Purchases - Remortgages - Capital Raising - Home Improvements - Debt Consolidation - Buy-to-Let - Equity Release Alternatives - Self Build 

Let an Angel guide you through the Mortgage Minefield

It started as a comic catch-phrase but now it regularly rings true - "the computer says no"!  This is now a common reply to many mortgage requests.  It seems that the High Street lenders only want to lend if you are able to prove that you don't actually need it. If you are lucky enough to be in this position then you probably do not need the services of a broker, unless of course you want to ensure that you are getting the best possible deal. However, if you currently have, or have had financial problems, then there are very few sympathetic ears around. All lenders have different lending criteria and although they might only vary slightly, the key is to find the lenders whose criteria most closely matches your borrowing requirements and personal circumstances.    This is the Mortgage Minefield    

 Over 60 and considering Equity Release?  Talk to us as there may be better options available 



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Some Mortgage Terms explained: 

Adverse Credit - This is a term which relates to an applicant with a poor credit rating. This might have come about from missed payments, arrears, County Court Judgements (CCJ's), Individual Voluntary Agreements (IVA's) or even house repossession.

APR (Annual Percentage Rate) - This is a figure that must be quoted by all lenders to show the overall cost of a mortgage as a percentage of the loan. This will include the original percentage interest rate, valuation fees and other charges that might be incurred throughout or at the end of the mortgage.

Arrangement Fee - A fee that is levied by the lender to cover administrative costs. It may be payable in advance or added to the loan.

Arrears - A mortgage account is "in arrears" if the borrower has failed to maintain monthly mortgage payments.

Base Rate - All mortgages, either directly or indirectly are linked to the bank of England base Rate which is reviewed every month by the Monetary Policy Committee

Booking Fee - Some lenders will charge a booking fee to reserve loan funds. This may be paid in advance or added to the loan.

Buy To Let (BTL) Mortgages - This is a mortgage on a property which the borrower intends to rent out to tenants.  The maximum loan amount is determined by property value in conjunction with the rentable income that the property will produce.

Capital & Interest Mortgage - also known as a Repayment Mortgage, whereby the monthly mortgage payment reduces the Capital borrowed and also the interest charged so that at the end of the mortgage term, the whole loan would have been fully repaid. 

Capped Rate Mortgage - This sets a ceiling on the interest that can be charged within the capped rate period. A maximum figure is set and cannot be exceeded within the set term.

Completion - In mortgage terms, this is when the paperwork has been completed and loan monies are handed over.

Conveyancing - is a legal term which relates to the transferrence of a property from one person to another.

Early Repayment Charge (ERC) - this is usually applied if a loan is paid off earlier than the agreed term or within a period of special rates eg fixed rate or discounted rate period. It may also apply if monthly repayments are greater than originally agreed. 

Endowment - this is a 'vehicle' (savings plan/pension etc) which is set up to cover the borrowed capital when a loan is paid on an interest only basis.

Equity - This is the difference between the value of a property and the total amount of loans secured on that property.

Fixed Rate Mortgage - this is where the interest rate has been fixed for an agreed period and will not be affected by bank base rate changes within that period.

Freehold - The owner of a Freehold property owns the building and the land that it stands on - see also Leasehold    

Higher Lending Charge - This is a charge that might be made by a lender to indemnify (cover) themselves in the event that a property has to be repossessed and sold at a figure that is less than the outstanding loan. It is an insurance policy or Mortgage Indemnity Guarantee (MIG)

Income Multiples - these are the multiples that a lender will apply to the borrowers income to determine the maximum amount of mortgage that they would be prepared to lend subject to property valuation.

Leasehold - the owner of a leasehold property owns the building but not the land that it stands on.

Let to Buy Mortgage (LTB) - this is where a mortage is arranged against the borrowers own property to raise money to buy another residence. The original property is then let to tenants and the resulting rental income is used to support the LTB mortgage.

Loan to Value (LTV) - this is expressed as a percentage and shows the amount of loan against the property value eg if the property is valued at £100,000 and the loan is £70,000 then the LTV is 70%.

Mortgagee - Another name for the Lender

Mortgagor - Another name for the borrower

Mortgage Term - the period over which the mortgage is to be repaid.

Overpayments - These are repayments which are made over and above the agreed monthly mortgage payments.

Portability - A portable mortgage can be transferred to another property without penalty if the borrower moves house within an early repayment period.

Redemption - a mortgage is redeemed when the loan (capital), interest and all other charges on it have been repaid in full. 

Regulated Mortgage - a loan provided to an individual whereby the lender takes a charge on the property as security against repayment of the loan.

Remortgage - Is where a new mortgage replaces an existing mortgage. The latter is redeemed (see redemption)

Repayment Mortgage - Also known as a "Capital & Interest Mortgage"

Right to Buy (RTB) - where a tenant purchases their council owned property at a discount.

Self Build - This is a mortgage for property under construction and is paid in stages  as the construction progresses.

Shared Ownership - This is a scheme operated by a Housing Association whereby the borrower owns part of the property and pays a mortgage on that portion and then also pays rent to the Housing Association for the other part of the property which it owns .

Split Loan - this is also known as a part and part mortgage wherby part of it is on a capital and interest basis (repayment) and the rest on an interest only basis.

Stamp Duty - this is a Government tax that is levied on the purchase of properties over a certain price.  It is paid by the purchaser.

Standard Variable Rate - This is a variable rate which differs from lender to lender unless linked to the Libor or Bank of England Base Rate.

Tracker Mortgage - This is a variable mortgage which is set at a certain level above or below the Bank of England base rate over a set period.

Valuation Fee - Paid by the borrower for a valuation to be carried by the lender prior to a new mortgage or re-mortgage.  The valuation fee usually increases with the value of the property.