Mortgage Jargon Buster | Aldermore Bank

Additional Borrowing	This is where you take on more borrowing from your existing mortgage lender.
Affordability Check	An assessment to find out whether your mortgage would be affordable based on your income, credit commitments and essential household spending. For buy-to-let mortgages an affordability check will also take into account rental income.
Annual Percentage Rate of Charge (APRC)	The annual percentage rate of charge (APRC) is the total cost of the loan, including fees and charges, expressed as an annual percentage.
Arrangement Fee	A fee charged by your lender for setting up your mortgage.
Arrears	If you are in arrears it means you have missed one or more monthly mortgage payments.
Assured Shorthold Tenancy (AST)	An Assured Shorthold Tenancy offers the landlord a guaranteed right to repossess their property at the end of the term stated in the tenancy agreement.

Bank of England Base Rate	The interest rate set by the Bank of England.
Bank Charge	A fee you have to pay your bank for either going into an un-authorised overdraft, or for unpaid Direct Debits, cheques or standing orders because you don’t have sufficient funds in your account.
Buy-To-Let Mortgage	A loan to purchase or refinance a residential property which is intended to let to tenants rather than to be lived in by the mortgage borrower.
Buildings Insurance	Insurance that covers you for damage to the structure of your property. Your lender will require that you have buildings insurance in place when you take out a mortgage.

Capital Gains Tax	A tax you pay on the profit when you sell (or ‘dispose of’) something (an ‘asset’) that has increased in value. It’s the gain you make that is taxed, not the amount of money you receive.
Capped Rate	A capped rate mortgage is a variable mortgage where the interest rate will not go above an agreed level.
Cashback	A cashback mortgage is a type of mortgage product that pays you a cash lump sum when you buy a house or remortgage your current property.
Change of Parties	A request to change the name of the people named on your mortgage account.
Company Let	A property let to a company. It may also be referred to as a corporate let.
Consent To Let	A formal request to your mortgage lender to give you permission to rent out your home, for a short period of time.
Conveyancing	The legal process you go through when buying or selling a property. Normally undertaken by a licensed conveyancer or solicitor.
County Court Judgment (CCJ)	A County Court Judgment is made against you for non-payment of debt and an application to the County Court is made for a Judgement against you to claim back the money. If the Court then decides the debt is to be paid, they will issue a CCJ which will set out how the debt should be repaid. Having a CCJ may make it harder for you to obtain a mortgage.
Credit Scoring	Credit scoring is where lenders analyse the information contained in your credit report to decide how likely you are to pay back the money they may lend to you.
Creditor	A person or business that money is owed to.

Debtor	A person or business that owes money to another party.
Decision in Principle	Sometimes known as an Agreement in Principle. This is a document from your lender confirming that you can borrow a certain amount and can be used as proof that you can afford to buy a property.
Deposit	The amount you need to pay towards the total purchase price of the property. This varies depending on the product and lender.
Discounted Rate Mortgage	A mortgage where your interest rate is reduced by a set percentage for the discount period (e.g 2 years). It tracks the Aldermore Managed Rate (AMR) which is set by us, and can be influenced by changes in the Bank of England base rate, as well as other market factors. Your monthly payments can increase or decrease in line with any changes we make to the AMR.

Early Repayment Charge	Some mortgages, such as fixed or discounted rate mortgages, charge you a fee if you pay back the loan early or if you pay more than you’re allowed. You can find information on your Early Repayment Charges in your mortgage offer or your annual mortgage statement.
Enquiry Fee	If a lender requests mortgage details from your existing mortgage lender, the existing lender may charge an enquiry fee.
Equity	The difference between the current value of your home and the amount outstanding on your mortgage.

Fixed Rate Mortgage	A mortgage where the interest rate stays the same for a specific period (e.g two or five years).
Financial Conduct Authority (FCA)	Is a financial regulatory body in the United Kingdom.
Freehold	You own the building and the land it stands on.
First Time Buyer	Someone who has not previously owned a property or doesn’t currently own a property.

Gearing	The overall equity levels within a portfolio of properties. It gives an indication of the level of debt against the portfolio value.
Gross	The full amount of money earned or paid before any deductions such as tax.
Ground Rent	An annual charge payable by the leaseholder to the freeholder.
Guarantor	A third party who agrees to meet your mortgage payments if you are unable to.

Higher Lending Charge (HLC)	This is sometimes charged by your mortgage lender if you’re borrowing more than 75% of the property’s value. It protects the lender against you defaulting on your mortgage.
House in Multiple Occupation (HMO)	A property rented to at least 3 people who are not living in one household but who share facilities such as the bathroom or kitchen. It is sometimes called a ‘house share’.

Individual Voluntary Arrangement (IVA)	An agreement between a debtor and their creditors to pay off the balance over a period of time. An IVA can be an alternative to bankruptcy.
Interest Only Mortgage	You only pay the interest on your mortgage each month and the amount of capital owed will not reduce. This means you need to have suitable plans in place to pay off the mortgage at the end of the term.
Intermediary	Also, known as a broker, an intermediary is an advisor who can help you arrange a mortgage.

Joint Mortgage

A mortgage taken out by two or more people.

There are no terms beginning with K.

Land Registry	The official body responsible for maintaining details of property ownership.
Leasehold	You own the property but not the land it’s built on for a specific number of years. Flats are usually owned on a leasehold basis. You may find it hard to get a mortgage if there are fewer than 70 years left on the lease of the property you want to buy. Leases are renegotiable, but the shorter remaining terms, the more expensive it will usually be.
Lessee	The tenant
Lessor	The landlord
Let To Buy	A mortgage that allows you to borrow money to buy a new home to move into, while your existing residence is let out to tenants.
Limited Company	An organisation set up to run your business that is responsible in its own right for everything it does and its finances are separate to your personal finances.
Loan To Value (LTV)	LTV means Loan to Value. It’s the size of your mortgage as a percentage of the value of your property. For instance, if you’ve a £50,000 mortgage and your home is worth £100,000, your LTV is 50%.

Monthly Repayment	The amount you pay your mortgage lender each month under the terms of your mortgage contract.
Mortgage Deed	The formal contract between a borrower and a lender which outlines the legal obligations of the borrower, and the rights of the lender if the borrower fails to make repayments.
Mortgage Term	The amount of time you’re repaying your mortgage over (e.g. 25 years).

Negative Equity	You are in negative equity if the amount you owe to your mortgage lenders is more than the value of your home.
Net	The amount of money earned or paid after any deductions such as tax.

Outstanding Balance	The amount owed to your lender on your current mortgage.
Overpayment	Where you pay extra, over and above your monthly mortgage payment. You could choose to make a one-off lump sum overpayment or overpay a regular amount with your normal mortgage payment. You should check your mortgage offer or annual mortgage statement for any Early Repayment Charges that may apply.
Owner Occupier	A person who will be living in the mortgaged property as their home.

P11D	A form to report end-of-year expenses and benefits for employees who earned £8,500 or more.
P60	An annual summary of all your payslips. Your employer gives you one at the end of each tax year, if you still work for the employer.
PCM	Per calendar month.
Prudential Regulation Authority (PRA)	One of two bodies responsible for regulating financial services in the UK working alongside the Financial Conduct Authority (FCA).

There are no terms beginning with Q.

Redemption	The process of paying off the outstanding balance on your mortgage, including any fees and interest that have been added to your account.
Remortgage	Changing your mortgage without moving home. This is the process of paying off your mortgage with the proceeds from a new mortgage, usually when you move your mortgage to another lender.
Rental Income	The amount of money collected by a landlord from a tenant or group of tenants for using a particular property.
Repayment mortgage	Also known as a capital and interest mortgage, your monthly payments will cover both the interest and reduce the outstanding balance.
Repayment plan	If you take out an interest only mortgage, you’ll need to pay off the outstanding balance at the end of your mortgage term. When you apply for your mortgage, we’ll need to know how you plan to pay this off. This is called your repayment plan.

SA302	A form showing your proof of earnings issued by HMRC.
Second Charge Mortgage	Sometimes referred to as second mortgages they have secondary priority behind your main (or first charge) mortgage.
Self Assessment	A system HM Revenue and Customs (HMRC) uses to collect Income Tax. Tax is usually deducted automatically from wages, pensions and savings. People and businesses with other income must report it in a tax return.
Stamp Duty	This is a tax you pay when you buy a property over a certain price. To check the latest levels and what may apply to your situation visit http://www.monyhelper.org.uk.
Standard Variable Rate (SVR)	The interest rate your mortgage lender will charge after your initial mortgage deal ends.
Subject to Contract	An agreement is not yet legally binding.
Switching	The process of changing your current mortgage deal, that has expired, to a new deal with the same lender.

Title Deeds	The legal documents that prove ownership of a property and which are transferred to the new owner on the sale of a property.
Tracker Mortgage	The interest rate on your mortgage tracks the Bank of England base rate at a set margin above or below it.

Underpayment

A reduction in mortgage repayments that is agreed with your lender.

Valuation Survey	A check carried out by the lender to find out whether the property is worth the amount you’re paying for it. You should always have your own survey done too, to check for any structural problems.
Variable Rate Mortgage	The mortgage interest rate may move in line with market conditions and therefore your repayments could go up or down.

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Yield

The rental income from a property calculated as a percentage of its value.

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