:: UK JARGON INFOGUIDE
Capped Rate
Mortgages
An interest rate that is set for anything from a few months to several
years. This means that if the interest rate went up above the set limit
you wouldn't pay any more. However unlike a fixed rate, your interest rate
can go down. The lenders make their money by locking you into the mortgage
for a minimum limited period and may include a penalty clause if you try
to swap.
Capital
This refers to either the deposit put down on a property or the amount
over and above the remaining mortgage repayments. The difference if the
property were sold is also known as equity and can be used as the basis of
a remortgage by releasing equity in your property.
Capital and Interest Mortgage
More commonly known as a repayment mortgage your monthly mortgage
repayments to your lender covers the capital, the actual money you
borrowed, and the interest the lender charges you for borrowing the money.
At the beginning of the mortgage most of the payment is used to cover the
interest and only a small amount is paid towards reducing the mortgage.
Over the term of the mortgage more and more of the monthly payment is
comprised of paying back the capital borrowed. As long as the monthly
payments of repayments are always made on time the mortgage is guaranteed
to be paid off at the end of the term.
Cash Back
Mortgages
This is a marketing offer to try to make you take out their mortgage. A
lump sum of money, usually a £1000, is given by the lender i.e. cash back
when you take out their mortgage. It could be a set figure or a percentage
of your overall mortgage. Sometimes be used to fund the deposit or be used
for immediate home improvements. You are probably paying for this cash
back in the mortgage rate you pay.
CCJ or County
Court Judgment
If you have not made payment on any debt you have then you will be taken
to Crown Court. If the debt isn't satisfied then a decision or judgment
made in the County Court, normally for the non-payment of that debt will
be registered on your credit file as a CCJ. If the debt is paid or
satisfied and a satisfaction certificate obtained it will be noted on your
credit file. Having unsatisfied CCJ’s will seriously effect your credit
rating and limit the lenders available to you.
Completion
The final stage of the mortgage process and the day you get the keys
becoming the new legal owner of your own home. The legal documentation is
finalised and the lender has sent the mortgage funds to the purchaser's
solicitor. Once the purchaser's solicitor forwards the funds to the
seller's solicitor the property is now owned by the Purchaser.
Consolidation or
Debt Consolidation
To consolidate your debts means instead of several debts where you are
struggling to meet all the repayments you have just one manageable debt
with a repayment you can afford.
Conveyancing
The legal process of transferring ownership of a property. A conveyancer,
usually a solicitor, deals with the contracts, legal jargon and property
searches.
Conveyancer
A specialist in the legal aspects of buying a house. This may be a
solicitor but not all solicitors are skilled conveyancers, so be sure they
undertake this type of work regularly as it is complicated and very
important.
Conveyancing fees
A solicitor will charge you a basic fee for undertaking the conveyancing
work associated with the purchase of your property.
Credit Check
Before lenders consider lending you credit they will undertake a credit
check. A credit check determines your credit history whether you have any
CCJ's, defaults or outstanding credit card bills using the services of a
credit agency (Experian or Equifax). Most high street lenders don't want
anyone with a poor credit history.
Credit Scoring
This process is used by most lenders to determine what level of credit
risk you are. They use a scoring system based on credit history; good or
bad, length at current address, security, employment, income and answering
these questions gives them a score or Credit Rating. Mainstream lenders
only want high scores. However there are lenders who will find credit to
suit your score even if it is a poor credit rating. The majority of your
credit history and suitability will be on a national credit database but
it is up to individual lenders whether the risk is acceptable.
Contents
Insurance
This type of insurance is separate to buildings insurance. Contents
insurance should be considered by all householders whether or not they
have a mortgage. It covers items such as furniture; carpets, curtains;
electrical goods and many policies also cover personal possessions, which
may be removed from the home. This type of insurance is not essential for
the mortgage lender but is essential for the homeowner
Cash buyer
A person or persons who do not require a mortgage in order to buy a home
and who do not have a property to sell. Other cash buyers are those with a
mortgage arranged and no property to sell or those who have already sold
their property.
Collateral
The property or other asset which the lender can sell to repay the loan if
the borrower does not keep up the mortgage payments. In most cases, the
home is collateral on a mortgage. If the borrower fails to repay the loan,
the property will be repossessed.
Completion date
The point at which contracts have been exchanged and legal transfer of the
property from the seller to the buyer is finalised. The buyer can take
possession of the property from this day.
Completion
This is the date when the buyer's solicitor forwards the funds for the
purchase of the house to the seller's solicitor. Once the seller's
solicitor has received the funds, the buyer legally becomes the owner of
the property and can move in. The mortgage must be effective before this
date in order for the funds to be transferred. The buyer must also pay
stamp duty, if applicable, and register their name with the Land Registry.
Compound interest
The interest paid on the principal balance in a mortgage and on the
accrued and unpaid interest of the loan.
Condition of the
sale
This is a legally binding clause in the contract of the property sale. A
buyer may insist upon the removal of the ridiculous garish carpets in a
house, as a condition of the sale, or insist that some minor repair work
is completed before the transaction is finalised.
Confirmation of
mortgage offer
This is when you get a written confirmation of your mortgage offer from
your lender-to-be. You usually receive two things - a standard covering
letter and a written mortgage confirmation. This will normally set out
some of your personal details, some facts about the property, your salary
details, your solicitors (if appointed), and will require a signature.
Consumer credit
act
Act of legislation to define the rules relating to lending money and aimed
at protecting the consumer when credit is agreed with a third party.
Credit reference
agency
When assessing your application, a mortgage lender will study your
records. These records are held centrally by credit reference agencies,
and contain information for many different aspects of your life.
Critical illness
insurance
Covers an individual for life or for a set period against a number of
serious illnesses, diseases and medical conditions. It pays out a single
tax-free lump sum on the diagnosis of one of the illnesses specified in
the policy details. The most common of these included in a policy of this
sort are: Heart attack, Stroke, Cancer, Kidney or liver failure paralysis
and multiple sclerosis. AIDS is not usually included.
