Glossary of Mortgage Terms

Glossary of Mortgage Terms

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Additional Security Fee

An Additional Security Fee (Mortgage Indemnity Guarantee policy) is the fee taken to get an insurance policy that will cover your lender so that if you default on payments, he will not suffer any loss. You have to pay the Additional Security Fee and the premium along with your mortgage advance. Although you are paying the premium, remember that this policy is for the protection of your lender and not for you.

Administration Fee

The administration fee is the amount charged by your lender to start working on the documentation part of your mortgage application. It includes the home valuation fee as well. The administration fee will not be refunded even if your valuation is not done or if your application has been rejected.

Adverse Credit

Adverse credit occurs when you have a history of bad credit, bankruptcy, CCJ, or loan arrears. Adverse credit can also be called bad credit or poor credit, or it can be said that you have a low credit score.

Agricultural Restriction

An agricultural restriction is a rule which will restrict you from holding a property if your occupation is in any way related to agriculture.

Annual Percentage Rate

The Annual Percentage Rate is the rate at which you borrow money from a lender. It includes all the initial fees and ongoing costs that you will pay throughout the mortgage term. As the name suggests, the annual percentage rate, or APR, is the cost of a mortgage quoted at a yearly rate. The annual percentage rate is a good way to compare the offers from different lenders based on the annual cost of each loan.

Apportionment

Apportionment, or sharing out, is a facility that allows you to divide the responsibility for utilities, property taxes, etc. with the buyer or the seller of the property when you are either selling or buying the property.

Arrears

Arrears happen when you default on your mortgage payment or any other type of debt payment. If you have arrears on the record of your current mortgage, you will face problems when you want to look at remortgaging or getting a new mortgage.

Arrangement Fee

An arrangement fee is an amount you have to pay your lender to access particular mortgage deals. While searching for a fixed rate, cashback, or discounted rate mortgage, you will pay this fee at the time that you submit your application, it must be added to the loan upon completion of the term, or it will be deducted from the loan on completion.

Assignment

An assignment is a document transferring the lease of the property or rights of ownership from a seller to a buyer. It may be an endowment policy to the building society in connection with a mortgage.

ASU

ASU is Accident, Sickness, and Unemployment insurance which covers your mortgage payments in case of an accident, a sickness, or involuntary unemployment.

Auction

An auction is the public sale of a property to the person who quotes the highest bid. The highest bidder has to sign a binding contract that ensures that he does all valuations, searches, etc. before the sale of the property.

Authority to Inspect the Register

An authority to inspect the registered document is a document from the legal or registered owner of a property allowing the solicitor of the purchaser to get information concerning the property.

 

Banker Draft

A banker draft is a way to make a payment. In appearance, it is the same as a cheque, but in effect, it is a cash payment. The money is given to the bank, and they issue a cheque that is certified to be good for the given amount.

Base Rate Tracker

A base rate tracker is a type of mortgage in which the interest rate is variable, but it is set at a premium (above) the Bank of England Base Rate for a period or for the full term of the mortgage. The best part about this type of mortgage is that it has little or no redemption penalty. This means that by making overpayments, you will be able to save money on interest by paying off your mortgage earlier than the agreed-upon date on the initial mortgage contract.

 

Booking Fee

A booking fee or arrangement fee is charged when applying for a fixed or a capped rate loan. Booking fees are normally non-refundable if charged upfront, but sometimes the booking fee is added to your final mortgage payment.

 

Bridging Loan

A bridging loan is useful when you want to purchase a property, but your ability to do so is contingent upon the sale of your old property. This is a very short-term loan that is paid off as soon as your old property sells. Speak with a loan adviser before taking out a bridging loan to be sure it is the best option for you.

 

Broker Fee

A broker fee is paid to your debt advisor or another intermediary that assists you in finding the best mortgage or loan deal for your circumstances. BSA BSA, or the Building Societies Association, is a group that works in the interest of member societies.

 

Building Societies Commission

The Building Societies Commission is a regulatory organization for Building Societies. This commission reports to the Treasury Ministers.

 

Building Society

A Building Society is a mutual organization that gives you money to buy or remortgage residential properties. This money comes from individual investors who are paid interest on their funds. A portion of building society funds is also raised through commercial money markets.

 

Buy-to-Let

When you purchase a property for the sole purpose of renting it out, you can apply for a buy-to-let mortgage. The payments for this type of mortgage are calculated based on your projected rental income instead of your personal income.

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