jargon buster : f
Below is a glossary of the terms you may not be sure about now and should understand when taking out a new mortgage. These are not legal definitions but clear everyday descriptions to help you make a more informed choice.
Any examples given are designed solely to simply illustrate the basics of the concept and are not to be taken as anything beyond that.
A lot of mortgage adviser regularly used terminology were banned in October 2004 and replaced by industry standard phrases to help consumers understand things better. The old terms have been included for reference purposes.
No information given here should be taken as advice.
| Fair Market Value | The amount paid for a property in a transaction in which neither the buyer nor the seller is being forced into the contract. Typically this value will be set by looking at the sale prices of similar properties in the same area. |
| Fee Simple (Scotland only) | A term used in Scotland to refer to property where the owner has the right to decide who inherits the property. |
| Feuhold | A term used in Scotland to refer to the ownership of both a property and the land on which it is built. The closest equivalent in England and Wales is Freehold. |
| Financial Ombudsman Service (FOS) | A third party independent adjudicator, separate to the Financial Services Authority. Tasked with arbitrating disputes between financial firms and customers. The FOS has jurisdiction over any product regulated by the Financial Services Authority and now credit and hire agreements. The service is free to customers and paid for by financial firms. The FOS decisions are binding on a firm though a customer may take further action through the courts. |
| Financial Services Authority (FSA) | This is the regulator for the UK financial services industry. A company in its own right rather than a government department,, it answers to the treasury. The FSA sets out all the rules under which a financial firm may operate within the UK. The powers of the FSA are very far reaching. |
| Financial Services Compensation Scheme | This body exists to compensate customers for those firms which go bankrupt with customer assets in the firm’s possession. This does not extend to financial advice. This service is regularly confused with the Financial Ombudsman Service. |
| First Adjustment | The point at which the borrower can expect the first rate adjustment under a variable rate loan. |
| First Charge | A legal right under which the holder (of First Charge) has first call on the property in the event that the borrower defaults on repayments. This is what differentiates a mortgage from a secured loan. The first charge is called the mortgage, all other charges are secured loans. Charges are ordered by the date they were first registered at Land Registry, not the date they were applied for. |
| First Mortgage | A mortgage that is the primary lien or first claim against a property. See also First Charge |
| First Time Buyer (FTB) | A purchaser who is buying a property for the first time. Typically a lender will offer more attractive deals for first time buyers. Also known as First Time Purchaser (FTP). Some lenders also include applicants who have owned a property previously and have nothing to sell now and or joint applicants where only one is a FTB. Some lenders also include applicants who have not had a mortgage for the last 12 months. |
| Fixed Rate Mortgage | A mortgage under which the rate of interest has been fixed for a specified period of time. |
| Fixed Term | Under a fixed term mortgage, this is the specified period during which the rate of interest has been fixed. At the end of the period, the mortgage usually reverts to the lender’s variable rate. |
| Fixtures | Items attached to – and therefore legally part of – a property. For example built in cupboards, sink, bath etc. |
| Flat over Shop | A flat or apartment that is located above a retail property. Lenders may view such a property as a higher risk category and adjust their mortgage offer accordingly. |
| Flexible Drawdown | A facility written into a mortgage that allows a borrower to access additional funds. |
| Flexible Mortgage | A mortgage that allows the borrower to make over- or under payments, or take a payment holiday. |
| Foreclosure | See repossession. |
| Foreign Currency | A mortgage that is taken out in a currency other than sterling. Typically used by people who are paid in foreign currency, this type of mortgage carries a higher risk for the lender (due to foreign currency fluctuations) and the rates may be adjusted accordingly. This is a very specialised mortgage and requires very careful consideration regardless of whatever advice is given. |
| FOS | See Financial Ombudsman Service |
| Freehold (England & Wales only) | A situation whereby the owner owns both the property and the land on which the property is built. See also Feuhold (Scotland) |
| Freeholder (England & Wales only) | The person who owns the freehold title to the land. This person will also hold the title deeds. Discovered through a search of land registry. |
| FSA | See Financial Services Authority |
| FSCS | See Financial Services Compensation Scheme |
| Full Status | The stage in a mortgage application at which the prospective borrower has provided credit check and other financial information. |
| Full Structural Survey | See structural survey |
| Further Advance | A situation whereby the lender makes available another loan and under which both loans are included within first charge on the property. This is normally used to consolidate debt or pay for improvements to the property. |
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