Glossary Of Terms

APR: Annual Percentage Rate. This is the rate of charge on a loan calculated to a set formula. It includes not just the rate of interest, but also associated costs. It was introduced to provide a meaningful comparison of rates charged by different lenders. You may see this expressed as "The overall cost for comparison is x.y% APR".

Arrangement Fee: This is normally charged by the lenders for arranging a mortgage loan.

Arrangement Fee Percent: The arrangement fee expressed as a percentage of the loan.

Capital and interest: Monthly repayments to a lender are made up of interest and capital which reduces the mortgage debt over time (also known as a repayment mortgage).

Early Repayment Charge: A financial penalty for repaying part or all of the mortgage before an agreed date. It is often applied to fixed, discounted, tracker, capped and cash-back mortgages. Quite simply, the lender agrees to offer what it believes is an exceptional package of benefits, providing the borrower agrees to keep the mortgage with them for an agreed length of time.

Higher Lending Charge: This insurance covers the lender if the property is repossessed and the subsequent sale proceeds do not repay the outstanding mortgage debt and costs in full. The Higher Lending Charge protects the lender, not the purchaser who would still be responsible for the shortfall.

Income Requirements: Whether proof of income is required.

Initial Rate: The initial interest rate you will be charged, often this is a discounted rate or a fixed rate.

Interest Only: Monthly repayments to a lender are made up of interest only which means that the mortgage debt does not reduce over time.

Loan Limits: The maximum amount the lender will agree to lend, often expressed as a percentage of the property value.

LTV: Loan To Value. This refers to the size of the mortgage in relation to the value of the property. For instance a mortgage of £75,000 on a property of £100,000 value is said to be a 75% LTV.

Repayment type: The method of repaying the mortgage, for example Interest only or Capital and Interest or a combination of the two types .

Reverting Rate: The interest rate applicable after the initial period.

Scheme Name: The type of mortgage e.g. fixed rate, variable rate.