Mortgage

A loan to buy a house, where the property is the security for paying back the loan. The lender has the authority to sell the property if repayments are not maintained. Mortgage repayments are usually made monthly over a long period, usually 25 years. There are many different mortgage options : repayment, flexible, tracker, capped, discount, self certification.

Remortgage

The arranging of a new mortgage for your property without moving. The reasons for remortgaging are usually to get a better mortgage rate or to release equity for improvements.

First time buyers

Borrowers who are purchasing a property for the first time, they are sometimes offered special offers – discounts, cash back and fixed rates. Mortgage lenders are most competitive with first time borrowers as they hope to interest them in subsequent mortgages.

Valuation

This basic survey is carried out by the mortgage lender and assesses whether the property is good security for the proposed mortgage loan. The buyer usually pays for this and receives a copy. Some lenders do not charge. This survey is suitable for a new house, but for any other property it is recommended you commission your own survey, such as the Homebuyer's survey & valuation

LTV

Loan-to-value ratio – this is the difference between the loan amount and the house's market value. A loan of £80,000 on a £100,000 home gives a loan-to-value ratio of 80%. The bigger the difference is between the loan and the value of the house, then the smaller the LTV. This difference is known as the equity.

Mortgage-in-principle

Lenders can agree to a mortgage in principle even before you find the right property. This is subject to further conditions being met, such as, credit checks and a property valuation.

Mortgage Offer

The document issued by the mortgage lender to the borrower following approval, setting out the conditions and terms.

Overpayment

This is when you pay more than the required monthly repayment to your mortgage lender. A flexible mortgage allows overpayment and underpayment. As long as there is no early repayment charge you should be able to overpay as much as you can afford and cut down your mortgage term and interest paid.

Portable Mortgage

This is where a borrower can transfer their existing mortgage to a new property without incurring the penalty of early redemption fees. Most mortgages are now portable mortgages, meaning that if you decide to move you take your mortgage on the same terms and conditions to your new property. Mortgage portability can be advantageous, if for example you have secured a good fixed rate, a capped, cash back or discounted product originally and the market has since changed, leaving no comparable deals.

Early Repayment Charge

Some mortgage contracts contain a penalty charge if you repay the mortgage early, such as during the period of a fixed or discounted rate - also known as Early Redemption Fee

Higher Lending Charge

Formerly known as a Mortgage Indemnity Guarantee, this is the sum required by the lender when the amount borrowed exceeds a given percentage of the value of the property. The charge is used to buy an insurance policy against you defaulting on the mortgage loan.

APR

The Annual Percentage Rate is the total amount of interest that will be paid over the whole term of a loan. The rate quoted on loans and credit cards may only be the monthly or annual rate of interest you pay. Lenders are required by law to inform you of the APR before you sign an agreement.

Completion

The date that the seller receives the money from the sale of the property and legal ownership passes to the buyer

Negative Equity

This is where the amount of money owed on the property exceeds the property's market value. So, if you sold your house you would not get enough money to pay off your mortgage loan.