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A

Additional security – further property being offered to support an application or transaction

Administration Fee – a fee charged either by a lender or broker to process a mortgage or loan

Agreement In principle (AIP) – formal acceptance from a lender for a loan. This is normally subject to a suitable valuation and the customer adhering to all underwriting criteria. This is not legally binding

Applicant – an individual applying for a mortgage, loan or credit

Application – the process of applying for a loan or credit. This is normally done with a completed and signed application form but this can be initially started by a phone call, email or via the internet

Application Fee – a fee charged by the lender or broker in relation to an application

Arrangement Fee’s – A fee that the lender charges to the developer and is usually about 1% of the loan amount and normally paid when the developer accepts the offer of finance. This fee is separate from any fees charged by a valuer, solicitor or monitoring surveyor

B

Bankruptcy – the process of declaring an individual bankrupt

Bank Base Rate – the rate of interest set by the Bank of England (BBR)

Bridging Loan – short term loan or finance normally secured on a property

Broker – an intermediary or third party

Broker Fee – a fee charged by an intermediary or third party, normally paid by the customer on successful completion of a mortgage or loan

Building Insurance – any mortgage or loan secured on a property will need adequate building insurance in place to protect the property and Lender

Buy To Let – a property other than a customer’s main residence that is let out and derives a rental income

C

Capital Raising – remortgaging a property with the existing or a new lender with the intention of obtaining additional finance, normally for home improvements, debt consolidation or business purposes

Cash Back – money given back to the customer from the broker, but normally the lender upon completion. This is usually confirmed in the mortgage offer letter

Charge – the security the lender relies on when granting finance

Commercial Mortgage – a mortgage granted on a commercial property, normally for commercial purposes although a residential property or semi commercial property may also be used

Commission – payment received normally from a bank or lender for recognition in introducing an application to them. This is only payable if a mortgage or loan successfully completes

Commitment Fee – a fee, normally payable by a customer, to a broker or lender, to allow an application to be processed.

Completion – the successful conclusion to a mortgage purchase, remortgage or loan. Sometimes called draw down

Completion Date – an agreed or set date for draw down of funds

Conveyancing – the legal process involved in a mortgage or loan often carried out by a qualified solicitor or conveyancer. It is normal practice for a solicitor to act for the customer and a separate solicitor to act for the bank. Normally the customer would pay for the cost of both

County Court Judgment (CCJ) – an amount of debt registered in the county court against an individual or company. The debt does not appear in the credit register if it is paid within 30 days, however if not cleared it can remain on a credit file and have a detrimental impact on a person’s attempt to obtain finance or credit

Credit Check – where an enquiry is made on the credit history of an applicant normally by the credit agency’s Equifax or Experian

Credit History – the history of a borrowers or applicants credit file

D

Default – a payment or payments missed on its contractual due date

Development Finance – money required to build, enhance or develop a piece of land or property

Direct Debit – a contractual and agreed method of making payments electronically, normally at a set time each month

E

Early Repayment Charge (ERC) – sometimes called a Redemption Penalty or Fee and is a charge levied to settle a loan earlier than it’s agreed natural end date

Employed – an applicant or customer who is on PAYE and can verify income through pay slips or an employer’s reference

F

Financial Advisor – a qualified person who assists individuals with their financial situation

First Charge – a legal charge used to secure the main mortgage. This charge ranks highest over any other charges on the property

Freehold – land or property that is owned outright by a company or individual

I

Income and Expenditure – confirmation of an applicant’s incomings and outgoing to help support and application

Interest Rate – the agreed payment rate to a lender, to borrow funds. This is detailed in the mortgage offer letter

Intermediary – a broker or financial advisor who introduces a customer to another broker or lender

Introducer – a broker or intermediary who introduces a customer to another broker or lender

J

Joint Application – an application made where there is more than one customer

L

Land Registry – a record or property, ownership and the mortgage is registered at HM Land Registry

Leasehold – the land or property that is not owned by the property purchaser but is held under a lease for a fixed period

Lender – the bank or institution that is loaning the money to an individual or company

Lenders Arrangement Fee – the fee that the lender charges for arranging the loan passed on to the customer

Libor – the London Interbank Offer rate is the rate that banks lend to each other and is different from the Bank of England rate. Libor changes every day but for lending purposes is normally set every 3 months whereas the BBR is reviewed by a committee every month

Loan – the amount to be borrowed

M

Mortgage – the name given to credit used to buy property or land

Mortgage Broker – an intermediary or introducer who specialized in helping customers obtain finance for a mortgage or loan

N

Non Status – a lenders term for various types of specialist lending for example not verifying id a customer is employed or self employed

O

Open market Value – the value or monetary figure given by a professional surveyor on a property or land allowing a reasonable period to sell

P

Purchase – the acquisition of a property or land

R

Redemption – the settlement of a mortgage or loan

Redemption Charge – the charge levied by a bank or lender to settle a loan

Refinancing – arranging finance with a different lender usually to obtain better rates or terms

Remortgage – arranging a loan on a property where the customer already resides either with their existing lender or a new lender

Repayment – this is a payment made to cover either the interest or the capital and interest on a loan or mortgage

S

Sanction – a formal written agreement from the bank with confirms terms and conditions to proceed

Second Charge – a charge that is a legal charge on a property or land that ranks behind a first charge but ahead of any subsequent charges, possibly to secure a second mortgage or loan

Secured Loan – a loan secured on a property normally in a addition to a mortgage that is already in place

Security Fee – is the lenders legals fees, payable by the customer either at offer stage or completion

Self Certification – a customer, self certifying the income or money they earn, through a declaration, or affordability statement. A customer accountant can also make the same statement, without the need to formally provide accounts or proof on income

Self Employed – a customer who is not paid through PAYE and cannot provide pay slips or an employer’s reference. Normally most lenders would class an individual with more than a 25% shareholding in a company as self employed

Semi Commercial – a property with both commercial and residential use

Stamp Duty – a tax paid on the purchase of residential or commercial property and is on a sliding scale depending on the value of the property

Survey – an inspection carried out by a surveyor or valuer for the benefit of the lender or bank to make sure that the property is good security for the mortgage or loan

V

Valuation – when a basic survey is carried out by a surveyor to establish the value of a property. A customer can pay for an additional survey, sometimes called a homebuyers report or a full structural survey, if they want independent confirmation that the property is suitable to purchase.

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