Mortgage Glossary N - Z
N
Negative Equity
Where the market value of the property is less than the amount loaned against the property.
Net Profit
The amount of profit a company makes after financial deductions have been made for running the business.
This figure will be used to workout the companies financial viability for a mortgage.
New Build
The term given to new properties.
Non Status
A financial loan given without making checks on the borrower's credit history or income.
Notice Of Default
The initial contact from the lender to the lendee when the borrower has fallen behind with the agreed repayment schedule.
O
Open Market Value
The value of a property if it was placed on the open market.
Outgoings
The financial commitments and liabilities, including debts, for example credit card payments.
Outstanding Balance
The amount that is still to be paid on the loan.
Overpayments
Some mortgages allow overpayments (paying more money than the agreed monthly repayment) to enable the debt to be paid off earlier.
P
Payment Default
If the agreed payments are not keep up to date, the lender is legally entitled to repossess the property or land in order to recover the money.
Payment Method
The agreed means by which the loan is repaid.
Payment Protection Insurance
An insurance which helps if the borrower is unable to meet the repayment reschedule.
Payment Schedule
The timetable of monthly payments for a loan.
Payment Shock
A term given to the point when a mortgage taken out on a lower interest rate for a period of time rises to the standard rate.
Pension Mortgage
A mortgage for people with very large pensions.
These are interest only mortgages; the capital is repaid from the tax free cash amount that can be received from the pension fund on maturity.
Portable
A mortgage that can be moved from one property to another.
Previous Lender's Reference
A reference concerning a borrower about the financial conduct of the borrower over a previous loan.
Prime Rate
The most advantageous interest rate only available to the lender's most important customers.
Principal
The amount of the load still needing to be paid back. This is the figure on which the interest is calculated.
Product
A financial deal offered to a borrower by a lender.
Purchase
Buying a property.
Q
R
Redemption
The process of paying off the mortgage. This occurs at the end of the mortgage term or when the borrower is moving to a different property.
Redemption Charges
Fees charged by the lender when the mortgage is repaid before the initially agreed end of the full term.
Also known as Early Repayment Charges.
Refinancing
Where the borrowings for a financial loan are re-negotiated with another lender in order to raise capital or achieve better financial terms.
Remortgage
A loan on a property which the borrower already lives in.
Usually this process involves the redemption of an existing loan on the property.
Remortgaging
The process of switching your mortgage.
Repayment
A payment made to the lender to reduce the principal of a loan or cover interest.
Repayment Plan
If the borrower fails to meet the initially agreed payment schedule, the lender may offer to renegotiate the repayment schedule. This plan is known as the Repayment Plan.
Restructured Loan
The offer from a lender of renegotiated terms.
Right To Buy
An option offered by councils for tenants to purchase the property where they reside.
The property is usually offered at discount; the amount of discount depends upon the length of the occupancy.
Royal Institute Of Chartered Surveyors
A professional body specifically for Chartered Surveyors.
It lays out a code of practice for it's members to adhere to.
S
Search Fee
A fee charged by the local authority for checking their records for you to ensure that there are no plans that will effect the property value.
Second Charge
A legal charge that has a call on the property after the first charge.
Second Home
A second property owned by the borrower which is not classified as the main residence.
Second Mortgage
A second loan on a property which ranks after the first charge mortgage.
Secured Loan
A loan secured using property.
Self Build
An unfinished property under construction and control of the borrower.
Loans will normally be given out on these type of properties in stage payments.
A qualified architect will need to be involved in the process in order to achieve the loan.
Self Certification
A loan where the borrower makes a statement of their income and, depending on the accuracy of the details, the lender will make less financial checks than usual.
Self Employed
A person who works for themselves.
Under mortgage definitions this includes professional practices and partners in unlimited liability businesses.
Semi Commercial
A property that is not used solely for residential purposes.
A semi-commercial mortgage is one that is taken out on a semi-commercial property.
Shared Ownership
A way of purchasing property between a housing association and an individual.
The borrower purchasers a percentage of the property, the rest is purchased by the housing association and is then rented out to the borrower.
The borrower's percentage is usually a minimum of 25%.
This is also known as co-ownership.
Simple Valuation
This just tells you the value of the property, it does not tell you if it is structurally sound.
Sitting Tenant
An individual who has legal right of occupation regardless of the property ownership.
Generally, properties with sitting tenants are worth 30-40% less than those with no sitting tenants.
Sole Occupancy
A property not inhabited by tenants but only by the borrower and the immediate family.
Special Conditions
Specified terms attached to a loan offer that must be complied with in order to obtain the loan.
Stamp Duty
A tax payable on property purchase. It's level and banding is set by the government.
Structural Survey
A detailed structural inspection of a property carried out by a chartered surveyor.
If a problem with movement within the property is indicated, a structural engineer's report may be required. This report is carried out by a chartered building engineer.
Survey
An inspection of a property carried out by the mortgage lender to ascertain whether the property is a good security for a financial loan.
It is only to assess the financial viability of a property and will not give full structural details.
T
Term
The length of time before the mortgage loan must be repaid.
Term Assurance
Life assurance covering a person against death within a fixed period.
If the person dies during the policy term, the financial sum assured is paid out.
If the person lives beyond the period of the policy no money is paid to the policyholders.
Terminal Bonus
A bonus paid at the end of an endowment mortgage. The amount, or indeed whether there will be a bonus, will be dependent on the financial performance of the investment fund.
Tied Agents
Financial agents that are part of a financial organisation.
Most of these advisers and agents have access to mortgages that you would not normally find on the high street.
Top Up Loan
A type of second mortgage to provide a loan greater than the loan to value ration granted by the primary lender.
These loans usually have higher interest rates.
Tracking
The process of keep up to date on the progress of a loan application.
U
V
Valuation
A basic survery carried out by a surveyor to compute the financial value of the property.
Valuation Fee
A fee charged by the lender for inspecting the property. The borrower usually pays this on application of the loan.
W
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