Glossary of Terms

Glossary of Terms

Adverse Credit
1) Credit not paid or not paid when agreed.
2) If someone has adverse credit they have not kept up with credit agreements that they are contracted to. Examples of Adverse Credit include; County Court Judgments (CCJ’s), mortgage arrears, and payment defaults.

Application
Information provided by a consumer disclosing their personal details and information about their current financial situation. This information is used by us as a brokerage to make an informed assessment.

APR
This means the ‘Annual Percentage Rate’ and tells you the rate of interest that will be charged on your loan taking into account the total cost of interest and other charges e.g. legal fees.

Arrears
Payments not made by a borrower on time. This is usually described in terms of money or missed payments.

Bad Credit
Used to describe a poor credit rating. This happens when borrowers make loan or other repayments late, borrow more than they can afford to repay, are/have been declared bankrupt, or have CCJ’s against their names.

Bankruptcy
A legal status for those who are not able to repay their debts.

Broker
Brokers are intermediaries who arrange both secured and unsecured loans for applicants with various lenders. Brokers often have a panel of different lenders with which they can place the applicant’s loan, and they may be tied to a particular lender or be independent.

Brokerage
The act of bringing together two or more parties in exchange for a fee or commission.

Budget Calculator
A form to help you work out your incomings and outgoings, and work out how much you need to borrow, and can afford to pay back.

Building Society Questionnaire
A questionnaire completed by a lender/bank or building society to gather details about a loan applicant’s mortgage and property.

CCJ or CCJ’s
County Court Judgement. An order of a court against a debtor to pay money owed.

Collateral
Security or Equity.

Commercial Loan
A loan used for business purposes.

Commission
A percentage of a loan which a broker might receive for placing a loan with a lender.

Consolidation
Refinance of outstanding debts into one new agreement, normally at a reduced interest rate.

Credit
Credit is the means by which consumers can get immediate benefit of goods or services upon the promise of payment at a future date.

Credit Agreement
A contract between a borrower and a lender detailing terms and conditions under which money was lent. This is a legally binding document.

Credit Reference Agency
Companies used by loan brokers/providers to make assessments on individuals wishing to borrow from them. They keep records on the existing credit of businesses and consumers.

Debt
Money owed to a lender or other financial institution.

Defaults
When an individual fails to keep up with mortgage payments that they have agreed to pay they are said to have defaulted.

Fixed Interest Rate
The type of interest rate that is fixed for the entire term of the loan. This kind of rate means that you have piece of mind that you will know exactly what your repayments are over the term of the loan. If used to describe a mortgage and interest rate is generally only fixed for a specified term. After this term the rate will usually revert to the lender’s standard variable rate.

Freeholder
When someone owns land or property outright. Property deeds will identify whether a property is held lease or freehold basis.

Home owner
The term used when the customer has purchased their home, normally with the aid of a mortgage.

IFA
Independent Financial Advisor.

Leasehold
A Leaseholder holds the title to land/property for a predetermined amount of time. E.g. if you are renting you will be the leaseholder for that period of time.

Lender
The actual company that provides you with your loan/mortgage.

Loan
An amount of money borrowed from a bank or other lender by an individual.

LTV
Loan to value, this is the size of the loan or mortgage as a percentage of the value of the property or price being paid for the property.

Lender
The actual company that provides the finance to satisfy a loan or mortgage request.

Loan Broker
An intermediary who identifies, and places, customers requiring a loan or mortgage etc. with a company (Lender) able to provide it. The broker often carries out the administration to do with processing the loan.

Loan Purpose
The reason why someone would want to borrow money. E.g. To pay for a new car.

Mortgage
A loan to purchase a home where the property is used as security in the event of non-payment of the mortgage.

Negative Equity
The situation where the amount owed on a mortgage is more than the value of the property.

Non Status
Where you have numerous CCJ’s or Mortgage Arrears.

Offer of Advance
Sometimes informally known as a mortgage offer. This document details the terms and conditions upon which the lender is prepared to make a mortgage loan. The applicant must sign and return a copy of the offer indicating their acceptance of the proposed terms.

Past Arrears
Payments not made on borrowing when agreed that have occurred in the past, normally within the last 12 months.

Payment Protection Insurance
Insurance which can be taken with a loan to help borrowers to make loan repayments in the event of redundancy, illness or disability.

Quick Application
A form on which consumers disclose only very basic personal details such as the name, contact numbers, e-mail address, house number/name, postcode and roughly how much they want to borrow. This information is then used by us as a loan broker to contact the consumer to go through a more detailed loan application.

Redemption Penalties
When a loan is redeemed (paid off) early, either in full or in part, many lenders will charge a fee. This particularly applies to Fixed, Discounted or Capped rate loans or mortgages.

Remortgage
Another loan/mortgage taken out by a borrower to replace another one secured on the same property.

Secured Loan
A loan that needs to be secured on assets, e.g. cars, houses etc. These assets will be at risk if the borrower does not keep up loan repayments as agreed.

Security
If a loan is taken out with assets as security, then the borrower agrees to the lender creating a charge over the property. Should the borrower not make repayments as agreed the lender will be allowed to reclaim the assets used as security as compensation. Security used can include houses, cars, and businesses.

Security Address
When taking a secured loan or mortgage, the security address is the address of the property which is being offered as collateral for the loan. Where property is offered as security in this way, lenders are generally prepared to offer more flexible terms and lower interest rates.

Self – Certified
Lenders that operate self certification schemes allow applicants to confirm how much they earn by “Self-certifying” their income. For self employed applicants there is no need for a full 3 years audited accounts to be provided.

Semi Status
Where you have CCJ’s or Mortgage Arrears.

Settlement Figure
The amount needed to repay the loan during the contracted term.

Sub-Prime Loan
A loan made available to people who are unable to borrow money from normal lending sources, such as Banks and Building Societies.

Tenant
A person who does not own a home, but instead pays rent to a landlord. This includes living with parents.

Term
The length of time that a loan will be repaid over.

Title Deeds
Documents relevant to the present and/or past ownership of a property. They outline names of owners and details of institutions that have registered a charge against the property. They are usually held by the first mortgage lender whilst their charge remains in existence.

Underwriting
The process by which a potential lender or brokerage determines the ability of the applicant to repay the loan they require.

Unsecured Loan
A loan that does not require any security. This may be because the borrower has a good financial position or credit rating. Such borrowers may be classed as ‘Clean’.

Variable Rate
A rate of interest which may vary up or down during the lifetime of a loan. The circumstances causing any change are outlined in the loan conditions.