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guide | Mortgage glossary
- a form of pension policy used to transfer benefits from an occupational
scheme to a money purchase arrangement but maintain the GMP element.
- schedule of monthly payments under a loan
see discharge fee.
- a legal charge that ranks behind a first charge, possibly to secure
a second mortgage, or a guarantee given to secure other borrowings.
- an alternative to your main residence - subject to Capital Gains
Tax! See also: holiday home.
- a further loan on a property which ranks after the first charge
mortgage.
- sources of income other than an individual's main employment.
- a property, the construction of which is controlled by the borrower;
not a finished unit. Loans on self build properties will normally
be advanced in stage payments and are subject to strict limits on
loan to value. A qualified architect will need to be involved and
lenders will frequently look for the builder to have NHBC or Foundation
15 guarantees.
- a mortgage loan where the borrower makes a statement of his or
her income and the lender makes fewer checks than normal on the
accuracy of this statement.
- working on one's own account. For mortgage purposes this will
include partners in unlimited liability businesses and professional
practices.
- a property that has at least part commercial use. A semi-commercial
mortgage is a loan on security that is not entirely used for residential
purposes, e.g. a shop and upper part.
- method of property purchase in partnership with a builder (vendor)
who offers an incentive for the prospective buyer by accepting,
say, 95% of the purchase price to be paid on completion and the
other 5% to be paid at some stated time in the future. The builder
will normally register a second charge on the property until the
remaining 5% has been paid. The 5% owing may be on an interest free
basis or interest may accrue and be added to the debt. Unlike shared
ownership, there is not normally a monthly payment commitment.
- method of property purchase in partnership with a Housing Association.
The borrower purchases part of the property and rents the remainder
from the Housing Association. Also known as co-ownership, this arrangement
is designed for people who could not otherwise become homeowners.
Under most arrangements, the minimum purchase amount is 25% of the
property value with the remainder available to be purchased in blocks
of 25%.
- a person having a legal right of occupation, even if the property
changes ownership, and who is able to apply to the local authority
to set a fair rent. Properties with sitting tenants are generally
worth at least 30% - 40% less than their open market value with
vacant possession.
- a property that is occupied by the borrower and his or her immediate
family only. No paying tenants are in residence.
- specific terms, usually outlined on the mortgage offer document,
that apply to a particular loan offer.
- unwilling or unable to provide the necessary documentary evidence
of income and status.
- mortgage where a notional rate is set designed to be a true reflection
of the likely average rate over a period. The borrower makes payments
each month based on this rate, but the rate charged to the account
may vary in line with market conditions. These products are designed
to protect borrowers from wildly fluctuating interest rates. Whilst
highly popular in the late 1980s they became discredited when some
lenders set unrealistically low notional rates resulting in borrowers'
being faced with a considerable increase in the loan amount outstanding.
- government land tax charged as a percentage of the purchase price
of a property. Charged on all property purchases over £125,000,
percentage varies by price.
- constructed of brick with a tile or slate roof. Lenders may be
less inclined to provide funds on properties of non-standard construction.
However, the definition is generally accepted to extend to the main
mass-building techniques that have not subsequently been found to
have greater potential for defects.
- a detached, semi-detached or terraced house or bungalow.
- a new business venture without a trading record.
- Any regular long-term payment from a Government department. e.g.
State Pension, benefits for low income, children, carers, incapacity
or sickness. Lenders vary greatly in their treatment of additional
income and may therefore not accept the full value of this income.
Provide the figure before tax is deducted.
- the widest form of inspection that can be undertaken by a Chartered
surveyor. In the case of properties with movement, lenders may require
a structural engineer's report. This is a different type of survey
carried out by a Chartered Building Engineer and should not be confused
with a structural survey.
- flat comprising a single habitable room, plus bathroom and possibly
separate kitchen. Many lenders will not lend on these properties
as they are considered more difficult to resell.
- a payment made by an employer to subsidise the cost of interest
payments on a home loan. The amount and extent of the subsidy will
vary from employer to employer and these can be calculated in a
variety of different ways. It is advisable to seek a specific statement
from your employer on the operation of the arrangement.
- the maximum amount payable under a policy of insurance. In the
case of a life assurance policy this is the amount payable upon
death. Under a general insurance policy it is the maximum amount
that can be paid out in the event of a claim. The sum assured under
a general policy must be adequate to represent the full value of
goods at risk. If an insurer feels that a policyholder has not declared
the full value of goods at risk and a claim occurs, the insurer
may reduce the claim by applying average.
- see valuation fee, home-buyer's survey fee.
Courtesy of UKMortgageangels.co.uk
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