Secured Loans & Mortgages

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Acceleration clause
A provision that allows a lender the right to collect the total outstanding balance of a loan under certain circumstances, including failure to make payments.

Access
Any means by which a person can enter property.

Accident, Sickness and Unemployment insurance
Accident, Sickness and Unemployment insurance (ASU), also referred to as mortgage payment protection and will provide you with an income to meet your outgoings if you are off work sick, have an accident or are made redundant. It pays out a monthly benefit to cover your mortgage and other related costs.

Actual age
The number of years a structure has been standing.

Additional principal payment
Additional money included in the monthly payment to reduce the principal and shorten the term of the loan.

Additional security fee
An additional security fee paid to the lender to protect against the borrower defaulting on the loan. This is usually charged on mortgages of more than 75% of the property value. Occasionally a parent may be required as a guarantor. Also known as Indemnity Guarantee Premium and Mortgage Indemnity Premium.

Add-on interest
The interest a borrower pays on the principal for the duration of the loan.

Adjustment date
The date on which the interest rate changes on an adjustable rate mortgage.

Administration fee
This fee is charged by Mortgage lenders to cover their costs of administration and sourcing funds. The fee is non refundable if the mortgage application doesn't proceed. These fees are usually less than £50.

Administrator
A person with the authority to manage and distribute the estate of someone who died without leaving a will.

Administrator's deed
A legal document used by an administrator of an estate to transfer property.

Advance
Loan from a bank or building society in the form of a mortgage.

Adverse possession
The acquisition of title to property through possession without the owner's consent for a certain period of time.

Adverse possessory title
If a piece of land is occupied without permission for at least 12 years, the occupier can become the legal owner.

Adverse use
The access and use of property without the consent of the owner.

Affiant
A person who makes a sworn statement.

Affidavit swear fee
Charged when a mortgage lender is required to swear an affidavit (written legal statement) to a solicitor in connection with mortgage arrears.

Agency closing
The process in which a lender uses a title company or other firm as an agent to complete a loan.

Agreement in principle
An expression of a mortgage lender's willingness to enter into an agreement subject to other conditions being met, such as credit checks and a satisfactory property valuation.

Alienation clause
A provision that requires the borrower to pay the balance of the loan in a lump sum after the property is sold or transferred.

Amortisation term
Expressed in months, this term states the time period to pay off a mortgage.

Amortization
The process through which the mortgage debt is altered, usually declining, as payments are made to the lender. "Negative amortization" occurs when monthly payments are too small to cover either the principal or interest reductions.

Amortization schedule
A schedule of how mortgage debt is changed over time.

Amortization tables
Mathematical tables lenders use to calculate a borrower's monthly payment.

Annual bonus
A bonus paid annually on an endowment mortgage which is dependent on the performance of the investment fund you are using to repay your mortgage.

Annual mortgagor statement
A yearly statement to borrowers that details the remaining principal and amounts paid for taxes and interest.

Annual Percentage Rate
Where interest on loans is expressed as other than a yearly rate, for example 1.5% per month, APR is the equivalent rate over a year, in this case 19.56%.

Annualised payment scheme
Although the borrower pays interest at a variable rate, which can change from month to month, the lender charges a set amount of interest each month and then adjusts the balance at the end of the year.

Application
A document detailing a potential borrower's income, debt and other obligations to determine credit worthiness.

Application fee
The fee a lender charges to process a loan application.

Applied or nominal interest rate
The rate used to calculate due interest.

Appointed representative
This is a salesperson, company or organisation that advises on the investment products (endowments, pensions, Unit trusts and so on) of one single life assurance company. It can also refer to an Independent Financial Adviser who is a member of a network.

Appraisal
A professional evaluation of the value of a home or other piece of property. It is often required by a lender.

Appraisal fee
The fee an appraiser charges for an estimate of the market value of the property.

Appraisal report
A detailed written report on the value of a property based on recent sales of comparable sites in the area.

Appraised value
A surveyor's estimate of the value of the property.

Appreciation
An increase in the value of a home or other property.

Approved tradesmen
Your insurance provider may insist that any repair work on your home is carried out by a tradesmen with whom they have negotiated favourable rates and who have been approved as meeting certain standards of workmanship.

APR
This is an indicator used to compare interest rates. It takes into account the costs involved in setting up the mortgage, any discount periods, how often interest is calculated and calculates what the average rate of interest will be over the life of the loan. All lenders that comply with the consumer credit act must ensure that the the borrower is informed of the APR.

Arrangement fee
An Arrangement Fee is a charge some brokers make for arranging your loan. For example, if you took out a loan for £5000, the broker may add £200 to your loan amount and claim that for themselves - your loan would actually be for £5200.

Arrears
These are the sum total of late or overdue payments for a mortgage, ground rent and maintenance charges, or any other regular payment. Some insurance policies will automatically be voided if you fall into arrears.

Arrears
Arrears occur when the borrower misses one or a series of monthly payments. Arrears can lead to the repossession of the property.

Arrears breakdown
A month-by-month breakdown of any arrear balance and charges for your mortgage. A fee for this service is often added to your account once you have been sent the breakdown. Costs £10 - £30

Arrears fee
A fee charged on a monthly basis to cover additional administrative costs where your mortgage account is one or more monthly payments in arrears. Costs £15 - £45. You may well be charged arrears fees in connection with other products.

Assessed value
A determination by a tax assessor of the value of a home in order to calculate a tax base.

Assumable mortgage
When the buyer assumes payment on the seller's existing mortgage.

Assumption
When a buyer assumes the loan payments and obligations of the seller. If the buyer defaults, however, both the buyer and seller are responsible for the debt.

Assumption clause
A clause stating that the seller has passed to the buyer full responsibility for the mortgage on the property. Often, an assumption fee must be paid to the mortgage lender.

Assumption fee
A fee the lender charges for processing new records for a buyer assuming an existing loan.

ASU
Accident, Sickness and Unemployment insurance (ASU), also be referred to as mortgage payment protection and will provide you with an income to meet your outgoings if you are off work sick, have an accident or are made redundant. It pays out monthly to cover your mortgage and other related costs.

Available funds
The difference between the initial amount you wish to borrow (initial mortgage balance) and up to 90% of the value of your home (Loan Limit). This is the amount you can take as extra borrowing throughout the term of your loan.

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