Mortgage 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.

Annual Percentage Rate of Charge (APRC)

A representative example or Annual Percentage Rate of Charge (APRC) is the overall cost of the mortgage expressed in a standard way. It is designed to help you compare the costs of different loans.

The APRC in the Mortgage Illustration includes the following:

• the amount borrowed and the term of the loan
• the interest rate you pay (including the rate you pay after any initial product period)
• charges which you have to pay, such as application, valuation and closure fees
• when and how often you have to pay the interest and charges
• any Higher Lending Charge.

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 existing 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.

Standard Variable Rate (SVR)

The Society’s Standard Variable Rate is determined by the Society’s Board of Directors and can vary upwards and downwards. Most borrowers pay this rate after the end of any special mortgage deal and so even if you wish to take a special mortgage deal, you should take note of it.

Scheme Fee

This is a one off fee that is sometimes charged for a special deal such as a fixed, discounted, tracker or capped rate mortgage. This fee is charged on completion and may be added to your mortgage balance dependent on your chosen scheme. (NB – any fees added to a mortgage will accrue interest and increase the amount repayable).

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.