All our mortgage terms explained.
- Additional borrowing
- If an existing customer borrows more money on top of their existing mortgage, by releasing equity in their property, it’s known as ‘additional borrowing’.
- Annual Percentage Rate of Charge (APRC)/Overall cost for comparison
- This represents the overall annual cost of a mortgage, taking into account interest, fees and charges, for easy comparison between lenders.
- Arrangement fee
- This is a fee for arranging your mortgage, which will vary depending on the mortgage you choose.
- The Bank of England Base Rate
- The Bank of England Base Rate is an interest rate set by the Bank of England. It can go up or down, and is set and announced by the Bank of England’s Monetary Policy Committee every month.
- Booking fee
This is a non-refundable fee charged on some mortgages to secure a particular mortgage deal.
With us, once you’ve paid the booking fee, your chosen rate will be available to you for six months.
- Capital is another term used for the total amount of money you've borrowed.
- Capital repayment
- Capital repayment is when you pay off some of the money you’ve borrowed, rather than just the interest.
- Closure fee
- This is an administration fee to cover the cost of closing a mortgage once it has been fully repaid. If you want to transfer your rate to another property, and the sale and purchase complete simultaneously, the fee will be waived.
- Deposit amount
- A deposit is the amount of money you put towards the purchase of a property – your mortgage is how you pay for the rest.
- Draw down
- You ‘draw down’ on your mortgage when we release the funds to buy the property – it’s another way of saying ‘taking the money’.
- Early Repayment Charges
An Early Repayment Charge is what you may have to pay if you fully repay your mortgage early.
Early Repayment Charges do not apply to our mortgages if you make overpayments or lump sum payments to your mortgage.
If you take a Fixed Rate Mortgage and you repay the whole of your mortgage during the Fixed Rate Period, an Early Repayment Charge will apply. This charge is calculated at 3% of the original amount borrowed during first year and 2% of the original amount borrowed if the mortgage is closed in any subsequent year during the Fixed Rate Period. If you choose to repay your mortgage after the Fixed Rate Period has ended, no Early Repayment Charge will apply.
The amount of any Early Repayment Charge will be displayed on your Mortgage Illustration, which you’ll receive if you apply for a mortgage.
- Enquiry fee
- When a new lender requests mortgage details from a customer's existing mortgage lender, the existing lender may charge an enquiry fee. This fee is normally paid by the new lender. You’ll be asked for written consent before the existing lender is approached.
- Estimated property value
- This is the conservative market value of the house you want to buy.
- Fee Saver
Fee Saver means no booking fee, no arrangement fee and no standard valuation fee. We’ll cover the cost of one standard valuation where required.
Other fees and charges may apply, like legal fees. You may also be liable for any charges from your existing lender.
- First time buyer
- Buying a property without already owning one.
- Home mover
- A person selling one property and purchasing another.
- Interest calculated daily
- The interest chargeable on the outstanding mortgage balance is calculated every day rather than at the end of each week, month or year.
- Interest only
- Your monthly payments will only cover the interest charged on your mortgage. You’re responsible for making your own arrangements to repay the original amount borrowed – this could be with an endowment policy, investment or savings plan.
- Interest rate
- This is the rate at which mortgage lenders calculate the interest they charge their customer for a mortgage.
- Interest type
- The interest rate on your mortgage can be Fixed or Variable. Fixed means that the interest rate stays the same for a certain period. Variable means that the rate can change.
- Loan to Value (LTV)
The LTV is the maximum percentage of a property’s value that we’ll lend you. So, if a property is worth £100k and a mortgage has an LTV of 75%, we’ll lend you up to £75k – you’ll have to find the rest yourself.
The maximum LTV we will lend will depend on your individual situation, the property, the loan you choose and the amount you borrow.
- Lump sum payment
- When you make a one-off payment to reduce the outstanding balance on your mortgage.
- Monthly payment
- This is the minimum amount you’ll pay each month.
- Mortgage Illustration
- This contains all the details you need to compare mortgages – all Mortgage Illustrations, from all lenders, are set out the same so customers can easily compare products.
- Mortgage term
- The length of time the mortgage lasts for.
- New build property
We define a new build property as:
- a house built in the last 24 months, including property bought directly from a builder or developer
- a house that has yet to be occupied for the first time, and/or
- a house that is yet to be occupied in its current form, for example following a renovation or conversion.
The property being purchased must have a first direct recognised satisfactory Structural Defects Warranty.
We may lend up to a maximum of 85% Loan to Value (LTV) on New Build Properties. Customers with an LTV greater than 75% are required to have a minimum deposit of £25,000.
- Outstanding balance
- The total amount you owe on your mortgage.
- Any amount you pay above your regular monthly repayments to reduce the outstanding balance.
- The term used to describe transferring your current first direct rate from one property to another when you buy and sell property simultaneously. This may be available, subject to Terms and Conditions.
- Rate period
- The set time you get a specific rate for – after this, your mortgage will revert to our Standard Variable Rate.
- When a person transfers their mortgage from another lender.
- Standard Variable Rate
- This is a variable rate set internally by us, which is not directly affected by the Bank of England Base Rate.
- Tie in period
- Some lenders specify that the borrower keeps their mortgage with them for a period of time after the agreed Fixed Rate Period has ended. If the borrower moves their mortgage elsewhere during the tie in period, they may have to pay an Early Repayment Charge.
- Valuation fee
- This is a fee to cover the cost of a valuation report. The fee will vary depending on the type of report and the individual property.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.
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What happens when – and why…? Whether you’re a first time buyer, remortgaging your current house, moving to a new place or an existing customer, we’ve got a handy buyers’ guide for you.
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