Annual Percentage Rate (APR)The measure of how much a loan will cost in interest per year. It takes into account all charges, such as valuation fees on a mortgage or any annual charges on a credit card, so it is the best measure of the total cost of a loan.
Arrangement FeeOtherwise known as an application fee, it is a mortgage lender's charge that goes to cover the cost of processing a mortgage application. The fee will typically be a couple of hundred pounds and is usually non-refundable, even if your loan application is rejected. Thankfully, many mortgage lenders no longer charge arrangement fees.
BrokerAnyone who sells financial products. A stockbroker sells stock, an insurance broker sells insurance and so on.
Building InsuranceAn insurance policy that covers the cost of rebuilding your home if it is destroyed. Most mortgage lenders demand that building insurance is taken out as a condition of your loan.
CompletionThe final stage of the property buying process. The completion date, which must be agreed by banks and solicitors for both parties, is typically two weeks to a month after contracts have been exchanged. On this day the money will be deposited with the seller and then it is just a matter of picking up, or handing over the keys.
Cooling off periodThe time given by the lender for the applicant to reflect on the arrangement and change their mind if necessary
Contents insuranceCover for household possessions. As a rule it covers anything that can be moved, and often covers items when they are outside of the house, such as a camera you have taken on holiday.
ConveyancingThe legal work carried out during the sale of a property. This should include a local authority search to check that there are no factors that will affect the future value of your home, such as subsidence or planned development.
Credit Reference AgencyA company which collects and stores information used by lenders to determine an individual's credit risk. You have the right to see this information, for a small fee.
Discount MortgageA mortgage that offers a short-term discount on its standard variable rate. These types of mortgages typically carry a penalty for early repayment.
Fixed Rate MortgageA mortgage that has an interest rate which does not move with market fluctuations. This means you can fix your monthly repayments in advance, helping you to plan your financial future. The fixed term can last anything from one year to 25 years. The downside is the mortgages often come with heavy fees and penalties. And, if interest rates fall, you could be locked into a high rate.
Flexible MortgageThis is a mortgage that allows you to vary your monthly repayments. The advantage is that, if you have extra money, you can pay your mortgage off early and so reduce its cost. Also you can put payments on hold if times are lean. In exchange for this flexibility the loans usually charge more interest.
GrossIncome, such as interest, wages or dividends, before tax and other charges are removed.
Income MultipliersWhen it comes to getting a mortgage, this is the most common way lenders work out how much you can borrow.
InterestThe amount charged by the lender for the borrowing of a certain amount of money. How much it is depends upon the credit risk of the borrower and the current inflation rate. It can also refer to the return upon an investment.
Interest-only MortgageThis is where monthly payments cover only the interest on a mortgage. The outstanding balance remains the same, so the borrower needs to make additional investments to ensure the full amount can be repaid at the end of the mortgage period.
Loan to Value (LTV)A mortgage term that describes the amount of money a lender will forward you as a percentage of your property's value. Banks and building societies tend to lend up to 95% of property value.
A loan where the borrower offers a property as security to a lender until the full amount is repaid.
A person or company authorised to search the mortgage market for a deal that suits you. They can contact mortgage lenders on your behalf to make arrangements to complete a loan. They charge a fee for their services, though often this will be paid as commission from the lender to the broker.
Negative EquityThe moment your mortgage is worth more than your home you are said be in negative equity. It is never a good thing, but only becomes a real problem if you want to sell your home. Unless you can make up the deficit then your lender can block the sale.
Notaire or NotaryA public official who can witness legal documents, administer and take oaths
Redemption PenaltyThis is an interest penalty levied by mortgage lenders on borrowers who pay back mortgages early. It is typically included on mortgages that offer some form of interest rate discount as a means of stopping borrowers leaving as soon as the discount period has run out. Increasingly redemption penalties only apply during the discount period of a mortgage.
Repayment MortgageThis is a mortgage that requires the borrower to repay interest and a slice of the money borrowed at regular intervals. As long as the homeowner meets every payment, the loan will be fully repaid at the end of the mortgage term.
SurveyAn inspection of the property to identify defects, faults and any necessary remedial work. This can then affect the valuation
ValuationThe process of assigning a value to a property. Lenders will demand that a property you plan to buy has a valuation by a registered surveyor before they agree a mortgage.
Variable Rate MortgageA mortgage whose interest rate moves in line with changes in the Bank of England Base Rate. The mortgages are set at a premium to the Bank of England rate.
If you have any further questions about buying a property abroad, taking out an overseas mortgage or just need a little bit of a nudge in the right direction, please get in contact with Conti, either via our website (www.mortgagesoverseas.com) or by telephone 08009700985