Jargon Buster
Annual Percentage Rate (APR)
The Annual Percentage Rate enables you to compare the cost of different loans on a 'like for like' basis. Usually, the higher the APR on a loan, the more you'll have to pay.
Capital
The sum of money that is lent to you to purchase or remortgage a property. Interest is payable on the capital that is released to you. You will have to repay both the capital and the interest due to the lender by the end of your mortgage term.
Completion
This is the last stage in the purchase of a property. The legal documentation is finalised and the lender has sent the mortgage funds to the purchaser's solicitor. Once the purchaser's solicitor forwards the funds to the seller's solicitor the property is owned by the purchaser and you can move into your new home.
Early Repayment Charge
A charge that may be incurred if you repay your mortgage (in whole or in part) before the end of a specified time period. Details of any early repayment charges applicable to a product will be shown on the product sheet and detailed in your key facts Illustration and mortgage offer.
Equity
The monetary difference between a property's actual value and the mortgage held against the property. If the property is worth less than the mortgage outstanding this will be described as 'negative equity'.
Interest Rate
This is the rate at which the interest charged on the mortgage is calculated.
Joint and Several Liability
An undertaking by two or more people to be responsible, either individually or jointly, for the mortgage and any other associated liabilities with the loan.
Key Facts Illustration (KFI)
A KFI is a document produced by mortgage lenders which summarises all the important features of the mortgage and must be clear, fair and not misleading. It must be presented in a standard way, so you can check the cost and terms of the mortgage and compare it with other similar mortgages from the same lender or other lenders.
Loan to Value (LTV)
The loan to value represents the percentage of the value of the property which the borrower is seeking to borrow. For example, a property worth £150,000 with an outstanding mortgage of £75,000 = a 50% LTV (outstanding mortgage amount / property value x 100).
The maximum LTV we will lend will depend on your individual situation, the property, the loan you choose and the amount you borrow.
Mortgage Offer
This is the document that states that the lender is prepared to offer you a mortgage for the purchase or remortgage of a property. This document will give details of the exact amount of money that will be lent to the borrower and on what terms.
Reference
The status checks that a lender will make before issuing a formal mortgage offer. For example this could be requested from a previous landlord, lender or your employer.
Remortgage
A remortgage is the process of moving your mortgage loan from one lender to another.
Retention
An amount kept back from the mortgage by the lender until certain works or other requirements relating to the improvement of the property are complete.
Stamp Duty
This is a tax payable on property purchases above a level set by the government. The amount depends on the purchase price of the property. Stamp duty may also be payable upon a remortgage where there is a transfer of ownership.
Title Deeds
These are legal documents that show the ownership of the property.
Transfer of Equity
The process of adding or removing a party to or from a mortgage.