:: UK JARGON INFOGUIDE
Early Redemption Fee
This is often associated with fixed, capped or cash-back mortgages. If pay
off your mortgage early or want to changes lenders then you may be charged
a fee. The lender gives you a package with benefits but you must keep the
mortgage with them for a minimum length of time. Some mortgages don't have
any early redemption penalties.
Endowment
Mortgage
An Endowment Mortgage is savings based mortgage with life assurance. Part
of your repayment pays the interest only and the other is invested by the
lender. These were designed to allow you to pay a smaller monthly premium.
At the end of the policy your invested amount should be enough to pay off
the balance of your mortgage. However current Endowment Policy Holders
have been notified that the final invested amount is unlikely to cover the
final balance of their mortgage.
Equity
This is the difference between the amount you owe on your current mortgage
and the current value of your property. This amount can be used in a
remortgage to allow money for home improvements, a new car, holiday of a
lifetime or reduce your monthly premiums.
Exchange of
Contracts
The contracts are exchanged between the buyer's and seller's solicitors.
Both parties are now legally bound to the sale and purchase of the
properties.
First Time Buyer
If you are after your first home and so your first mortgage, you are
classed as a first time buyer. There are first time buyer mortgages
available aimed at buyers new to the market. First time buyers may be able
to access particularly attractive mortgage packages such as fixed rates
and discounted rates
Fixed Rate
Mortgage
This is what it says. A fixed interest rate set for an agreed period of
time. If the interest rates went really high then you don't pay a higher
interest rate. However you don't pay any less if the interest rates go
really low.
Flexible Mortgage
This type of mortgage allows flexibility of repayments. Normally, a
borrower will be allowed to overpay, underpay, take payment holidays. You
can sometimes offset savings against the mortgage to help with payments.
Certain flexible mortgages will offer daily interest rates so any
overpayment will show benefits straight away.
Freehold
A term which means you are the absolute owner of the property and the land
it's on. When you have paid your mortgage you would have the freehold to
your property.
Financial adviser
Recommend products and services that help individuals plan their income
and expenditure. There are two types: Independent work on behalf of the
client and can choose from any product or service; Tied advisors work on
behalf of their company to recommend their products only.
Foreclosure
The legal process that occurs when a buyer defaults on a loan. The lending
institution takes back the property because of a lack of payments.
