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Glossary of Financial Terms

Glossary of Financial Terms

A – F G – K L – P Q – Z

Land Registry
This is a record of property. Ownership and the mortgage is listed on a register at HM Land Registry.

Landlord
This is someone who lets out a property in return for a regular rental payment.

Landlord’s Reference
This is a reference from a previous landlord regarding the general conduct of a tenant, the state he property was left in and whether their rent was paid promptly.

Lease / Leasing Agreement
This sets out the rental term, stating how long it will last as well as listing the conditions.

Leasehold
As a leaseholder, you do not own the property outright, but have the right to reside there for a specified term in return for rent and any service charges specified in the lease.

Legal Charge
This is a legal document which grants rights of security over your property with a lender. The type of legal charge used varies depending on the lender.

Lender
This is company that provides finance to a borrower.

Letting Agent Fees
This is a fee charged by Letting agents (usually a percentage of the monthly rent) for finding and monitoring tennants.

LIBOR
London Interbank Offered Rate is the rate banks buy and sell money to each other. It varies from day to day and is linked to Base Rate.

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LIBOR-linked
This is a rate of interest linked to LIBOR and will be set at a certain margin above the LIBOR rate (typically 1 – 1.5%).

Life Insurance
This is a policy that pays out a set amount on the death of the policyholder. Life insurance policies linked to mortgages are usually run for the same period as the mortgage and cover the repayments.

Limited Company

Loan to Value (LTV)

This is the amount a lender will be prepared to lend on a property. It is based on a current market valuation.

Loan – Secured
With this, the equity is used as security against the loan not being repaid. The loan is secured against your property. It means the property could be repossessed if repayments aren’t paid.

Loan – Unsecured
Certain loans don’t require any security. That’s if the loan amount or the financial position of the applicant means there’s little risk to the lender.

Local Authority Search
A search of local authority records to confirm the status of the property. This is normally done by your solicitor and the fees for this are included as part of their disbursements. This search will reveal certain important information about the property you intend to buy and the surrounding area, such as planning permissions and enforcement notices.

Maintenance Costs
These are costs necessary to keep a property in good condition.

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Mortgage
This is a loan used to buy a property. The property itself is used as security to protect the lender from non-payment.

Mortgage Deed
This is a legal document which secures a loan on a property.

Mortgage Officer
This is a fully-qualified and experienced Go representative who can help you with all aspects of your mortgage application from initial enquiry through to completion.

Mortgage Subsidy
Some employers offer their employees a subsidy or additional income payment to help meet the cost of mortgage interest payments. The amount of subsidy offered will vary and can be calculated in a number of different ways.

Mortgage Term
This is the length of time set for the mortgage to run. At the end of the mortgage term, you are legally obliged to repay the loan in full.

Mortgage Payment Insurance (MPI)
This is a special type of insurance used to protect your mortgage repayments in the event of illness or accident.

Multipliers (income multiplier)
This is the factor a lender applies to an applicant’s income to work out how much they can borrow. Although Go calculate the amount as a percentage of the property value – up to 85%.

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National Insurance
These are insurance contributions paid to the government by every working person who earns above a minimum amount. A self-employed person does not automatically have National Insurance (NI) contributions deducted from his or her salary like an employed person, so they have to make arrangements to pay their own.

Negative Equity
If your property is worth less than is owed on your mortgage, this is known as negative equity.

Net Profit
This is the income of a company or self-employed business after all the expenses of running the business have been deducted. The lender uses this figure to calculate an applicant’s borrowing limits.

No Capital Raising
This is an application for a loan which is to replace an existing loan and doesn’t involve additional borrowing.

No Credit History
If an individual has no credit arrangements already in place, it can be difficult to obtain new credit because a lender cannot easily assess how ‘creditworthy’ the applicant is.

Non Status
This is a loan that is approved without making enquiries about the borrower’s income or credit history. Part & Part

Part & Part
This is a term used to describe a mortgage that is split between two repayment methods, with part of the mortgage set up on a repayment method, the other on an interest-only basis.

Payment Protection Insurance (PPI)
This is a type of insurance that pays your monthly repayments for a limited time in the event of accident, illness or unemployment.

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Payment Schedule
This is a schedule of monthly payments that you are legally obliged to make when your mortgage starts.

Pension Mortgage
This is an interest-only mortgage that will use the ‘tax free cash’ element of a personal pension plan to repay the mortgage at the end of the term.

Portable
This is a mortgage that can be transferred from one property to another.

Principal
This is the original amount of the loan.

Profit
This is the amount of money left after allowing for the legitimate expenses of running the business.

 

 

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