Tuesday, 4 August 2009

75 Mortgage Terms In Plain English

posted by debts.org at 23:13

If you are looking to arrange a mortgage, unless you do your homework first, it can be a confusing experience. There are so many mortgage deals available on the market that you should seek advice from a mortgage broker who will advise and guide you. Mortgage terms used by estate agents, banks, building societies and solicitors are easier to understand when translated into plain English. If you are suffering debt problems before you apply for a mortgage, seek debt advice from a regulated debt solutions company in the UK. When arranging a mortgage, be aware, ask questions and don´t sign anything which may make your debt problems worse:

1. Adverse Credit can include bankruptcy

This is the term used about a borrower who has had bad credit in the past including a bad payment record, bankruptcy or a County Court Judgement against him (CCJ).

2. Annual Percentage Rate (APR) can get you into serious debt

The APR relates to the cost of a loan, including interest charges, which is shown as a percentage rate. APR is a standard calculation in the mortgage industry, and enables easy comparisons of mortgages from all lenders. Avoid debt problems by thoroughly checking APR details before applying for credit, a mortgage, store cards or credit cards, which can plunge you into serious debt problems.

3. Assignment

An instrument transferring the secured rights of a mortgage to another party by the original party which possessed those rights.

4. Outstanding mortgage debt balance

The amount of mortgage loan still outstanding at any given time.

5. Understand the Bank of England Base Rate to stay out of mortgage debt

The Bank of England Base Rate is set each month, and banks and building societies use this rate to set the interest rates they pay on deposits or charge on debts. Make sure you understand how the base rate works before applying for a mortgage or you could end up with mortgage debt or serious debt problems in the future.

6. Beware bridging loans and bridging finance

Beware bridging loans if you are already suffering debt problems and seek debt advice before applying for a bridging loan. A bridging loan is a temporary loan made to people who want to buy another property, but are yet to sell theirs. You can end up with serious debt problems if you take out a bridging loan to buy a new property and then yours fails to sell.

7. Insurance for buildings to avoid debt problems

Always make sure your house is insured or you could face serious debt problems if your house is damaged in a fire, a storm or a flood.

8. The Building Society

Different to a bank, the building society is an institution which is owned by its investors, and provides a wide range of mortgages and savings schemes. If you borrow more money than you can afford to pay back from a building society by means of a mortgage or a home loan, you could end up with bad debts, and have to seek debt advice in the UK.

9. Cashback mortgage

You may be offered a lump sum or a certain percentage of your mortgage in cash when you complete your mortgage. Be aware that this may be paid two to three weeks after your mortgage is completed, which means you may not be able to use it for buying another house.

10. Charge or debt secured against property

A charge is an interest in the ownership of a property, and usually translates as a mortgage or another debt secured against the property. If you secure any debt against your property, exercise extreme caution. Most people need a mortgage in order to buy a house, but any other debt secured against your property could leave you homeless if you default on your repayments.

11. Completion on a property

Completion on a property takes place when the ownership is transferred between the seller and the buyer, the seller moves out and the buyer moves in. Never rush completion, and make sure everything is in order and legally binding before signing any contract, or you could end up with serious debt problems or mortgage problems in the future.

12. Conclusion of Missives in Scotland

This is the final part of the purchase process in Scotland. Beware hasty conclusion missives or you could face debt problems or even have to seek debt advice about debt management plans and IVAs in the future.

13. Contents Insurance to avoid debt

Contents Insurance is the insurance you should take out against accidental damage or theft of the contents of your home, including furniture, electrical appliances and furnishings. Home insurance or contents insurance is not obligatory but you are strongly advised to take it out, or you could face serious debt problems if your home is robbed.

14. Property contract agreement

The contract is the document which describes the agreement between the seller and buyer, and how the property will change hands. Read any contract carefully or it could result in you suffering debt problems and seeking debt help in Liverpool, London, Manchester, Plymouth, Northampton, Portsmouth, Birmingham, Walsall, West Bromwich, Nottingham, Mansfield, Bristol or any city in the UK.

15. Conveyancing

Conveyancing is the transfer of a property from one party to another and is usually managed by a solicitor or licensed conveyancer, who will make sure the process runs smoothly. Shop around before hiring a solicitor to do your conveyancing and agree a price before the sale goes through, otherwise you may end up out of pocket and starting life in your new house with serious debt problems.

16. Covenant in the title deeds

A covenant in the title deeds is a condition which the buyer must comply with. A restrictive covenant is one which does not allow the new owner to do something related to the property. Ensure you are aware of any covenants or restrictions in your title deeds before you sign for the house, or you could end up with expensive court costs and resulting mortgage debt in the future.

17. Credit scoring and home loans

Credit scoring will allow the lenders to decide whether to grant you a mortgage or not. You will be asked a range of questions regarding your finances and your answers will be scored by your lender. Depending on the score, your application for mortgage will be accepted or declined. Always answer honestly. If you don´t tell the truth and are found out, not only will you be refused a mortgage this time but it could affect any chances of getting credit in the future, and result in serious debt.

18. Debt Consolidation to ease debt problems

Debt consolidation is the process of combining all of your outstanding debts in to one loan. You can combine credit card debts, store card debts, bank loans and car loans into one lump sum which means you will only have to pay one amount each month. Be careful when considering a debt consolidation loan as the interest rates could plunge you further in to debt than ever.

19. Debts and deeds

Deeds are legal documents that show who the legal owner is of a property or piece of land. Make sure the deeds are in order before buying a property, or you could end up with serious property debt problems later on, or mortgage debt problems.

20. Deposit to secure a loan or mortgage

A deposit is the amount of money paid by a prospective buyer to secure the mortgage loan after exchange of contracts. This deposit is normally 5 or ten percent of the purchase price. Make sure all paperwork is in order before paying any deposit, and avoid seeking mortgage debt advice or even house repossession in the future.

21. Direct Debit to avoid debt

A direct debit is an instruction from a customer to the bank or building society to make regular payments direct from their account. This can save money in the long run and make payments such as mortgage or bank loans easier to handle, but beware unscrupulous companies or lenders who could take more than they are owed and plunge you into serious debt.

22. Disbursements and legal work

Disbursements are various costs for carrying out legal work connected with the remortgaging of your home. If you are considering remortgaging your home, take your time to shop around for the best mortgage deals and offers to suit you, or you could end up paying more than you need to and having to find debt advice in the UK.

23. Discount Mortgages and debts

Discount mortgages sound like a great idea at the outset but don´t let them lull you into a false sense of security. Your mortgage lender may offer you reduced monthly mortgage repayments for two or three years, but budget wisely for when the mortgage increases, and save as much money as you can while the mortgage payments are reduced or you could face massive debt problems in the future.

24. Early repayment charges can mean debt problems

Many banks and building societies charge customers for paying off their mortgages early. If mortgage redemption fees or early repayment of mortgage fees are deemed to be unfair, which many of them are, you can claim them back through a regulated debt management company who will give you free debt advice and guidance in the UK.

25. Easement

Easement is a legal right over land which could cause disputes or even debt problems to buyers in the future if they are not aware of it. It may be a legal right of way or access to an area of land.

26. Negative or positive Equity

Equity is the difference between the value of your property and the amount of mortgage or bank loan you have left to pay on it. Equity release is the release of that money, but be very cautious if considering an equity release scheme for all or some of your equity as it could result in you or your family losing their home or their inheritance.

27. Exchange of Contracts not an exchange of debts

An exchange of contracts is when two parties sign their copies of the contract to exchange the property. These contracts are exchanged by legal representatives from both sides and are legally binding. The buyer normally pays a deposit at this point and the completion date is agreed. Never exchange contracts without proper legal representation or you could face house repossession, bankruptcy or serious debt problems in the future.

28. Financial Services Authority (FSA) help you avoid debt

The FSA is a regulatory authority for the financial industry in the UK, and all lenders and mortgage intermediaries must be authorised and regulated by them. Authorities such as the FSA safeguard your interests when dealing with mortgage firms, banks or building societies, and help to prevent debt problems which can result from dealings with unscrupulous lenders.

29. Fixed rate mortgage and debt advice

If you have been trying to pay off a fixed rate mortgage, which is a mortgage where the interest payment is fixed for a specific time, seek the advice of a professional debt solutions company who can guide you in the right direction to a debt free future. Debt management plans and Individual Voluntary Arrangements can be arranged on your behalf to clear your debts completely if you are having problems with credit card debt, store card debt or bank loan debts. A fixed rate mortgage will normally revert back to a variable rate after an agreed time limit.

30. Fixtures and fittings

Fixtures and fittings are the non-structural items included in the property when you buy it. Make sure these are all clearly listed in an inventory, or you may face having to re-furnish the house from scratch which could cause you some bad debt problems in the UK.

31. Flexible Mortgage can be a debt solution

If you are struggling to keep up with your repayments on a fixed rate mortgage, or if you are applying for your first mortgage, avoid debts and seeking debt help and advice by discussing a flexible mortgage with your lender. A flexible mortgage will enable you to overpay towards the mortgage when you are better off, and pay less when things are tough. You may even be able to take a payment holiday at some stage if you have overpaid.

32. Freehold property or freehold land

If you own freehold property or freehold land, you own absolute ownership of the land the property is on.

33. Full structural survey to avoid debt problems

A full structural survey will help you decide whether to buy the property or not. The survey will pay particular attention to the main features of the property including walls, the roof, the foundations, plumbing and wiring, which can help you avoid property debt problems or mortgage debt problems , or even house repossession in the future.

34. Further mortgage advance

An additional loan on top of your existing mortgage is known as a further advance, and can be taken once your original mortgage has completed. But be careful and don´t borrow more than you can afford as a further advance will also be secured against your property.

35. Gazumping on a property

Gazumping is when a seller pulls out of a sale with you after accepting a higher offer from someone else. If you make an offer for a property which is verbally accepted, try to move things along quickly to get a completion date and avoid getting gazumped.

36. Gazundering

Hmmm a new one on me. Gazundering, apparently, is the term given to the tactic of a buyer offering less than the agreed price for a property just before exchange of contracts. If you are selling a house, refuse any reduced offer so close to completion, as the buyer probably had it planned from day one and you can find yourself with serious debt problems if you agree to a low price under pressure.

37. Ground rent for property

Ground rent is the annual fee which a freeholder charges a leaseholder, and is also known as community fees . When you buy a leasehold property make sure you understand exactly how much you will be expected to pay the freeholder each year, what you will get for your money, and at what percentage rate the fee will increase annually.

38. Guarantor for a mortgage

A guarantor will guarantee to pay your mortgage if you default on any payments. You may be asked to provide details of a guarantor before you are offered a mortgage. Guarantors are not always easy to find, as they are responsible for your mortgage debt if you cannot pay for any reason.

39. Higher lending property charge

A higher lending property charge is payable if you borrow more than 90% of the value or purchase price of your property. These rates vary and it is worth shopping around to find the best deal to suit you and to make sure you will not be left struggling with debt problems a few years after signing for your mortgage.

40. Home Buyer´s Report

A home buyer´s report is a survey which is offered by the mortgage lender and is prepared by the company´s own surveyor. This report will take into consideration the general structural condition of the property but is not an in depth survey. If you find you have borrowed too much and are struggling with mortgage debt or mortgage arrears, you can arrange to pay off your credit card debts or store card debts with the help of a debt management plan which will reduce your monthly outgoings.

41. Home Enviro-search

A home enviro-search involves a detailed history of every UK region with regard to floods, subsidence and land contamination. This will help you to assess the area you want to buy property in. Imagine finding your dream property only to be flooded out 6 months after buying. Avoid major debt in the future and carry out an enviro-search before buying your property.

42. Initial disclosure document

An initial disclosure document is a paper designed to help you to compare the services provided and the fees charged by lenders and intermediaries.

43. Interest only mortgage and debt problems

An interest-only mortgage means you will only pay the interest off the amount borrowed for a set amount of time. You may have arranged to pay interest only for the first three years for example, but watch out, you may be in for a shock when the repayments shoot up after the agreed period of interest only. You may want to put some money away to pay off the remainder of the loan when the interest only period finishes. Seek professional advice before accepting mortgage conditions and if you are already in debt, or suffering serious debt problems, contact a professional debt management company who can give you free debt advice in the UK.

44. Joint Mortgage

A joint mortgage is one with more than one name on the contract.

45. Joint Tenants

Joint tenants is a term for ownership by couples which means that when one dies, the property passes automatically to the living partner. A similar term is Tenancy in Common. If you are suffering debt problems after the death of a partner, or mortgage arrears in London, Luton, Liverpool, Oldham, Blackpool, Manchester, Carlisle, Norwich, Bournemouth, Cardiff, Mansfield, Burnley, Huddersfield, Swindon or any UK city, you can get free debt help and advice from a professional debt solutions company.

46. Key Facts

Illustration (KFI) and debt adviceA KFI (that´s a KFI not a KFC), contains key mortgage information which will help you to compare the costs and features of different mortgages to find the right one for you. Take some time to compare mortgage terms and conditions thoroughly as this can save you a lot of hassle in the future and will save you having to seek debt advice and debt help in the UK.

47. Land Certificate

A land certificate proves ownership of a property and is supplied from the land registry.

48. Land Registry

The Land Registry is a government organisation which holds records of all registered properties in England and Wales.

49. Land Registry Fee

and debt help in the UKA land registry fee is one that is paid to register your details if you have either bought a property or changed your mortgage lender. If you are suffering debt problems in the UK after falling behind with your mortgage payments or you have mortgage arrears, you can talk to a trained debt counsellor free of charge, who will give you free advice and guidance.

50. Life Assurance to avoid debt

Life assurance is an insurance that pays out on the death of the policy holder and offers some debt relief for your family. Debt help and debt advice in the UK is free with many regulated debt help companies, and you should not be embarrassed to ask for debt advice if you are suffering debt problems after the death of a loved one, redundancy or an accident or illness.

51. Local Authority Search

to avoid debt problemsA local authority search will uncover any major road building or planning permissions that will take place in the area you want to buy a property and you can decide what impact this could have on your house.

52. Loan to Value

(LTV) and property valueAn LTV is the amount of mortgage expressed as a percentage of the true value of that property. If your mortgage amount is £90,000 and your property is valued at £100,000, then your loan to value is 90%.

53. Calculate monthly interest

This is the method of calculating mortgage interest on a monthly basis. If you are falling behind with your mortgage repayments or have mortgage arrears, you should seek free debt help, advice or counselling. You may be able to arrange a debt management plan to pay off credit card debts or store card debts, which will free more money up for your mortgage.

54. Mortgage deed and debt advice in the UK

A mortgage deed is a legal document which relates to the mortgage lender´s interest in the property, and outlines their legal rights regarding the property. Ensure you seek proper legal advice when buying or selling a house and don´t be duped into signing something you are confused about or you could end up having to seek debt advice in the UK or borrowing more money than you can afford to put things right in the future.

55. A mortgage offer from the lender

A mortgage offer is the amount of money the lender offers to you in the form of a mortgage. Never borrow more money for a mortgage than you can reasonably afford to pay back or you will suffer serious debt problems and have to seek debt help and debt advice, or even have to arrange a debt management plan, an individual voluntary arrangement or bankruptcy.

56. Payment Protection Insurance

can be mis-soldPayment protection insurance is designed to pay your monthly mortgage payments for a set amount of time if you find yourself unable to work after redundancy, accident or illness. However, thousands of payment protection insurances (PPIs) have been mis-sold over the years, and if you think you have a case to reclaim money from a mis-sold PPI, contact a debt help company who can help get your money back.

57. Mortgage Term and mortgage help

The mortgage term is the amount of time agreed with the bank or building society for the mortgage to be repaid. This is typically 25 years but can be shorter or longer, depending on your mortgage agreement. Try to pay off your mortgage as quickly as you can, and avoid debt problems or ongoing mortgage payments for more years than you need.

58. Negative Equity on your home

Negative equity can equal debt problems. When the sum remaining on your mortgage is higher than the current value of your house on the market, this is called negative equity.

59. The NHBC and ten year warranty

The National Building Council offers a warranty scheme for new properties which means that if any major structural defects occur within ten years, you are covered for repair.

60. Ombudsman and housing disputes

An ombudsman is an independent professional body which helps settle differences and disputes between consumers and companies, such as solicitors, insurance companies and estate agents.

61. Planning Permission

for new buildingThis is the permission you need from the local council or planning authority before building on to an existing property or changing the use of the building. Never attempt to make major alterations or add extensions to a property without seeking planning permission as it could result in you having to pay thousands in fines or ripping down the building altogether which could plunge you into serious debt.

62. Premium payment

A premium is the payment you make regularly, monthly or every year to an insurer for an insurance policy, and could refer to home insurance or contents insurance.

63. Private Sale of a property

The private sale of a property is one which does not involve an estate agent. If you choose to sell your property without the help of an agent, you can save a lot of money in commission fees, but take professional advice before going ahead and always use a solicitor before exchanging any paperwork or you could end up facing serious debt problems as a result of your DIY house sale.

64. A product mortgage fee

A product mortgage fee can be charged when you first apply for a mortgage. This fee reserves the mortgage and covers administration costs. It is also known as an arrangement fee, but be sure to shop around and find the best deal. If you pay out large amounts for mortgage arrangement and solicitors, you could leave yourself facing mortgage debt and mortgage arrears in the future.

65. Remortgage your house to avoid debt

One way of freeing up some capital is to remortgage your house. This involves the process of moving your mortgage from one lender to another, and can incur fees, so to avoid debt, read the terms and conditions carefully before remortgaging.

66. Sole agency agreement

A sole agency agreement means that you will only have one estate agent to act on your behalf when selling your property. This can prove tricky if other agents approach you for viewings so weigh up all your options before signing a sole agency agreement to avoid having to refuse viewings and possibly create debt problems if the property doesn´t sell as quickly as expected.

67. Stamp Duty explained

Stamp duty is a tax which must be paid on a property at the time of completion when you buy it. When working out a budget and expected outgoings after buying a property, remember to include stamp duty, solicitors fees and any extras you may incur before completing on the property so you can avoid seeking debt advice in the UK.

68. Subject to Contract

Subject to contract means that an agreement is not yet legally-binding, and can still be changed. Take the advice of a solicitor for any property transactions as there may be confusing issues in the deeds, which could leave you seeking debt solutions later on.

69. Title in the deeds

The title is the record of ownership of a property and the evidence of which is recorded in the title deeds.

70. Total amount payable

This refers to the total cost of mortgage payable.

71. Tracker Mortgages can help you avoid debt

Tracker mortgages follow movements in the Bank of England base rate, and the interest is set at a level just above or below the base rate. Your payments will fall into line with the base rate, going up when the base rate does, and going down when it falls. Tracker rates can be arranged for a set amount of time, usually 5 years.

72. Equity Transfer

A transfer of equity is what happens when a person or persons are added to or removed from a mortgage agreement. Always seek professional advice if you are considering equity transfer, or you could suffer serious debt problems.

73. Under Offer

If a property is under offer, it means the seller has provisionally accepted the buyers offer. However, if you are buying, don´t take this as meaning the property is definitely yours until completion.

74. Valuation of a property

A property valuation is carried out for mortgage purposes, usually by the bank or lender to make sure it is worth the amount requested for mortgage. If the property values up, don´t be tempted to borrow more than you need as you could get yourself in to serious debt a few years down the line if your circumstances change.

75. Valuation Fee

Unless you have a special arrangement with the lender, you will be charged a valuation fee before the bank arranges to have a valuation carried out. Only arrange for a valuation if you are serious about buying the property or you could find yourself in debt before the property has even been bought.

If you are experiencing debt problems or you need help with free debt advice, help or guidance in Preston, Milton Keynes, Newcastle, Reading, Southampton, Derby, Dudley, Luton, Walsall, Bournemouth, Huddersfield, Swindon, Liverpool, Nottingham, Burnley, Bolton, Blackpool, Middlesbrough, Oxford, Telford, York, Watford, Slough, Gloucester, Cambridge, Exeter or any UK city or town, debts.org can help. Call our free advice line on 0844 277 7999 or fill in the online form for professional and friendly debt help.

Labels: 32. Freehold property, Easement, Flexible Mortgage