A to D - E to I - L to N - O to S - T to Z

E

Early Redemption Fees - This refers to any redemption fees that a lender will charge if a mortgage is redeemed before the end of the term.

Endowment Mortgage - This is a mortgage where interest only is paid and the proceeds of the endowment policy when it matures will repay the mortgage. The most popular type of endowment is the low cost endowment, which is designed to repay the mortgage as long as certain investment assumptions are met. The endowment does not guarantee to repay the mortgage. As well as being an investment vehicle the endowment policy will also include life assurance and may include critical illness and other benefits for the policyholder.

Equity - see Capital.

Equity Appreciation - See Capital. This is the increase in capital available in the property over and above the mortgage amount.

Exchange of Contracts (England only) - At this stage of property purchase legally binding contracts are exchanged between the buyer and the seller. After contracts have been exchanged the vendor must sell and the purchaser must buy on the terms agreed.

Existing Liabilities - This phrase simply refers to all the other financial commitments apart from the existing or proposed mortgage. Liabilities will include credit cards, bank loans, maintenance payments to ex-spouse and school fees, etc. Lenders will take these items into account when evaluating the mortgage amount they are prepared to lend.

Expatriate - This is someone who is working or what is known as domiciled (living in) in a country which is not the place of his or her birth or nationality. (Back to Top)

F

Fee - A lender, mortgage broker or adviser may charge this for arranging a property purchase.

Feuhold - This is found in Scotland and is similar to freehold.

First Charge - A lender will always use this to secure the main mortgage therefore a lender who has a first legal charge overa property will have the first call on any funds raised from the property sale.

First Time Buyers (FTB) - The lending market is very competitive for first time buyers. Mortgage lenders want to be the first to lend to such borrowers in order to keep them as customers for subsequent mortgages. Generally this phrase is used for those borrowers who are buying a property for the first time. Some lenders will also consider someone who has owned a property before but maybe currently renting. First time buyers may be able to access particularly attractive mortgage packages such as fixed rates and discounted rates.

Fixed Rate Mortgage - These are mortgages where the interest rates are set for a number of months or years. After the fixed rate period the interest rate will revert to the normal variable mortgage rate. If the mortgage is redeemed during the fixed rate period there are usually redemption penalties.

Flat over shop - This is a private flat which is located above a retail outlet. Some lenders do not view this type of property as favourably as those flats found in blocks which are completely residential.

Flexible Drawdown/Repayment Features - This refers to mortgages which permit additional funds to be borrowed later on during the mortgage term and/or flexible repayments to be made. Flexible repayment mortgages may allow payment holidays and/or the amount of monthly payments to be varied.

Foreign Currency Mortgage - These are mortgages where the loan has been drawn down in another currency which is not Sterling. Such loans require careful consideration as they can be beneficial however the opposite also applies and in some cases borrowers have found the mortgage debt has increased.because of currency movements. Financial advice should be sought if considering such a mortgage.

Freehold (England only) - This refers to land or property which is owned indefinitely. Leasehold property only gives the owner a right to hold for a limited period of time.

Full Status - This refers to a mortgage where full credit checks and information has been sourced on the borrower.

Further Advance - This describes when a further loan has been granted by the current mortgage lender. This loan is also secured by the first charge on the property. Further advances are generally used for debt consolidation or home improvements. (Back to Top)   

G

General Conditions - These are the standard conditions applicable to a mortgage. These will be found in the paperwork given to a borrower.

Geographical Restrictions - These are areas where mortgage lenders wish to lend or operate in. This may simply be because they have no branches in this area or a lower awareness of the area. This is usually applicable to smaller lenders.

Gross Monthly Payment - This refers to the monthly mortgage payment before the deduction for MIRAS tax relief.

Gross Profit - This is the profit of a company before allowing for expenses.

Guarantor - This is a person who will guarantee that the mortgage repayments are made in the event of default by the borrower. Usually this will be a parent or relative of a borrower. It should be remembered that a guarantor would be fully liable for repayment of the mortgage amount if a borrower defaults. The guarantor should therefore be confident that the borrower will meet all the necessary monthly payments. (Back to Top)   

H

Higher Early Redemption Fee - This phrase will usually be found in conjunction with fixed rate, capped and discounted mortgages. As the lender has given the borrower an attractive mortgage package they will impose a penalty over and above the normal redemption fees if the mortgage is paid off within the period of the special terms.

Holiday Home - This refers to a property which is purchased for use at weekends and for holidays only. As the borrower is not living in the property all the time, mortgage lenders have stricter lending criteria and borrowers may find that they have to put down larger deposits.

Home Buyers Report - This is a property survey report which has more information than a mortgage valuation but is not as detailed as a full structural survey report. This report is used by the lender in place of the mortgage valuation report and gives more information that will enable a borrower to reach a decision on whether or not to purchase. A detailed a structural survey report may be more suitable for some types of property, e.g. older. It is essential that professional advice is sought in this area.

Home Buyers Valuation Fee - see Home Buyers Report. This is the fee payable for the report. (Back to Top)

I

Illustration - This is a quotation given to a potential borrower to show the monthly cost of a mortgage and any other expenses incurred with the loan.

Impaired Credit - This refers to the credit rating of an individual who may have CCJs or maybe behind with payments to personal loans or a mortgage. This phrase is also applicable to someone who has been declared bankrupt.

Income Multiplier - Lenders use income multipliers in calculating how much they can lend on a mortgage. Usually a single income has a multiplier of three times and a joint income has a multiplier of two and a half times. Some lenders will give higher multiplies of income if a borrower is a professional.

Indemnity Premium- See Mortgage Indemnity Fee

Initial Fees - This figure includes an assumption of expenses which include the solicitors fees, valuation fees and any arrangement, reservation, booking and application fees applicable. This is only an estimate and the costs are likely to differ dependent on the type of survey carried out and property purchased.

Initial Interest - This often catches borrowers unaware. Initial interest is a payment which covers the period between completion and the normal date when the mortgage payment is due, e.g. a mortgage maybe completed on the 15th October and the first payment due is on the 28th. A borrower will have to pay interest for the period between the 15th and the 28th, 13 days interest. This is an extra cost not always pointed out to borrowers until they have completed.

Initial Rate - This is the interest rate that is paid from the beginning of the mortgage to the end of the initial rate period. This usually relates to fixed and discount mortgages which may have an initial rate of interest lower than the normal variable rate. At the end of the initial period the normal variable rate will be payable.

Insurance Guarantee Premium - see Mortgage Indemnity Fee.

Interest Calculated - This is a figure for guidance purposes only and shows the interest only which is payable on a typical mortgage. You should be aware that to get an exact costing an illustration will be required from a lender. This is particularly the case if your circumstances do not meet standard mortgage lending criteria.

Interest Only Mortgage - This is a mortgage where only the interest is paid to the lender. A borrower should be aware that any capital repayment is an extra amount which will be over and above the interest paid. The capital will be repaid from an endowment policy, pension plan or PEP/ISA. It is the responsibility of the borrower to ensure that the repayment vehicle will pay off the mortgage at the end of the term. Remember that Life Assurance will also be costed separately.

Introducer - A mortgage broker or adviser who introduces a borrower to a potential lender.

ISA Mortgage - A mortgage which will be repaid from the proceeds of an ISA. (Back to Top)