A debt which you have failed to pay. If you have missed 3 months of mortgage payments, you will be ‘in 3 months of arrears’.
An asset is any property, vehicle, machinery, furniture, or anything owned by an individual or business that has monetary value.
A landlord is required to give their tenants an assured shorthold tenancy contract to sign. This states how much rent needs to be paid, who is responsible for repairs and how long the tenancy will last.
This is the original loan amount, before any interest or fees are applied.
This is a deal offered by lenders allowing you to ‘cap’ the interest rates on your loan. This gives you certainty that you will never have to pay more than what you can afford. However, it is generally a lot higher than other rates.
Pre-arranged loan amount which you can choose to take money from as and when you need it.
This is a type of court order that is filed against you if you fail to pay a debt. You will normally have 30 days to pay the money back, and if you don’t, it will be added to your credit report which will remain there for 6 years. This could significantly damage your credit record and affect you from borrowing money in the future.
This is a type of valuation done of a property by using publicly available information. They will use things like the postcode, tax records, number of bedrooms and facility rooms, and the local area to determine the value- assuming it is in an average condition.
This is a deal offered by lenders, giving you a discount on the interest rates you are paying on your loan. This deal normally lasts around 2-5 years.
This is when the surveyor will value the property just from the exterior- they won’t go inside.
This is a financial penalty when you choose to pay back a loan earlier than the agreed term with the lender- this may be because you have inherited some money or sold a property. The lender will charge this based on one of these four ways:
A percentage of the original loan amount.
A percentage of the balance that you still owe on the mortgage.
A percentage of the loan amount that you have already repaid.
A certain number of months’ interest.
The value of the proportion of the property you own out right- unmortgaged. If you owned a £200,000 property and you put in £20,000 of your own money and had a £180,000 mortgage, you would have £20,000 in equity.
This is a deal offered by lenders at the beginning of a mortgage term, normally lasting 2-5 years. This ensures that the interest rate you are paying on your loan will stay the same every month, making the monthly payments the same.
This is when you borrow more money from your current mortgage lender. This is normally a different rate to your main mortgage.
A 40% tax charged by the government on the estate of someone when they have passed away. This is charged on anything over the value of £325,000 For example, if your estate was worth £500,000, you would be charged 40% on £175,000.
A percentage rate charged by a lender based on the amount of money borrowed and the length of time it is borrowed for. It builds on a monthly or annual basis.
When you take out a loan, most of time, you will be paying the money back monthly, Interest-only is when you only pay back the interest of the loan each month, and nothing off the original loan amount.
Loan to Value is an expression used by lenders to determine the value of a loan in comparison to the amount the property is worth (in cases where the loan is secured against a property). For example, if your property was worth £200,000 and you applied for a loan worth £100,000- the loan would be 50% LTV.
This type of interest is not paid monthly, it is added on to the total loan amount each month. Then, the next month, you are paying interest on the initial loan amount and the interest already accumulated. This is then all paid back together at the end of the loan term.
A second charge loan is a loan that is put ‘behind’ another one. For example, a secured loan would be second charge to a mortgage- so, if the property was sold, the mortgage lender would be re-payed first and the secured loan lender, second.
All lenders have a standard ‘default’ interest rate that they charge on loans, normally influenced from The Bank of England’s base rate. This rate is different for all lenders and it can move up and down throughout the loan term without warning.
This is normally a personal loan from a bank where you have agreed monthly repayments. The rates tend to be much higher as the loan isn’t secured against anything that the lender could seize if the repayments weren’t made.
The estimation of the property’s value- carried out by a professional valuator sent from the lender before offering a loan amount.
See also Frequently Asked Questions