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Mortgage Terms & Definitions
By BELLA of Moneyvally.com

Definitions of terms commonly associated with mortgages and property ownership in the UK.

Added to Loan

The costs borrowers incur when arranging a mortgage. Usually refers to expenses such as arrangement and administrative fees.

Administration Fee

A fee charged by some lenders to cover the costs of setting up the mortgage.

Annual Percentage Rate (APR)

The yearly rate charged on a loan required by law to be shown to borrowers. The APR includes the interest rate and other fees charged on the mortgage.

Arrears

Borrowers are said to be in arrears when they have either not made their repayments in time or if they have not paid the correct amount.

Base Rate

Set by the Bank of England the base rate is the lowest percentage amount of interest lenders can charge. Interest rates on loans are set at an amount over the base rate decided according to the level of risk involved.

Capital and Interest Mortgage

A common type of where the monthly repayment made by the borrower includes a repayment of both the capital borrowed and the interest charged.

Capped Rate Mortgages

A combination of a fixed rate and a variable rate mortgage. In a capped rate although the interest rate can change it will never rise above a certain level.

Cash Back Mortgage

In a cash back the lender will pay 'back' to the borrower a percentage of the amount borrowed. This lump sum payment is made on completion of the mortgage.

Conveyancing

Conveyancing is the legal process that must be completed for the transfer of ownership of the property to take place. Conveyancing work is usually performed by solicitors.

Credit Reference Agency

An organisation that collates information on the borrowing records of people in the UK. This information is used by lenders when setting up credit agreements.

Deferred Interest Mortgage

A type of in which the full rate of interest is not paid in the first few years of the agreement. The deferred interest is added to the amount borrowed and is repaid over the rest of the term.

Endowment Mortgage

An endowment is a type of where the property buyer makes two monthly payments; one into a life assurance (endowment) policy and the other to the lender to cover interest payments. At the end of the loan period the is paid off in one lump sum.

Equity

The difference between the value of a property and the amount remaining to be paid on the loan (mortgage) secured against it.

Exchange of Contracts

One of the final stages in the transfer of ownership of a property. In the exchange of contracts the buyer and seller both sign a contract committing to completing the sale.

Fixed Rate Mortgages

In a fixed rate the interest charged is set for a certain period of time and does not vary with changes to the base rate.

Land Registry

The Land Registry is the government department responsible for maintaining and updating the ownership records of all properties in England and Wales.

Local Search

Part of the conveyancing process, local search refers to an application to the local authority for information relating to a property.

Negative Equity

Negative Equity is a situation where repayments on a property are for a higher amount than the actual value of the home. This means that the home owner has paid or will pay back more than what the property is worth.

Re-mortgage

A term for when a home owner replaces their existing with a new agreement. Remortgaging is common for people looking for better rates of interest, lower repayments or a different type of mortgage.

Stamp Duty

A tax on property transactions paid by the buyer of the home.

Variable Rate Mortgage

The most common type of agreement where the lender sets an interest rate that will change according to variations in the base rate.

Mortgage Terms Recommended by BELLA,Click Here Now

Mortgage companies have created a lot of dynamism in the real estate market. Earlier, people were not able to purchase expensive property without having total liquidity. But due to mortgages, they are able to buy even huge properties and pay for them in easy installments. Properties that were considered unaffordable have now come within the realm of affordability thanks to mortgage companies.

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Lenders come in various sizes, organizational structures and degrees of complexity. There are banks, mortgage companies and brokers. All of these can provide you with the pre-approval letter, but not all have loans that will fit your specific needs. For example, a good Bank will have a selection of its own home mortgage programs to offer the prospective home buyer. The Bank’s lending officer will work with you to find a loan structured to fit your needs and may well have access to other banking services that will help you to become established in the new neighborhood or community.