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You can use our glossary
to find the definitions of many terms you will come
across when arranging a secured homeowner loan
Click on a letter A to Z for terms beginning with that letter
F
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.
First charge
If your property is for more than one loan and the borrower on payments, the lender with a first charge has the option to
the home.
First mortgage
The original loan taken out to purchase a home.
Fixed rate loans
Fixed rate loans guarantee a specific rate of interest for a set length of time.
Forbearance
A course of action a lender may pursue to delay foreclosure or legal action against a
borrower.
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.
Forfeiture
The relinquishing of property rights by a borrower.
Fraudulent
Involving criminal deception or dishonesty.
G
Grace period
A specified amount of time to make a loan payment after its due date without penalty.
Gross income
Your total income before tax and expenditures.
Guarantor
The guarantor is responsible for payments if you
. If a lender is concerned
about your ability to repay your loan, they may require you to find a guarantor for the loan.
H
High street lenders
Providers of mortgage products who can be broadly split into two groups -
the building societies and the banks. Banks are profit-making businesses that return a portion
of their profits to shareholders in the way of dividends. Building societies on the other hand,
are mutually owned organisations, which exist not for profit but for the benefit of the members.
They claim that this allows them to return profits to their customers in the form of cheaper products.
Household insurance
Buildings and contents insurance can often be purchased together protecting
both the building structure and your belongings and possessions inside.
I
IFA - Independent Financial Advisor
In theory, these intermediaries should look at the entire financial market before making a selection
and offer unbiased advice and access to all suitable financial products. they sometimes still have access to special
deals not on offer elsewhere because they may subscribe to a mortgage panel along with other advisers and brokers.
Together they convince lenders to provide special packages in return for their continued custom. The only trouble is
that they have to deliver a certain level of business over a year to remain on the panel, so they may favour some
products over others.
Impaired credit
Impaired credit loans are specialist products for customers whose credit problems disqualify them
from using the lenders' standard products. Some lenders specialise in loans such as these, which are also known as
‘non-status’ loans.
Incidence of interest calculation
The frequency that the outstanding interest and ongoing mortgage repayments are calculated.
Charging interest on the of your loan at the end of each day, means you reap immediate
benefits of any repayments you make, since you will be charged interest on a smaller debt each day.
As long as you are making payments on time, the more often interest is calculated the better for you.
This is a common feature of flexible mortgages, but is not restricted solely to them. When interest is calculated annually,
repayments are not updated to include the reduction in capital that arises from the payments you make throughout the year.
Income multipliers or multiples
The size of the mortgage that lenders offer, will often be worked out by multiplying your income each year
by a set percentage.
Income protection insurance
Insurance designed to protect you if you are unable to continue providing for yourself or others.
Income protection will not specifically pay off your mortgage, loans, private medical treatment or special needs that arise
through disability. It will provide you with a regular weekly or monthly income if you become unable to work as a result
of accident, sickness or disability. The amount of benefit that is paid out it is not linked to your mortgage or other
loan payments, but your overall level of income.
Income references
Conformation of stated income provided by an employer or certified accounts if self employed.
Inflation
Sustained increase in price or earnings levels, commonly measured by changes in the Retail Prices Index
(price inflation) or changes in the index of National Average Earnings (earnings inflation).
Insurance excess
Applies to an insurance claim and is simply the first part of any claim that must be covered by yourself.
This can range from £50 to £1000 or higher. Increasing your excess can significantly reduce your premium.
On the other hand, a waiver can sometimes be paid to eliminate any excess at all. Always check the excess in your policy.
Interest rate
The is the percentage of your loan that a lender charges you each year for the privilege of borrowing money.
The prevailing level of interest charged by lenders depends largely on the economy and the Bank of England base rate.
If the Governor of the Bank of England and the Monetary Policy Committee are worried about the economy overheating and
causing inflationary pressure, they may raise interest rates. This makes it more expensive to borrow money and therefore
the overall demand for borrowing is reduced. Since this is one of the most commonly used instruments for managing the economy,
we are subject to fairly frequent changes in interest rate.
Intermediaries
Brokers and other intermediaries attempt to arrange suitable financial products or policies for you.
They can be fully independent, part of a network that uses a panel of providers, or tied to certain institutions in
which case they can only sell their products.
IPT
Insurance premium tax. Tax on all UK general insurance under Government control, currently charged at 4% (1/1/2000) of the premium.
ISA
Individual Savings Account. ISAs provide tax-free growth, generated mainly by stock market investment.
The ISA aims to repay the loan's capital at the end of its term, but the interest element must be cleared separately as
you go along.
J
Joint income
The total gross income of the mortgage applicants.
Joint liability
The responsibility of two or more people to fulfill the terms of a loan or debt.
Judgement lien
An court-ordered monetary judgment against a current or previous property owner which has not been paid.
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