Keep It Simple - A Jargon Buster
Mortgages, Remortgages and Loans Explained
We believe in making things simple and guiding you every step of the way. To take the guesswork out of common terms used in the marketplace, here’s a jargon buster to help you.
Click on a phrase in the list below to get a simple explanation…
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Standard Variable Rate – mortgages & remortgages (also known as SVR)
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Self certification mortgages & remortgages (also known as a self-cert mortgage)
Remortgage – what is a remortgage?
Well this is the process of paying off your current mortgage with the proceeds from a new mortgage using the same property as security. Also you may be able to borrow additional cash you need in the process.
Standard Variable Rate – mortgages & remortgages (also know as SVR)
This is the standard rate of interest charged by the lender, which is usually around 1-2% higher than the Bank of England base rate. As the title states the rate is variable which means that it can go up as well as down. If your mortgage is on this type of rate your payments can go up as well as down.
Fixed Rate – mortgages & remortgages
This means the lender fixes the interest rate for a set period of time. If your mortgage is on this type of rate, your payments will remain the same for the fixed period of time set by the lender. This type of mortgage is useful if you’re on a budget. You need to be aware that this type of mortgage will carry early repayment charges (see relevant explanation) should you try to leave or repay the mortgage early.
Discounted Rate – mortgages & remortgages
With this type of rate the lender offers a discount on it’s standard variable rate usually for a set period of time. This means the rate is set lower than the standard variable rate but is still variable and therefore can still go up as well as down. You need to be aware that this type of mortgage will carry early repayment charges (see relevant explanation) should you try to leave or repay the mortgage early.
Capped Rate – mortgages & remortgages
Capped rates give you the ability to benefit from reductions in the Bank of England base rate with the peace of mind that should there be a rise, there is a capped level which your rate will not rise above. Although this type of product usually has a rate higher than a fixed or variable rate. You need to be aware that this type of mortgage will carry early repayment charges (see relevant explanation) should you try to leave or repay the mortgage early.
Repayment mortgages & remortgages
This type of mortgage pays off both the money you borrow and the interest charged at the same time. If you make all your payments the mortgage will be repaid at the end of the term.
Interest only mortgages & remortgages
With this type of mortgage you only pay the interest charges for the money you borrowed each month. This means that you are not reducing the loan amount, which will need to be repaid in some other way.
Self-Certification mortgages & remortgages (also known as Self Cert Mortgage)
This type of mortgage is designed for the self-employed and anyone who has difficulty in providing proof of their income. The borrower will state their income to the lender on a signed declaration to confirm that the mortgage is affordable. There is no need to supply accounts, bank statements or any other proof. The lender normally requires a slightly larger deposit due to the extra risk involved and it may result in higher rates payable.
Debt consolidation mortgages & remortgages
This type of mortgage is to help those who are struggling with their current commitments on their mortgage, loans, credit cards and other finance agreements. The mortgage is designed to place all their debts under one roof - making one simple monthly payment with the potential to reduce your monthly outgoings.
Initial Disclosure Document (also know as an IDD)
The Initial Disclosure Document gives you the key facts about us, and how we conduct our business with you. It confirms our authorisation by the Financial Services Authority our regulator. The type of service we provide, the lenders we use and the fees we charge for our service are also explained.
Key Facts Illustration Document (also know as a KFI)
This document will outline information about the recommended mortgage, the type of mortgage, the term, monthly repayments and any early repayment charges involved. It will also confirm the type of service we have offered you and the costs and fees involved.
This is a charge made by the lender that you will have to pay if you end your mortgage deal – either by paying back the mortgage early or if you move your mortgage to another lender.
This type of loan is designed to help unfortunate people who have past or current credit problems (such as CCJ’s, defaults and arrears) raise the cash needed at a competitive rate of interest.
This type of loan is offered with lower interest rates than unsecured loans. In addition you can borrow larger amounts over longer repayment periods. The reason for the attractive proposition is that you must provide the lender with security for the money you borrow in the form of a legal charge against your property.