Jargon Buster

AER
This stands for annual equivalent rate. It shows how much the interest rate would be if the interest was worked out and paid into the account once a year and makes it easier for you to compare different financial products.

BACS
This stands for Bankers Automated Clearing System, which is used to send money payments electronically between banks. BACS can also show up on your statement as direct debits and direct credits.

Balance
The amount of money in your account or the amount you owe.

Bank of England Bank Rate / Base Rate
This rate, controlled by the Bank of England, can go up or down depending on market conditions. This rate is reviewed regularly by the Bank of England.

Capital
The amount of money you have invested or borrowed.

Cash ISA (Individual Savings Account)
A cash-based type of savings account, with a limit on how much you can save each tax year. The interest on the savings is tax free, that is free of UK income tax and capital gains tax.

CHAPS
This stands for Clearing House Automated Payment System, which is used to send money payments electronically between banks so they are received on the same day that they are sent.

Debit
A payment out of an account.

Direct Credit
An electronic credit or payment into an account.

Deposit
This means money you pay into a savings account. When buying a home, it means the amount of money paid by the buyer from his own funds. It also means the money you pay to the seller when you exchange contracts.

A vendor gifted deposit is when a part of the balance (usually 5%) is paid by the company or person selling the house. We need to know if your vendor is making a vendor gifted deposit.

Web ISA
An ISA which can be opened and managed entirely online. You can also transfer into our Web-ISA from an existing cash ISA.

Web Saver
A savings account which can be opened and managed entirely online.

Executor
The person appointed in a will to deal with the estate.

Faster Payments
A system used to send money payments electronically so they are received on the same day that they are sent.

Financial Advisor
A professional person qualified to give financial advice, and who is regulated by the Financial Conduct Authority.

Fixed Rate Bond
An investment which has a fixed rate of return, usually for a fixed length of time.

Gross Interest
Interest before any tax is taken out.

ISA (Individual Savings Account)
A tax free form of saving. You can only invest up to a set limit each tax year.

Maturity
When an investment reaches the end of its term.

Net Interest
Interest after any tax is taken deducted.

Passbook
A book given to customers that records their deposits, withdrawals, and interest payments, on some savings accounts.

Payee
A person/organisation receiving payment, through cheque or electronic transfer for example.

Payer
A person making payment to the payee.

Power of Attorney
A legal document that allows a person to act on behalf of another.

Variable Interest Rate
The interest rate paid on savings and borrowing which changes according to circumstances. For example, movement in the Bank of England Base rate could be an influence.

 

Additional Borrowing
This is sometimes called a further advance on your mortgage borrowing when you are an existing mortgage customer.

Advance
The amount of money we lend you.

AER
This stands for annual equivalent rate. It shows how much the interest rate would be if the interest was worked out and paid just once a year and makes it easier for you to compare different financial products.

APRC
This stands for annual percentage rate of change. It is the overall cost for comparison and is quoted by all mortgage lenders. It shows the total yearly cost of a mortgage as a percentage of the loan. It includes the interest rate you pay at the start of the mortgage, any application fee, survey fee and other charges commonly paid at the end of the mortgage.

Arrears
Used to describe a mortgage account if a borrower has not kept up the monthly mortgage payments. Arrears fees are added to your mortgage and interest charged on them.

Balance
The amount of money in your account or the amount you owe.

Bank of England Bank Rate / Base Rate
This rate, controlled by the Bank of England, can go up or down depending on market conditions. This rate is reviewed regularly by the Bank of England.

Bank of England Tracker
A mortgage product with the interest rate linked to the Bank of England Bank rate so it will go up or down in line with the Bank rate.

Beneficiary
The person or company that receives a payment. It also means someone who benefits from a will, a trust or a life insurance policy.

Bridging Loan
A temporary loan which allows you to buy a new home, before completing on the sale of your current home.

Building Survey
A Building Survey report is a more comprehensive inspection of the property and is particularly suitable for large or listed properties, those over 120 years old or those in a poor state of repair. The survey covers all accessible parts of the building and details both major and minor defects and technical information on construction and material.

Capital
The amount of money you have invested or borrowed.

Capital and Interest Mortgage
A mortgage where you make monthly repayments to cover both the amount you have borrowed and the interest charged. Providing you have made the payment when due, this means you owe nothing at the end of the term. Also known as a Repayment Mortgage.

Capped Rate Mortgage
A variable rate mortgage that has an upper interest rate limit set that the interest rate cannot go above.

Cashback
An incentive offered to borrowers, on certain mortgage products, to help you pay for the costs associated with buying a property, and perhaps to help you furnish your property.

CCJ (County Court Judgement)
A decision reached by the County Court, which can relate to non-payment of debt. It will remain on the court file for 6 years and can make it hard to borrow money. If you pay off the debt the CCJ is satisfied and a note is put on your records to say this.

Certificate of Title
This is provided by your solicitor when you buy a property and is required on all new mortgages. It confirms that your solicitor has carried out all the necessary checks on the title (ownership) of the property and that any special conditions of your mortgage offer have been met. It confirms any leaseholds, insurance arrangements, the purchase price and title number.

Completion Date
The date agreed when you pay the balance of money owed on the property you are buying; we pay over the money we are lending you when you take out a mortgage; and the legal transfer of a property so that you own it and you can move in.

Conveyancing
The name for carrying out all the actions needed to transfer the ownership of a property.

Credit Reference Agencies
Organisations licensed under the Consumer Credit Act 1974 to hold information about people’s credit agreements and how well they keep to them. Lenders use these agencies to help make decisions about your application and whether to lend you money.

Credit Search
A check the lender makes with a credit reference agency to find out whether you have any county court judgements or a record of not re-paying your borrowings. A credit search will also show if you have a good history of making payments for credit. Every time a search is made it is added to your record with a credit reference agency.

Credit Scoring
A way of working out the risk of not being repaid if money is lent. A high score means that the risk of a potential borrower not being able to repay is low.

Daily Interest
Interest on a mortgage balance which is calculated on a daily basis rather than annually, which can make borrowers large savings.

Decision in Principle
An agreement from your mortgage provider to lend a certain amount of money. The amount is dependent on proof of your income and identity. A decision in principle is not a mortgage offer. You should not make any commitments in reliance on it.

Deposit
This means money you pay into a savings account. When buying a home, it means the amount of money paid by the buyer from his own funds. It also means the money you pay to the seller when you exchange contracts.

A vendor gifted deposit is when a part of the balance (usually 5%) is paid by the company or person selling the house. We need to know if your vendor is making a vendor gifted deposit.

Disbursements
Fees paid by your solicitor, and passed onto you, when you buy or sell a property. These can include HM Land Registry fees, stamp duty and search fees.

Discharge Fee
The fee we charge when you repay the mortgage debt, as shown in the offer letter.

Discount Rate
A mortgage interest rate discounted below our Standard Variable Rate for a set period.

Drawdowns
A feature of a flexible mortgage which enables you to pre-arrange the amount of money you may wish to borrow in the future. The increased borrowing is added to your existing mortgage and can either be repaid over the existing term of your mortgage or a shorter period.

Early Repayment Charge
If you pay off part or all of your loan before the end of your mortgage term, you may have to pay an Early Repayment Charge. This usually applies in the early years of a mortgage and details of any charge are shown in your mortgage offer. The charge applies during the early repayment period.

Endowment Policy
An insurance policy that pays out a lump sum on a fixed date in the future, or when you die, if this happens earlier. Endowments are often used to pay off mortgage loans.

Equity
The difference in money between the value of a property and the mortgage loan on it. For example, if you property is worth £100,000 and your outstanding mortgage is £60,000, you have equity of £40,000.

Equity Release
A way of releasing extra funds by borrowing against the equity on your property.

Exchange of Contracts
This is the point when you legally commit to a deal, typically when buying and selling a property, in England and Wales.

Fixed Rate Mortgage
An interest rate that is fixed on a mortgage for a set length of time. The rate will not go up or down during this period, even if the Standard Variable Rate changes.

Fixtures
Items that are attached to the property and so are legally part of the property.

Flexible Features
Mortgages with flexible features allow borrowers to tailor their payments to suit their individual circumstances. Features can include overpayments, lump-sum payments, underpayments, payment holidays and draw-downs.

Freehold
If you have a freehold property, you own it outright, unlike leasehold.

Further Advance
Additional borrowing secured against your property, over and above your initial advance.

Gazumping
When a seller accepts an offer, then turns it down in favour of a higher offer from another buyer.

Gazundering
When a seller accepts an offer, then the buyer puts in a new, lower offer just before the exchange of contracts.

Gross Monthly/Annual Income
Your monthly or annual salary before tax and national insurance are taken out.

Ground Rent
The annual fee a leaseholder pays the freeholder. Ground rent generally applies to flats.

Guarantor
A person who promises to pay the debt of another person, if that person fails to pay.

Homebuyer’s Report
A detailed survey undertaken for the benefit of the purchaser. It provides condition ratings for elements of the building and services, along with any actions or decisions to consider prior to purchase. It is not as detailed as a Building Survey.

HPI (House Price Index)
A calculator that helps you work out the current value of your home and provides general information about the house price market.

Interest Only Mortgage
Your monthly repayments only cover the interest on your loan so the amount you owe does not go down. You will need to repay the money you owe at the end of the loan term and typically, an endowment, pension or ISA can be used to do this.

Initial Interest
The interest charged from the working day before the completion date given to us by your solicitor, to the end of the month before the first payment is due.

Initial Period
The time that applies to certain special products or terms. For example, for mortgages, the time when a fixed or discounted rate applies, or for savings, when a fixed or bonus rate of interest applies.

Intermediaries
Individuals or organisations who help customers choose a mortgage and introduce mortgage applications to lenders. Intermediaries include estate agents, mortgage brokers, independent financial advisors, solicitors, accountants and life assurance companies.

Land Registry
The organisation that keeps record of properties in England and Wales. Any transfer of ownership has to be registered with HM Land Registry.

Leasehold
Ownership of a property, by a landlord or freeholder, for a fixed term, usually between 99 and 999 years. The buyer buys the lease and pays ground rent and service charges to the landlord or freeholder.

Loan to Value (LTV)
The amount of your loan compared to the valuation or purchase price of your property (whichever is the lower), shown as a percentage.

Mortgage
A long-term loan secured on a property.

Mortgage Commitment Fee
A charge for the costs involved in the processing of your mortgage application. You must pay this fee with your mortgage application. You can pay by credit/debit card or cash  (unless where your application is submitted by a broker). We will not process your application until the fee is paid. The fee is not refundable.

Mortgage Deed
The legal document drawn up between the lender and the borrower, which secures the loan against your property.

Mortgage Offer
This is a document which states how much a lender is prepared to lend the applicant(s) to buy the property. It also states the conditions of making that loan, such as the interest rate, the term of the loan and any essential conditions the lender wants to enforce prior to the loan being released.

Negative Equity
When the outstanding loan amount is greater than the value of the property it is secured against.

Net Disposable Income
Your monthly income after all tax, outgoings and commitments have been taken off.

Net Monthly/Annual Income
Your monthly or annual salary after tax and national insurance are taken out.

Overpayment
Higher regular payments or extra lump sum payments made on a mortgage with the aim of paying your mortgage off earlier to reduce the interest and save money.

Payment Holiday (Mortgages with Flexible Features only)
A period of time when you do not make your usual regular mortgage payments, by agreement with your lender.

Portability
If you move house, you may be able to transfer your existing mortgage to your new property, in England or Wales, without changing your lender.

Private Sale
Sale of a property without using an estate agent.

Product Fee
A fee charged on some mortgages to take advantage of the product.

Purchase Price
The amount the buyer offers to pay for a property.

Purchaser
The person who buys the property.

Redemption
When you redeem or repay the loan in full, including any charges and interest on your mortgage. The loan is then brought to an end.

Remittance Fee
A charge made by the lender for sending the mortgage funds to your solicitor when the property purchase is just about to be completed.

Remortgage
Repaying one mortgage by taking out another, on the same property.

Repayment Mortgage
Your monthly repayments include some of the money you borrowed and the interest. This means that your mortgage is paid off in full at the end of the mortgage term as long as you make all your payments.

Secured
A secured loan is guaranteed against your assets, typically your property but it can also be guaranteed against other assets, such as a life policy. If you don’t repay your mortgage, your lender has the right to sell the asset.

Self-Certified
You confirm how much you earn, without needing to provide any confirmation from an employer or third party. This typically applies if you are self-employed.

Stamp Duty \ Land Transaction Tax
A tax paid to the Government when you buy a property, which is a percentage of the purchase price. Some areas are exempt from this tax. See the HM Revenue Customs website for details of the percentage you need to pay. Stamp Duty for properties located in England or Land Transaction Tax for properties in Wales.

Standard Variable Rate (SVR)
A rate of interest set by your lender on a mortgage. This rate will go up and down, at the lender’s discretion, usually because of changes in the Bank of England Base Rate or other reasons. This is the normal rate without discounts or deals.

Structural Survey (Building Survey)
A Building Survey report is a more comprehensive inspection of the property and is particularly suitable for large or listed properties, those over 120 years old or those in a poor state of repair. The survey covers all accessible parts of the building and details both major and minor defects and technical information on construction and material.

Surveyor
The person instructed by your mortgage lender to carry out a survey on the property you are buying.

Term
The period over which a mortgage loan is to be repaid. This will be shown in your mortgage offer.

Term Assurance
Life insurance that pays out on the event of your, or your partner’s, death if you die within the agreed term. This can be used to pay off your mortgage. The policy only pays out upon the first death and does not pay out any money at the end of the term.

Tie-in Period
The time for which you may have to stay with a lender after your special mortgage deal has ended. If you move your mortgage to another lender during the tie-in period, you may have to pay an early redemption charge.

Title
The legal right to ownership of a property.

Title Deeds
The document that shows who owns a property.

Total Amount Payable
The total cost of repaying your mortgage over the loan period, including the original amount borrowed, interest and any charges due.

Tracker Mortgage
A mortgage that follows changes in the Bank of England Bank rate, usually for a set period of time. So your payments will go up and down as the Bank rate goes up and down.

Transfer Deed
A purchase document that transfers ownership of land from the seller to the buyer.

Underpayments
If you have built up a surplus on your mortgage through making overpayments, you can reduce your monthly repayments for a period of time until the surplus is used up, with the prior agreement of your lender.

Valuation
A brief study of the condition and value of the property you are buying that helps your lender decide whether to lend to you or not. This is not a survey.

Valuation fee
It is a charge to carry out the Principality Building Society valuation of the property.

Variable Interest Rate
The interest rate paid on savings and borrowing which changes according to circumstances. For example, movement in the Bank of England Base rate could be an influence.

Variable Rate Mortgage
A mortgage with an interest rate that goes up and down, roughly in line with the Bank of England base rate.

Vendor
The person selling a property.

Beneficiary
The person or company that receives a payment. It also means someone who benefits from a will, a trust or a life insurance policy.

Buildings Insurance
Protects your property against the financial effects of hazards such as fire, flood and subsidence. It is a condition of taking a mortgage with us that you have adequate buildings insurance.

Commercial Insurance
A range of insurance protection products for property investors and businesses.

Contents Insurance
Protects the items in your home, such as furniture and personal possessions, against theft, loss and damage.

Critical Illness Cover
Insurance which pays out if the policyholder gets certain specified serious illnesses, such as heart disease or cancer.

Endowment Policy
An insurance policy that pays out a lump sum on a fixed date in the future, or when you die, if this happens earlier. Endowments are often used to pay off mortgage loans.

Financial Advisor
A professional person qualified to give financial advice, and who is regulated by the Financial Conduct Authority.

Home Insurance
Insurance that protects your home (Buildings Insurance) and belongings (Contents Insurance) in the event of loss and damage.

MPPI (Mortgage Payment Protection Insurance)
Insurance to pay your mortgage for an agreed amount of time if you are made redundant or are unable to work because of illness or injury.

Term Assurance
Life insurance that pays out on the event of your, or your partner’s, death if you die within the agreed term. This can be used to pay off your mortgage. The policy only pays out upon the first death and does not pay out any money at the end of the term.

Whole Life Assurance
Pays out an agreed sum when you die, whenever that is, as long as you have been paying the premiums.

AER
This stands for annual equivalent rate. It shows how much the interest rate would be if the interest was worked out and paid just once a year and makes it easier for you to compare different financial products.

BACS
This stands for Bankers Automated Clearing System, which is used to send money payments electronically between banks. BACS can also show up on your statement as direct debits and direct credits.

Balance
The amount of money in your account or the amount you owe.

Bank of England Bank Rate / Base Rate
This rate, controlled by the Bank of England, can go up or down depending on market conditions. This rate is reviewed regularly by the Bank of England.

Beneficiary
The person or company that receives a payment. It also means someone who benefits from a will, a trust or a life insurance policy.

Capital
The amount of money you have invested or borrowed.

CCJ (County Court Judgement)
A decision reached by the County Court, which can relate to non-payment of debt. It will remain on the court file for 6 years and can make it hard to borrow money. If you pay off the debt the CCJ is satisfied and a note is put on your records to say this.

CHAPS
This stands for Clearing House Automated Payment System, which is used to send money payments electronically between banks so they are received on the same day that they are sent.

Credit Reference Agencies
Organisations licensed under the Consumer Credit Act 1974 to hold information about people’s credit agreements and how well they keep to them. Lenders use these agencies to help make decisions about your application and whether to lend you money.

Credit Search
A check the lender makes with a credit reference agency to find out whether you have any county court judgements or a record of not re-paying your borrowings. A credit search will also show if you have a good history of making payments for credit. Every time a search is made it is added to your record with a credit reference agency.

Credit Scoring
A way of working out the risk of not being repaid if money is lent. A high score means that the risk of a potential borrower not being able to repay is low.

Debit
A payment out of your account.

Direct Credit
An electronic credit or payment into an account.

Deposit
This means money you pay into a savings account. When buying a home, it means the amount of money paid by the buyer from his own funds. It also means the money you pay to the seller when you exchange contracts.

A vendor gifted deposit is when a part of the balance (usually 5%) is paid by the company or person selling the house. We need to know if your vendor is making a vendor gifted deposit.

Executor
The person appointed in a will to deal with the estate.

Faster Payments
A system used to send money payments electronically so they are received on the same day that they are sent.

Financial Advisor
A professional person qualified to give financial advice, and who is regulated by the Financial Conduct Authority.

Net Disposable Income
Your monthly income after all tax, outgoings and commitments have been taken off.

Net Interest
Interest after any tax is taken out.

Net Monthly/Annual Income
Your monthly or annual salary after tax and national insurance are taken out.

Payee
A person/organisation receiving payment, through cheque or electronic transfer for example.

Payer
A person making payment to the payee.

Power of Attorney
A legal document that allows a person to act on behalf of another.