A to D - E to I - L to N - O to S - T to Z
T
Tax Free Cash Sum - This is the part of a pension mortgage which is used to repay the mortgage loan at retirement. Usually lenders will set a ceiling on the amount of tax free cash that is used to repay the mortgage of no more than 70 or 80%. Alternatively, the lender may base repayment of the mortgage amount on the full tax-free cash sum, and in this case, a lower rate of growth is assumed in the pension fund.
Term Assurance - This is the simpliest form of life assurance. It pays out the sum assured on the death of the policy holder as long as it occurs within the term of the policy. This is mainly used in conjunction with capital and interest mortgages. In particular the policy is known as a mortgage protection assurance. This version of term assurance has cover which reduces in tandem with the reduction in the mortgage amount owing. Some borrowers prefer to use level term assurance which does not reduce. The means that there would be a capital sum left over if they died in the later years of the mortgage.
If the borrower lives to the end of the mortgage term the term assurance cover simply expires and has no value. As this is a protection only contract premiums are relatively inexpensive.
Timber Framed - A method of building where no inner cavity wall is constructed. In the past timber framed properties suffered from damp and accordingly some lenders did not view them as secure as other types of property to lend on. More recent building techniques have eradicated such concerns and most lenders find such properties as acceptable for lending purposes.
Typical APR - Mortgage quotations and advertisements will usually show a typical APR figure in order to comply with the Consumer Credit Act. (Back to Top)
U
Unencumbered - This is a property without any loans or borrowings secured on it.
Unit Linked - This phrase refers to the type of life assurance product where the premiums are invested into an asset backed fund. Therefore a unit linked UK equity fund will invest in UK shares either directly through the fund or through the life company's unit trust/OEIC.
Unitised with Profits - Is a modern version of the traditional with profit policy which seeks to smooth the peaks and troughs of the stock market and other asset backed investments. Bonuses are allocated in a form more akin to annual interest payments. Such contracts are easier for investors to understand. See With Profit Policy.
V
Variable Rate - Many mortgages are still arranged in this manner. Such mortgages have interest rates which fluctuate up and down often in tandem with bank base rates. In more recent years many variable rate mortgages are marketed with an initial discounted rate or fixed rate period. (Back to Top)
W
With Profit Policy - At one time such policies were the most popular method of repaying mortgages, particularly low cost versions.
A conventional With Profit Policy is designed to smooth the returns from different investments. Under such a policy the insurance company will declare annual bonuses usually known as reversionary bonusees. Once declared, these bonuses are guaranteed. At the end of the policy term if the insurance company has managed investments well and market conditions allow, a final or terminal bonus would be paid. Under a unitised With Profit Policy the annual bonuses are declared by a method more akin to interest payments. The units grow at a predetermined rate during the year and if the Actuary is comfortable with the performance of the investments the rate may be increased or maintained. Terminal bonus maybe paid as a lump sum at the end of the policy term or as further increases in the rate of bonus on units after a period of time, e.g. five years. With Unitised With Profits an Actuary may level what is known as a market value adjuster if a policy holder surrenders the plan early.
Actuaries prefer Unitised With Profits to conventional With Profits Plans as the Insurance Company does not have to set aside as much in the way of reserves to cover their liability. (Back to Top)
