Obligatory Insurance - Overpayment

Obligatory Insurance

Same as conditional insurance.

Offset Mortgage

This is a fully Flexible mortgage which allows a borrower to keep balances (such as mortgage debt, savings account and current account) in separate accounts, but, for the purposes of interest calculation, all balances are aggregated. Money in savings or current accounts is set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are reduced.

One Hundred Percent Mortgage

A loan for the full cost of the home you are buying if are unable to raise a deposit to buy a property. You may have no existing equity, no savings, be using up all you do have on the other costs of the move, or perhaps be saving what you do have so that you can fix up your new home when you do buy it.

Outstanding Balance

The amount to be repaid at any point in time.

Overdraft Facility

This is a facility on the Bank Account which allows customers to borrow up to a pre determined limit. This limit must be agreed in advance and is subject to status.

Overhanging Redemption Penalty

An early redemption charge that lasts beyond the benefit period is referred to as an extended or overhanging redemption penalty. These should be avoided where possible.

Overpayment

This is when an unscheduled capital repayment is made or when monthly payments are increased, in order that the mortgage is repaid before the end of the mortgage term, saving considerable sums in interest. Many traditional (i.e. non-Flexible) mortgages include early repayment charges if overpayments are made within a set period. In contrast, Flexible mortgages allow unlimited overpayments without penalty and, increasingly, mortgages are semi-Flexible, allowing borrowers to overpay a certain percentage of their loan each year without incurring early repayment charges.