Jargon buster
Our customer service team will explain everything to you, but if you want to check
the meaning of a financial term, it should be listed below.
If you have any further questions, either call us on 01902 585 016.
Or we can call you back
If you're a homeowner you can use the equity you have in your home to help you sort
out your finances, finance home improvements and deal with your debts. The wide
range of products we offer at Promise Loans means we can help find an ideal, affordable
solution to suit you.
- Adverse Credit
- Credit not paid or not paid when agreed.
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- APR
- Annual Percentage Rate of charge. The true rate of interest charged on a loan taking
into account the total cost of interest and other charges e.g. brokers fees/legal
fees. The calculation is set out in statutory regulations.
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- Arrears
- Payments not made on borrowing when agreed.
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- Mortgage or Finance Broker
- An intermediary who identifies, and places, customers requiring a loan or mortgage
etc. with a company (Lender) able to provide it. The broker often carries out the
administration to do with processing the loan.
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- BTL - BUY TO LET
- A property that is bought with the intention of letting it out to tenants. We offer
Mortgages for this purpose. Not all buy to let mortgages are regulated by the Financial
Services Authority.
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- Capped Rate
- 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 cannot go above.
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- 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. Cashback
may need to be repaid if the mortgage is repaid early.
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- CCJ or CCJs - County Court Judgement
- An order of a court against a debtor to pay money owed.
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- Consolidation
- Refinance of outstanding debts into one new agreement, normally at a reduced interest
rate.
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- Debt
- Money owing.
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- 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. Therefore
the discounted rate may still fluctuate, but in this scenario will always be 2%
lower than the SVR.
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- Early Repayment Charges (also known as a repayment penalty)
- When a loan is redeemed (paid off) early, either in full or in part, many lenders
will charge a fee. This particularly applies to Fixed, Discounted or Capped rate
loans or mortgages.
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- Exchange of Contracts
- Agreement signed by house purchaser and vendor committing themselves to the transaction.
Once the contracts have been exchanged a legally binding contract is in existence
and the purchaser must complete the purchase within a specific period of time.
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- 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.
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- FTB -FIRST TIME BUYER
- You are buying a property for the first time.
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- Fixed Rate
- 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.
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- 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 Promise Loans Representative will provide
more detail if you are interested in this type of loan.
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- High Street Mortgages
- The term used where the lender offers cheap rates in line with High Street interest
rates.
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- Home owner
- The term used when the customer has purchased their home, normally with the aid
of a mortgage.
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- IFA
- Independent Financial Advisor.
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- 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.
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- Loan
- Or advance, a sum borrowed.
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- 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%.
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- Lender
- The actual company that provides the finance to satisfy a loan or mortgage request.
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- Mortgage
- A loan to purchase a home where the property is used as security in the event of
non-payment of the mortgage.
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- Mortgage Deed
- The formal document signed by the borrower(s) whereby they agree to the lender creating
a charge over the property; the deed makes reference to the rights and obligations
of both parties as detailed in the Mortgage Conditions Offer of Advance or Loan
Agreement.
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- Negative Equity
- The situation where the amount owed on a mortgage exceeds the value of the property.
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- Non Status
- Where you have numerous CCJs or Mortgage Arrears
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- 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.
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- Past Arrears
- Payments not made on borrowing when agreed that have occurred in the past, normally
within the last 12 months
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- RTB - RIGHT TO BUY
- A term associated with legislation that gives council house tenants the Right to
Buy their homes.
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- Re-mortgage or Remortgage
- Loan taken out by a borrower to replace another one secured on the same property.
Typically taken out by borrowers switching lenders to achieve a better rate or more
affordable monthly repayment. We specialise in this service.
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- Repayment Mortgage
- With a repayment mortgage you pay part interest and part capital repayments to the
lender each month and in this way the capital that you borrowed is reduced until
the loan is repaid.
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- Secured Loan
- A loan to be used for any purpose. The equity in the property is put up as security
against not paying the loan back.
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- Security
- When a loan is taken out it is 'secured' on a property, the borrower agrees to the
lender creating a charge over the property; the deed makes reference to the rights
and obligations of both parties as detailed in the Legal Charge, Standard Security
or Loan Agreement. Thus the property is known as the 'security'.
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- Security Address
- When taking a secured loan or mortgage, the security address is the address of the
property which is being offered as collateral for the loan. Where property is offered
as security in this way, lenders are generally prepared to offer more flexible terms
and lower interest rates.
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- Self-Certified or Self Declared
- Lenders that operate this type of scheme allow the applicant to confirm how much
they earn by "Self-certifying" their income. Schemes are available to both employed
and self-employed applicants. Typically for the employed, the schemes are designed
to help those applicants with incomes that incorporate a large element of bonus
or where they derive income from a number of jobs. Whereas for self-employed there
is no need for full 3 years audited accounts to be provided.
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- Semi Status
- Where you have CCJs or Mortgage Arrears.
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- Settlement Figure
- The sum quoted in order for the loan to be repaid during the contracted term.
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- Sub-Prime Mortgage
- Mortgage granted to a person who is unable to borrow money secured on a property
from a normal lending source. The reasons the applicant may not be granted a mortgage
by a high street lender, could fall into one of three categories:-
- Adverse Credit information registered against them
- Existing arrears on current mortgage facilities
- An inability to satisfactorily prove the level of income required by a high street
lender.
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- Tenant
- Where the customer does not own a home, this includes living with parents.
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- 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.
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- 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.
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- Variable Rate
- 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.
Promise Loans can put you back in control