Your home may be repossessed if you do not keep up repayments on your mortgage
The Mortgage and financial Industry can be very confusing! At Complete Financial Centre we like to help our customers by explaining some of the Mortgage terminology.
- Rate Explained
- Mortgages Explained
- Financial Terms Explained
Variable rates are rates can which go up and down and track the bank of England base rate or the lenders standard variable rate during the course of the mortgage term.
Fixed rates are rates which allow you to fix the interest rate for a certain period of time.Capped Rates
Capped rates are rates which cannot go any higher than the maximum rate which has been set at the beginning of the mortgage. The rates are able to go down at any time.Tracker Rates
Tracker rates are rates which track the Bank of England base rate plus a certain percentage.
Discount rates are rates which give you a discount from the lenders standard variable rate for a period of time agreed by the lender.
This is short for Standard Variable Rate.
Repayment Mortgages allow you to repay the mortgage amount which you have borrowed over the selected term. Once all payments have been made you will then own the property outright.Interest Only Mortgages
Interest Only Mortgages are mortgages which will have the same amount borrowed as at the beginning of the term and will have the same amount owing at the end of the term of the mortgage. Throughout the term of the mortgage only the interest is repaid to the lender. You will need a repayment vehicle in place so your are able to repay the full loan amount at the end of the term.Part and Part Mortgages
Part and Part Mortgages are mortgages which allow you to repay part of your mortgage as it is on a repayment basis, bringing down the loan amount at the end of the term, and have the other part of the mortgage on interest only basis so at the end of the term this part will need to be repaid using your repayment vehicle as above with an interest only mortgage.Buy to Let Mortgages
A Buy to Let Mortgage is a Mortgage on a property which is rented out to a third person. It is a property which is purchased with the intention to be let or rented out. Buy to let mortgages are not regulated by the Financial Conduct Authority.
A Guarantor Mortgage is a mortgage where a second person is added to the Mortgage to guarantee a higher amount of borrowing, their income is used as part of the affordability for the Mortgage. An example of a guarantor mortgage could be where a young person could not afford the mortgage on their own income and a parent agrees to be the guarantor, their income is taken into account for the affordability purposes, they are responsible for the mortgage in the event of non-payment.
A Portable Mortgage is a mortgage where you are able to move property midterm of the Mortgage and take the Mortgage with you, up to the same loan amount.
Shared Ownership Mortgages
A Shared Ownership Mortgage is partly owned by the applicant and partly owned by a third party, this is normally a housing association.
A Commercial Mortgage is a Mortgage which is used for companies to purchase their own business premises. Commercial lending is not regulated by the FCA.
Offset or Flexible Mortgage
Offset or Flexible Mortgages are mortgages which allow you to offset savings against the Mortgage with the ability to release these at any time. You can either reduce the term of the mortgage or the monthly amount. For example no interest is charged on the amount of the loan which is equal to your savings amount.
This is a temporary loan which enables you to complete the purchase of your property before completing the sale of your existing house. A typical example of when you may need one would be if you wanted to buy a second property before you had sold your first. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.Equity
This is the amount between the value of your property and the amount of any outstanding loans secured against it.Negative Equity
This is when a mortgage is greater than the actual value of the property.
A deposit is the amount of money you will be putting down on a property that you intend to buy.
The vendor is the person who is selling the property.
Is the person who is applying for the Mortgage.
This is short for Loan to Value, this the ratio between loan amount and purchase price of the property.
Bank of England Base Rate
The Bank of England Base Rate determines how much other banks and building societies pay for the loans that they take out from the Bank of England. These base rates will in turn affect the interest rate paid for loans including the loan on your mortgage.
These are usually charged by the lender when arranging a loan on certain products, this can be added to the loan amount and spread over the term of the Mortgage.
These are the charges made on a loan, calculated as a percentage of the total amount that you borrowed on your mortgage.
This is a charge from the lender when arranging the mortgage to secure the product. This is normally non-refundable.
Cash back is available on certain Mortgages, the lender will transfer the amount to the solicitors once the Mortgage has completed.
This is the length of time the mortgage is taken over and the term the loan is to be repaid in.
Early Redemption Charge
If you pay off your mortgage in full or make overpayments in excess of the amount agreed by your lender at the start, you may be asked to pay an early repayment charge by your lender.
This is carried out by the lender to assess the value of a property. All lenders insist that a valuation is carried out on a property as this will determine how much the lender will lend. As they are lending money on a property, this is their security and they need to know it is worth what they have been told and is in a good condition.
Home Buyers Report
A Home Buyers Report can be carried out by lender or applicant (this may accrue an extra charge) this report will show extra information about the property itself, outside and inside, also the grounds and includes any work which needs to be carried out on the property.
Offer of Loan
This is the formal document approving the mortgage you have requested.
This happens when another potential buyer puts in a higher offer for a property after your offer on the same property has been accepted.
You own the property for a set period before handing back ownership to the freeholder. When you hold a leasehold on a property, it remains the property of the freeholder.
When you have the freehold on a property this means that you solely own the property and the land it is situated on.
This is the legal process involved when buying or selling property. This is available via referral only.
These are the fees charged by a solicitor or other qualified individual to carry out the legal work associated with buying a property.
These are the enquiries made by your solicitor, at the Land Registry, the Land Charges Register and Local Authorities to ensure there is nothing to cause concern about title to the land and the property you intend to buy.
These are the fees your solicitor has to pay on your behalf (e.g. Stamp Duty, Land Registry Fees and Search Fees) which will be added to your conveyancing bill from the solicitor on completion of the buying or selling of a property.
This is a charge levied by the government on house purchases and different bands apply to different values of properties.
This is the legal document which transfers ownership of registered land from the seller to the buyer.
This is the legal right to the ownership of your property.
These are the legal documents showing the ownership of your property.
Subject to Contract
This is the provisional agreement made between the buyer and the seller, before contracts on a property are actually exchanged. This allows either side to back out of the agreed sale without any financial penalty.
Exchange of Contracts
This is when you have a legal obligation to purchase the property and the vendor has a legal obligation to sell the property to you and you are legally bound to complete the transfer.