Capital

The principal part of a loan, i.e. the original amount borrowed

Capital Growth

Where the original amount you invest increases over a period of time. Generally this is achieved by interest or dividends being added back to an account for reinvestment.

Capital & Interest

Otherwise known as a repayment loan. The borrower pays an amount each month to cover the amount borrowed, or principal, and the interest charged on that amount.

Capital Raising

When taking out a new loan in order to pay off existing or outstanding debts, but leaves a surplus at the disposal of the borrower. Alternatively a loan taken out just to raise capital.

Cash Advance

A withdrawal of cash made against a credit card, which is then charged to the card account.

Cashback

A type of loan where the borrower is given back a sum of money (usually a percentage of the loan). Used by lenders as an incentive to promote their products.

Cat Standards

The standards published by the Government which make it easier for people to assess the basic parts of a ISA. CAT stands for Cost, Access and Terms. You can find out more information about these standards in the ISAs section of the site.

CCJ

County Court Judgement. An order of a court against a debtor to pay money owed.

CHAPS

Clearing House Automated Payment System. An electronic way of transferring money between accounts.

Classic

All Classic Mortgages benefit from an interest rate which tracks the Bank of England base rate. You can choose from a range of special offers for the early years of the mortgage, for example fixed rate, discounted rate or a cashback. A CAT Standard Mortgage is also available as part of the Classic range. Whichever Classic Mortgage you choose, you have attractive rates.

Commission Amount

An amount deducted to reflect the costs of providing a service.

Completion

The final step in transferring ownership of the property, when the lender will pay the rest of the buying price to the seller's legal representative, and you can collect the keys and move in.

Commercial Mortgage

A loan granted for a commercial purpose, normally secured against commercial property, although residential property may be used. Usually carries a higher rate of interest than a normal loan because the lender perceives a higher degree of risk.

Compulsory Excess

Where a customer is required to pay the first part of a claim.

Contribution

An amount of money paid into an account. This can be a 'one off' payment or on a regular basis.

Consumer Credit Act (CCA)

The Consumer Credit Act 1974 regulates consumer credit and consumer hire agreements for amounts up to A325,000. Its protections apply to agreements between traders and individuals, sole traders, partnerships and unincorporated associations, but not agreements made between traders and corporate bodies such as limited companies. The Act lays down rules covering:The form and content of agreements; credit advertising;The method of calculating the Annual Percentage Rate (APR) of the Total Charge for Credit; The procedures to be adopted in the event of default, termination, or early settlement;The Act also requires that all traders who make regulated agreements obtain licences from the Office of Fair Trading. Credit brokers, debt advisors and others, may also require licences.

Conveyancer

A person, used as an alternative to a solicitor, to carry out the legal work involved in buying and/or selling a property. Note: It should be checked that they are licensed to carry out this function.

Counter Cheque

A cheque withdrawal made over the counter, issued by the cashier

Credit Check

Enquiry made on the credit history of an applicant, normally by reference to one of the major credit agencies such as Equifax, Experian or Westcott Data. Information held covers voters roll, residential history, other residents over 18 in the same household, credit cards, loans and all other lines of credit held. Sometimes mortgage payment information is held, but not all banks subscribe to the credit reference agencies. You can apply to the agencies to find out what information they hold on you. )

Credit Scoring

The method of loan assessment carried out by scoring the various answers given on a loan application. The lender asseses the information given by the applicant along with the results from the credit check.

Criteria

The lender's standard terms and conditions for acceptable loan applications. These vary from loan to loan and lender to lender depending on the amount being borrowed and the status of the borrower.

Debt Consolidation Loan

The action of combining several loans or liabilities into one loan. Put another way, debt consolidation is the process of taking out a new loan to pay off a number of other debts. Most people who consolidate their debt are usually doing it to attain a lower interest rate, or the simplicity of a single loan. Also known as a "consolidation loan".

Debt To Income Ratio

The ratio, expressed as a percentage, which results when a borrower's monthly payment obligation on long-term debts is divided by his or her gross monthly income.

Deeds Case

When a secured loan is taken out against a property where there is no outstanding mortgage. (unencumbered)The lender will place a 1st charge on the property and may require to hold the deeds to the property. Under new legislation coming in, this type of loan will be classed as a mortgage and not a secured loan.

Default

Failure to make loan or mortgage payments on a timely basis or to comply with other requirements of the loan or mortgage contract.

Delinquency

Failure to make loan or mortgage payments when the payments are due.

Dependants

Person(s) who depends on another for financial support.

Direct Debits

A payment made from your account automatically to pay bills etc, usually amounts that vary, e.g. A gas bill.

Discharged Bankrupt

A person whose period of bankruptcy has ended. After a period, normally three years, the debtor is discharged from bankruptcy, his debt being treated as paid. A discharged bankrupt is likely, however, to experience severe difficulties in borrowing money. Credit reference agencies will normally identify former bankrupts for 15 years after their discharge.

(Discounted) Rate

A discounted rate gives you a reduction of, for example, 2% off the standard variable rate (SVR) for a specific period. So, during this period should the SVR rise and fall, you will still qualify for the discount and therefore pay a lower rate.

Distribution

A cash amount paid to a holder of units in a unit trust. The amount of the distribution depends on the number of units held.

Diversified

Wide-ranging.

Dividend

A cash amount paid to a shareholder. The amount of the dividend depends on the number of shares held.

Double Insurance

Policies vary from lender to lender. Generally double insurance offers protection against sickness, accident and redundancy for the first and second wage earners. Cover is also available for self employed borrowers and under certain circumstances for non working partners. Details of the specific insurance plan will accompany the lenders offer.

Finance Tracker Ltd strongly recommend that you consider some form of insurance protection, especially in the case of secured loans, bridging loans, unsecured loans, car hire purchase, mortgages and remortgages.

Eligibility Criteria

These are criteria which you must satisfy before an account or service application can be progressed.

Emergency Home Assistance

An insurance policy that will provide a suitable tradesman to effect a repair in the event of an unforeseen home emergency e.g. a plumber for burst pipes, a roofer for lost tiles etc.

Employers Reference

A written statement from an employer confirming the borrower's employment, giving details of his or her salary and length of service; an essential requirement for assessing an employee's ability to repay the loan.

Employment Status

The term used by lenders to describe potential borrowers' working arrangements. the basis of an individual's employment: i.e. employed, self-employed, controlling director or not in employment. Self-employed applicants are sometimes seen as a greater risk than employees. Many specialist lenders and loans have emerged in recent years designed specially for different types of employment status.

Endowment

A life assurance policy that is designed to produce a lump sum to pay off an interest only mortgage. There are a number of different kinds of endowment policies: 'with-profits', 'unit-linked' etc.

Equity

The stake that you own in your home, i.e. the property value less the mortgage loan outstanding.

Equity Release

In loan terms is simply releasing the equity that has appreciated in your home. Allows you to take out a loan secured against your property.

Estate Agent

A firm that works for the seller to help find buyer for their home. They earn commission from the seller of the property: as a buyer you should not incur any charges from them. Their work includes: Preparing accurate descriptions of the properties on their books; Suggesting a price that will attract buyers whilst satisfying the seller; Sending out lists of properties for prospective buyers and arranging viewings.

Exchange of Contracts

Agreement signed by house purchaser and vendor committing themselves to the transaction. Once this has occurred a legally binding contract is in existence and the purchaser must complete the purchase within a specific period of time.

Financial Advisor

Someone qualified to recommend products and services that help individuals plan their income and expenditure. There are two types: Independent work on behalf of the client and can choose from any product or service; Tied advisors work on behalf of their Company to recommend their products only.

First Charge

Normal legal charge used to secure the main mortgage. A lender with a first legal charge over a property has a first call on any funds available from the sale of the property. If your property is collateral for more than one property and the borrower defaults on payments, the lender with a first charge has the option to repossess the home. (see also second charge)

FISA

Finance Industry Standards Association. This organisation sets the standards within the broker introduced sector of the finance industry. A FISA member agrees to the FISA code of practice and therefore agrees to observe a higher standard in his business practices than would be required by law. FISA monitors the conduct of its members in order to ensure that those standards are achieved and maintained.

Fixed Interest Stocks

Securities which carry a fixed rate of interest, also known as the coupon, normally payable for a predetermined period twice a year. Fixed income is the term usually applied in the US, while fixed interest is the European phrase.

Fixed Rate Loan

The rate is fixed for a specific number of years, so you know what your payments will be over that period. Following this period, the rate will usually revert to the lender's standard variable rate.

Flexible mortgages

A more recent innovation, these give various benefits which usually include the ability to vary payments in line with your circumstances. They may also allow you to take "payment holidays" and to borrow back any overpayment you may have made. Because of their flexible nature and the variety of schemes available it is not possible to give a full description here, but your finance Representative will provide more detail if you are interested in this type of loan.

Foreclosure

The legal process that occurs when a buyer defaults on a loan. The lending institution takes back the property because of a lack of payments. (repossession)

Fraudulent

Involving criminal deception or dishonesty.

Freehold

Land / Property is owned outright by the Freeholder. Whether the property is held on a lease or a freehold basis will be identified in the deeds to the property.

Full Status

A loan where the lender carries out complete checks against the borrower's credit history, residential history and income. Full status loans offer the best interest rates as the Lender has ensured that they are minimizing any risk.

Further Advance

An additional amount of money borrowed from the lender at a later date on top of the original loan amount.

Gilts

Are fixed interest stock used by the UK Government.

High Street Lenders

Providers of loan products who can be broadly split into two groups - the building societies and the banks. Banks are profit-making businesses that return a portion of their profits to shareholders in the way of dividends. Building Societies on the other hand, are mutually owned organisations, which exist not for profit but for the benefit of the members. They claim that this allows them to return profits to their customers in theform of cheaper products.

Home Equity Loan

A fixed or variable rate loan obtained for a variety of purposes, secured by the equity in your home. Often used for home improvement or freeing of equity for investment in other property or investment. Recommended by many to replace or substitute for consumer loans whose interest rates are high, such as car or boat loans, credit card debt, medical debt, and education loans.

IFA

Independent Financial Advisor

IMRO

The Investment Management Regulatory Organisation.

Inflation

Sustained increase in price or earnings levels, commonly measured by changes in the Retail Prices Index (price inflation) or changes in the index of National Average Earnings (earnings inflation).

Insurance (Term)

A life insurance policy often linked with a mortgage or loan. The premium goes towards insuring your life, and will pay off loan in the event of death. No benefits are received after the policy expires.

Interest Calculation

Interest is calculated daily and charged monthly. This is officially known as 'Monthly Rest' and gives the customer immediate benefit from Overpayments or Lump Sum Payments. Please see the General Conditions section for information regarding capital repayments made during a special offer period.

Interest Only Mortgage

With this type of product, your monthly repayments will only cover the interest element of the loan. You will typically set up another repayment vehicle eg an endowment or ISA to repay the capital element of the loan

International Equities

Ordinary shares issued by companies which are quoted on the stock exchange outside the UK.

Income Replacement

An insurance policy that will provide an income in the event of job loss or illness.

Individual Voluntary Arrangement (IVA)

Introduced under the Insolvency Act 1986 with the intention of allowing an individual to avoid bankruptcy and make maximum possible restitution to creditors. An IVA is seen as preferable to bankruptcy as the debtor can retain his tools of trade and, in the case of a professional person, continue to practice, or hold company directorships. IVAs can be set up for either a person or a company. An Insolvency Practitioner petitions the High Court for protection for a borrower debtor under an IVA. A proposal is put to the creditors of whom 75% must accept. If this is achieved, the arrangement becomes binding upon debtor and all creditors named in the agreement. If the debtor fails to meet payments under an IVA, the Insolvency Practitioner is likely to petition for the individual to be made bankrupt. Whilst bankruptcy normally lasts for only three years some creditors insist that IVAs last for a longer period.

Interest Only Loan

Interest only loan - where only payments of interest are paid to the lender during the term of the loan. Some lenders will allow loans to be set up without any specific provision to repay the capital at the end of the period. This is known as a pure interest only loan

Interest Rate

The percentage of your loan that a lender charges you each year for the privilege of borrowing money. The prevailing level of interest charged by lenders depends largely on the economy and the Bank of England base rate. If the Governor of the Bank of England and the Monetary Policy Committee are worried about the economy overheating and causing inflationary pressure, they may raise interest rates. This makes it more expensive to borrow money and therefore the overall demand for borrowing is reduced. Since this is one of the most commonly used instruments for managing the economy, we are subject to fairly frequent changes in interest rate.

Intermediaries

Brokers and other intermediaries attempt to arrange suitable financial products or policies for you. They can be fully independent, part of a network that uses a panel of providers, or tied to certain institutions in which case they can only sell their products.

Involuntary Unemployment

Where employment ends other than through the employee’s choice or because of something the employee has done. Usually means compulsory redundancy.

Impaired Credit

Impaired credit loans are specialist products for customers whose credit problems disqualify them from using the lenders' standard products. Some lenders specialise in loans such as these, which are also known as 91non-status92 loans, bad or poor credit loans.

ISA

Individual Savings Account.

ISA Manager

A firm authorised to manage ISA's.

ISA Regulations

The Individual Savings Account Regulations 1998, including any future changes.

Joint Income

Where the total gross income of the loan applicants is taken into consideration by the Lender when calculating the affordability of theloan.

Joint Liability

The responsibility of two or more people to fulfill the terms of a loan or debt. When a loan is taken out as a joint application, both applicants are liaible should the loan repayments not be kept up.

No terms Recorded

Leasehold

A leaseholder holds the title to land only for a finite term i.e. the length of the lease upon payment of a consideration e.g. rent.

Lender

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

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. A secured loan will normally be secured by a second charge. Building societies are allowed to lend only if they have a first chargeon a property.

Loan (Secured)

A loan to be used for any purpose. The equity in the property is put up as security against not paying the loan back.

Loan (Unsecured)

A loan to be used for any purpose. The credit rating or financial position of the applicant is such that no security for the loan is required.

Liabilities

Liabilities are debts that you have and the regular utgoing payments that you make.The reason you must show your bank statements is usually to help the underwriters identify anything in your current expenditure that may impinge upon your ability to repay the loan. They may want to know about any other mortgages, debts, credit cards, HP agreements, loans, overdraft facilities, maintenance and court orders.

Loan Illustration

Example of the monthly cost of a loan and other expenses associated with the loan. The loan illustration should show all fees, set up costs (if any) and the APR relevant to the loan.

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 e.g. A property valued at £50,000 with a mortgage of £45,000 would have an LTV of 90%.

MCRI

Mortgage Code Register of Intermediaries. A register maintained by the Council of Mortgage Lenders of the names of mortgage brokers subscribing to the Mortgage Code.

MGI

Mortgage Guarantee Insurance. An insurance policy designed to make good any shortfall between the amount owed on a mortgage and the value of the mortgaged property. Provides a benefit to the lender in the event of repossession resulting from non-payment.

MIG

Mortgage Indemnity Guarantee. See MGI

Mini ISA and Maxi ISA

There are three types of ISA: Mini; Maxi and TESSA only option. The ISAs section on our site explains each type of ISA. The rules amd limits are laid down by the ISA regulations. When you apply for an ISA we will confirm what type your ISA is.

MIRAS

Mortgage Interest Relief at Source. This is tax relief on mortgage interest payments. Currently 10% on the first £30,000 of the loan. However, it will be phased out in April 2000.

Monthly Fee

A fee charged once a month.

Mortgage

Mortgage is the name given to a loan used to buy property, where the property is used as security for the loan.

Mortgage certificate

Shows you how much you can borrow in principle, based on your income and outgoings. This will help when choosing your new home.

Mortgage Debt

The amount outstanding on your mortgage.

Net

What is left after the deduction of taxes ie what you take home.

Negative Equity

The situation where the amount owed on a mortgage exceeds the value of the property.

No Insurance

Insurance is offered to provide peace of mind against life's unexpected problems which invariably occur. Selecting "No insurance" means that you are choosing not to protect your proposed loan repayment in the event of you being unable to work due to an accident, sickness or redundancy.

Non Status

loan granted without making enquiries as to the borrower's income or credit history. This is useful for people who may be self-employed and/or unable to prove their income. Often attract a higher rate of interest as there is more risk to the Lender.

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.

Office Copies

Copies of documents held at Land Registry showing ownership and mortgages outstanding on a property.

Office of Fair Trading (OFT)

A non-ministerial government department, headed by the Director General of Fair Trading which aims to protect consumers by ensuring that trading practices are as fair as possible and by encouraging competition among businesses. One of the OFT's major responsibilities is the administration and enforcement of the Consumer Credit Act 1974. Any business planning to provide consumers with credit facilities, or refer them to a source of credit, or hire out goods, must first obtain a consumer credit licence from the OFT. The OFT also has consumer protection duties under the Fair Trading Act 1973, the Estate Agents Act 1979, the Control of Misleading Advertisements Regulations 1994. Monopolies and mergers are dealt with under the Fair Trading Act, and other competition issues are covered by the Restrictive Trade Practices Act 1976, the Resale Prices Act 1976, the Competition Act 1980 and the Financial Services Act 1986.

Outstanding Balance (Flexible Mortgages)

The amount to be repaid at any point in time.

Overdraft Facility

This is a facility on the Bank Account which allows customers to borrow up to a pre determined limit. This limit must be agreed in advance and is subject to status.

Payment Protection Insurance

A type of insurance that pays your loan for you if you become unable to work for an extended period of time, as a result of redundancy, accident, sickness or disability. This is quite advisable to have if the loan is secured against property.

PIA

The Personal Investment Authority.

PIN

Personal Identification Number - a series of digits used to identify the legitimate holder of a card when used in an ATM.

POP

Point-of-Presence. A phone number through which users can access an ISP.

Portfolio

A group or range of investment products held by an individual. Can also be used to describe a range of investment vehicles in which we invest money on your behalf.

Premiums

Monetary amount paid into a policy.

Prime Rate

The prime rate is the best interest rate available to a lender's most qualified customers.

Principal

The principal is the original amount of the loan, the capital.

Processing

The administration and paperwork related to a loan from the time a completed application form is received through to completion of the loan process.

Product

This is a loan product offered by a Lender. A Lender may offer a variety of loan products to cover a large spectrum of varying clientssituations.

Product Related Charge (PRC)

Also known as an Early Redemption Charge, this is a fee charged by the lender if you pay off all or part of your mortgage, or you move the loan to another lender before an agreed date. These charges usually apply to all types of mortgages.

Professional

A professional is a person who is a member of a recognised profession, such as a doctor, dentist or solicitor. The definition of a professional can vary substantially from lender to lender with occupations such as banker being accepted as a profession by some but rejected by others. Many professions are disqualified from practising if they become bankrupt.

Quotation

A quotation is a detailed document itemising costs, fees etc. which will be incurred in taking out the specified loan. Borrowers are advised to shop around for quotations from different lenders before making a commitment. A quotation is also an illustration of the costs involved in the loan and repayments.

Rate (Capped)

Usually for a set number of months/years where the interest rate can go up and down but there is a maximum (capped) interest rate which it can not go above.

Rate (Variable)

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.

Redemption

Paying off the loan, either to move the loan to another lender or at the end of the loan term.

Redemption charges

Any charge levied by the lender when the loan is repaid before the end of the full term.

Redemption Statement

A statement from the Lender indicating the outstanding balance of the loan and any redemption charges. Indicates the final amount which needs to be repaid to redeem the loan.

Redundancy Insurance

Also known as accident, sickness and unemployment insurance - (ASU) or Payment Protection Insurance (PPI) Insurance cover arranged by the borrower to protect against inability to meet loan re-payments. This cover should more accurately be described as accident sickness and redundancy insurance as unemployment cover is generally seriously restricted to cover only events that are entirely beyond the control of the insured person. Typical exclusions include dismissal following professional misconduct and any act of voluntary redundancy. The accident and sickness cover will also be subject to major restrictions such as any act of self-injury or any injury related to the use of alcohol or drugs.

Refinancing

Rearranging borrowings with a different lender, usually to obtain more attractive terms or to raise fresh capital.

Target Retirement Income

The amount of annual income which the customer wants from his pension.

Tax Credit

When a distribution or dividend is received , a tax credit normally attaches to it and we will normally reclaim this from the Inland Revenue.

Tax Efficiency

Where certain investment accounts are used to maximise tax free opportunities.

Tax Relief

An allowance given to an individual based on their personal tax status.

Tax Status

An individuals position in respect of Inland Revenue rules which lay down who does and does not pay tax, how much should be paid.

Tax Year

The period from 6 April in a year to 5 April of the following year.

Telegraphic Transfer

A telegraphic transfer is electronic transfer of money between two parties. It is usally the preferred method that a Solicitor uses to transfer money between Lenders and Vendors.

Term

Period of a loan expressed in months or years.

TESSA

Tax Exempt Special Savings Account.

TESSA Maturity

At the end of a Tessa’s 5-year term, the account is closed and the capital and tax free interest are returned or reinvested according to the customers wishes.

Tiered in Credit Interest

The rate of interest is structured to rise for larger balances.

Title

The title is the evidence of the right of property ownership. can be held solely, jointly, in common or incorporate or partnership form.

Title Deeds

Set of documents relevant to present and past ownership of a property. Details names of owners and details of institutions that have registered a charge against the property. Held by the first mortgagee lender whilst their charge remains in existence.

TOISA

A TOISA (TESSA only-ISA) is a special tax-free account designed by the Government as a home for the capital you have invested in your TESSA, once your TESSA comes to an end. A TOISA can be held in addition to the annual ISA limits, but can only be opened within six months of a TESSA maturing.

Top-up Loan

A top-up loan is a form of second mortgage normally used to provide an overall loan in excess of the loan to value ratio allowed by the primary lender.

Typical APR

The typical APR is example of the annual percentage rate for a given mortgage product, normally used in an advertisement in order to comply with the requirements of the Consumer Credit Act (Advertising Regulations).

UK Equities

Are the ordinary shares in issue by each company quoted on the UK stock exchange.

UK Quoted Securities

Are those formally quoted and listed on the London stock exchange.

Underwriting

The process by which the ability of a prospective borrower to repay a loan is assessed (also the name of the department that undertakes this work). The process takes into account various factors including employment history, financial status, previous credit history and current earnings.

Unencumbered

An unencumbered property is one that is owned without any borrowing or other legal charge over it. In other words, it is owned outright with no mortgage or charges attached to it.

Unemployment Insurance

Another form of income protection, but one that does not cover any form of sickness, injury or disability. The purpose of this type of policy is to replace income lost through a short to medium term period of redundancy. It provides you with a monthly tax-free income to cover a portion of your lost earnings. It is often sold in conjunction with the accident, sickness and disability element of income protection policies, in which case it is known as Accident, Sickness and Unemployment (ASU).

Unemployment Insurance

Another form of income protection, but one that does not cover any form of sickness, injury or disability. The purpose of this type of policy is to replace income lost through a short to medium term period of redundancy. It provides you with a monthly tax-free income to cover a portion of your lost earnings. It is often sold in conjunction with the accident, sickness and disability element of income protection policies, in which case it is known as Accident, Sickness and Unemployment (ASU).

Unsecured Loan

A loan to be used for any purpose. The credit rating or financial position of the applicant is such that no security for the loan is required.