Copy of `Charles Conran Financial Services - financial terminology`
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Charles Conran Financial Services - financial terminology
Category: Economy and Finance > Finance
Date & country: 11/11/2007, UK
See Valuation/Survey Types
A policy that protects against loss or damage caused by fire, some natural disasters and vandalism.
A quotation supplied to a potential borrower showing the costs associated with taking out a mortgage through a certain provider including monthly repayments.
The amount of money an individual earns.
The formula used by certain lenders when deciding how much money they are willing to lend an applicant(s), it is based on a certain number of times (e.g. 3.75) an individuals income or joint income.
Independent Financial Adviser
A qualified and regulated individual that is able to provide you with impartial advice on financial products.
A published interest rate, e.g. Bank of England base rate which is used to determine the rate on a variable rate mortgage.
Individual Savings Account (ISA)
A tax free investment in which people can place cash, shares, or life insurance up to certain limits set by the government.
Interest Only Mortgage
A mortgage whereby the borrowing elects to repay only the interest on the loan and repays the loan at the end of the mortgage term.
A person or company that acts as a mediator between two parties (Charles Conran Financial Services is an intermediary between its clients and the lenders/providers)
A person or company that`s introduces applicants to lenders/providers.
Savings that are designed to increase in value over time and can be used to repay an interest only mortgage
The total gross income of both applicants in a joint mortgage.
A mortgage whereby more than one applicant applies for the mortgage together, so that all individuals are party to the mortgage
Key Facts Document
A document designed to show all relevant details relating to an insurance policy which must be given to all applicants prior to any application.
Key Facts Illustration (KFI)
A detailed [illustration] that must be handed to all applicants prior to any mortgage application.
The legal process of registering the title to an area of land with the Land Registry. There will be a charge to the solicitor for this process which may form part of the disbursements.
The owner of a property that is leased or rented to another.
A reference given to a lender by a current landlord or previous landlord, which will reflect an applicants payment of rent and conduct as a tenant, this will be used by the lender to help them make a decision on whether to lend to an applicant or not.
Leasehold (England & Wales only)
A type of ownership whereby the person(s) own the property but not the land it stands on. The land will typically be leased to the owner for a certain period of time and they may be required to pay some form of rent.
Enquiries carried out by the purchasers solicitor/conveyancer to the vendors solicitor/conveyancer relating to any leasehold that may be attached to a property.
A document held by Land Registry which outlines who holds the first charge on a property.
The fee that a solicitor or legal conveyancer charges for their services.
The party offering a loan.
Level Term Assurance
An insurance policy that pays out a lump sum under the terms of the policy (typically on death of a policy holder) during the term of the policy. Level term refers to the fact that the benefit remains at a constant level throughout the term. It is often set up to protect an interest only mortgage.
Debts held by an individual.
An insurance policy that pays out in the event that the policyholder dies.
Loan to Value (LTV)
The proportion of the value of the property that the lender is willing to loan.
Local Authority Search
A check carried out by the purchasers solicitor/conveyancer to ensure that there are no issues relating to the local authority such as planning issues or enforceable notices. The Local authority will charge the solicitor for this and this may form part of the disbursements.
The property in which an individual resides for the majority of the time.
A legally enforceable payment made to assist in the cost of bringing up a dependent
The charge often charged by the freeholder to a leaseholder to cover any maintenance costs to the property, often charged annually.
A flat that has more than one floor.
How much a property is worth based on market conditions
A loan for which the security is a property.
The legal document that seals the conditions of the mortgage
The term over which a mortgage must be repaid to a lender.
See [Valuation/Survey Types]
The lender in a mortgage
The borrower in a mortgage
The value of the property has less value than the mortgage amount secured on it.
The income of a person (often measured monthly) after all deductions for tax, etc have been made. Sometimes referred to as a persons â€˜take home` figure.
Refers to the income of a self employed person after all running costs and taxes have been deducted.
A newly built property.
Non Income Verification
A mortgage application whereby the applicant does not need to prove their income to the lender. This is generally more suitable for the self-employed or commission based employees.
The situation whereby more than the required amount (i.e. the monthly repayment) is paid to the lender in order to decrease the term of the mortgage, this can be in the form of a lump sum or regular monthly overpayments.
PAYE (Pay as You Earn)
The HM Customs & Excise System for collecting income tax from the pay of employees to a company.
Borrowers may be permitted to take a break in their mortgage repayments for a specified period.
The method in which a mortgage is repaid at the end of the term e.g. capital & interest, endowment, ISA, etc.
A set charge that a lender may charge under certain circumstance for example on early repayment.
Permanent Health Insurance (PHI)
An insurance policy that is designed to pay out a monthly income in the event that the policy holder becomes ill and is unable to work.
With a portable mortgage you are able to take your existing mortgage agreement from one property to another, subject to underwriting.
A collection of investments (including property) held by an individual
Previous Lenders Reference
A reference requested from an applicants previous lender to show applicants previous repayment record. Often shown in the form of the applicants current mortgage statement.
A Landlord that owns a large number of properties forming a portfolio. These individuals often earn their living from renting out these properties.
The price paid to purchase a property agreed between the purchaser and the vendor.
The individual buying a property.
Expressed as an annual percentage it is the amount of interest charged on a loan.
The processing of one mortgage being replaced by a new mortgage. Similar to refinancing.
The full repayment of a mortgage.
Fees charged by the lender on the redemption of the mortgage e.g. deeds release fee, sealing fee, etc.
The cost of repaying the mortgage in full
The paying off of one debt with the proceed of a new debt.
A bonus or overtime that is not [guaranteed] i.e. it is not always available it may be performance related or an occasional occurrence.
See Capital & Interest mortgage
The legal procedure whereby a defaulting borrower has their interest in the property removed and is handed over to the party that holds the first charge for them to dispose of in order to recover the funds they are owed.
Where a lender holds back part or all of the mortgage funds until certain conditions of the mortgage offer are met.
Right to Buy
Housing Associations and Local Authorities offer their tenants to buy the property they rent from them, often at a discounted price depending on the length of time they have rented from the relevant organisation.
A subsequent debt secured on a property in addition to the [first charge].
Self Build Mortgage
A mortgage taken out on a property that has yet to be built or under construction. Usually the loan is paid in instalments to the borrower depending on the completion of various stages of the build.
An applicant declares their income to a lender and provides no proof to the lender. This is generally more suitable for the self-employed or commission based employees.
An individual who conducts business as a sole trader, they do not receive an income from a companies PAYE scheme.
A scheme whereby an individual purchases only a percentage of the property and the developer owns the remaining percentage. Rent is paid to the developer on the remaining percentage.
Similar to shared equity but instead of a developer owning the other percentage it is owned by a housing association.
An individual that is renting and occupying a property who has legal rights to remain in the property.
A property that is occupied by only those named on the mortgage application and their direct family members.
Conditions placed on a mortgage offer that applies specifically to an individual application that do not appear in the lenders standard conditions.
Is when a mortgage has a proportion of the mortgage is being paid on a Capital & Interest basis and the remainder is on an Interest only basis. E.g. a mortgage of £100,000 may have £50,000 being paid on a Capital & Interest basis and the remaining £50,000 is being paid on an interest only basis.
The tax paid by purchasers of property to the government. The amount of tax payable is dependent on the price of the property you purchase. See below:
0 to 120,000* No Tax
120,000 to 250,000 1% of the purchase price
250,000 to 500,000 3% of the purchase price
500,000 plus 4% of the purchase price
*in certain wards the threshold is up to £150,000
A property that is constructed using conventional techniques and materials i.e. bricks or stone and a tiled or slate roof.
Planning consents and building control certificates
See [Valuation/Survey Types]
The fee payable to the surveyor for carrying out a survey on a property. This is often paid through the lender.
A person who is qualified to value and assess the condition of land and property.
The length of time between taking a mortgage out and the mortgage being repaid.
An insurance policy that is designed to pay out a lump sum in the event of Death and/or critical illness during a specified period.
Terms of sale
Evidence of Title
The document confirming legal ownership.
A search carried out by the solicitor/conveyancer. To check the ownership history of the property to ensure there are no restrictions, unpaid charges registered on the property, etc. The cost of this will normally form part of the disbursements.
A type of mortgage whereby the rate changes in line (tracks) another specified rate e.g. if the specified rate goes up by 0.25% then the other rate will go up by 0.25%. Usually the rate being tracked will be the Bank of England Base Rate.
Repayments on a loan that are below those required by the lender to repay the mortgage on time. Underpayments are normally agreed by a lender only after sufficient overpayments have been made to balance out the shortfall.
A property that has no loans or mortgages secured on it.
See [Mortgage Valuation]
See [Market Value]
A rate which can be changed at the lenders own discretion, this often reflects changes in the Bank of England Base Rate.
A person(s) who is selling a property they own.