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Guaranteed Earned Income
This is income you are guaranteed to receive, although it is not part of your basic pay under the terms and conditions of your employment.
Higher Lending Charge (HLC)
This is a charge made if a borrower wants a mortgage that exceeds 75% of the property's value. This figure is known as the 'Loan to Value'.
Homebuyer's Report or Homebuyer's Valuation
This is an inspection of the property you intend to buy, carried out by a surveyor. The inspection is more detailed than a basic valuation, but will not be as in-depth as a Full Structural Survey. The surveyor will send you a report, detailing the condition of the house, its current market value and any repairs that are required.
Illustration (Key Facts Illustration)
This explains exactly how much a mortgage will cost to repay (interest payments) and set up (fees and
other costs).
Income Multiples
The amount you can borrow usually depends on how much you earn. Each lender uses a set of 'income multiples' to work out the maximum loan they will grant, subject to a property valuation. Most lenders allow 3 times the income of a single applicant or 2.5 times the incomes of joint applicants.
Individual Saving Accounts (ISA)
These are savings accounts introduced by the Government. ISAs have a special tax status, which means that all growth and profit on your investment is free of income and capital gains tax, although there are limits to the amount you can invest each tax year. ISAs can be used to help repay the capital of an interest-only mortgage.
Voluntary Arrangement
Initial Interest
This is interest to cover the period of time between completion date and the normal monthly repayment date.
Interest Only
With an interest only mortgage or loan, the monthly repayment consists of the interest element only, leaving the original capital outstanding at the end of the term.
Insurance
Joint Application
A mortgage application involving more than one person as the borrower.
Key Features Illustration
To comply with mortgage regulations, borrowers must be provided with a Key Features Illustration (or KFI) before they take out a loan. This states what rate of interest is to be charged, how much the borrower will repay and any charges that apply.
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