Jargon Buster

Our jargon buster aims to explain some of the words and phrases you may come across when taking out a mortgage.

What does APRC mean?

APRC stands for Annual Percentage Rate of Charge. An indicative guide to help you compare the cost of different mortgage deals, taking account of interest rates payable (both during the initial product period and after) and fees. 

What is a Standard Variable Rate?

This is our standard rate of interest which we will charge on most mortgages at some time during the mortgage term. It is variable, which means it can change.

What is a property valuation?

An assessment of the property's value to confirm whether it is suitable to provide a mortgage on.

What does conveyancing mean?

The legal process of transferring ownership of a property from one person to another.

What is credit scoring?

A method of assessing how likely a person is to keep up their monthly mortgage repayments. It is based on the track record of the particular borrower or borrowers in similar circumstances. We do not use this method of assessment.

What is an Initial Disclosure Document?

A document which explains the services we can offer and how we will conduct our relationship with you.

What is an Endowment policy?

A combined life assurance and investment policy which you can take out at the start of a mortgage to help you repay the loan at the end of the mortgage term.

What does Equity mean?

If your home is worth more than the mortgage you owe on it, the difference is known as the ‘equity’. For example, if you have a mortgage of £50,000 and your home is worth £60,000 you have equity of £10,000. (Also see negative equity).

What is a Higher Lending Charge?

A charge we may make so we can buy extra security for loans of more than 80% of the property’s value or the price being paid for it (whichever is lower).  This extra security is in the form of a mortgage indemnity. A mortgage indemnity provides cover which would protect our interests if you fell behind with your mortgage payments and we had to take possession of your property and sell it.  If we sold your property for less than the amount you still owed us on your mortgage, we could claim on the mortgage indemnity to recover some or all of our loss.

What is a Key Facts Illustration?

An illustration which shows the key features and costs of the particular mortgage you are interested in.

How do I work out my Loan-To-Value?

The amount of your loan compared to the valuation (not necessarily the sale price) of the property you want to buy.

What is a mortgage offer?

If we accept your mortgage application, we will send you a mortgage offer, which includes details of the mortgage we will provide, any amounts and charges added to the mortgage, the mortgage term and the conditions of the offer. We can withdraw our offer at any time up to completion. The mortgage offer is an important document which you must read carefully.

What is a mortgage term?

The period over which you will pay off the mortgage and any amounts added to it. This period will be shown in the mortgage offer.

What is negative equity?

If your home is worth less than the mortgage you owe on it, the difference you have is known as ‘negative equity’. For example, if you have a mortgage of £60,000 and your home is worth £50,000, you have ‘negative equity’ of £10,000. This is only likely to be a problem if you want to sell your home. See also 'what does Equity mean?'

What is a portable mortgage?

If you move home, the mortgage can be transferred from your old property to your new property, without penalty.

What is a mortgage redemption?

Paying off the full mortgage and all amounts added to it.

What is a Remortgage?

Paying off one mortgage and taking out another, secured on the same property, with a new lender.

What is a mortgage repayment strategy?

This term is used to refer to an endowment policy, ISA or other investment intended to provide a lump sum to pay off an interest-only mortgage at the end of the mortgage term. As one of the main obligations in an interest-only mortgage is that you will pay back all the money at the end of the term, it is important that you arrange, and maintain, an adequate repayment strategy.

What does retention mean for mortgages?

An amount of the mortgage held back until all necessary work identified in our valuation has been carried out. When the work has been completed to our valuer’s satisfaction, we will release the retention.

What does being in arrears mean?

Your mortgage account is in arrears if you have failed to keep up the monthly mortgage repayments for two or more months.

What is a Payment Shortfall?

A payment shortfall is where you have fallen behind with your monthly mortgage payments. If you fall behind by two or more months then we say that you are in arrears.

How do I know my mortgage has completed?

Whether you are buying a property or remortgaging, completion is when we actually transfer the money we have agreed to lend to you, you then become responsible for making monthly repayments.

 

Your mortgage is secured on your home. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

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