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Glossary

A | B | C | D | E | F | H | I | J | K | L | M | O | P | R | S | T | U | V

If you are not sure what a particular mortgage term means, our definitions of frequently used terms, are the best place to start.

A

Advance: The mortgage loan.

Advice: A recommendation about the most suitable mortgage for your individual circumstances, given by a firm, which is regulated by the Financial Conduct Authority. Bank of Ireland can offer mortgage advice to our customers. Simply call 0345 300 8000* to talk to one of our Mortgage Advisers.

Annual Percentage Rate of Charge (APRC): This shows the overall cost of borrowing, taking into account the term, interest rate and other costs.

Approval in Principle (AIP): The AIP process verifies how much you could borrow based on the information you have provided, as well as performing various criteria and credit reference agency checks.  An AIP is a conditional decision to lend based upon the findings.

Arrears: Mortgage repayments that have not been paid as requested and have become overdue.

B

Balance outstanding: The amount still owed on your mortgage at a particular time.

Bank of England Base Rate (BBR): The rate set by the Bank of England. Banks and Building Societies use the Bank of England Base Rate to set the interest rates they pay on deposits, or charge on loans.

Base Rate Tracker: These mortgages track the Bank of England Base Rate, with the interest rate changing as the base rate rises or falls.

Buildings insurance: Insurance against the cost of repairing or rebuilding your property and any permanent fixtures and fittings (such as bathroom suites) following structural damage, such as fire or flood.

Building Survey: A survey that provides a comprehensive account of a property’s condition. It looks at all the main features of the property, including: walls, roof, foundations, plumbing, joinery, electrical wiring, drains and garden. You'll receive a technical report describing any defects or issues discovered.

Buy to Let mortgage: Mortgages specifically designed for investors who are buying property for the purpose of letting it to tenants.

C

Capital: The amount of money you borrow to finance the purchase of your home.

Capital and Interest mortgage: Also called a repayment mortgage; your monthly payment covers the interest a lender charges for the loan and also repays part of the money borrowed. In the early years of your mortgage term, the bulk of your monthly payment is interest. However, in time, as the mortgage balance reduces so does the proportion of interest. Assuming that you maintain the payments, the mortgage will be repaid at the end of the mortgage term.

Certificate of Title (CoT) - England & Wales and Northern Ireland: A document completed and signed by a solicitor, providing confirmation to your lender that all the legal requirements have been, or will be, complied with.

Chain: The common term for a series of property transactions linked to your sale or purchase through your buyer or seller.

Change of parties administration fee: The fee charged for a Transfer of Equity.

Completion: Completion is achieved when the purchase money is paid to the seller, the transfer documents have been completed and the seller hands over the keys. The mortgage is normally completed at the same time by the signing of the mortgage deed and the transfer of the advance.

Conveyancer: A legal practitioner who specialises in property transactions.

Conveyancing: The legal process involved in buying and selling a home.

Conveyancing fees: The legal fees incurred and charged for managing the sale or purchase of your property; including the fees of the lender's Solicitor plus any additional charges incurred for Land Registry or Local Authority searches.

Council of Mortgage Lenders (CML): The Council of Mortgage Lenders is a trade association for the mortgage lending industry.

Credit score: Credit scoring is used by most mortgage lenders to assess whether to give a loan. Your credit score will be based on your credit history - your past reliability in repaying: loans, mortgages, credit cards etc.

D

Debt consolidation: Combining a number of outstanding debts into one loan.
 
Deeds: Legal documents that demonstrate ownership of a property or piece of land.

Deposit: A percentage of the purchase price which the buyer pays on exchange of contracts.

Direct Debit: An instruction that authorises your bank or building society to allow regular payments direct from your account.

E

Early Repayment Charge (ERC): A charge payable on some mortgages usually during a promotional period if the outstanding balance is repaid early, or a sum is repaid before it is due. The amount depends on the sum involved and the terms of the mortgage.

Equity: The amount that would be left after selling the property and paying off any outstanding mortgages, fees or charges.

Exchange of contracts: The point at which both buyer and seller sign their copies of the contract and these are exchanged by their respective legal representatives. The buyer usually pays a deposit at this point and the date of completion is agreed. In England and Wales, but not in Scotland, this is when everybody is legally bound to the transaction and when the buyer should take out buildings insurance.

F

Financial Conduct Authority (FCA): The FCA regulates the financial services industry in the UK, including mortgages. It aims to protect consumers, protect and enhance the financial markets and promote effective competition in the interest of consumers.

Financial Ombudsman Service (FOS): An independent ombudsman which is set up by parliament to help resolve individual disputes between consumers and financial businesses.

Fixed rate mortgage: These mortgages fix the interest rate you pay for an agreed promotional period. They revert to a different variable rate at the end of the fixed period.

Freehold: A freehold title is the most complete form of ownership of land.

Fund transfers: The transfer of money from one financial institution to another; usually occurs at completion, via a solicitor, when the money for your purchase or sale is transferred.

Further loan (also known as a further advance): An additional loan to your existing mortgage taken after the main mortgage has completed which is also secured against the property.

H

Higher Lending Charge: A fee which may be charged when the amount borrowed is more than a given percentage of the value of the property. In these cases the lender will use the fee to purchase an insurance policy to protect them against financial loss in the event of a borrower not meeting their mortgage payments. The fee is usually payable in full upon completion. You would still be liable for any mortgage shortfall debt if, after possession, the sale proceeds are not enough to repay your outstanding debt.

HomeBuyer Report: An intermediate level survey that comments on the structural condition of most parts of the property that are readily accessible. This is not an in-depth investigation or a test of water, drainage or heating systems. A HomeBuyer Report will only report on obvious problems.

Home contents insurance: A policy insuring household contents against theft, damage and accident.

I

Illustration: A document for Buy to Let applicants that details the most important features of the unregulated mortgage, to help you work out if you can afford it. The format of the information allows you to compare it with other lenders' mortgages.

Initial interest: The payment due for the period from the day the mortgage began up to the first payment date.

Interest: The charge applied when you borrow money from a lender.

Interest rate: The percentage figure that determines how much interest you pay.

Interest only mortgage: With this type of mortgage you only pay the interest on your mortgage every month and you pay back the amount you initially borrowed at the end of the mortgage term. If you choose an interest only mortgage it will be your responsibility to ensure that you have adequate means to repay the capital at the end of the mortgage term.

Interest rate change letter: You'll receive an interest rate change letter around one month before your promotional rate is due to end. This explains the rate that your mortgage will revert to and what your new monthly repayments will be.

J

Joint mortgage: A mortgage with more than one named individual responsible for repaying the loan.

Joint tenancy: A form of ownership frequently used by couples so that if one dies, the property passes automatically to the other. The alternative is Tenancy in Common.

K

Key Facts Illustration (KFI): A document for Residential applicants that details the most important features of a mortgage, to help you work out if you can afford it. The format of the information allows you to compare it with other lenders' mortgages.

L

Land Registry: The organisation responsible for the keeping and maintaining of the Land Register for England and Wales.

Land Registry fee: The fee charged to register the new details in the Land Registry's records after you've bought a property or changed lenders.

Leasehold: A legal title where the land is held under a lease granted by the freeholder. The lease gives the leaseholder a right to use the property for a fixed period of time, normally subject to payment of a ground rent to the freeholder.

Lender: The bank or building society who lent you the money for your mortgage.

Life insurance cover: Insurance which pays out on the death of the policy holder. Policies can run alongside your mortgage and will pay off all or part of the outstanding debt if you die within a specified term of the insurance policy.

Loan to Value (LTV): The LTV is the amount of your existing loan as a percentage of the value of your property. For example if your outstanding mortgage balance is £75,000 and your property is worth £150,000, your current LTV would be 50%.

Local Authority search: Part of the conveyancing process it is a search of the local area to highlight anything that may affect the property or surrounding area, such as planned road building and planning permissions.

M

Mortgage: A mortgage is a method of using property as security for the repayment of a debt.

Mortgage deed: A legal document between a lender and a borrower creating the mortgage lender's charge on the property.

Mortgage offer (also known as Offer of loan): The terms and conditions of the offer made by a lender, including the loan amount it is prepared to provide.

Mortgage Payment Protection Insurance (MPPI): An insurance policy designed to provide a regular income to pay your mortgage if you become unemployed or unable to work due to an accident or sickness.

Mortgage term: The length of time over which your mortgage is to be repaid.

O

Overpayments: This is a sum of money paid to your mortgage account in addition to your normal monthly payment with a view to paying off your mortgage earlier or to reduce your monthly payments.

P

Part repayment and part interest only: Part repayment and part interest only mortgages allow you to pay off the Capital and Interest on one part of your mortgage, and only the interest on the other part. On the interest only part of your mortgage it will be your responsibility to ensure that you have adequate means to repay the capital at the end of the mortgage term.

Portability/Porting: A portable mortgage allows you to transfer your mortgage rate if you move, subject to lending criteria.

Product fee: When you apply for your mortgage, we may charge you a fee for providing the loan. This fee varies between individual lenders.

Promotional period: A mortgage product with a special interest rate for a specified length of time. This will normally have an Early Repayment Charge attached, which is payable if the mortgage is repaid during this promotional period. Your mortgage statement will tell you if you are in a promotional period.

Purchaser: The term used by estate agents, solicitors and lenders for the buyer of a property.

R

Redemption: The repayment of the loan by the borrower.

Repayment mortgage: Also called a Capital and Interest mortgage. Your monthly payment covers the interest we charge for the loan and also repays part of the money borrowed. In the early years of your mortgage term, the bulk of your monthly payment is interest. However, in time, as the mortgage balance reduces so does the proportion of interest. Assuming that you maintain the payments, the mortgage will be repaid by the end of the mortgage term.

Residential mortgage: A loan that one or more persons borrow from a bank or building society in order to buy a house or other property in which they will live. The loan is secured against the property and is repaid over an agreed period of time.

Revaluation: A shorter version of a Standard Mortgage Valuation, that is instructed when required (e.g. when a Standard Mortgage Valuation expires).

S

Solicitor: A qualified and regulated person handling legal matters including property ownership transfers.

Solicitor's searches: Checks carried out during conveyancing to discover any planning proposals or anything else which might affect the property. Another search is carried out after the exchange of contracts to check that the borrower is not bankrupt.

Stamp Duty Land Tax: A government tax you will have to pay if the price of the property you are buying is above a minimum amount (specified by the government and subject to change). The percentage you pay varies according to the value of the property and is paid on a sliding scale. For further details visit HM Revenue & Customs website.

Standard Mortgage Valuation (also known as Lender’s Valuation): The main purpose of this report is to ensure that the property is worth the amount that you are borrowing. We need to determine whether it's sufficient security for your mortgage. You need to be aware that this type of report does not go into great detail about the property's condition and in some cases we may instruct an automated valuation which will not include a site visit and you will not receive a written report. You may want to get a more detailed report so you are fully aware of any structural issues for your own purposes.

Standard Mortgage Valuation Fee: This is the fee payable for the basic assessment carried out on a property, so a lender can decide whether to lend on the property by assessing its condition and likely value.

Standard Variable Rate (SVR): A variable rate of interest set by a lender, which many mortgage products change to when their Promotional Period ends. Changes to a Standard Variable Rate are made at a lender’s discretion and are not directly linked to an external rate.

T

Tenancy in Common: Joint ownership of a property where should one of the joint owners die, their share passes to their beneficiaries by their Will or intestacy. The alternative is joint tenancy.

Tracker mortgage: Variable rate mortgages which track the Bank of England Base Rate (BBR). Rates move up or down as the base rate changes.

Transfer of Equity: Adding someone to a mortgage or removing them from it. This is subject to underwriting approval and we will then action the change as a 'rearrangement'. This means that the existing mortgage is cancelled and a new mortgage put in place. We charge a Change of parties administration fee for a Transfer of Equity.

U

Under offer: When the seller has provisionally accepted the buyer's offer.

V

Vendor: The term used by estate agents, solicitors and lenders for the seller of a property or piece of land.

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