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.
| Past Arrears |
Payments due under a credit agreement not made on time. |
| Payment Protection Insurance |
Insurance that can be taken with a mortgage or remortgage to help borrowers to make mortgage or remortgage repayments in the event of inability to work as a result of involuntary unemployment, illness or disability. |
| Payment Holiday |
A period of one or more months when the borrower does not make any payments to their mortgage. Normally only available to borrowers with a flexible mortgage who have previously overpaid their monthly repayments. |
| Packager |
A firm which undertakes packaging activities. May be an administration company for a lender, a network or a broker themselves. |
| Packaging |
The process by which a broker or administration handling company collects all the necessary documentation for a lender to underwrite the deal prior to submission. The broker may be able to present the deal in a more favourable light to a lender’s underwriter when they have packaged than if the application was presented straight of the street without investigation. |
| Panel Valuer |
An independent valuer with whom a lending institute is prepared to arrange inspections of property to determine the adequacy of security for loans. |
| Part and Part Mortgage |
A combination of Repayment (capital and interest) and interest only mortgage. E.g. £100,000 borrowed £60,000 on capital and interest and £40,000 on interest only. |
| Penalties |
See early repayment charge |
| Pension Mortgage |
An interest only mortgage where the borrower plans to use some or all of the cash lump sum from their pension policy to repay the mortgage. This requires a lot of saving on the part of the borrower as the max lump sum is 25% of the pension fund. E.g. £100,000 mortgage requires a £400,000 pension fund to pay it off. |
| Percentage Advance |
See loan to value |
| Portable |
A mortgage that can be transferred to another property. Some lenders place restrictions and charges into the ability to do this. |
| Previous Lender’s Reference |
A document provided by a lender outlining an individual’s previous repayment history. This has to be obtained for every remortgage application |
| Principal |
The amount outstanding excluding interest |
| Principal and Interest Mortgage |
See repayment mortgage |
| Property Information Form |
This form is filled in by the seller of the property and provides information about guarantees, neighbour disputes and other things which affect the property. Honest answers must be given to the questions raised in this document and there are penalties for not so doing. |
Your home may be repossessed if you do not keep up repayments on your mortgage.
The actual rate available will depend on your circumstances. Ask for a personal illustration.
Think carefully before securing other debts against your home.
There will usually be a fee charged when we successfully arrange a mortgage / re-mortgage. The amount will depend on the complexity of your requirements and your personal circumstances, typically the fee charged will be 3% of the mortgage advance (minimum fee £3,000 up to a maximum of £10,000).
