Glossary

Adverse Credit: This is the term used if the borrower has suffered a poor credit history. This could include previous mortgage or loan arrears, CCJ's or bankruptcy
APR: This stands for Annual Percentage Rate and can be used to compare the cost of borrowing money from different lenders. Only applies to personal loans and domestic mortgages
Bridging Loan: Short term loan to facilitate the purchase of one property. Professional advice should always be taken prior to considering any bridging finance as they can be expensive.
BTL: Buy to Let
Buy to let mortgage: A mortgage designed for property investors who buy a property and then rent it out.
CCJ: County Court Judgment. A decision reached in the County Court normally for not paying debts.
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.
Capped rate: With this type of mortgage, the rate that you pay is variable to a maximum limit set at the outset for a fixed period (it can go up and down).
Cashback: Some mortgages offer cashback as an incentive. It is a cash sum that you receive when your mortgage completes.
Credit Search: A check the lender makes with a specialist company to find out whether you have any CCJs or a bad credit record.
Conveyancing: The legal process for buying and selling property.
DDM: Direct Debit Mandate
Defaults: A note on credit reference agencies files to show non payment of a credit agreement, loan or mortgage
DIP: Decision in Principal
Discounted rate: With this type of mortgage, the rate that you pay is discounted from the lender's standard variable rate. This discount is guaranteed for a set period of time and the rate can go up and down.
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.
Fixed rate: With this type of mortgage, the rate you pay is fixed for a set period of time.
Freehold: This means you own the property and the land the property is on.
Ground rent: A fee that a leaseholder has to pay the freeholder every year.
Homebuyers report: This is a residential property valuation, which reports on the condition of the property in more depth than a basic valuation.
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. CPFC does not advise on investments.
Leasehold: If you own a leasehold property, you own the property for a set number of years but not the land on which the property is built, as opposed to freehold where you own both the property and the land indefinitely.
Libor: London Inter Bank Offered Rate is the rate at which banks notionally buy and sell money to each other. It varies from day to day and is closely linked to bank base rate. If Libor is above base, it indicates rates are expected to rise, if below, rates are expected to fall. The key Libor rate is 3 month Libor, but there is also a 1 month, 6 month and 12 month Libor.
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%.
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.
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.
Self Certified: Normally when a borrower applies for a mortgage and does not want to provide evidence of income. This involves signing a declaration which states your income. Lenders will sometimes charge higher rates than normal and offer you a more limited range of mortgages if you choose to self-certify your income.
Stamp Duty Land Tax (SDLT): This is a tax that may be payable on purchases of flats, houses and other UK land and buildings.
SVR Standard Variable Rate: This is the interest rate that the lender charges. The rate goes up and down and your repayments are adjusted accordingly
Sub-prime mortgage: A mortgage that is designed for someone with adverse credit.
Tracker mortgage: With this type of mortgage, the mortgage rate tracks the Bank of England base rate by a set amount for a specified period of time.
Variable rate: This is the rate set by a lender, which can go up and down.