Jargon Buster

Agricultural Restriction

A Freehold covenant restricting the occupancy of a property to those engaged in agriculture.

APRC

The APRC (Annual Percentage Rate of Charge) is a figure that is used to compare different mortgages. Defined by law, it includes repayments on the loan plus any fees such as booking, arrangement or redemption fees. The APRC shows the true cost of borrowing, and should appear on all mortgage illustrations and quotes.

Adverse Credit

This is the term used if the borrower has suffered a poor credit history. This could include previous mortgage or loan arrears, CCJ’s or bankruptcy.

Menu

Arrangement Fee

This is a fee you pay to your lender in return for providing you with a mortgage. Usually paid on completion or with application , these fees typically apply when you take out a fixed rate, discount or cashback mortgage.

ASU

Accident, Sickness and Unemployment insurance (See also MPPI). This insurance is designed to cover the borrower's mortgage payments, and other monthly commitments, in case of accident, sickness or involuntary unemployment.

Base Rate Tracker

The interest rate is variable but set at a premium (above) the Bank of England Base Rate for a period, or even the full term of the mortgage. 

Booking Fee

Arrangement fees are charged in connection with some mortgages. Often they are charged in connection with a fixed or capped rate loan. The fee is normally non-refundable if charged upfront. Sometimes it is added to the mortgage debt on completion.

Bridging Loan

Short term loan to facilitate the purchase of one property prior to the sale of another, releasing funds that are required for the purchase. Professional advice should always be taken prior to considering any bridging finance.

Broker's Fee

A fee charged by an intermediary or advisor for identifying the most appropriate mortgage for the borrower.

Buy-to-Let

This is a mortgage designed for people who wish to purchase a property to rent out to others. The ability to repay this type of mortgage is often based on the projected rental income from the property, as opposed to the personal income of the borrowers.

Capital and Interest

Your monthly payments are partly to pay the interest on the amount you borrowed and partly to pay the outstanding mortgage and ongoing costs involved in a mortgage.

Capped Rate

An interest rate charged on a mortgage, where there is a guarantee from the mortgagee, that the rate will not exceed a certain amount.  This is usually for a set period of 1 – 5 years but which will reduce if the standard variable rate falls below the capped rate.

Cashback

A payment you receive when you take out a mortgage. It may be a fixed amount, or a percentage of the amount of the mortgage.

CCJ

County Court Judgment. A decision reached in the County Court for non payment of debt. If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this.

Completion

When the sale and purchase of the property are finalised, and you become the owner of your new house.

Contract

Legally binding agreement of sale. In two identical parts, one signed by seller and one by purchaser. When the two parts are exchanged (exchange of contracts), both parties are committed to the transaction.

Conveyancing

The legal process involved in buying and selling property.

Credit Scoring

This is a way in which lenders assess whether you are a good risk to offer a mortgage to.

Credit Search

A check the lender makes with a specialist company to find out whether you have any CCJs or a bad credit record.

Debt Consolidation

This is a means by which to repay high interest debts (such as credit cards and personal loans) by incorporating them into a new mortgage to benefit from lower interest rates and lower monthly payments. In the long term this may be a very expensive way of repaying these debts.

Deed

A legal document which is ‘signed, sealed and delivered’, not just signed. This has special significance in law. Title to both freehold and leasehold property can only be transferred by deed.

Deposit

The amount of money you put towards buying your property.