Jargon Buster
A
Acct Accountant
APR This stands for Annual Percentage Rate and can be used to compare the cost of borrowing money from different lenders.
ASAP As soon as possible
B
Basic valuation A check carried out by a surveyor, on the property, which determines how much the property is worth and to confirm that the property is suitable for a mortgage.
BBR This stands for Bank base rate, which is reviewed every month by the Monetary Policy Committee.
BTL Buy to Let
Buy-to-let mortgage a mortgage designed for property investors who buy a property and then rent it out.
C
Capital and interest mortgage This is sometimes called a repayment mortgage. With this type of mortgage you pay off some of the capital (the amount of money borrowed) and some of the interest every month.
Cash back Some mortgages offer cash back as an incentive. It is a cash sum that you receive when your mortgage completes. You will not be charged interest on the cash back.
Conveyancing The legal process for buying and selling property.
D
DDM Direct Debit Mandate
DIP Decision in Principal, also known as AIP agreement in principal.
Docs Documents
E
ERC This stands for Early Repayment Charge and is an amount of money that you may be charged if you fully repay your mortgage before a set time, usually before the end of the incentive period.
F
FSA This stands for the Financial Services Authority. The FSA is an independent organisation that regulates specific areas of the financial services industry including mortgage advice, but not buy to let mortgages.
Freehold This means you own the property and the land the property is on.
Full Structural Survey This survey is a more in-depth review of the condition of the property than a homebuyer survey. It does not incorporate a basic valuation.
H
HLC This stands for higher lending charge and it is an insurance policy that you pay for but which protects the lender in the event that the lender may have to repossess the property, sell it and then does not retrieve enough money in the sale of property to repay the mortgage in full. This policy would then pay the outstanding balance remaining. The borrower, however, is still responsible for the outstanding balance, also known as Mortgage Indemnity Guarantee
Homebuyers report This is a survey, which reviews the condition of the property, and incorporates a basic valuation.
I
ID Identification
Info Information
Interest-only with this type of mortgage you only pay off the interest every month, not the capital (the amount of money borrowed). The capital is paid back at the end of the mortgage term. A repayment vehicle, such as an endowment policy or Individual Saving Account, could be used however you should seek independent financial advice. BTL247 does not advise on investments.
L
Leasehold This means you own the property for a set period of time but not the land the property is on. After the set period of time, ownership of the property reverts to the freeholder. Many flats are leasehold properties; however you can purchase the leasehold thus turning the property into freehold.
LIBOR This is a rate that banks base the rate of interest when they lend each other money, some mortgages are LIBOR linked.
LTV This stands for loan to value and denotes the relationship between the amount of money you want to borrow (the loan) and the cost of the property (the value) and is expressed as a percentage. For example, if you borrow £85,000 and your property costs £100,000, then the loan to value is 85%.
M
Min/Max Minimum / Maximum
Mortgage This is a loan that is used to buy a property, where the loan is secured against the property as a charge. This acts as security for the lender in case you fail to repay the loan.
O
O/S Outstanding
P
POMP Proof of mortgage payments
POR Proof of residency
R
Re: Regarding
Rental Criteria This is a formula that lenders use to calculate the rental income and how much they will lend you secured against the property subject to maximum LTV limits.
Repayment mortgage This is sometimes called a capital and interest mortgage. With this type of mortgage you pay off some of the capital (the amount of money borrowed) and some of the interest every month.
S
Stamp Duty Land Tax (SDLT) This is a tax that may be payable on purchases of flats, houses and other UK land and buildings.
Sols Solicitors
Sub-prime mortgage This is a mortgage that is designed for someone with adverse credit.
V
Val Valuation
Variable rate This is the rate set by a lender, which can go up and down.