Not sure what it all means?
Here we explain some of the jargon you'll encounter when you enter the 'Mortgage Maze'.
Jargon
Explained : Types of Mortgages Capped Rate Mortgage
The interest rate can go up and down but it will not rise above an agreed
rate (the cap), which is specified at the outset for a fixed period. At
the end of this period, the interest rate would normally revert to the
lenders standard variable rate applicable at that time.
Cashback Mortgage
As soon as you enter into the mortgage, you will receive an agreed amount
- the Cashback. You are free to spend this as you wish although you may
be required to return the cashback if you repay the mortgage early.
Discount Mortgage
For a set period the interest rate you will be charged will be a set percentage
below the standard variable rate. It will go up and down in line with the
standard variable rate. After the set period, the interest rate reverts
to the standard variable rate.
Fixed Rate Mortgage
The interest rate is fixed at the outset, usually for a set period. After
that period, you would normally return to the standard variable rate.
Interest Only Mortgage
You simply pay the interest on the amount that you borrow. At the end
of the mortgage term you pay back the amount you originally borrowed. You
must take out and keep up an ISA, endownment plan, pension plan or other
approved investment product to build up the money to pay back the amount
that you owe at the end of the mortgage term.
Capital and Interest Repayment Mortgage
You pay off the interest and capital over the life of the mortgage. In
the early years you pay mostly interest, but the amount that you owe reduces
more rapidly in the later years.
Jargon
Explained : General Mortgage Terms APR
The Annual Percentage Rate. This enables you to directly compare the costs
of different products, as the APR translates the interest rate together
with related set-up costs into an equivalent annual interest rate.
Conveyancer
A legally qualified person who deals with the transfer of the legal title
to property. Usually a solicitor, you need one when buying or selling a
property.
Remortgage
This is when you switch your mortgage from your current lender to a different
one by taking out a new mortgage to pay off your current one. You may be
able to get a better deal, which saves you money in the short or long term.
You may also be able to increase the size of your loan, giving you spare
cash to pay for, for example, a new car or home improvements.
Early repayment charges may be made by the your current lender if you remortgage.
This may lead to an increase in total costs and to an extension in the repayment period. Early repayment charges may be made by the your current lender if you remortgage.
Early Repayment Charges
(Formerly known as Redemption Penalty)
If you want to pay off your mortgage early for whatever reason, you may
have to pay an early repayment charge during the early years of your loan
- especially if if your mortgage is a capped rate, fixed rate or cashback
mortgage. The early repayment charge is usually related to the amount of
the original loan.
Higher Lending Charge
(Formerly known as Mortgage Indemnity)
An insurance arranged by the lender as additional security for the loan.
This is arranged when the mortgage is greater than the normal lending limit,
which is generally 75% of the value of the property. It is usually paid
as a single premium, which can often be added to the mortgage amount.
"Howards Financial Services Limited" is an Appointed Representative of Personal
Touch Financial Services Limited which is authorised and regulated by the Financial
Services Authority.
Howards Financial Services Limited is a wholly owned subsidiary of Howards
Group Limited.
We do not normally charge a fee for mortgage advice, however a fee paying option
is available.
Our typical fee is 1.5% of the loan amount.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Howards Financial Services East Anglia UK T: 0845 38 90 458
