, sickness and unemployment insurance (or payment protection insurance) used to cover your mortgage payments.
No claims discount
A discount if you haven't made a claim on your insurance policy within a specified period of time (for example 3 years) but it does not mean the premiums to which the discount is applied do not rise.
Payment protection insurance (or accident, sickness and unemployment cover)
Pays out a regular amount (repayments of a loan, although some cover bills as well) for a limited time – a year, say – if you can't work for health reasons or redundancy.
Policy
The details of what your insurance covers, what it doesn't, and what it costs, normally provided separately.
Premium
The amount your insurer requires you to pay for insurance.
Private medical insurance
Insurance that pays for you to receive private medical treatment.
Schedule
The specific details of what's covered, and what's excluded, by a policy.
Term insurance (or term assurance)
Life insurance giving protection for a specific amount of time (the 'term'). |
