Taylor Rose Financial
  • t. 0203 540 0085
  • t. 01733 55 77 55
  • e. info@taylorrosefinancial.co.uk
Menu
Glossary
Definition of terms

Glossary

Finance can be a difficult enough subject to grasp without all the confusing terminology making things more obscure, this is why we have created a glossary for you to refer to, which will help you understand some of the language you may encounter when it comes to topics such as pensions, mortgages or investments.

Mortgages

Application fee

As part of the initial set up fee this allows you to secure a particular mortgage rate and can usually be added on to the loan amount.

Valuation fee

Mortgage lenders require a basic valuation of the property to assess its condition and make sure it is worth the amount of money you are paying for it, their fee is usually added to your bill.

Legal fees

When lenders incur legal fees they usually automatically pass this cost on to you which is determined by their solicitors, you will also need a firm of solicitors to deal with conveyancing on the property.

Protection fees

Although you are only required to have a basic amount of building cover in place, it is wise to consider taking out additional protection for your home, such as contents insurance and mortgage protection insurance.

Survey fees

You are only required by mortgage lenders to have a basic valuation of the property, but often for peace of mind chartered surveyors are instructed to perform additional surveys assessing internal as well as external risks to the property.

Stamp Duty fee

If you are purchasing a property over 125,000 then you will be subject to stamp duty, the further over the threshold the property is the more stamp duty you will have to pay on that property.

Early repayment fee

This can be applicable to mortgages with fixed or discounted rates if you pay off all or some of your mortgage within a specified period of time. It is always best to ask if there are potential additional charges to your mortgage before agreeing to take it out with your lender.

Exit fee

When you finish paying off your mortgage or if you wish to switch mortgage providers, you can often be charged an exit fee. This fee usually covers administration costs, and the amount you will be charged can be found in your contract.

Land Registry fee

If the property you are purchasing has been registered with the land registry, then you will need to pay a fee to have the necessary changes made and have the property registered in your name.

Higher Lender fee

When you want to borrow over 75% of the property value you may find yourself subject to this fee, the size of the fee depends on the size of the loan you are taking out. This can be a fairly rare charge to encounter as most lenders only apply this fee to a mortgage with loan to value (based on the percentage of the property you wish to borrow) so if you have over a 10% deposit you most likely won’t be subject to this charge.

Interest only mortgage

With an interest only mortgage option you will be making monthly repayments that only pay off the interest of the loan.

Repayment mortgage

With a repayment mortgage you will be paying off some of the interest and the capital each month, which means that by the end of the term you will have paid off the entire loan.

Fixed Rate

The interest rate on your mortgage will be fixed for an agreed period of time dependant on your mortgage of choice, when this time period is over your rate will rise or fall with the standard variable rate.

Discounted Rate

You will receive a discount on the interest of the standard variable rate (SVR) after the time period for this rate has completed your interest rate will revert back to the lenders SVR.

Tracker Rate

Your mortgage will rise and fall in line with the Bank of England base rate allowing you to benefit from a low rate with reduced mortgage repayments

Standard Variable Rate

Your mortgage will rise and fall according to your mortgage lenders standard variable rate, factors affecting the rise and fall is usually the bank of England base rate, the rising or falling investment rates and market conditions.

Capped & Collared Rates

Your mortgage rate will rise and fall in line with the lenders standard variable rate, but you are protected as the rate will never rise above the agreed cap, if the lenders standard variable rate falls below the cap you’ll pay the bottom end of the cap. At the end of the capped rate period you will go back to the lenders standard variable rate.

Droplock Mortgage

This mortgage is designed to let you take advantage of low interest rates but allow you to switch to a fixed rate at any time without any additional charges, this offers you protection should the interest rates begin to quickly rise.

Offset Mortgage

This is a flexible mortgage that will link to your savings or current account, the balance in your account will be subtracted from your mortgage, so you’ll only pay the amount of interest on your mortgage minus the amount in your bank account.

Buy to Let

A buy to let mortgage usually requires a modest deposit with lenders looking at not just your income and credit rating, but the potential return rate as part of the lending criteria.

Joint Mortgage

This is where you will be sharing ownership with a friend, a family member or a partner which will ease the financial burden and make both of you responsible for paying the mortgage. Usually a contract is drawn up outlining who owns what percentage of the property and put what money forward.

Parental Help

Due to economic constraints, the volatile interest rates and the current market condition it can be hard for first time buyers to get on the property ladder at all. Sometimes parents act as guarantors on a mortgage or may assist in building a decent deposit, depending on your circumstances and your parent’s circumstances you may be able to reduce payments or borrow more.

Joint Tenants

As joint tenants you will both own the property equally, and should either of you die the property automatically passes to the remaining living owner.

Tenants in Common

Both you and your partner will own the property, however you will each own shares of the property which you are free to sell or pass on to anyone you wish when you die.

Shared Equity

You will not have to share ownership, with this option you will have to take out a mortgage and an equity loan to finance the purchase of the property, you will also need a deposit as well. You are usually charged a low rate on the equity loan for the first few years of it being taken out. When it comes to the time you eventually do sell your property you will need to pay off the mortgage, the loan and a proportion of the increase in equity, if there has been any over the time of your ownership.

Shared Ownership

You will own a share of the property with another party, this will usually be a housing association and you will pay them rent on their half of the property, as well as pay a reduced mortgage payment on your share of the property. This reduces costs and comes with the idea in mind that eventually you will increase your share of ownership, until you own all of the property.

Rent to Buy

This allows you to rent with the future expectation that you will eventually buy the property at an agreed price. This will ensure that you have protection in place should the market property prices rise, and usually the rent you have paid is given back to you which you can then put forward as a deposit.

Repossessed Property

Repossessed properties can be an excellent way of picking up a property at a reasonable price, although mortgage lenders aren’t keen on disclosing how many repossessed properties they have, you are entitled to ask if there are any deals available. Keep in mind that some repossessed properties may require some work.

Property Auctions

Property auctions are organised by mortgage lenders as a way of selling repossessed properties, you do have to take into account the certain risks involved with buying at auction, such as the fact that the typical surveys have not been conducted before bidding begins.

Buildings Insurance

Essential for your home, it covers everything from property structural damage including out buildings to permanent fixtures such as kitchens. You’ll also be protected from buildings risks such as vandalism, fire, storm damage and flooding.

Contents Insurance

Cover that protects your possessions both inside and outside of the home from theft, loss and damage, cover is very affordable and can make all the difference when it comes to treasured family items.

Mortgage Protection Insurance

A mortgage is a large and lengthy commitment, and with the unstable economic climate it’s sensible to consider taking out insurance that will cover your mortgage payments should you lose your job or become too ill to work.

Company Registration Number: 08318842

Taylor Rose Financial Services Limited is an Appointed Representative of Intrinsic Financial Planning and Intrinsic Mortgage Planning who are authorised and regulated by the Financial Conduct Authority. Taylor Rose Financial Services Limited are registered in England and Wales.

Registration Number: 08318842 Registered Address: Northminster House, Northminster, Peterborough, PE1 1YN

© 2018 Taylor Rose Financial Services Limited. All rights reserved.

preload