Provides an income should you be unable to work for any of the above. Benefit payments are usually paid for a maximum of 12 months. A deferred or waiting period before the benefit is paid may apply in addition to an own occupation / work tasks or daily living definitions. (Excludes voluntary unemployment)

APR stands for the Annual Percentage Rate of charge. You can use it to compare different credit and loan offers.

The overall cost of borrowing if you owe money on your credit card, loan or overdraft.

But don’t just look at the APR. It doesn’t include all the costs associated with a credit agreement. Also look at the total amount payable.

These can be charged by the lender when arranging a loan on certain products.

The main interest rate in the economy, set by the Bank of England, upon which others rates are based. Known as the ‘base rate.’

This is a short term loan which enables you to complete the purchase of your property before completing the sale of your existing house. A typical example of when you may need one would be if you wanted to buy a second property before you’d sold your first. Interest rates for this type of loan can be relatively high.

These are usually charged by the lender when arranging a loan on certain products. Fees can be payable upfront and some are non refundable if you decide not to go ahead with the mortgage.

This is a type of mortgage used to buy property that will be used solely for the purposes of renting to a third party i.e. you as the owner never intend to live there.

A mortgage interest rate that cannot go above the cap (the highest rate) nor fall below the collar (the lowest rate).

There are two ways of repaying a mortgage either by the capital and interest or interest only route. With a capital repayment mortgage, the capital and interest elements of the loan are paid off with each monthly instalment, with the balance reducing over the length of the loan.

Therefore by the end of the mortgage term, assuming all mortgage payments are made, you have paid off the balance in full and you therefore own your property outright.

This is a type of loan where a maximum rate of interest is set at the start of the mortgage term. During the capped rate period the interest rate can fall below the capped rate but will never rise above it.

What this means for you the borrower is that you know how high the mortgage payments could rise but are guaranteed the rate will not go any higher, therefore making home loan budgeting easier.

A mortgage with a minimum interest rate you’ll pay during a deal period.

This is a mortgage used by businesses for the purpose of purchasing their own business premises or for financing for investment purposes.

For example, you would need to apply for a commercial mortgage when investing in commercial property or purchase commercial property for investment purposes.

This is the point at which the money to buy your new property is released to the seller, ownership is then transferred to you and you become a home owner.

This is the legal process involved when buying or selling property. Most people use a solicitor or a licensed conveyancer when buying or selling a property because there’s quite a lot of detailed work to do when transferring ownership of a property. If you are obtaining a mortgage your lender will insist that you use a solicitor.

Gives critical illness protection for a specific amount time (the term). The policy is designed to pay a lump sum on the diagnosis of certain life-threatening or debilitating (but not necessarily fatal) conditions.

There are different types, but the policy usually pays out a lump sum or an income when the person insured is diagnosed with a defined critical illness.

Then money can be used as financial security for your family or it you could use it to pay off the mortgage.

Decreasing Term Life Insurance (sometimes called mortgage protection assurance) is where the sum assured decreases over the term of the policy. This type of policy is typically purchased by people who want to protect their repayment mortgage in the event of death.

As the outstanding mortgage balance reduces every year, so does the level of insurance. The purpose of this type of plan is to repay any capital you owe if you died. Assumes all monthly payments are made.

A deposit is the term used for the monies that you use as a down-payment on a property that you intend to buy.

These are the fees your solicitor has to pay on your behalf (e.g. Stamp Duty, Land Registry fees and search fees) which will be added to your conveyancing bill from the solicitor on completion of the buying or selling of a property.

A discounted rate mortgage offers you reduced repayments for a given term. This interest rate is discounted from the published lender standard variable rate, for an agreed period from the start of the mortgage.

What this means for you the borrower is that you are guaranteed to pay a set amount below the standard variable rate for the period of the discount. The standard rate can go up and down, but the discount amount remains fixed during the agreed period.

If you pay off your mortgage in full or make overpayments in excess of the amount agreed by your lender at the outset you may be asked to pay an early repayment charge by your lender.

This charge is raised in order to recover any losses or costs incurred by your lender as a result of your early payment.

This is a form of life assurance savings scheme that pays out a lump sum at the end of an agreed period.

If the Endowment is linked to an interest only mortgage, the lump sum from the endowment policy is designed to repay the mortgage, subject to investment returns.

This is the positive difference between the value of your property and the amount of any outstanding loans secured against it.

For example if your home was worth £300,000 and the mortgage on your property was £100,000 your equity would be £200,000.

This is the stage in England, Wales and N.Ireland when both the buyer and seller have legally committed themselves to the sale and purchase of a property and are legally bound to complete the transfer.

There are mortgages available exclusively for first time buyers and can have some special features such as; assistance towards legal fees, cash backs and free valuations.

This is the term for a person taking out their very first mortgage.

This is a mortgage rate where the interest rate is agreed at the start of the mortgage and will not change during the term of the fixed rate.

So you know exactly how much your monthly payment will be each month during the fixed rate period.

When you have the freehold on a property this means that you solely own the property and the land it is situated on.

This rather unfortunate state of affairs occurs when another potential buyer puts in a higher offer for a property after your offer on the same property has been accepted.

This means that your offer is then rejected. This can happen because under English law, the seller is not legally committed to go ahead with the sale until the point at which contracts are exchanged.

If borrowing a high percentage of the value of the property the lender may charge a fee to take out insurance cover. The cover is used by the lender to protect them if the property is worth less than the loan. There are many mortgages that do not carry this charge and based on your situation it is possible that this type of charge can be avoided altogether. Also know as mortgage indemnity guarantee.

Provides an income should you be incapacitated due to accident or sickness. The benefit is payable for a selected term and will pay out until you return to work, reach a specific age, until retirement or until you die. A deferred or waiting period before the benefit is paid may apply.

These are the charges made on a loan, calculated as a percentage of the total amount that you borrowed on your mortgage.

There are two types of mortgage, interest only or capital repayment. With an interest only mortgage you only pay the interest charges of the loan each month the balance of your mortgage stays the same throughout the mortgage term and this will need to be repaid in some other way.

If you do choose an interest only mortgage you are responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the term

This is a system used mainly in England where you own the property for a set period before handing back ownership to the freeholder. When you hold a leasehold on a property, it remains the property of the freeholder.

A leasehold agreement will set out the details of obligations of the leaseholder for repairs and maintenance of the property.

These are the fees charged by a solicitor or other qualified individual to carry out the legal work associated with buying a property.

Gives life protection for a specific amount time (the term). There are different types, but the policy usually pays out a lump sum or an income when the person insured dies.

Then money can be used as financial security for your family and could be used to pay off the mortgage.

This is the interest rate on a mortgage loan.

This is the term used for the type of loan used to buy a property.

This is the creditor or lender i.e. your bank or building society, that lends you the money for your mortgage.

This is the person who borrows money, usually to buy a property.

This situation occurs when a mortgage is greater than the actual value of the property. This can occur due to a decline in the value of the property after it is purchased.

For example, if the mortgage on the property is £300,000 but the value of the property is only £270,000 then a negative equity situation has occurred.

This is the formal document approving the mortgage you have requested. This document details the terms and conditions that will apply during the whole term of your mortgage.

This is the term used when moving your mortgage from one lender to another without actually moving house. You may do this to save money.

This might be possible by switching to another mortgage product with the same lender or by switching your mortgage to a competitor. But remember, if you move lenders, the saving you make on the interest rate you pay may be partially or wholly eaten up by the transaction charges associated with moving your loan.

So, if you are thinking about remortgaging it is advisable to do your sums carefully and take good advice from a mortgage adviser. If you don’t do your homework properly you could face the equivalent of several months’ mortgage payments which would effectively wipe out any of the benefits of remortgaging

These are mortgages specifically tailored for public sector tenants who qualify to buy their home under the Government’s Right-to-Buy scheme. You may be eligible to qualify to buy your council home if you are a secure tenant of either; a London Borough council, a district council, a non-charitable housing association, or a housing action trust.

Discounted rates are usually offered to council tenants for their homes. So if you are a council tenant wanting to buy your home, the rate you will pay will depend upon how long you have lived there. The amount of discount you will receive is roughly in proportion to the number of years you have been paying rent. You will need to check with your local council for terms and conditions.

These are the enquiries made, usually by your solicitor, at the Land Registry, the Land Charges Register and Local Authorities to ensure there is nothing to cause concern about title to the land and the property you intend to buy.

This is a package for people looking to build their home themselves.

This is a charge levied by the government on house purchases. There is a sliding scale of stamp duty depending upon the value of the property you are buying. Your mortgage broker can provide more information on the amount you will have to pay when purchasing your property.

A loan at the lender’s normal mortgage rate – ie without any discounts or deals. It moves up or down at the lender’s discretion.

This is the provisional agreement made between the buyer and the seller, before contracts on a property are actually exchanged. This allows either side to back out of the agreed sale without any financial penalty.

An examination & valuation of a property you are considering buying used to discover any flaws or repairs needed. There are three types of survey available ranging in detail and cost.
1. Basic survey

2. Home buyers

3. Full Structural

This is the length of time over which your mortgage loan is repaid.

This is the legal right to the ownership of your property.

These are the legal documents showing the ownership of your property.

This is a variable rate mortgage where the interest rate is linked to a bank’s base rate or the Bank of England Base Rate. Therefore when the Base Rate changes, the rate on your tracker mortgage changes by the same amount. For example, if the Base Rate increases by 0.25% then your mortgage payments will increase by the same amount.

This is the legal document which transfers ownership of registered land from the seller to the buyer.

This is an independent assessment of the value of a property carried out by an approved surveyor and paid for by you the customer. All lenders insist that a valuation is carried out on a property. The valuation is used by the bank or building society to decide how much they are willing to lend you.

Interest rates offered by banks and financial institutions on loans or deposits which are liable to change according to circumstances. For example, a movement in the interest base rate set by the Bank of England could be an influence.