Call Option - Current Account Mortgage

Call Option

A clause in a loan agreement that allows a lender to ask for the balance at any time.

Cancellation Clause

A clause in a loan agreement that allows a lender to ask for the outstanding balance at any time.

Cap

A limit on the amount the interest rate or monthly payment can increase in an adjustable rate mortgage.

Cap & Collar Mortgage

This is a mortgage that has both a top and bottom limit set for the interest rate. It is a very safe and risk free type of mortgage, as you are protected against intetrest rate rises above a certain point, but you are losing some of the potential gains if interest rates drop.

Capital

In the context of mortgages, capital describes the original sum borrowed as distinct from interest required on that loan. A repayment mortgage involves repayment of a little of the capital interest each month.

Capital and Interest Mortgages

With this method the monthly mortgage repayments pay off both the initial loan amount and the interest that is charged upon it. At the end of the loan term the entire debt will be repaid.
Also known as: Repayment mortgage.

Capital Appreciation or Depreciation

The increase or decrease in the value of the individual's investment in the property.

Capital Expenditure

The cost of making improvements on a property.

Capital Gains

Profits an investor makes from the sale of real estate or investments.

Capital Gains Tax

A tax placed on the profits from the sale of real estate or investments.

Capital Growth

Where the original amount you invest increases over a period of time. Generally this is achieved by interest or dividends being added back to an account for reinvestment.

Capital Rest Period

This is the regularity with which a Lender calculates the outstanding balance on mortgages, and hence the size of monthly repayments. It is usually annually, monthly or daily. With Capital and Interest mortgages this can be important; an annual interest calculation means that the borrower will pay interest on capital repayments that have been made in the course of that year. In contrast a daily or monthly interest calculation means that the balance, and consequently the interest charged, will reduce with every capital repayment made.

Capped Rate Mortgage

This is a mortgage that is guaranteed not to rise above a specific rate (the 'cap') within a set period. Unless this is combined with another rate, such as a Discount or Tracker, the Lender's SVR will be charged if it is lower than the capped rate; if it rises above this ceiling the rate charged will remain at the capped level. There are often early repayment charges applicable if the loan is repaid within the capped period.

Cash Buyer

A person or persons who do not require a mortgage in order to buy a home and who do not have a property to sell. Other cash buyers are those with a mortgage arranged and no property to sell or those who have already sold their property.

Cash Deficit

In relation to a loan, this is money still owed at the end of the repayment period of an interest only mortgage.

Cashback Mortgage

This is a mortgage in which the Lender refunds a sum of money, either as a percentage of the loan or a flat figure, to the borrower upon completion. With this type of offer the borrower will typically be tied to the Lender's SVR by early repayment charges necessitating repayment of the cashback if the loan is repaid within a set period.

CAT Standard

These are a set of standards proposed by the government aimed at ensuring a certain level of standard amongst financial products such as mortgages and ISAs. Whilst they are a sign that a lender or provider is a reputable business and offers products that are of a certain quality, a CAT mark does nott ensure that a product is the most suitable one for you.

Caveat

A formal notice, that asks a court to suspend action until the party which filed the challenge can be heard.

Caveat Emptor

A legal principle derived from Latin than means "let the buyer beware."

Certificate of Deposit (CD)

A document which shows that the bearer has a specified amount of money on deposit with a bank, stock-brokerage firm or other financial institution.

Certificate of Title

A written opinion on the status of a piece of property based on an examination of the public record.

CHAPS

Clearing House Automated Payment System. An electronic way of transferring money between accounts.

Charge Certificate

A certificate from the Land Registry that shows the boundaries of a property and gives details of covenants affecting it.

Chattel Mortgage

A lien on personal property used as collateral for a loan.

Chief Rent

A payment made on freehold land to the original freeholder for an infinite period. Distinct from ground rent which has a finite period.

Clear Title

Ownership of the property is clear, with no legal complexities.

Closing

The final procedure in which documents are signed and recorded, and the property is transferred.

Closure Fees

A fee charged by the lender when you pay off the homeloan at the end of the mortgage term.

Co Signer

A person who assumes joint liability for a loan. The co-signer of a loan agreement is not necessarily, however, a co-owner.

Code of Practice

An agreement that certain professions can sign up to in which they agree to act or serve in a certain way and which therefore protects the consumer in areas (such as estate agency) which are not regulated by an institution.

Collateral

The property or other asset which the lender can sell to repay the loan if the borrower does not keep up the mortgage payments. In most cases, the home is collateral on a mortgage. If the borrower fails to repay the loan, the property will be repossessed.

Collateral Security

Additional security a borrower supplies to obtain a loan.

Collection

The series of steps a lender takes to bring a delinquent mortgage up to date.

Collusion

The action of two or more people to break the law.

Commission

A percentage of the sale price which the selling party receives. This can be an estate agent in relation to a property or a broker selling you a mortgage.

Commitment

A promise by a lender to make a loan with specific terms for a specified period.

Commitment Fee

The fee a lender charges for promising to make a loan.

Common Area

An area inside a housing development that is owned by all residents.

Common Law

A body of laws based on custom, usage and rulings by courts in various jurisdictions.

Comparables

Properties used as comparisons to determine the value of a certain property.

Comparative Market Analysis

An estimate of the value of a property based on an analysis of sales of properties with similar characteristics.

Competent

A term for a buyer who is "legally fit to enter into a sales contract".

Completion

This is the moment when a transfer of property has legally taken place, after all legal documentation has been completed and funds have been transferred from the buyer's solicitor to the seller's solicitor.

Completion Date

The point at which contracts have been exchanged and legal transfer of the property from the seller to the buyer is finalised. The buyer can take possession of the property from this day.

Completion Statement

A statement, prepared by the seller, stating exactly how much the buyer should be paying on completion.

Compound Interest

The interest paid on the principal balance in a mortgage and on the accrued and unpaid interest of the loan.

Compulsories

This is shorthand for compulsory insurance. Some lenders, at least for certain mortgages, insist that you take out their buildings insurance – which is not usually the most cost effective on the market.

Conclusion of Missives

Scottish term for exchanging contracts.

Condition of the Sale

This is a legally binding clause in the contract of the property sale. A buyer may insist upon the removal of the ridiculous garish carpets in a house, as a condition of the sale, or insist that some minor repair work is completex before the transaction is finalised.

Conditional Insurance

The borrower must sign up to one or more insurance policy with the lender in order to take out a specific mortgage. Check that the insurance premiums are competitive.

Contents Insurance

This protects your belongings and possessions that are not part of the fabric of your house. See Buildings and Contents Insurance.

Contingency

Provision within a contract that renders an agreement incomplete until a designated event such as a survey or inspection occurs.

Contract

A legal document between two parties confirming any sort of agreement such as terms of sale, employment or service.

Contract for Deed

A contract in which the seller agrees to defer all or part of the purchase price for a specified period of time.

Contractual Liability

The terms of a contract to which you must abide. There may be financial or even criminal penalties which you incur if if you do not meet your contractual liabilities.

Contractual Lien

A voluntary obligation such as a mortgage or trust deed.

Contribution

An amount of money paid into an account. This can be a 'one off' payment or on a regular basis.

Conventional Loan

A long-term loan a lender makes for the purchase of a home.

Conveyance

The transfer of title of property.

Conveyance Tax

A tax imposed on the transfer of real property.

Conveyancer

A specialist in the legal aspects of buying a house. This may be a solicitor but not all solicitors are skilled conveyancers, so be sure they undertake this type of work regularly as it is complicated and very important.

Conveyancing

This is the legal process whereby ownership of a property is transferred.

Conveyancing Fees

A solicitor will charge you a basic fee for undertaking the conveyancing work associated with the purchase of your property. This covers their time spent on taking your instruction, advising you, working on the contract refinements, liasing with the other party's solicitor, explaining the contract to you, obtaining your signature, exchanging contracts, investigating the title deeds, and basically dealing with all other related matters.

Cooperative Mortgages

Any loans related to a cooperative residential project.

Cooperative Project

A project in which a corporation holds title and sells shares representing individual units to buyers who then receive a proprietary lease as their title.

Copy Statement

This is an additional statement of your mortgage account. You are usually charged by your lender when you request a copy of an annual statement previously issued or when you request a statement outside of the normal annual statement period.

Council of Mortgage Lenders

An institution that sets out code a code of good practice which mortgage lenders volunteer to stick to - they are not regulated by the government.

Counter Cheque

A cheque withdrawal made over the counter, issued by the cashier.

County Court Judgement

Whenever someone fails to pay for something and is subsequently taken to court, the magistrate may issue a County Court Judgement against that individual to pay the outstanding debt. This may well affect your ability to raise finances in the future.

County Court Re-Issue Fee

This fee will apply when county court papers are re-issued by your mortgage lender to solicitors within three or six months of the issuing of the original information.

Credit

A measurement of a person's ability to pay bills on time. Several companies track individuals' credit histories by detailing late or missed payments on loans, credit cards and other debts.

Credit Agencies

Companies such as Equifax or Experian that are often used by lenders to assess your financial background and determine the level of risk involved with lending you money.

Credit Averse

When a borrower has a poor credit history, has previously been declared bankrupt or has outstanding County Court Judgements, they are often described as credit averse. People with averse credit ratings often have to pay higher interest rates on a mortgage.

Credit Checks

These are checks made when you try to borrow money or purchase goods on hire purchase, and are used to determine the risk of lending you money. They will examine your credit history and check for payment defaults and what you owe to other financial organisation. A credit agency is often used.

Credit History

If you have a history of bad debts, county court judgements or bankruptcy to your name, you may not be eligible for a mainstream mortgage. To help ensure you are a good credit risk, a lender may require references from your existing lender, bank or landlord. In addition to this, many lenders will make use of the services of one of the two large credit agencies, Experian and Equifax. These offer a credit inquiry or a full credit application, which show details of any existing credit arrangements or county court judgements against you.

Credit Period

The time frame for which the lender agrees to provide you with credit.

Credit Rating

The degree of credit worthiness assigned to a person based on credit history and financial status.

Credit Reference Agency

When assessing your application, a mortgage lender will study your records. These records are held centrally by credit reference agencies, and contain information for many different aspects of your life.

Credit Union

Nonprofit cooperative organizations that provide banking and financial services, including mortgages, home improvement loans and home equity loans, to their members.

Creditor

An individual or institution to whom a debt is owed.

Curable Defect

A deficiency in a property that is easy or inexpensive to fix, such as chipping paint.

Currency Swings

These affect foreign currency mortgages. In pound sterling terms, the value of the capital outstanding on your mortgage can rise or fall dramatically if there is movement in the value of either the currency of the loan or UK pounds sterling. If the value of the pound increases, you should benefit from lower repayments, as the value of the foreign currency you have borrowed decreases. Less sterling is required to buy the same amount of foreign currency necessary to meet the repayments and vice versa.

Current Account Mortgage

This is a fully Flexible mortgage combined with a current account. Money in the current account is automatically set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are reduced.