FAQ About Mortgages Page 2
What is a Repayment mortgage / Capital and Interest?[+] Expand
These operate in the same way as most types of loan. A regular monthly payment is made to the lender, and the payment is made up of capital, that is repaying the money you have borrowed, and interest due. As long as the correct payments are kept up to date, at the end of the term you have repaid the loan in full. A repayment mortgage is also known as a Capital and Interest mortgage.
What is a Land Registry Fee?[+] Expand
This is a fee charged by the Land Registry to record a change in the registered title of Registered Land.
The change will normally be notified to the Land Registry by the solicitor acting in the house purchase (or remortgage) and as such the Land Registry fee will normally be payable to the solicitor and accounted for in his final account.
What is Let To Buy?[+] Expand
This is where the owner of a property wishes to rent their current property and purchase another to live in.
What is Loan To Value (LTV)?[+] Expand
LVT is the relationship between the size of the mortgage and the value of the property. Eg a mortgage of £30,000 on a property valued at £40,000 would be shown as 75% LTV. This figure can determine what mortgage schemes and fees are applicable to you.
What is a Mortgage?[+] Expand
This is a loan secured on a property.
What is a Mortgage Deed?[+] Expand
This is the legally binding contract between the lender and the borrower.
What is a Higher Lending Charge?[+] Expand
This is a single premium policy, paid sometimes by the borrower prior to completion of the mortgage. Some lenders allow this fee to be added to the mortgage loan. It insures the lender for losses in excess of usually 75% of the loan-to-value sum. The borrower still remains liable for any amount claimed, so the insurer can recover the sum paid out.
What is a Mortgage Term?[+] Expand
This is the number of years over which the mortgage is arranged.
What is a Mortgage Valuation?[+] Expand
This is the most basic form of survey and is the minimum required by lenders in order to ascertain the suitability of the property as security for their loan. Although the borrower will normally receive a copy of this report it should not be relied upon as a comprehensive report on the condition of the property. A more detailed report, either a Home Buyers Report or Structural Survey, should be commissioned when considering the purchase of a property.
What is the NHBC ?[+] Expand
The National House Building Council is a builders’ federation, which provides a defect protection scheme, ‘Buildmark’ on new houses. Membership of NHBC is conditional on the builder maintaining certain minimum standards of construction.
What is Negative Equity?[+] Expand
This is where the loan amount outstanding exceeds the market value of the property held as security.
What is an Offer of Advance?[+] Expand
This is the formal statement by the lender to a mortgage applicant of the amount that it is prepared to lend and the terms and conditions attached to this. All offers are issued conditionally and are therefore not binding on the lender.
What does Part and Part mean?[+] Expand
This is when, on occasion, some lenders may allow you to combine both Repayment and Interest-Only mortgage payments methods.
What does Portable mean?[+] Expand
This describes the ability to move a particular mortgage product from one property to another in the event of a property move.
What is Part Redemption?[+] Expand
This occurs when the borrower makes a lump sum capital repayment in part settlement of a loan. Some lenders specify a minimum amount, which can be part redeemed.
What is Leasehold?[+] Expand
As opposed to freehold property the rights to the property are owned only for a fixed period of time, with the freehold being held by a third party. The lease outlines the responsibilities of the lessees and determines the arrangements to be adopted for such things as upkeep of the common areas and insurance of the property. Note: This does not apply to Scotland.
What is a Retention?[+] Expand
This is a condition of mortgage where a lender holds back a portion of the money until improvement works are carried out by the borrower.
What is a Repayment Charge (Early)?[+] Expand
This is an additional charge made by the lender if the mortgage is repaid within a pre-agreed period of time.
What is Right To Buy?[+] Expand
People who have been renting their home from the council for some time who are given a substantial discount off the true value of their home in order to purchase it from the council. Owners are able to borrow more than the discounted price (within the value of the property) for home improvements only, in the first three years of ownership.
What is a Secured Loan?[+] Expand
This is a secondary loan often arranged through a different lender to your mortgage. Sometimes this is referred to as a Second Charge.
What is Self Build?[+] Expand
This is the ability to borrow monies in the form of a mortgage to build your own property.
What is Self-Certification?[+] Expand
This is where some lenders allow borrowers to ‘self certify’ their income and so no further checks on income are made. This type of scheme is useful to the self-employed who may not have accounts available or any other person who has difficulty in proving their earned income.
What is meant by Self-employed?[+] Expand
For mortgage purposes this is the term used to cover anyone who is not paid under PAYE (Pay As You Earn taxation).
What is Shared Ownership?[+] Expand
This is a scheme that enables a borrower to buy a proportion of the property, with the remainder being owned by a housing association. Rent is paid on the remainder. The borrower is usually entitled to buy subsequent shares in the property.
What is Stamp Duty.[+] Expand
This is a tax that is payable when you purchase a property. It’s paid by the purchaser and it’s currently set at the following rates : 1% of property value £125,000 (£150,000 for disadvantaged areas) – £250,000, 3% of property value £250,001 – £500,000 and 4% of property value £500,001 and above. The appropriate rate is paid on the whole purchase price and not just the excess applying to that band.
What is Tenancy in Common?[+] Expand
This is where more than one person owns a property, with each person’s share being specifically defined, and one of them dies, then the share of the deceased owner does not automatically pass to the surviving owner or owners, but to whoever the deceased person has stated in their will.
What is a Transfer of Equity?[+] Expand
This is the process of adding or removing somebody from a mortgage agreement.
What is an Undertaking?[+] Expand
This is a legal condition of a mortgage where you are obliged to carry out certain works within a specified period of time following completion of the mortgage.
What is a Remortgage?[+] Expand
This is a mortgage which is a replacement loan for another mortgage.