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

L

Land Registry Fee - This is the fee paid to the Land Registry to record a change in the records following a transaction involving land registered with them. The change is usually notified to them by the borrower's solicitor.

Landlords Reference - This is a reference from the borrowers previous landlord stating whether the rent and conduct would make him or her a suitable lending risk.

Large Town Allowance - This is a part of salary paid to an employee because of extra expense incurred from working in a more expensive area of the country. This payment is usually taken into account by mortgage lenders when calculating the amount that can be borrowed.

Leasehold (England only) - If a property has a tenure which is Leasehold then the land is not owned by the property purchaser, and is only leased to them for a certain fixed period.

Legal Charge - see Charge or Legal Charge.

Lender - The organisation offering the mortgage loan.

LIBOR - is the London Interbank Offered Rate. This is the rate at which banks buy and sell money to each other. It changes daily and is linked to base rates set by the Bank of England. LIBOR usually changes daily and a LIBOR linked mortgage may be adjusted at fixed intervals, e.g. every three or six months. Studying the movements of LIBOR compared to the base rate can indicate the direction of bank base rates. If bank base rates are significantly below LIBOR then the money markets think that interest rates are about to fall. Conversely if LIBOR is significantly more than the base rate this indicates that the markets believe interest rates are about to rise. Most analysts follow the three month LIBOR rate, however, there are also rates quoted for one, six and twelve months periods.

LIBOR Linked Mortgage - This is linked to LIBOR and the lender adds a fixed margin over this rate which is reset usually quarterly. The margin dependent on type of mortgage will vary but for a normal borrower is around 1-1.5%. LIBOR mortgages tend to have more interest rate changes than a normal mortgage. They may be beneficial where interest rates are relatively low and more expensive when interest rates are high.

Life Company - This is the term used for a life assurance company. Life companies are authorised and supervised by various Government bodies.

Life Insurance - Term used to describe a policy which pays out benefits if the policy holder dies.

Loan to Value (LTV) - This term explains the relationship between the value of the property and the amount of mortgage, e.g. a mortgage of £75,000 on a property valued at £100,000 would have an LTV of 75%. The higher the LTV required (i.e. the more of the property value being borrowed), the fewer lenders willing to lend.

Loan Consolidation - see Debt Consolidation.

Local Authority Search - This is carried out by the purchaser's solicitor to check the status of the property. This search reveals whether any proposed changes in the area are taking place, details of planning permission for the property and whether enforcement notices have been served by the Local Authority on the property.

Local Authority Search Fee - This is the fee payable to the Local Authority for the search.

Low Cost Endowment - This is the most usual form of endowment used to repay a mortgage. It provides life cover which would pay off the mortgage if the policy holder dies. As long as investment assumptions are met the endowment should provide a lump sum sufficient to repay the mortgage at the end of the term. If the assumptions are exceeded then there would be a lump sum over and above the mortgage amount for the borrower to enjoy.

Low Start Low Cost Endowment - also known as Low Start. This is a low cost endowment where the premiums are lower to start with and build up gradually, usually over the first five years. As the premiums are initially lower the total paid over the term is greater than a low cost endowment to make up for the loss of growth. (Back to Top)

M

Main Residence - Sometimes referred to as the principal private residence. This is the normal home where someone lives.

Maintenance Payments - Normally paid or received under a Court Order for a child or to make up income.

Maisonette - Usually a flat which may have more than one floor or has its own entrance at street level.

MIRAS - Mortgage interest relief at source. This is tax relief allowed on mortgage payments. The tax relief is usually allowed at source. MIRAS is now at a relatively low level.

Mortgage Deed - This is the legal document which establishes the loan on a property.

Mortgage Indemnity Fee - If a 'high percentage loan to value' mortgage is required, then this fee is payable. The lender uses the mortgage indemnity fee to purchase insurance which covers against a borrower defaulting on the mortgage and a loss on repossession if the property has to be sold. It should be noted that the borrower receives no benefit and no protection from the policy. If a lender does have to claim on a mortgage indemnity policy then the insurance company who paid the claim to the lender can pursue the borrower for repayment of the amount. The mortgage indemnity fee varies from lender to lender and generally this fee is levied on loans of more than 75% of the property value. The fee is calculated as a percentage of the amount borrowed over 75% of the property value. Some lenders do not charge mortgage indemnity fees or have higher or lower property value limits.

Mortgage Indemnity Guarantee - See Mortgage Indemnity Fee.

Mortgage Indemnity Premiuim - See Mortgage Indemnity Fee.

Mortgage Subsidy - This is a payment made by an employer to help an employee purchase a home. The way in which the subsidy is calculated and paid can vary substantially from employer to employer. In recent times many employers have either phased out the subsidy or frozen the mortgage amount it is based on.

Mortgage Term - The length of time the borrower has a mortgage.

Mortgage Valuation - This is the cheapest and most basic type of property survey. It is the minimum required survey by lenders in order that they can evaluate the suitability of the property for mortgage purposes. The borrower normally receives a copy of this report, however, it is not a comprehensive report on the condition of the property. The borrower should consider a home buyer's report or structural survey if they require more detailed information before deciding to purchase.

Multiplier (Income) - see Income Multiplier.

Mutual Membership Terms - This refers to whether or not taking out a mortgage with this lender will enable the borrower to become a mutual member of the organisation or society. Such membership usually confers voting rights and perhaps an entitlement to any so called windfall benefits if the society or organisation demutualises. (Back to Top)

N

Negative Equity - A phrase now quite well known although its affects have more recently, largely disappeared. This occurs when the property value has fallen below the amount of mortgage still owing. There are a number of lenders who have products which can help such borrowers.

Net Profit - This is the income of a company or self employed person after the expenses of running the business have been deducted. In the case of a limited company, corporation tax will also have been deducted. With regard to the self employed, the net profit figure is the one that can be used to calculate their ability to repay a mortgage.

New Build - Newly built housing on either a brown field or green field site.

No Capital Raising - This refers to a mortgage which replaces an existing mortgage for exactly the same amount.

Non-Contributory Pension - A company pension scheme which does not require employees to make any contributions.

Non-Status Mortgage - Mortgages offered by lenders without any proof of previous mortgage history, proof of income. The usual maximum loan to value is around 70% and a credit check is still carried out. (Back to Top)