land registry - A record of property, ownership and the mortgage is registered in a central register at HM Land Registry.
land registry fees - fee payable to the land registry to change an entry in their records following a transaction involving registered land. This can be following a change of ownership or just a change of mortgage.
landlord's reference - reference from the previous landlord regarding the general conduct of the tenant and whether rent has been paid promptly.
large town allowance - additional portion of salary payable to an employee to compensate for the additional expenses incurred as a result of working in a major conurbation. In theory the payment is made to cover either increased housing or commuting costs and is normally considered as part of basic income when applying income multipliers.
leasehold - the land on which the property is built is not owned directly by the property purchaser and is held under a lease for a fixed period.
legal charge - the means by which lenders enforce their rights to a property - it is recorded at the land registry. There are various different types of legal charge and the type used will vary from lender to lender. Building Societies tend to use a charge for the specific amount that they have lent. Banks tend to use an all monies charge, allowing them to free equity in a property if it is owned by them. This may allow them to recover overdrafts and other loans if they have granted more than just a mortgage. A primary mortgage will normally be secured by a first charge. Building societies are allowed to lend only if they have a first charge on a property. Second or subsequent charges may be granted on a property if additional money has been borrowed against it.
legal mortgage fee - fee charged by the solicitors acting for the lender in creating their legal charge over the property.
lender - An organisation which offers mortgage products.
LIBOR - London Interbank Offered Rate is the rate at which banks notionally buy and sell money to each other. It varies from day to day and is closely linked to Base Rate. The relationship of LIBOR to base rate can give an indication of the possible future direction of base rates. If LIBOR is significantly above base rate it indicates that the money market believes interest rates are about to increase. If it is significantly below, the reverse is true. The key LIBOR rate is 3 month LIBOR, however rates are also quoted for one, six and twelve month periods.
libor-linked - A mortgage linked to libor will be charged at a given margin over the Interbank rate (typically 1 to 1.5%) and is likely to be reset quarterly. LIBOR rates tend to be more volatile than variable mortgage rates as the rate payable will change almost every quarter. They offer the customer the opportunity to pay a rate closer to the true cost of money. In a low interest rate environment they are likely to result in lower overall payments but will be more expensive in periods of higher interest rates.
life company - a life assurance company.
life insurance - policy payable upon the death of the insured, usually referred to as assurance.
loan - the amount to be borrowed. First charge mortgages are now regulated by the FSA and no longer fall within the remit of the Consumer Credit Act.
loan illustration - example of the monthly cost of a mortgage and other expenses associated with the loan such as set-up costs.
loan to value ratio - is the ratio of the loan amount to the property valuation expressed as a percentage. E.g. if a borrower is seeking a loan of £20,000 on a property worth £40,000 it has a 50% loan to value rate. If the loan were £30,000, the LTV would be 75%. The higher the loan to value the greater the lender's perceived risk. Lenders will be more cautious in underwriting high loan to value loans. Loans above normal lending LTV ratios may require additional security.
local authority search - a search of local authority records to confirm the status of the property. Local authority searches should reveal any proposed changes in the area, the details of the planning permission for the subject property and whether any enforcement notices have been served by the local authority.
loan authority search fee - fee payable for the local authority search.
low cost endowment - the most common form of endowment policy used to repay a home loan. It is a mix of full endowment and term assurance designed to provide full life cover in the event of death during the loan period. If investment returns are high enough it should also provide sufficient funds to repay the loan at the end of the term and ideally provide the borrower with a tax free cash surplus. It is not guaranteed to pay off the loan and that any shortfall will have to be made up by the borrower.
low start - (premiums) - a premium structure for a low cost endowment or other investment policy which allows the level of premiums payable to commence at a low level and build up over a period of time (normally the first five years). The total premiums payable under a low-start arrangement will exceed those payable under a normal contribution structure to compensate for the loss of investment growth on the reduced payments in the early years.
loyalty bonus - a concessionary bonus (usually by way of a temporary reduction in interest) payable for maintaining a satisfactory account with a lender for a period of years. Alternatively, loyalty bonuses may be offered to existing customers who return to the lender for a new mortgage. In which case the bonus may be dealt with by way of a reduction in the set-up costs of the new loan or a lump sum payable upon completion.
LTV - loan to value ratio (LTV) - is the ratio of the loan amount to the property valuation expressed as a percentage. E.g. if a borrower is seeking a loan of £20,000 on a property worth £40,000 it has a 50% loan to value rate. If the loan were £30,000, the LTV would be 75%. The higher the loan to value the greater the lender's perceived risk. Lenders will be more cautious in underwriting high loan to value loans. Loans above normal lending LTV ratios may require additional security.
