Ability to Pay - Available Funds
Ability to Pay
A method or system which calculates how much someone has left from their income to make the loan or motgage payments.
Acceleration Clause
A provision that gives the lender the right to collect the balance of a loan if a borrower misses a payment.
Access
Any means by which a person can enter property.
Accident, Sickness and Unemployment Insurance (ASU)
In the event of an accident, sickness or involuntary unemployment befalling a borrower, this insurance will cover their mortgage repayments. Some Lenders attach mandatory insurance cover to their most attractive rates, although this is increasingly uncommon.
Also known as: Mortgage Payment Protection Insurance (MPPI).
Actual Age
The number of years a structure has been standing.
Add on Interest
The interest a borrower pays on the principal for the duration of the loan.
Addendum
An addition or change to a contract.
Additional Principal Payment
Extra money included in the monthly payment to help reduce the principal and shorten the term of the loan.
Additional Security Fee
An up-front, one-off 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. Also known as Indemnity Guarantee Premium and Mortgage Indemnity Premium.
Adjustment Date
This is the date on which the interest rate changes for a variable rate mortgage.
Administrator
A person given authority to manage and distribute the estate of someone who died without leaving a will.
Administrators Deed
A legal document an administrator of an estate uses to transfer property.
Advance
Loan from a bank or building society in the form of a mortgage.
Adverse Credit
This is an umbrella term used of applicants with poor credit history. This may include mortgage arrears, defaults, County Court Judgements (CCJs), bankruptcy, Individual Voluntary Agreements (IVAs) and house repossession. Borrowers with elements of adverse credit are offered higher rates than standard Full Status applicants are, usually with terms and conditions relating to the extent of their adverse credit history. Often, adverse credit mortgages are Libor-linked rates.
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.
Affiliate 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.
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
The first document provided by an mortgage lender which shows any prospective seller that you can actually get a mortgage to cover the purchase price. It also provides a handy reference for some of the key features of your mortgage, and what your repayments will be for the introductory offer period, if there is one.
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 how long it will take to pay off a mortgage.
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 Mortgage Statement
A yearly statement to borrowers that details the remaining principal and amounts paid for taxes and interest.
Annual Percentage Rate (APR)
The APR is a rate calculated using a generic formula applicable to all Lenders, which includes all the costs associated with a mortgage. This allows for easy comparisons to be made between the different mortgage products offered by each Lender.
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 the interest due.
Appointed Representative
Salesperson, company or organisation that advises on the investment products specific to one life assurance or investment company.
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.
Arrangement Fee
This fee may be charged on specific products and is either payable in advance, added to the loan or deducted from the advance on completion. It covers the administrative expenses incurred whilst processing an application.
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 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.
Arrears Fee
This is charged on a monthly basis to cover additional administrative costs where your mortgage account is one or more monthly payments in arrears.
Assessed Value
A determination by a tax assessor of the value of a home in order to calculate a tax base.
Assumable Mortgage
A mortgage that can be transferred to another borrower.
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.
ASU
A form of income protection incorporating cover for loss of earnings arising from accident, sickness or unemployment. Is usually paid out in the form of a monthly tax-free income to cover a portion of lost earnings and is usually restricted to two years from the date of the first payment.
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.