Guide to Mortgage Terms

Listed below is a guide to mortgage terms. It is a useful list of definitions of mortgage terms that may or may not be familiar to you.

Apr

This stands for Annual Percentage Rate. It takes into account all fees and other costs in connection with the mortgage as well as the lenders interest rate.

Advance

This is the actual amount of money that you borrow including any additional fees that have been added.

Base Rate

The UK 's core interest rate which is set by the Bank of England.

Bridging Loan

A temporary loan that enables you to complete the purchase of a new home before completing the sale of your existing property.

Capped Rate

These mortgages have a ceiling above which your payments will not rise.

Completion

The point at which the money to buy your new home is released to the seller and ownership is transferred to you.

Conveyance

Legal document which transfers ownership of unregistered freehold land.

Disbursements

The fees your solicitor has to pay such as; stamp duty, land registry, search fees, etc which will be added to your solicitor's bill.

Discounted Variable Rate

For a set period the interest rate charged will be a set percentage less than the standard variable rate.

Early Redemption Charge

If you repay your mortgage in full before a specified date you may be asked to pay an early redemption charge.

Equity

The difference between the value of your property and the amount of any outstanding loans secured against it.

Fixed Rate

These mortgages offer a fixed interest rate for a set period of time.

Freehold

The term used to indicate ownership of property and the land on which it stands.

Interest Only Mortgage

With this type of mortgage, the payments you make each month simply pay the interest on the amount you borrow. At the end of the mortgage term you must pay back the amount you originally borrowed.

Land Registration

This is a record held by HM Land Registry which lists the registered owner of a plot and any legal charge that may be placed on it.

Lease

A document, which grants possession of a property for a fixed period of time and sets out the obligations of both landlord and tenant such as; payment of rent and repairs.

Leasehold

Arrangement between a landlord and tenant where the landlord agrees for the tenant to lease the property for a fixed period of time.

Legal Charge

The legal document held by the Land Registry that identifies who has a claim on your property.

Mortgage

A loan you take out to buy your home.

Mortgage Deed

Legal document that you must sign to say that the lender has a legal charge over your property.

Mortgage Payment Protection Insurance

This is an insurance that will cover your mortgage payments should you be unable to work due to an accident, illness or involuntary redundancy.

Mortgagor

Person who borrows money to buy a property.

Mortgagee

Building society, bank or other company which lends money against the security of a charge over the property purchased.

Offer Letter

This is the official letter that the lender sends to you once all the referencing and valuations have been carried out satisfactorily.

Quotation

Document that illustrates the cost of your mortgage.

Redemption Penalties

These are the charges that some lenders make if you decide to move your mortgage.

Repossession

When a borrower fails to pay back their loan in accordance with its terms and conditions, the lender can exercise their legal right to take ownership of the property.

Repayment Mortgage

The payments you make each month will pay off the interest and an element of the capital.

Redemption Figure

This is the amount to be repaid to your existing lender when you move your mortgage.

Sealing Fee

This is the charge made by some lenders when they release the legal charge over your home.

Searches

Enquiries made at the Land Registry, the Land Charges Register and Local Authorities to ensure there is nothing to cause concern about title to the land.

Stamp Duty

A government tax on the price you pay for your home.

Standard Variable Rate

This is the normal variable rate charged by a lender. This rate can go up or down at any time at the lender's discretion.

Subject to Contract

A provisional agreement made between buyer and seller, before exchange of contracts, which allows either side to back out without penalty.

Term

Length of time over which your mortgage loan is to be paid.

Title

Legal right to ownership of a property.

Title Deed

Legal document which transfers ownership of registered land.

Valuation

This is a report produced on behalf of the lender. Lenders use this to decide whether they will offer a mortgage on the property.

Valuation Fee

A fee paid by the borrower for the lender's inspection of the property.

You may freely reprint this article provided the author's biography remains intact:

About the Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find the best available loans via the http://www.directonlineloans.co.uk website.

ABC News
US mortgage applications hit 8-year low
Times Online, UK - Aug 20, 2008
... mortgage applications fell to an eight-year low last week as Americans delay or abandon purchases and fewer people seek to refinance their loans. ...
US MBA's Mortgage Applications Index Fell 1.5% (Update1) Bloomberg
Mortgage application volume hits multiyear low The Associated Press
Mortgage volume fell 1.5% last week: MBA MarketWatch
USA Today - International Herald Tribuneall 242 news articles

St. Louis Post-Dispatch
Mortgage Rates for Best Borrowers Rise as Bonds Slump (Update2)
Bloomberg - 51 minutes ago
21 (Bloomberg) -- A decline in mortgage bond prices is raising interest rates on US home loans, even for borrowers least prone to default. ...
Fannie, Freddie: Plunge then rebound CNNMoney.com
Business Highlights Forbes
Freddie and Fannie Bail-Out Imminent Sovereign Society
FT Alphaville - Forbesall 1,798 news articles

Housing And Economic Recovery Act
Mondaq News Alerts (subscription), UK - 7 hours ago
The Act also expands the target population served by the FHA and creates the "Hope for Homeowners" voluntary FHA-insured mortgage refinance program. ...

COMMENTARY: FHA is riding to the rescue, taxpayers beware
Reuters - 2 hours ago
(Ann Schnare is an economist specializing in housing and mortgage finance. She was former senior vice president for corporate relations at Freddie Mac and ...
Consumers feel fallout from Fannie, Freddie CNNMoney.com
all 45 news articles

Housing market keeping couples together
Chicago Sun-Times, United States - 3 hours ago
If one wants to keep the home, it's difficult to refinance the mortgage so the departing spouse can be cut loose from the debt. And evaporated home equity ...

Economist
A Treasury bailout of Fannie and Freddie is all but a foregone ...
FT Alphaville, UK - 11 hours ago
Failure to refinance would be an immediate signal to the Treasury to step in; it would force its hand. Mish Shedlock notes that $225bn is an aweful lot to ...
Rising Cost of Debt Stokes Fears Wall Street Journal
Freddie And Fannie Bailout Fears Mount Investor's Business Daily (subscription)
all 282 news articles

Boston Globe
THE ASSOCIATED PRESS
Newsday, NY - Aug 20, 2008
They can't refinance because housing prices in those markets have nose-dived, and lenders are now demanding full documentation of income and assets. ...
FDIC to offer better terms on thousands of IndyMac mortgages MarketWatch
FDIC Details Rescue Plan for Homeowners With IndyMac Mortgages ABA Journal
all 348 news articles

Combating the mortgage crisis
Bridgeport News, CT - 3 hours ago
She is based in Bridgeport and currently has 70 clients trying to refinance with her assistance. “We have relationships with the lenders,” Latorre said. ...

HeyJoJo.com Relaunches Contact Management Solution and New Social ...
PR-CANADA.net (press release), Montenegro - 3 hours ago
“I made $45000 in commission income on $5000000 in refinance volume. I could not have taken advantage of this opportunity without HeyJoJo.com,” said ...

Buyers flock to FHA, government-backed loans
Inman.com (subscription), CA - Aug 18, 2008
... by raising loan limits and creating new products that allow borrowers who are behind on their existing mortgage refinance into more affordable loans. ...

Wind Chimes and more...

Windchimes for great gifts!

Poor Credit? Get a Sub-Prime Mortgage Now, and Refinance to a Conventional Mortgage Later