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Mortgages Jargon Buster

Buying a property and moving home can be difficult enough even if you have done it before, so you don’t want to be confused by the terminology and abbreviations used during the process. Here’s our simple guide to beating the jargon.

Additional secured borrowing

Sometimes called second charge borrowing. This is where a lender offers a loan secured on the property which, if your property is sold, will be paid off after a First legal mortgage. Skipton does consider additional borrowing but only where we hold First legal mortgage. 

Annual Percentage Rate of Charge (APRC)

An indicative guide to help you compare the cost of different mortgage deals, taking account of interest rates payable (both during the initial product period and after) and fees. 

Bank of England Base rate (BoEBR)

This is the rate which is set on a monthly basis by the Monetary Policy Committee (MPC) of the Bank of England and is the rate that it charges for its borrowing. 

Binding offer

The society will issue a binding offer following receipt of an acceptable mortgage application.

Completion

The point at which the money is released to remortgage your home or to buy your new home. Your conveyancer will ensure that ownership is transferred to you enabling you to move. This is known as Settlement in Scotland. 

Conclusion of Missives

The point at which both buyer and seller are legally bound to the purchase (Scotland only).

Consumer Buy-to-Let (CBTL)

From 21 March 2016 CBTL contracts will be offered to customers who are assessed as not acting wholly for a business purpose when they apply for a Buy-to-Let mortgage. 

Conveyance

The legal document which transfers ownership of unregistered freehold land, in England and Wales. 

Disbursements

The fees your solicitor has to pay to others on your behalf e.g. Stamp Duty Tax, Land Registry fees, search fees.

Electronic Transfer

This is the method by which your mortgage advance is paid to your conveyancer.

Equity

The positive difference between the value of your property and the amount of any outstanding loans secured against it (i.e. the amount you own outright).

First legal mortgage

Also known as first charge mortgages. This means that the loan takes priority over any other borrowing secured on your property, if your property is sold the first charge will be paid off first.

Foreign currency lending

Lending where, at the start of a new contract, a customer is not a UK resident or relies on income or assets which are not pounds sterling to repay the mortgage. The Society does not offer foreign currency lending. 

Interest only (Interest only Mortgage)

The monthly payments over the term of the mortgage cover only the interest charged on the amount borrowed. This means that the original amount borrowed together with any fees or charges' debited to your account, will be owed in full at the end of the term.

Key Facts Illustration (KFI)

This document was replaced by the Mortgage Illustration in December 2015. Mortgage brokers and other lenders may still use a variant of the KFI. For more information see Mortgage Illustration.

Lease

A document which grants possession of a property for a fixed period of time and sets out the obligations of both parties, landlord and tenant, such as payment of rent, repairs and insurance. 

LIBOR

London Inter-Bank Offered Rate. The interest rate that the banks charge each other for loans (usually in Eurodollars).

Loan

Sometimes called the advance. This is the actual amount of money that we agree to lend you. 

Loan to Value (LTV)

This is the value of your loan as a proportion of your property's value. For example, if you were purchasing a home for £100,000, and had a deposit of £15,000 then you would need to borrow £85,000. This would mean that you would require a mortgage product that offered an LTV of at least 85%

Missives

The formal written offer to purchase and the acceptance (Scotland only).

Mortgage Illustration

Introduced in December 2015, this document replaced the KFI. This document, or ones similar to it, must be provided to you by law and shows you all the key information you need when choosing a mortgage. You can use it to compare different mortgages with different lenders. 

Part and Part

This is a combination of both repayment and interest only mortgage. For example, a loan of £50,000 could be made up of £30,000 repayment and £20,000 interest only, so there would be a remaining capital balance of £20,000 to repay at the end of your mortgage term.

Porting

The process of transferring your existing Skipton mortgage product to a new property. All of the terms and conditions of your mortgage product remain the same but the mortgage is moved onto the new property that you are purchasing. When you port your mortgage you may require additional borrowing and for this you may require an additional mortgage product.

Redemption Administration

The process of moving your existing mortgage to a new lender without moving home.

Redemption Administration fee (sometimes called a Mortgage Exit Fee)

A fee charged by the lender for releasing the legal charge over your property following repayment of a mortgage.

Reflection period

This is a formal period of time which allows you to consider a mortgage offer. The reflection period does not affect how long your offer is valid for. 

Repayment (Repayment Mortgage)

Original amount borrowed plus any interest, together with any fees or charges debited to your account.

Repayment Strategy

This is the means by which you choose to pay off the capital on an Interest Only mortgage when the mortgage term comes to an end. You need to check with us to make sure that your chosen repayments strategy is acceptable to the Society.

Searches

For example, enquiries made at the Land Registry, the Land Charges register and local authorities to ensure there is nothing to cause concern about the property. 

Subject to Contract

A provisional agreement made between buyer and seller, before exchange of contracts, which allows either side to back out without penalty (England and Wales only).

Term

The length of time over which your mortgage loan is to be repaid. 

Title

The legal right to ownership of a property.

Title Deeds

The documents showing the ownership of the property. 

Transfer Deed

The legal document which transfers ownership of registered land. 

Vendor/Seller

The person(s) selling the property.
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