Ever wondered what it all means?

Lets explore of the mortgage Jargon

Mortgage:

A legal agreement by which a bank or similar organization lends you money to buy a property and you pay the money back over a particular number of years; the sum of money that you borrow.

Term:

This is the duration of the mortgage.

Capital Repayment:

This is a method of paying back your mortgage. With a capital repayment mortgage, you pay the mortgage interest and the balance over a period of time. Once the mortgage term has finished, you will have paid off the mortgage.

Interest Only:

This is a method of paying back your mortgage. With Interest Only, you only ever pay the interest due and not the capital.

Part & Part:

This is a combination of the two above. For example, you have a £100,000 mortgage and £50,000 is on capital repayment and the other £50,000 is on interest only.

Offset Mortgage:

This type of the mortgage is where you have a value of money, which is set aside with the mortgage and helps to offset your interest. Usually savings. For example, you have a £100,000 mortgage and £20,000 savings. The £20,000 is offset against the £100,000 meaning you only pay interest £80,000.

Deposit:

This is an amount of capital you have to initially put down on the property. Your deposit can come from many sources, like savings, pensions, family and other property.

Equity:

The equity is the capital in the property, less any commitments secured on the property. For example, if you have house valued at £100,000 and hold a £75,000 mortgage, this means you have £25,000 in equity.

Negative Equity:

This is where the secured finance against the home exceeds the value of the property. For example, you have a £100,000 mortgage but the property is only worth £90,000. In this example your are £10,000 in negative equity, which means if your to sell the property you need the find the extra funds to repay the debts.

Fixed rate:

This where you take rate for part of all of your mortgage at a fixed percentage. This type of rate is rather common as it provides mortgage owners with a level of security for a chosen number of years.

Tracker rate:

This type of rate typically tracks the Bank of England base rate by a certain value. For example the base rate is 0.50% and your rate tracks at 1%, you would have an interest rate of 1.5%. This type of rate is variable which means it can change.

Discounted rate:

This type of rate typically tracks the lenders standard variable rate at a discounted value. For example the standard variable is 4% and your receive a discount of 2% so your rate is 2%. This type of rate is variable which means it can change.

Early repayment charge (ERC):

An ERC is a charge set by the lender when you secure a product. So, if you were to redeem a portion of the mortgage during the product term, you could be charged a fee for doing so.

Overpayment:

This where you make a capital overpayment onto the balance of your mortgage. Most lenders will allow this within certain parameters without an ERC.

First Time Buyer:

As the name suggest a first time buyer is someone that hasn’t owned a property before. Some lenders may say that you’re a first buyer if you haven’t owned a property in a number of years. If your unsure please check with your solicitor.

Remortgage:

A remortgage is when you mortgage your property to another property to another lender. You would typical do, when your rate ends, your situation has changed or you wish to changes to your mortgage.

Conveyancing:

The branch of law that involves preparing the documents needed for moving property from one owner to another.

Stamp Duty:

This is tax you are due to pay when purchasing a property.

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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP THE REPAYMENTS ON YOUR MORTGAGE

The information contained in this website is subject to UK regulatory regime and is therefore intended for consumers based in the UK.

Not all forms of mortgage lending such as certain Buy to Lets are regulated by the Financial Conduct Authority along with some additional related services, such as Conveyancing. A full disclosure document will be provided to you.

If you are considering securing additional debts against your home: Think carefully about securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or other debt secured on it.

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Robin Mortgage Design is a trading style of Robin Partnership Ltd whom is an appointed representative of HL Partnership Limited, which is authorised and regulated by the Financial Conduct Authority.  The registered Office of Robin Partnership Ltd is 22 South Street, Castlethorpe, Milton Keynes, Buckinghamshire, MK19 7EL. For more information please refer to the FCA register https://register.fca.org.uk

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