Mortgage Advice and Jargon Buster

Jargon Buster

Annual Percentage Rate (APR) - This rate takes into account all the costs, interest charges, arrangement fees etc. Theoretically it allows you to compare mortgages on a like for like basis. However, you need to be careful as different lenders calculate it in different ways.

Capped Rate - The interest rate can go up and down. This is usually referred to as the Standard Variable Rate. However, it won't rise above an agreed rate - the Cap. If the standard variable rate goes above the cap, you'll only pay the capped rate. The capped rate usually lasts for an agreed period.

Conveyance - The legal process involved in buying and selling properties.
Exchange of contracts - The point at which the buyer and seller have legally committed themselves to the sale and purchase of the property.

Fixed Rate - The interest rate is fixed for a set period.

Freehold - This is when you own the property and the land that it is on.

Leasehold - This is when you own the property for a set number of years. After that it goes back to the freeholder. Most flats in England are leasehold.

LTV - Loan to Value. This is the amount of the mortgage expressed as a percentage of the value of the property, or the price you are paying for the property. So a £60,000 mortgage on a £80,000 property would mean an LTV of 75%.

Remortgage - This is when you switch your mortgage from your current lender to another one. You take out a new mortgage to repay your current one. You may be able to get a better rate that saves you money.

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Mortgage Advice and Protection

Mortgage Life Assurance Explained

Decreasing Life assurance or mortgage life assurance is a term assurance product where the amount of cover decreases over the period of the policy.

This is usually used along-side a repayment or capital and interest mortgage to ensure that the amount of mortgage is repaid if the life assured died during the term of the mortgage. As with Level Term Assurance, the level of cover can also include Critical Illness.

Repayment / Capital and Interest Mortgage

Your monthly payments are partly to pay the interest on the amount you borrowed, and partly to repay the amount you borrowed. At the end of the mortgage, the capital and the interest is all completely repaid. It is also known as a repayment mortgage.

Valuing Your Property

A simple check of the property to establish how much it is worth and whether it is suitable to lend a mortgage on. The cost of the valuation is payable when you apply for your mortgage and is dependent on the purchase price or valuation of the property.

Title Deeds

Documents showing who owns a property. Where the property is registered at HM Land Registry, the Registry no longer issue a document of title known as a 'Land Certificate'.

The Register is now fully electronic and online via the Land Registry's Website and property owners can now verify ownership of their home personally and obtain copies of their registered entry for a small fee. A copy of the registered entry may be provided by the Solicitor acting for the borrower on completion of the purchase transaction.

Sealing Fee

A charge made by lenders when you repay the mortgage to release the deeds of the property. Also known as a deeds fee.

Stamp Duty

Government tax payable on the purchase of property. It ranges from 1% on properties over £125,000, up to 4%.

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