Jargon Buster

To help you understand all of the mortgage and remortgage terminology used throughout this website, we have created this 'Jargon Buster'.

Please click on the relevant letter of the alphabet to find the word or phrase you require.

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Accident, Sickness and Unemployment Insurance (ASU)
An insurance policy arranged by a borrower to help meet mortgage repayments should accident or illness strike. The unemployment cover really means redundancy, rather than someone who makes themselves unemployed through resignation or sacking. Other exclusions might include self-injury or accidents caused by the misuse of alcohol or drugs.
Once you start claiming, ASU cover normally only lasts for 12 months. Once that period is over, you will be expected to meet the mortgage payments yourself.

Accountant
Someone who prepares and audits the accounts for an individual or company.

Accountant's Letter
If a self-employed individual does not have fully audited accounts to prove a regular income, some lenders may be prepared to accept an Accountant’s Letter to confirm recent income levels.

Accounts
Documents relating to the turnover of a business, including a profit and loss account. Accounts are usually prepared on an annual basis and are a crucial part of proving the income of a self-employed person.

Added to Loan
Any fees or charges that a lender allows you to add to your mortgage loan, rather than paying them up front. These might include arrangement fees and Higher Lending Charges.
Remember, any fees or charges added to your loan will attract interest and will also increase the overall ‘Loan to Value’, which could mean additional charges are applied.

Additional Security
When lending exceeds a certain Loan to Value lenders may require additional security. The usual form is a High percentage Advance Fee "HPA". The lender uses this fee to purchase indemnity cover to protect the lender in the event of loss. No protection is offered to the borrower who remains responsible for repaying the whole of the debt to the lender. Alternatively lenders may accept other security such as cash or shares or a charge over another property.

Administration Charge
Some lenders will reserve a proportion of the fee charged for the valuation to cover their own costs. This element of the valuation fee may not be refunded should an application not proceed even if the valuation has not taken place

Adverse Credit
Another way of saying poor credit or bad credit. Someone who has had problems repaying or managing debt in the past is likely to have an adverse credit history. This can make applying for credit such as mortgages more complicated as some lenders will regards them as too ‘high risk’ to lend to.

Allowances
Any item that can be deducted from gross salary to help reduce the amount of tax you pay is called an ‘Allowance’. These can include your Personal Allowance – the amount you can earn before you pay any income tax – or other legitimate business expenditure that a self-employed person can use to reduce their gross income. These might include:
• Petrol and other associated car costs (assuming the car is used for your business)
• Phone bills
• Office bills (heating, electricity etc)
• Other business-related expenses (parking, travel costs etc)

Arrangement Fee
A fee charged by the lender for setting up your mortgage account. It is usually payable up front, although some lenders will allow the fee to be added to the loan.

Arrears
Mortgage payments that have not been made by the due date in accordance with the contractual agreement you have with the lender.

Annual Percentage Rate (APR)
This is the true cost of your borrowing, in percentage terms. It is usually higher than the ‘headline rate’ you will see advertised with a product because it takes into account the likely total cost of your borrowing over the full term of the mortgage, including any charges.

Asset Finance
Sometimes known as a leasing agreement, this is a term used in commercial lending for the purchase of equipment (plant and machinery).

B

Base Rate
The standard rate of interest charged by banks, set by the Bank of England’s monetary committee each month. Mortgage interest rates are usually 1-2% higher than the current ‘Base Rate’.

Booking Fee
A fee charged by lenders to secure mortgage funds, usually special deals such as fixed or capped rates. This fee is usually paid up front, although your lender may allow it to be added to the loan.

Broker
An authorised intermediary who can find and place mortgage deals for customers. A broker can take care of all the paperwork for you and deal with the lender on your behalf, although a broker fee may be charged for this service.

Broker Fee
A mortgage broker is normally paid in one of two ways – either by commission from the lender or by a broker fee, charged to the customer. Under current regulations, any mortgage broker that offers “independent” mortgage advice must offer customers the choice of paying a fee if they prefer. This fee will normally be a percentage of the mortgage loan required, typically 1-3%, but may be higher for more difficult cases such as ‘adverse credit’ mortgages.

Buildings Insurance
The insurance of your house against damage or loss as a result of fire, flood and other accidental damage. This does not include the loss or damage caused to your possessions, for which you will need Contents Insurance.

C 

Capital & Interest
This is another name for a Repayment Mortgage. The capital is the original loan, which is repaid a month at a time over a fixed period (usually 25 years). On top of the repayment element, interest is charged. At the end of the mortgage term, providing all the payments due have been made, you are guaranteed to have repaid your mortgage in full.

Capital Gains Tax
This is a tax – currently up to 40% - on any profit you make on an investment, over and above a certain level set each tax year by the Chancellor.
If you sell a property in which you were living, there is no Capital Gains Tax to pay, regardless of how much profit you make. However, you may have to pay the tax if you make any profit on the sale of a second property, such as a Buy to Let.

Capped Rate
A rate of mortgage interest that has an upper limit, or ‘cap’, of interest set from the outset for a set period of time. For example, the cap might be set at 6% for 2 years, which means that, even if rates go higher than 6%, this is the maximum you will be charged during that 2 year period.

Chain
The houses linked in a buying and selling process. This is known as a ‘chain’ and can contain a large number of people and properties. The first person in a chain is someone who doesn’t have a property to sell; the last person is generally either buying an empty house, moving into rented accommodation or not buying another house.

Completion
This is the final stage of the conveyancing process, when legal ownership of a property transfers from one person to another. If you are buying a house, you are normally not allowed to take ownership until completion has taken place.

Conditional Insurance
An insurance policy that has to be taken out as a condition of obtaining a loan.

Contents Insurance
The insurance of belongings within your home, such as furniture, clothing etc, as opposed to the insurance of the house itself (Buildings Insurance).

Conveyancing
This is the term used to describe the legal process of buying and selling property and involves the transfer of the title deed from one owner to another.

Conveyancing Fee
The fee charged by your solicitor to deal with the legal paperwork involved with transferring property ownership. On top of their fee, they will also ask you for other fees involved including stamp duty and disbursements.

County Court Judgement (CCJ)
This is a judgement made against a debtor in a County Court for non-payment of a debt. If a CCJ is not settled within 30 days of the judgement, it will appear on the credit register for the next six years and could affect your ability to obtain credit, such as a mortgage.

Credit Line
Companies that take out a mortgage for commercial purposes can sometimes establish a credit line with their lender for future lending purposes. This allows them to make much quicker decisions on purchases and expansion as they know they have the ability to borrow more money if needed.

Credit Score
When you apply for any sort of credit, including a mortgage, the lender will assess your application and award ‘points’ depending on your answers to certain questions – age, employment status, income etc. The total number of points you are awarded is known as the ‘credit score’. People with low credit scores may be refused credit terms.

Credit Reference
As well as using your credit score, a lender will also get a report from one or more of the main Credit Reference Agencies in the UK, such as Experian or Equifax, to help assess your credit worthiness. This credit reference will contain details of your recent credit applications, as well as showing whether you have missed any payments and other potential credit problems.

Creditor
A person or company that you owe money to, such as a bank or building society.

D 

Debt Consolidation
Using one new loan to repay other existing debts and help reduce the overall monthly repayments. A remortgage is often used for this purpose, because the interest rates charged on mortgages are generally much lower than other forms of debt, such as credit cards and personal loans.

Debtor
A person or company that owes money to a creditor.

Decision in Principle
Based on certain information provided in advance, a lender can normally tell you if you are likely to be successful in applying for a mortgage by giving you a ‘Decision in Principle’. However, this is not a formal mortgage offer and is subject to references, a valuation and other conditions.

Defaults
Failing to make repayments on things such as a credit card or a mortgage is sometimes referred to as ‘defaulting’.
Defaults can, over time, lead to County Court Judgements and are recorded on a person’s credit file, which could make applying for other credit more difficult. At Oakhill Mortgage Services, we are willing to accept mortgage applications even where mortgage defaults or ‘arrears’ exist.

Deposit
Whenever you buy a house, your lender will normally insist that you put a deposit towards the total cost. This is usually at least 10% of the total purchase price. If you are selling a property as well, the equity you have in your house can be used as a deposit.

Disbursements (conveyancing)
Fees charged by a solicitor as part of the conveyancing process to cover certain additional expenditure they will incur on your behalf, such as Local Authority Searches.

Discharge Fee
An administration fee sometimes charged by mortgage lenders to close your mortgage account – for example, when you have finished repaying your mortgage loan.

Discount Purchase Price
Price of a property that has been reduced below the open-market value, such as in the case of a Right to Buy.

Discount Rate
A rate of mortgage interest which is marked down, or ‘discounted’, at a rate below the lender’s Standard Variable Rate (SVR) – for example, 2% discount for 12 months.

E 

Early Repayment Charge (ERC)
If you have special mortgage terms with your lender, such as a fixed or discounted rate, you may be charged an ERC if you repay your mortgage (either in part or in full) before the end of the deal term. An ERC could be a percentage of the loan or equivalent to a set number of monthly repayments.

Equity
This is the difference between what you owe on your mortgage and what your property is worth on the open market. If the property is worth less than you owe, this is known as ‘Negative Equity’.

Employed/Employee
Normally refers to a person who has an open-ended contract of employment and has income tax and national insurance contributions deducted from their salary.

Employment Status
The basis of an individual’s employment – i.e. employed, self-employed, unemployed etc.

Endowment
A special type of long-term savings policy sometimes used to help repay an ‘Interest Only’ mortgage. An endowment policy will aim to build up a cash sum large enough to repay the loan at the end of the mortgage term. It will also include an element of life insurance to help repay the loan should you die beforehand.

Exchange (of contracts)
This is one of the final stages of a house buying process, normally about 1-2 weeks before completion, when all of the conveyancing is complete, you have your mortgage offer in place, you have paid your deposit and everyone in the chain has agreed to a completion date.
Once you have exchanged contracts, you are legally obliged to buy the property and you could be sued (for up to 10% of the purchase price) if you pull out.

Factoring
Another form of borrowing for companies. A commercial loan can be secured against the value of any outstanding invoices, rather than a property. This is also known as ‘invoice discounting’.

First Charge
A method of securing the main mortgage, whereby a lender has first call on any funds available from the sale of the property, with any equity passed back to the borrower (less any deductions for charges).

First Time Buyer
Someone who is buying a property for the first time and who doesn’t have a property to sell. A First Time Buyer is usually the first person in a house buying ‘chain’.

Fixed Rate
A rate of mortgage interest which is set, or ‘fixed’, at a certain level for a given period of time. For example, the rate might be fixed at 6% for 2 years, which means that the rate of interest charged during that period will always be 6%, no matter what happens to interest rates generally.

Footprint
When you apply for credit, your lender will do a credit check with one of a number of Credit Reference Agencies, such as Experian or Equifax. This check will be recorded on your credit record, leaving a mark or ‘footprint’ for other companies to see.

Freehold
If you own a freehold property, you are the outright owner of the property and associated land.

Full Structural Survey
This is the highest level of property inspection you can get, and the most expensive. The surveyor will make a detailed analysis of the property, including checks for damp, rot and other infestations. You can also ask your surveyor to check out specific things that you might be concerned about regarding the property and surrounding land. If a surveyor misses something in a Full Structural Survey that later becomes a problem, you would be able to take legal action against the firm to recover any costs incurred.

Guaranteed Earned Income
This is income that you are guaranteed to receive each year, although it is not part of your basic pay under the terms and conditions of your employment.

Higher Lending Charge (HLC)
A charge that is sometimes made if a borrower wants a mortgage that exceeds 75% of the property’s value. This figure is known as the ‘Loan to Value’. The charge only applies to the additional lending required, over the 75% threshold.
The money is used to pay an insurance premium that protects the lender from losing money should they have to repossess the house for any reason. Although it is the borrower who pays for this insurance, they receive no benefit from it.

Homebuyer's Report or Homebuyer's Valuation
This is an inspection of the house you intend to buy, carried out by a surveyor. The inspection is more detailed than a basic valuation, but will not be as in-depth as a Full Structural Survey. The surveyor will send you a report, detailing the condition of the house, its current market value and any urgent repairs that may need to be carried out or looked at in more detail.
Most lenders are prepared to lend up to 90% of a property’s ‘Loan to Value’. However, if you want to borrow more than 75% of its value, your lender may charge a ‘Higher Lending Charge’. This fee is designed to reflect the additional risk involved to the lender because, with higher lending, there is less equity in the property and a greater risk of them losing money if you were to default on your mortgage repayments.

Illustration (Key Facts Illustration)
This is a document that sets out exactly how much a mortgage will cost you to repay (in terms of interest payments) and set up (in terms of fees and other costs).

Income Multiples
The amount you are able to borrow as a mortgage will usually depend on how much you earn. Each lender uses a set of ‘income multiples’ to work out the maximum loan they are prepared to give you, subject to a property valuation. Typically, most lenders will allow 3 times the income of a single applicant or 2.5 times the incomes of joint applicants.

Individual Saving Accounts (ISA)
A special savings policy introduced by the Government as a replacement for Personal Equity Plans (PEPs). ISAs have a special tax status, which means that all growth and profit on your investment is free of income and capital gains tax, although there are limits to the amount you can invest in an ISA each tax year. ISAs can be used to help repay the capital of an interest only mortgage.

Initial Interest
This is a payment of interest to cover the period of time between completion date and the normal monthly repayment date. For example, if mortgage repayments are normally due on the 30th of each month and the loan completes on the 14th of March, the first monthly repayment may be due one month from 30th March, on 30th April.
This first payment will also include an element of interest (the ‘initial interest’) due between the 14th and 29th of March, making the first repayment slightly higher than future repayments.

Interest Only
With an interest only mortgage or loan, the monthly repayment is made up of the interest element only, leaving the original capital outstanding at the end of the mortgage or loan term.

Joint Application
Mortgage application involving more than one person as the borrower.

Key Features Illustration
Under mortgage regulations, all borrowers must be provided with a Key Features Illustration (or KFI) before they take out a loan. The KFI will detail exactly what rate of interest is to be charged, how much the borrower will repay and any charges that apply.

Land Registry
A record of property. Ownership and the mortgage is registered in a central register at HM Land Registry.

Land Registry Fees
As part of the conveyancing process, your solicitor will ask you for Land Registry Fees, to cover the administration involved in changing an entry in the Land Registry. This can be as a result of a change of ownership or simply a change of mortgage.

Landlord
Someone who lets out a property to others, in return for a regular rental payment. It is the landlord’s responsibility to make sure that the property is well maintained and has all of the necessary safety certificates in place (such as Gas boiler checks etc).

Landlord's Reference
Reference from a previous landlord regarding the general conduct of a tenant and whether their rent has been paid promptly.

Lease / Leasing Agreement
A lease or leasing agreement sets out the rental term, specifying exactly how long it will last and when it will end. If you lease a property, you do not own it outright, but merely have temporary possession until the lease expires.

Leasehold
If a property is described as leasehold rather than freehold, then you will not own the property outright, although as a leaseholder you will have the right to live there for a specified time in return for rent and any service charges payable to the landowner or landlord.

Legal Charge
This is a legal document which grants rights of security over your property with a lender. The type of legal charge used will vary from lender to lender. Some use a charge for the specific amount they have lent you, whilst others use an ‘all monies’ charge to cover all borrowing you have with them, such as overdrafts and personal loans.

Lender
A company that provides finance to meet a request from a borrower for a loan or mortgage.

Letting Agent Fees
People who have a property to rent will very often ask Letting Agents to help them find suitable tenants and manage the day-to-day landlord duties. Letting Agents will help assess potential tenants by taking up references, hold deposits and can arrange for maintenance to be carried out on behalf of the landlord. In return, they will charge a fee which is usually a percentage of the monthly rent.

LIBOR
London Interbank Offered Rate is the rate at which banks notionally buy and sell money to each other.
It varies from day to day and is closely linked to Base Rate. The relationship of LIBOR to base rate can give an indication of the possible future direction of base rates.
If LIBOR is significantly above base rate it indicates that the money market believes interest rates are about to increase. If it is significantly below, the reverse is true. The key LIBOR rate is 3 month LIBOR, however rates are also quoted for one, six and twelve month periods.

LIBOR-linked
This is a rate of interest linked to LIBOR and will be set at a certain margin above the LIBOR rate (typically 1 – 1.5%).
LIBOR-linked mortgages and loans are likely to be more volatile than standard mortgage rates, although they give customers a chance to pay a rate closer to the true cost of money. When interest rates are low, this will probably lead to lower overall payments compared to a standard mortgage, but when rates are high the payments are likely to be higher.

Life Insurance
This is a policy that pays out a set amount on the death of the policyholder. Life insurance policies linked to mortgages are usually set to run for the same period as the mortgage (e.g. Term Assurance or Decreasing Term Assurance).

Loan to Value (LTV)
This is the amount a lender will be prepared to lend on a property, based on a current market valuation.
Typically, most lenders are prepared to lend up to 90% of a property’s LTV. So, if a house was valued at £100,000, the maximum mortgage available would usually be £90,000. If you need a LTV of more than 75%, your lender may charge you an additional fee, known as a ‘Higher Lending Charge’.

Loan - Secured
The equity in the loan is used as security against the loan not being repaid, and the loan is secured against your property. This means that your house could be repossessed if you do not keep up repayments on your mortgage.

Loan - Unsecured
Certain loans do not require any security, if the loan amount or the financial position of the applicant means that the lender means that there is less risk to the lender. Other types of unsecured debt include credit and store cards.

Local Authority Search
A search of local authority records to confirm the status of the property. This is normally done by your solicitor and the fees for this are included as part of their disbursements. This search will reveal certain important information about the property you intend to buy and the surrounding area, such as planning permissions and enforcement notices.

Maintenance Costs
Any costs associated with keeping a property in good order, such as fixing leaks and replacing fencing etc. Some things are required by law, such getting gas appliances checked and approved by Corgi registered fitters on an annual basis. If you intend to furnish your Buy to Let, you will need to make sure they comply with furniture and furnishings regulations. You may also be required to fit additional safety measures such as fire escapes and fire doors.

Mortgage
A loan used to buy a property to live in where the property itself is used as security to protect the lender from non-payment or defaults.

Mortgage Deed
Legal document which secures a loan on a property.

Mortgage Officer
The dedicated Oakhill Mortgage Service representative who is on hand when you’ve got questions to ask about your mortgage application. We try to make sure that you deal with the same Mortgage Officer right through the application process, from initial enquiry to completion.

Mortgage Subsidy
Some employers will offer their employees a subsidy or additional income payment to help meet the cost of mortgage interest payments. The amount of subsidy offered will vary from company to company and can be calculated in a number of different ways.

Mortgage Term
The length of time set for the mortgage to run. At the end of the mortgage term, you are legally obliged to repay the loan in full.

Mortgage Payment Insurance (MPI)
This is a special type of insurance used to protect your mortgage repayments in the event of illness or accident. See also ‘Accident, Sickness and Unemployment Insurance’.

Multipliers (income multiplier)
This is the factor a lender applies to an applicant’s income to work out how much they can borrow. Typically a single applicant would be able to borrow up to 3 times their annual salary.

National Insurance
A Self Employed person does not automatically have National Insurance (NI) contributions deducted from salary like an employed person, so they have to make arrangements to pay their own. The Inland Revenue have a special department set up to help Self Employed people do this, and it may be possible to avoid paying any NI contributions if your income is below a certain level.

Negative Equity
If your house is worth less than you owe on your mortgage, this is known as negative equity.

Net Profit
The income of a company or self employed business after making full allowance for the expenses of running the business. This is the amount that a lender will generally look at for the purposes of calculating an applicant’s borrowing limits.

No Capital Raising
The application for a loan is simply to replace an existing loan without any additional borrowing.

No Credit History
If an individual has no existing or previous credit arrangements in place, it can be difficult to obtain new credit because a lender cannot easily assess how ‘creditworthy’ you are.

Non Status
Loan granted without making enquiries about the borrower’s income or credit history.

Ombudsman
An independent professional body set up by law to help resolve individual disputes and complaints between consumers and firms (e.g. solicitors and insurance companies).

Open Market Value
The value of a property on the basis of a willing buyer and a willing seller in the open market allowing for a reasonable period for sale.

Outgoings
Your existing liabilities, such as debts (credit cards, loans etc), household bills (water, electricity etc) and other fixed monthly expenditure.

Part & Part
This is a term sometimes used to describe a mortgage that is split between two repayment methods, with part of the mortgage set up on a repayment method, the other on an interest-only basis.

Payment Protection Insurance (PPI)
See Accident, Sickness and Unemployment Insurance.

Payment Schedule
The schedule of monthly payments that you will be legally obliged to make once your loan or mortgage starts.

Pension Mortgage
An interest only mortgage that will use the ‘tax free cash’ element of a personal pension plan to repay the mortgage at the end of the term. Personal pension plans were first introduced in 1986, with very generous tax benefits to encourage people to save for their own retirement rather than relying on the State pension.

Portable
A mortgage that can be transferred from one property to another at the lender’s discretion.

Principal
The original amount of the loan – the capital.

Profit
Gross profit of a company before allowing for the legitimate expenses of running the business. Not all of the profits left over will be available for the business owner(s) to use as income so it is not always a reliable measure of total income for lending purposes.

Quotation
Also known as an illustration (Key Features Illustration). This document outlines the details of how much a loan or mortgage will cost you, including the monthly repayments, the total amount that will be repaid over the term of the loan and any charges or fees that apply.

Redemption / Redeeming your Mortgage
This means paying off the mortgage in full, either when you move house or at the end of a mortgage term. There may be charges involved in redeeming your mortgage, including Early Repayment Charges.

Redundancy Insurance
See Accident, Sickness and Unemployment Insurance.

Refinancing
Rearranging borrowing with a different lender, usually to obtain better terms or to raise fresh capital.

Regular Earned Income
This is income which is not guaranteed but does form a regular part of an employee’s salary (for example, annual bonuses). A lender will normally ask to see proof that these payments are being made on a regular basis before agreeing to include them as part of an income multiplier.

Regulated Loan
A loan of under £25,000, which is regulated under the terms of the Consumer Credit Act.

Remortgage
A remortgage is a new mortgage loan that you take out without actually moving house. You will normally redeem your existing mortgage and then take out a fresh loan either with your existing lender or a new one.
The new loan could be higher than your previous one, enabling you to use the extra cash for home improvements or debt consolidation.

Remortgage with Outstanding Discount
A property bought under a Right to Buy scheme that the owner now wishes to remortgage, but where there is an outstanding discount remaining.

Rent / Rental Income
The income you earn from a rental property, such as a Buy to Let. When applying for a Buy to Let, most lenders will want to know what rental income you expect to get, and will normally only lend on a Buy to Let if rental income is at least 130% of the monthly mortgage repayment.

Repayment Mortgage
With a repayment mortgage, part of each monthly repayment goes towards repaying the loan itself, whilst the rest is made up of the interest due on the outstanding amount. If you make all of the repayments due, you are guaranteed to repay the mortgage at the end of the term.

Right to Buy
Under Government legislation, council tenants have a right to buy their council property, with a discount offered on the market value of up to £26,000.

Schedule D
This is the schedule of taxation that applies to Self Employed people. Employees are subject to Schedule ‘E’ taxation.

Second Charge
This is a legal charge on a property that ranks behind a ‘first charge’. A second charge is usually used to secure additional borrowing, such as a second mortgage or a secured loan.

Second Mortgage
A further loan on a property which ranks after the first charge mortgage.

Security Address
This is the address of the property that is being offered as security against a mortgage or secured loan.

Secured Loan
A personal loan that is secured against a property, in the same way as a mortgage or remortgage. If there is a mortgage already in existence, the lender takes what is known as a ‘second charge’ on the property.

Self-build
A self-build property is one that is built by the borrower themselves– it is not an existing property. Self Build Mortgages are usually advanced in stage payments and are subject to strict limits on Loan to Value.

Self Assessment
Each year, self employed people (and those subject to the highest rates of income tax) are required to complete their own tax return – a process known as Self Assessment. This covers income that falls outside of the ‘Pay As You Earn’ (PAYE) system, which Self Employed people are not subject to.
Once the return has been made to the Inland Revenue, the amount of tax due can be calculated and is normally paid in three instalments throughout the year.

Self Certification / Self Certified Mortgage
If you are self employed (or a contract worker) and you cannot prove a regular income, it is still possible to get a mortgage by applying for a Self Certified Mortgage. With this type of loan, you simply confirm on the application form (or ‘self certify’) your income level. Some lenders may want to see an Accountant’s Letter as further evidence of this income to help show that you can afford the mortgage repayments.
Because of the additional risk to the lender, Self Certified Mortgages usually have higher rates of interest and administration fees associated with them.

Sitting Tenant
This is someone who has a legal right of occupation, even when a property changes ownership. They also have a right to apply to their local authority to set a fair rent.

Sole Occupancy
This is a property that is only occupied by the borrower and their immediate family (i.e. no paying tenants).

Special Status or Non Status
Someone who is unable to provide all the necessary documentation relating to income and credit history is described as special status or non-status.

Stamp Duty
A tax imposed by the Government on all house sales over a certain threshold, which is reviewed by the Chancellor each year. The threshold is currently £120,000.

Start-up Business
A brand new business with little or no trading history.

Status
The credit-worthiness of a borrower.

Structural Survey
Same as Full Structural Survey

Sum Assured
The maximum amount payable under a policy of insurance. In the case of a life insurance policy set alongside a mortgage, the sum assured is usually equal to the loan amount.

Tax Free Cash Sum
Under personal pension legislation, it is possible to withdraw a lump sum from your pension fund as cash, free of income tax. This money can be used to help repay an interest-only mortgage.

Tenant
Someone who rents a property from a person or company (a landlord).

Tenancy Agreement
This is an important document which sets out the terms of a tenancy, including rights of both the tenant and the landlord in respect of the property and the period of the lease. The most common form of Tenancy Agreement is an ‘Assured Shorthold Tenancy’, which allows a landlord to reclaim possession of the property at the end of the tenancy period.

Timber Framed (house construction)
Timber framed houses have, in the past, been difficult to obtain mortgages on because of the problems of damp and rot affecting many older houses. Today, modern building methods have helped to reduce these problems.

Tracking
This is the process of following a mortgage application from beginning to end. This can sometimes be done on-line or through updates passed from the lender directly to the borrower or their mortgage broker.

Tracker Mortgage
A mortgage with a rate of interest linked directly to the movement of the Bank of England Base Rate.

Total Amount Payable (TAP)
This is the total amount payable to a lender throughout the lifetime of the mortgage or loan, including all interest payments and charges.

Typical APR
This is an example rate of interest, designed to give borrowers a better idea of the total cost of borrowing for any given mortgage product.

Underwriting
This is the process a lender goes through to assess a mortgage application, taking into account the information given to them by the borrower and the credit reference they obtain.

Unemployed Insurance
See Accident, Sickness and Unemployment Insurance.

Unencumbered
A property that is owned without borrowing or other legal charge over it.

Unsecured Loan
A personal loan that is not secured against a property. The lender will simply take into account the employment and credit status of the individual when assessing their suitability for a loan.

Valuation
This is a brief inspection of a property, carried out on behalf of a lender. It is designed merely to confirm the current market value of the property in its current state of repair.
Although a borrower might be sent a copy of the valuation report, they should arrange for a more detailed inspection such as a Homebuyer’s Report or Full Structural Survey if they want reassurance about any potential problems with the structure of the house, such as damp, rot or subsidence.

Valuation Fee
The fee payable to a lender to arrange for a valuation of the property. This is normally paid when you send in your application and, once the valuation has been carried out, this fee is not refundable, even if you do not go ahead with the mortgage.

Variable Rate
This is a rate of interest that will vary according to market conditions and the general cost of borrowing.