APR This stands for Annual Percentage Rate and can be used to compare the cost of borrowing money from different lenders.
Asset Finance Finance lent to companies by specialist providers which enables them to purchase business assets. The finance provider will normally require security to be taken over the asset with loan repayments spread over the normal life of the asset.
Assured Shorthold Tenancy (see also Tenancy) Under section 20 of the Housing Act 1988 this is an assured tenancy, which is fixed in term for between six months and not more than twelve months. It is not terminable by the landlord within the first six months unless appropriate notices have been served.
Assured Tenancy A type of residential tenancy, where the tenant has the right to remain in the property as long as the terms of the tenancy agreement are not broken.
BACS The Bankers Automated Clearing System (BACS) is an electronic payment scheme widely used for transferring money from one financial institution to another.
Basic valuation A check carried out on the property, by a surveyor, to determine its acceptability to the lender as security against the mortgage.
BBR This stands for Bank Base Rate, which is reviewed every month by the Bank of England's Monetary Policy Committee.
Bedsit A form of rented accommodation consisting of a single room and shared bathroom.
BDM Business Development Manager.
Bridging Finance A loan for a short-term period taken out until long-term finance can be arranged, often used in property development projects at the end of a construction loan period before permanent financing can be arranged.
BTL Buy-to-let.
Buy-to-let mortgage A mortgage designed for property investors who purchase a property to rent out.
Buy-to-let mortgage finder This is Buy-to-Let Directs’ free online buy-to-let mortgage system which enables you to search the market place for a suitable buy-to-let mortgage.
Capital and interest mortgage Also known as a repayment mortgage. With this type of mortgage the borrower pays off some of the capital (the amount of money borrowed) and some of the interest every month.
Capped rate The rate that the borrower pays 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 the borrower receives when their mortgage completes.
Completion On property purchases, completion is the date when a property is legally transferred to the buyer and the balance of the purchase price is handed over to the seller’s solicitor. When remortgaging, completion is the commencement of the new mortgage (also referred to as 'drawdown').
Completion free A fee charged by the mortgage lender to the mortgage borrower at the point that the legal documentation is finalised, and funds have been transferred.
Conveyancing The legal process for buying and selling property.
Credit reference agency A company which collects information about consumers from a variety of sources, which it uses to provide credit information to third parties, such as lenders, to assist them in assessing the creditworthiness of an individual.
DDM Direct Debit Mandate.
DIP Decision in Principle.
Disbursements Fees paid by the solicitor to third parties on a purchaser/seller’s behalf such as Stamp Duty, Land Registry Fees, search fees etc.
Discounted rate With this type of mortgage, the rate that the borrower pays 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.
DSS tenants DSS stands for Department of Social Security. DSS tenants are tenants who are in receipt of housing benefits from the government via the local council.
ERC Early repayment charge. An amount of money that the borrower may be charged if they fully repay their mortgage before a set time, usually before the end of the incentive period.
Energy Performance Certificate (EPC) An EPC is required for all homes whenever built, rented or sold. The certificate records how energy efficient a property is as a building and provides A-G ratings.
Equity Owner’s financial stake in a property. It is the difference between the value of the property and the amount of any loans taken out against the property.
Exchange of contracts The point at which the contract signed by the buyer is exchanged for the contract signed by the seller and the deposit is paid by the buyer to the seller’s solicitor. At this point, both parties are legally bound to the transaction and a completion date is agreed.
Ex-pat A person who does not live in their own country.
FCA Financial Conduct Authority. The FCA regulates specific areas of the financial services industry including mortgage advice.
Fixed rate The rate the borrower pays is fixed for a set period of time.
Freehold The borrower owns the property and the land the property is on.
Foreign national A person who is a citizen of a different country from the one they reside in.
Full Structural Survey This survey is a more in-depth review of the condition of the property than a homebuyer survey. It does not incorporate a basic valuation.
Flying freehold Where a part of one freehold property is built over part of another, so that it does not touch the ground e.g. a bedroom built over a common access passageway.
Ground rent The rent paid to a landowner by a leaseholder, in respect of a leasehold property. Set when the lease is first granted and may contain provisions for rent increases during the term.
HLC Higher lending charge. This is a fee that is payable if a "high percentage loan to value" is required. The HLC fee is used by the lender to purchase insurance to cover them in the event that you default on the mortgage and they make a loss on possession and resale of the property. The policy has no benefit to the borrower and offers no protection - indeed if your property is repossessed and the lender claims on the Mortgage Indemnity Insurance then the insurance company that has paid out the claim to the mortgage lender can still pursue you, the borrower, for repayment of that amount.
Home Information Packs (HIPs) A scheme where the seller of a property must produce a pack containing information about their property, before placing it on the market. Home inspector: An individual employed to produce Home Condition Reports and Energy Performance Certificates.
Homebuyers report This is a survey, which reviews the condition of the property, and incorporates a basic valuation.
Incentive A feature of a mortgage product which is designed to attract customers, such as a free valuation or a cashback amount.
Industrial investment An investment in the industrial sector.
Interest rate The cost of borrowing money usually set as a percentage of the money borrowed.
Interest-only The borrower only pays 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 Savings Account, could be used, however the borrower should seek independent financial advice. Buy-to-let direct does not advise on investments.
Inventory A list which details the contents of a leasehold property and describes the condition of the furnishings, decorations, and contents at the start and end of a tenancy. This enables any change to be documented and arrangements to be made to return the property to its condition at the start of the tenancy.
Invoice discounting The provision of finance to a company using its outstanding invoices as security.
Lease Legal document by which the freeholder or landlord of a property lets the premises – or part of it – to another party for a specific length of time, after which point the right to occupy may revert to the freeholder or superior leaseholder.
Lending criteria A set of rules and guidelines that lenders apply when assessing the suitability of an application for a mortgage/loan.
Light industrial Consumer-orientated industries such as the manufacturers of clothes, shoes, furniture, consumer electronics and household items.
Leasehold The borrower owns the property for a set period of time but not the land the property is built on. After the set period of time, ownership of the property reverts to the freeholder. Many flats are leasehold properties.
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%.
Local Authority search An investigation undertaken by a purchasing solicitor where a search of local authority and other agencies (e.g. transport or water companies) is carried out to identify any proposed plans for development or enforcement, which may affect the property or its immediate surroundings.
London Inter-Bank Offered Rate (LIBOR) The interest rate available between banking institutions to borrow money. Quoted daily for terms between 1 month and 5 years. Some mortgage rates are linked to 3 month LIBOR.
Mortgage A sum of money advanced by a lender, usually a bank or building society, to assist in the purchase of a property. The loan is secured against the property and is usually taken out over a number of years.
Mortgagee The borrower in a mortgage agreement.
Mortgage offer A formal document drawn up by a mortgage lender detailing the terms on which the loan is agreed.
Mortgagor The lender in a mortgage agreement.
Mortgage term The period of time over which mortgage repayments are made.
Mortgage valuation The most basic form of survey and the minimum required by lenders to decide 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 Buyer's Report or Structural Survey) should be purchased by the buyer when considering the purchase of a property.
Repayment mortgage Also known as a capital and interest mortgage. With this type of mortgage, the borrower pays off some of the capital (the amount of money borrowed) and some of the interest every month.
Regulated tenancies The letting of a dwelling by a non-resident private landlord, usually at a registered fair rent, from which the landlord cannot evict the tenant without a possession order from a court.
Remortgaging The process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.
Rental coverage Usually represented as a percentage and calculated by using the existing or anticipated rental income from a property divided by the interest due per annum.
Repayment method The method chosen to repay the loan amount. Normally either interest only or repayment can be selected.
Repayment mortgage A mortgage which involves the repayment of both capital and interest in monthly instalments within a specified term of years.
Repossession Occurs when a mortgage company obtains a court order to take possession of a property due to non-payment of the mortgage, or non-compliance with the mortgage terms and conditions.
Retention A sum of money held back by the lender until such time as repairs or remedial works have been satisfactorily carried out to the property on which they have provided a mortgage.
Reversion rate The interest rate a loan will change to at the end of the initial fixed or discounted interest rate. The offer letter will indicate the length of time a fixed or discounted rate will last together with the new rate that will apply at the end of the incentive period.
Search Numerous searches concerning the property and its locality are made by the buyer’s solicitor during the purchase process; these include a Local Authority search, Land Registry search, Coal Mining search, Water search, Commons Registration search, Bankruptcy search etc. The buyer’s solicitor will decide which searches are appropriate according to the location/age of the property concerned.
Securitisation Securitisation is a financial technique that pools assets together and, in effect, turns them into a tradable security. Financial institutions and businesses of all kinds use securitisation to immediately realise the value of a cash-producing asset.
Security Property which is pledged as collateral for a loan
Standard variable rate (SVR) A variable rate determined entirely at each lender's discretion, unless it is linked to LIBOR or the Bank of England base rate. The SVR is often the reverting rate at the end of any special offer period, such as a capped, discounted or fixed rate.
Stamp Duty Land Tax (SDLT) A tax that may be payable on purchases of flats, houses and other buildings in the UK.
Statutory periodic tenancies A tenancy that arises when the fixed terms of Assured and Assured Shorthold tenancies come to an end, but the tenant stays on with the landlord's consent. The terms of the tenancy remain the same.
Structural survey A detailed survey of the structure of a building carried out by a Structural Engineer or Chartered Building Surveyor.
Studio flat A self-contained apartment which combines a bedroom, living room and kitchen in a single unit and has a separate bathroom.
Sub-prime mortgage A mortgage that is designed for someone with adverse credit.
Tenancy An arrangement where the owner (landlord) allows another person (tenant) to take exclusive possession of land in return for rent, either for an agreed period or on a periodic basis until formally terminated.
Tenancy agreement Legal agreement designed to protect the rights of both tenant and landlord, setting out the terms under which the rental of a property has been agreed.
Tenant The person who has temporary use and possession of a property owned by another person; the landlord. The duration and terms of a tenancy are usually fixed by a lease or tenancy agreement.
Tenant assessment A service which provides information to a landlord about a prospective tenant such as credit and employment history. The tenant assessment can help a landlord to decide whether the person would be a suitable tenant.
Tenure Describes the manner in which the property is held by the owner i.e. either Freehold or Leasehold.
Term The length of time the mortgage advance is borrowed over. At the end of this period the loan must be repaid.
Tracker mortgage The mortgage rate tracks the Bank of England base rate by a set amount for a specified period of time.
Valuation An inspection of the property to decide its acceptability to the lender as security against the mortgage loan.
Variable rate A rate set by a lender, which can go up and down.
Vendor Term used to describe the owner of a property which is being sold.

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