Second Charge


Additional Security If you are applying for finance in order to fund the acquisition of a property, or solve a temporary cash flow problem, the lender will normally offer a secured borrowing product with a net amount totalling between 70% and 75% of the equity owned in the collateral you are providing as security. However, some borrowers may require funds up to 100% of the property’s open market value and in these instances some type of additional security must be offered in the form of a supplementary property asset (or multiple real estate assets). If you are unable to provide this additional security, it may still be possible to get the finance you need – although you may need to ask a relative or business associate to act as a guarantor on the loan.
Agreement in Principle (AIP) A document from a mortgage lender confirming that you will be able to borrow a certain amount subject to conditions. Sometimes called a Decision in Principle or "DIP".
Annual Percentage Rate (APR) The overall cost of a mortgage, including the interest and fees.
Arrangement Fee This is a fee a mortgage lender may charge for providing you with a mortgage and are usually paid on completion (although some lenders may let you pay this upfront). This may also be called "completion" or "arrangement" fees.
Arrears Missed or late payment on a credit agreement.
Asset Turnover Asset turnover is the term used to describe just how quickly and efficiently any given asset or assets can be used to generate a profit in relation to the cost of the assets themselves – and therefore just how valuable the assets are in actuality.
Assets An asset is any item of value that can be used as security against loan repayments in case the borrower defaults. In the vast majority of cases, borrowers will need to provide some form of property asset as security, such as their home or a commercial building. However, other assets are sometimes used to secure bridging finance and these include luxury vehicles, expensive machinery, valuable antiques and land or building materials.
Base Rate Base rate usually refers to the Bank of England Base Rate. This is the cost of borrowing for major banks set by the Bank of England and reviewed monthly. Some lenders use this as a reference for their own mortgage rates.
Booking Fee This is a fee that a mortgage lender may charge for reserving the money you wish to borrow. It's normally paid upfront when you make your mortgage application and is typically between £99 and £200.
Bridging Loan This is a short-term loan that 'bridges' the time period between two transactions. Loans are typically no longer than 24 months (althought the majority are 12 or less) and is designed to solve a problem and an immediate need such as cashflow, refurbishment costs etc
Building Society A building society is a type of financial institution that provides mortgages and savings accounts to its customers (as well as other banking services). Many of a building society's customers are also members – the society is run for the benefit of members rather than shareholders. Building societies are also limited by law as to how much they can borrow from other financial institutions. This has traditionally seen them regarded as more stable and sustainable than banks.
Buildings Insurance (BINS) Insurance that covers you for damage to the structure of your home. A lender will require you to have this in place when you take out a mortgage.
Buy-to-Let A buy-to-let property is bought with the sole intention of letting it to tenants.
Capital Gains Tax (CGT) This is a tax on any profit made on the increase in the value of an asset since it was purchased. Capital gains tax isn't payable on any profit you make on your own home; however, it may be payable for profit you make from selling a buy-to-let property.
Capped Mortgage A capped rate mortgage doesn't let your interest rate rise above a certain level. However, if interest rates go down it will allow your interest rate to fall.
Cashback Mortgage This mortgage gives you a cash rebate on completion of the mortgage. The sum is either a percentage of the amount you borrow, or a fixed sum. Cashback could help you to cover some of the expenses of setting up your home, but this bonus often comes at the expense of a higher interest rate or is subject to a penalty if you repay the mortgage early.
CHAPS Fee This is a fee you pay on completion of the mortgage to cover the cost of the mortgage lender sending the funds to your solicitor. The CHAPS fee is normally between £25 and £50 and is paid either by being added to your mortgage balance, or by being deducted from the balance you receive on completion.
Charge When you purchase a property using a mortgage, the details entered into the land registry database will entitle your mortgage provider to sell the property in order to recoup their funds should you find yourself unable to honour the debt. When a third party has permission to sell your home in such circumstances, we refer to this as the lender having a charge over the property. If you are looking to take out additional finance secured against your home, your new lender will also expect a percentage of the proceeds if your home needs to be sold in order to pay off any outstanding debt. We call this a second charge. Consequently, many homeowner loans are also referred to as second or third charge borrowing products.
Closed Bridging Loans A closed bridging loan is a short-term, secured finance product that is specifically aimed at borrowers who have a clearly defined exit route, i.e. a reliable means of repaying the debt by an agreed date. For example, if you are using a bridging loan as a means of purchasing a property, and you have already exchanged contracts on a house you are selling in the meantime and you intend to use the money raised in order to pay off the loan, a lender will consider this to be an acceptable exit strategy. Closed bridging loans are the most common type of bridging finance available. If you do not have a clear exit strategy in place, you will need to apply for an open bridging loan instead. However, open bridging finance is more difficult to obtain, and can be a more expensive product.
Collar Rate A collar rate basically means that your interest rate can't go below a certain, minimum level. Collar rates are often put on tracker mortgages by lenders, to make sure that the rate doesn't fall to an amount that's too low, as happened to some fortunate mortgage borrowers when rates fell in the wake of the financial crisis of 2008.
Commercial Bridging Loans If you run a business that is experiencing short-term cash-flow problems then a commercial bridging loan could help to solve your problems. Commercial bridging loans are available for any business owner with suitable assets and they can be arranged quickly with flexible repayment terms and charges that can be deferred until the full balance is due. If you are looking to secure a commercial bridging loan secured against your residential property then you should look to work with a provider that is FCA regulated and approved. Commercial bridging loans can be used for all manner of reasons, including the payment of urgent bills, the expanding of operations or the payment of wages whilst waiting for an invoice to clear or some other type of finance to arrive.
Completion Completion is when the purchase or remortgage of a property is complete and you are legally the new owner, or the new mortgage has formally begun.
Compounded Interest Bridging loans differ from mortgages in that the monthly repayments (plus any additional charges) can be deferred until the end of the loan term when the full loan is repayable – which means you won’t have to pay back anything on a monthly basis. However, whilst the loan amount remains the same throughout the term, the interest will still accumulate each month and the total amount of interest repayable on the date that the initial loan advance is expected to be repaid is known as compound, or compounded interest. For example, if you borrow £100,000 and the monthly interest rate is 1.5%, you will owe £101,500 by the time the second month has arrived. On the third month, you will owe £101,500, plus an additional 1.5% in interest, and so on.
Consent to Let If you already have a mortgage on your residential property and you wish to rent it out, you must get a 'consent to let' from your mortgage lender. You may be charged a fee for getting this permission and it may mean your interest rate changes. However, if you fail to notify your mortgage lender, you will be in breach of your mortgage conditions.
Conveyancing Fee The fee that your solicitor or licensed conveyancer will charge for undertaking the legal work involved in buying, selling or remortgaging your property.
Conveyancing The legal process of transferring the ownership of property which is involved in buying, selling or remortgaging your property.
County Court Judgement (CCJ) These are made against you for non-payment of debt, and could make it harder for you to get a mortgage.
Credit Rating A credit reference agency collects information on your credit accounts and makes this available to lenders. This information will either be in the form of a full report showing your conduct on accounts or a score provided by that agency. The higher the score, the more appealing you are to a lender. The lower the score, the more likely the agency feel you are to default on any debts. This score can affect your access to lenders, or the price of the product offered to you.
Credit Reference Agency A credit reference agency is a specialist company that holds current information on a borrower’s credit history. The three main credit reference agencies are Experian, Equifax and Callcredit. Every time you make (or dont make) a payment on a credit account, the information is recorded with these agencies and made available to other creditors that you may approach in the future.
Credit Search Before a lender offers you credit, they will want to inspect your credit file as a means of determining whether you are a financial risk or not. If you have ever fallen behind on your bills or received a court summons or CCJ (County Court Judgment), or you have ever been declared insolvent or bankrupt, your credit rating will reflect this and you might find it difficult to get credit without security. The information on a borrower’s credit file is usually stored for a 6 year period.
Current Account Mortgage A current account mortgage, sometimes known as an offset mortgage, allows you to link your current account to your mortgage. This method enables you to save on your mortgage interest as your normal account balance can reduce the outstanding debt. There may be additional conditions on your account, such as availability of overdraft.
Daily Interest Rate Lenders calculate interest either daily, monthly or annually. Daily interest gives you more flexibility for repayments on shorter loans (ie if you redeem after 10 days you pay 10 days interest, not the full month). For this reason some bridging loans are calculated on this basis.
Debt Consolidation Debt consolidation is a term that is applied whenever a borrower condenses a number of different borrowing products into a single loan product with a singular, more manageable repayment with lower rates. This is generally over a longer term to make the payments manageable.
Deed of Consent When you mortgage or remortgage a property, anyone who lives in your home other than you (over the age of 17) could claim squatter's rights if the mortgage lender has to repossess the property. To protect against this, mortgage lenders will ask for all people over the age of 17, such as your children, to sign a Deed of Consent to say that they will not be able to claim squatter's rights in the event of repossession.
Deed of Postponement If you want to remortgage and have both a mortgage and a secured loan on the property (first and second charge), your new mortgage lender will insist on you getting a Deed of Postponement from your existing secured loan (second charge) provider. This is because your mortgage lender will need to have first legal charge (or claim) on your property in the event that you can't repay your debts and your house has to be repossessed. In the event of repossession debts are repaid in the order of the charge (ie first, then second, then third etc). To register a new first charge, the second charge holder postpones their charge to allow the registration of a new first charge, before reapplying their second charge.
Deeds Sealing Fee This fee may be charged for your lender closing down your mortgage account and posting your title deeds to you.
Deposit This is the amount you are required to put down yourself towards the purchase of the property. Typically, the more deposit you can put down the lower the lenders risk therefore the lower the interest rate available.
Development Finance Development finance is a specific type of short-term borrowing product that is intended for property developers who require funds in order to proceed with new builds and redevelopment projects. Typically available with terms of up to three years, development finance is often released in planned stages as the building work progresses. This is possible because most development projects undergo a significant increase in value as the completion stage draws nearer.
Discounted Mortgage Discounted rate mortgages offer a discount on another interest rate – usually a lender's Standard Variable Rate (SVR). So if an SVR is currently 5% and the discounted rate is 1% below SVR, you'd pay a rate of 4%. Discounted rates are still variable, so your payments can go up as well as down.
Drawdown Drawdown refers to when you actually physically borrow the money from your mortgage lender. Sometimes you may not want all of the money you borrow at the outset of your mortgage, for example if you intend to use £30,000 to build an extension to your property. Instead, you keep a portion of the loan in your mortgage account where you can later withdraw it, or draw it down. Although this extra money is in your mortgage account you don't pay interest on it, which will mean lower monthly repayments.
Droplock Droplock is where a lender offers you an option to later change from a tracker rate to a fixed rate without having to pay an Early Repayment Charge (although you may have to pay other fees). This gives you the flexibility to make the most of low interest rates, while having the option to fix later if rates go up.
Early Repayment Charges (ERC) If you repay (redeem) your mortgage at any time before the end of the mortgage term, you may have to pay certain fees and an early repayment charge. This charge is usually a percentage of the amount remaining on the mortgage, or the original amount you borrowed. Early repayment charges often go down the further you are into a mortgage and most of the time they aren't payable after an introductory fixed, tracker or discount period ends.
Endowment Mortgage An older form of interest-only mortgage where you also pay money into a type of investment called an "endowment", which was an investment product designed to pay off the mortgage balance at the end of the term.
Energy Performance Certificate (EPC) All homes that are sold need to have an EPC or Energy Performance Certificate. This certificate tells prospective buyers how energy efficient a home is currently, as well as what can be done to improve energy efficiency in the future.
Equity The amount (or percentage) of the property that you actually own. For example, if you have a £90,000 mortgage on a property worth £100,000, the amount of the property (equity) you actually own is £10,000 or 10%.
Equity Release Scheme An equity release scheme allows older homeowners to release the cash tied up in their property. There are two types: lifetime mortgages and home-reversion schemes. These typically have no, or lower repayments than a standard mortgage and are repayble on sale or death.
ESIS An ESIS (European standardised information sheet) is the replacement for the traditional KFI, and should be given to you by your lender or mortgage broker before you make a mortgage application. It describes the key things you need to know about your mortgage, such as payments and fees (see also Key Facts Illustration)
Exit Route If you have an interest only mortgage, or bridge, the lender will need to know how you intend to repay the amount borrowed- known as the exit. This could be sale of this or another property, inheritance, etc.
Family Offset Mortgage Used by family members (usually parents) who want to help first-time buyers get onto the property ladder. Your savings are balanced against your child or family member's debt, so the amount they owe and pay in interest is reduced.
FCA Regulated Loan The Financial Conduct Authority is a regulatory body that ensures UK consumers and corporate borrowers are treated fairly by lenders and brokers without being misled or taken advantage of. If you are a homeowner and you are looking to take out a product secured against your home then it would be in your best interests to apply for an FCA regulated loan in order to ensure you are adequately protected.
First Charge Loans A first charge lender is any party that owns the charge on the land registry on behalf of a borrower’s property. If you apply for a loan and give the right of first charge to a lender, then that lender is fully entitled to sell your property should you default on repayments or find yourself unable to sell the full outstanding amount by the agreed repayment date. Once the loan is repaid, the charge will then be lifted.
First Time Buyer A first-time buyer is someone who has never bought a property before. A buyer who has previously owned a property, but hasn't done so for a number of years, may also be considered a First Time Buyer.
Fixed Rate Mortgage A fixed rate mortgage is when your interest rate and mortgage payments stay exactly the same for an initial period. They are ideal if you have a tight budget or if you think interest rates will rise.
Flexible Mortgage The main feature of a flexible mortgage is the facility to make extra payments when you have the money. You may also be able to reduce monthly repayments or even take payment holidays, although you will normally have to build up a reserve through making overpayments before this arrangement is allowed.
Freehold Freehold means that you own both the building and the land it is on (see also Leasehold)
Full Structural Survey A full structural survey is the most in-depth form of property survey. It should be thorough enough to uncover any major structural problems with a property and is particularly useful when purchasing an older house or flat. If you subsequently find that the property has major problems not unearthed by the survey, you may be able to claim compensation from the surveyor. A full structural survey is the most expensive form of survey but it does not include a mortgage valuation, which will be needed if buying a property with a mortgage or if you're remortgaging.
Further Advance This is when you borrow additional money from your existing mortgage lender. The extra money you borrow will also form part of the mortgage balance.
Gazumping Gazumping is when the seller of a property accepts a higher offer when they have already accepted a lower offer from another potential buyer.
Gazundering Gazundering is where the prospective buyer of a property makes a lower purchase offer after they have already made a higher offer previously. This is normally done later on in the property buying process, when the seller is committed and it would take a long time for them to get to the same stage with a new buyer.
Goodwill Goodwill refers to a payment made above the value of the property and its assets, and typically refers to the intangible value. This is normally seen when buying a business.
Gross Loan When you add the net loan amount to all the other borrowing costs (arrangement fee etc), the figure you arrive at is what is known as the gross loan.
Guarantor A guarantor is someone who guarantees that the payments will be made on someone else's mortgage. Usually a guarantor is the parent or guardian of the mortgage holder. If the mortgage holder can't repay, the guarantor is then responsible for making the payments. This is either in the form of a charge on the guarantors property, or the guarantor being an additional borrower.
House of Multiple Occupancy (HMO) The new HMO rules as of 1st October 2018 mean properties occupied by three or more people that form two or more households, regardless of the size of the property or the number of floors is classed as an HMO and must be licensed as such. Full rules can be found here:
Income Multiple This is a calculation used by mortgage lenders to determine the maximum they will lend you. This is typically in the region of 4 x your income, or 3.5 x joint income. However, lenders are now more frequently basing this on your ability to make repayments, taking into account your income and outgoings rather than just a straight multiple.
Indemnity Policy An indemnity policy is an insurance document that covers a property against any costs that may be incurred as a direct result of some defect that is referred to in the property’s title. For example, some older properties sometimes have a covenant that states no further developments should be made without permission from the original builder. However, if the original document is 75 years older or more, the chances of that builder being alive – and therefore granting permission – are practically nil. Now, if the builder’s relatives raised a legal objection to any further works being undertaken on the property, the indemnity policy would cover the costs. An indemnity policy is usually paid off as a one off premium – and they typically stand regardless of how many times a property changes hands – meaning a single policy can be used for the entire lifetime of a building.
Interest-Only Mortgage With an interest-only mortgage your monthly mortgage payments only pay the interest element of the loan and not any of the amount you borrowed. To repay the mortgage some borrowers pay into an investment such as an ISA, pension or an endowment. Others sell their property at the end of the mortgage term.
Joint Tenants This is when you hold property ownership rights equally with another person or persons. If one of the joint tenants dies, ownership reverts entirely to the surviving tenants. This legal agreement supersedes any will the deceased may have made.
Jointly and Severally Liable When you take a joint mortgage you will usually be "jointly and severally liable" for making the repayments. This means that if one of you does not pay or is unable to pay (due to death, illness, unemployment or abandonment), the other person is still fully responsible for paying the mortgage.
Key Facts Illustration (KFI or KFI+) A Key Facts Illustration (or ESIS) should be given to you by your lender or mortgage broker before you make a mortgage application. It describes the key things you need to know about your mortgage, such as payments and fees.
Let-to-Buy Mortgages Let-to-buy mortgages allow someone to rent out their existing home, rasing money to buy a new house to live in.
LIBOR LIBOR stands for London Inter-Bank Offered Rate – the rate that banks charge each other for lending to them. This rate is sometimes linked to some tracker mortgages.
Life Insurance A type of insurance that pays either a lump sum or an income if you die within a set term. You can set up life insurance to repay the mortgage if you die, so that your family aren't forced to move out of their home if they can't afford the repayments.
Loan-to-Value (LTV) This refers to the amount of mortgage you have in relation to how much your home is worth. So if you have a mortgage for £90,000 on a property worth £100,000, the loan-to-value would be 90%.
Mezzanine Finance Typically used by property developers, mezzanine finance is a type of loan product that is used to finance an urgent gap in funding. For example, if a property developer has £250,000 of their own money, and they can only access a further £500,000 through their main provider towards the end cost of a project worth £1,000,000 upon completion, the remaining £250,000 could be raised by means of mezzanine finance.
Monthly Repayment The amount you pay your mortgage lender each month. If you're on a repayment mortgage (the most common kind), the payment will cover a percentage of your mortgage plus interest.
Mortgage Account Fee This fee can be charged by the mortgage lender for setting up, maintaining and closing your mortgage account.
Mortgage Deed This is the legal document that you sign to formalise the mortgage agreement.
Mortgage Payment Protection Insurance (MPPI) This insurance covers you if you can't work due to an accident or sickness, or are made redundant. It works by making a monthly payment to you to cover your mortgage and essential bills. This is a short-term insurance that normally only pays out for a maximum of 24 months per claim.
Mortgage Term This is the length of time the lender will allow you to repay the loan or mortgage over. Most mortgages tend to be up to 30 years, and most bridging loans tend to be up to 12 months. On a repayment mortgage your payments are designed to pay the loan off in full over this term. On an interest only mortgage you will be expected to pay back the full balance at the end of the term. This is not to be confused with your initial product period, which may only be 2, 3 or 5 years of the 30 year mortgage.
Mortgage Valuation A mortgage valuation is the most basic form of survey undertaken by a surveyor. Some mortgage lenders will not even physically visit a property to perform a valuation for low loan-to-value mortgage applications, relying on an automated system or a 'drive by' valuation instead. The basic mortgage valuation will value your property as well as giving a rebuild value (the amount your home would need to be insured for to cover if it needed to be completely rebuilt). The valuation may uncover any obvious defects with the property, although it is not as thorough as a homebuyer's or full structural survey.
National House Building Council (NHBC) The NHBC is the UK’s largest home warranty provider and it is their aim to improve the standard of construction across all new build homes. If you are a first time buyer or a property owner who is looking to move home, and you purchase a house with the NHBC buildmark then you can rest assured that the property has been built to the highest achievable standards by fully regulated and authorized NHBC registered builders.
Negative Equity This is when the amount you owe on your mortgage is greater than the amount your property is worth ie a £100,000 mortgage on a property worth £90,000)
Net Loan Amount The net value of a loan is the capital borrowed before any additional costs are added, such as the arrangement fee or the interest. Once the additional costs of borrowing are added, the new amount is referred to as the gross loan amount.
NHBC Certificate An NHBC certificate is an official document that shows your property is covered for at least a full ten years against any type of fault or damage that you would not expect to occur if the property had been built in line with the national House Building Council’s standards. Details of any cover provided, along with any limitations and exclusions, are provided in the policy document that you will receive upon purchasing your home.
Offset Mortgage An offset mortgage allows you to use your savings to reduce the amount of interest you pay on your mortgage. The effect is that you can either finish your mortgage earlier by having a shorter term, or make lower monthly payments.
Open Bridging Loan An open bridging loan is a short-term financing product that is loaned to a borrower who does not have a clear exit strategy in place. For example, if you were looking to borrow £150,000 in order to purchase a new property whilst relying on a buyer to show up so that you could sell another property in order to repay the loan, you would typically need to apply for an open bridging finance product. Open bridging loans are not as common as closed bridging loans and they are usually more difficult to obtain, unless you are able to provide additional security and have a good credit score.
Overpayment This is when you pay extra, over and above your minimum monthly mortgage payment. You could choose to make a one-off lump sum overpayment or overpay a regular amount with your normal mortgage payment. Overpayments save you interest and will shorten your mortgage term.
Own Buildings Insurance Fee If you choose to arrange your buildings insurance through a provider other than your mortgage lender, they may charge you an administration fee of around £25. It's charged for the work involved in checking that your buildings insurance is sufficient.
Payment Holiday This is a period during which you make no payments on your mortgage, interest will continue to be charged during this time. This feature is usually only available on a flexible mortgage.
Personal Loan A personal loan is an unsecured loan product. This type of finance does not require you to be a homeowner or to offer any other kind of asset as collateral, although you will only be able to borrow a limited amount. The interest rate charged and loan amount offered, are based on your credit score.
Portability This is when a mortgage can be transferred between properties when you move house, subject to the new property meeting the lender's criteria.
Prohibition Notice A prohibition notice is a document served by a Local Authority on a property that is in a dangerous condition that poses a threat to the health and safety of passersby and local residents. This type of notice can be served with immediate effect and with serious consequences if ignored.
Redemption This is when you pay off your mortgage at or before the end of the mortgage term
Redemption Administration Fee A mortgage lender charges this fee for closing your mortgage account when you have repaid your mortgage.
Remortgage Remortgaging is when you switch your current mortgage to a new lender without moving home.
Repayment Mortgage (or capital & interest) With a repayment mortgage the money you pay each month repays both the interest and the amount you borrowed. This means that at the end of the term your mortgage is guaranteed to be fully repaid if you have met all your payments.
Repayment Vehicle Required by lenders if you take out an interest-only mortgage, this is the means by which you're intending to pay off your mortgage at the end of the term - for example, another property, or a stocks and shares portfolio.
Reposession This is the legal process by which a borrower who has been unable to make mortgage repayments has the property taken away from them. This usually involves a forced sale of the property at public auction. Repossession is only ever used as a last resort by mortgage lenders.
Retained Interest Bridging loan applicants are typically not required to make monthly repayments. Instead, they are expected to pay back the net bridging loan amount plus any additional costs, such as interest charges and arrangement fees, at the end of the loan term, and in full. Although each lender is slightly different in the way that they calculate their borrowing costs, most use retained interest as means of working out the total amount repayable. Once the loan is approved and completed, the applicant will receive the net loan amount by means of bank transfer – with any extra borrowing costs deferred until the time when repayment is expected. If the loan term is fixed at 12 months, and the borrower repays the loan early, then interest will only be paid for the time that the loan is outstanding – typically without any expensive exit fees.
Right to Buy This is where tenants in local authority housing are given the option to buy their home at a reduced cost.
Searches When undertaking the legal work, your solicitor will need to carry out several searches to make sure the property has no restrictions or hidden legal problems. The most common search is with the Land Registry, but this can also include mining searches or, if the property is near an old church, a chancel repair search - some older properties are obliged to maintain the local church
Second Charge or Secured Loans Second charge loans or secured loans are borrowing products that are secured on a property (or properties) that are already mortgaged. If you are applying for a second charge or an additional charge loan then you will usually require permission from your original lender, or whoever holds first charge over the property. Second charge products are useful when the original mortgage has an expensive exit fee or early repayment charge, which can make other types of refinancing such as remortgaging an unrealistic option.
Security If you want to borrow a considerable sum of money (over £25,000) and you are looking to spread the repayments over an extended number of years, you will typically need to offer some form of collateral as security against the loan. All property types can be considered, and lenders have varied appetites for different security types.
Self Build Mortgages This is a specialist type of mortgage designed for people who are building their own home. The mortgage is normally released in stages to coincide with important points in the build.
Self Invested Personal Pension (SIPP) A Self Invested Personal Pension is a government approved pension plan that enables the policy holder to choose exactly where their funds are to be invested. The available investment products have all been approved by HMRC, although there are limits on how much you can pay in on an annual basis. SIPPs can own investment property.
Service Charge The fee paid to a managing agent for the ongoing maintenance of a leasehold property.
Shared Ownership This scheme is where you buy part of a property from a local authority or housing association, and rent the remaining part.
Soft Search If you are applying for finance and you are only looking for a quotation in order to help make up your mind, then the lender may do a soft search. This can be carried out without affecting your credit file and will not leave a footprint on your record. If you apply for credit multiple times and have been refused repeatedly, this can be used against you and is often detrimental towards your chance of approval.
Stage Payment A stage payment is when the mortgage is released to you in parts, to help for example with a self build. Typically, the mortgage lender will release the stage payments at important points in the build and will inspect the property before releasing each payment.
Stamp Duty This is a tax that is payable when you buy a property. Stamp Duty is charged as a percentage of the purchase price. Following the 2017 Autumn budget, stamp duty is no longer payable for first time buyers purchasing a property up to £300,000, or on the first £300,000 of a property up to £500,000. Depending on which banding your property falls in, the amount you pay can vary
Standard Bridging / Light Refurbishment Bridging Standard and light refurbishment bridging loans are typically the most expensive type of bridge finance available. This finance is normally used for houses that are in excellent condition and only requiring slight, cosmetic upgrades such as redecorating or new bathrooms and kitchen installations.
Standard Variable Rate (SVR) A Standard Variable Rate is a type of mortgage interest rate that you are most likely to go onto after finishing an introductory fixed, tracker or discounted deal.
Starter Homes Initiative A government scheme that promises to build 200,000 new homes for first-time buyers aged under 40. Buyers will be given a minimum discount of 40%.
Sub-Prime/ Non-Conforming Mortgage A sub-prime, or non-conforming mortgage is geared towards people who have had credit problems. It is now much harder to get a sub-prime mortgage than before the credit crash in 2008 due to stricter regulations.
Support for Mortgage Interest (SMI) This scheme is aimed at homeowners who are on certain income-based benefits, such as Income support or income-based jobseeker's allowance. It is paid to the mortgage lender by the Government 13 weeks after the initial claim and covers interest due on the first £200,000 of the mortgage (£100,000 if the claimant is receiving pension credit) at the Bank of England's published monthly average mortgage interest rate. It is paid for the first two years for those claiming income-based jobseeker's allowance. In April 2018, the current SMI benefit will be replaced by a loan which needs to be repaid (plus interest) on sale or transfer of the property.
Surveyor A surveyor is a person who is qualified to carry out valuations and surveys of properties.
Tenants in Common Tenants in common is when each party owns a percentage of a property. In contrast to joint tenants, when you are a tenant in common you can pass on your portion of the property on death. This option is good if several friends are buying a home together, or if you wish to protect yourself if you are making the lion's share of the mortgage payment or deposit.
Term This is the length of time the lender will allow you to repay the loan or mortgage over. Most mortgages tend to be up to 30 years, and most bridging loans tend to be up to 12 months. On a repayment mortgage your payments are designed to pay the loan off in full over this term. On an interest only mortgage you will be expected to pay back the full balance at the end of the term. This is not to be confused with your initial product period, which may only be 2, 3 or 5 years of the 30 year mortgage.
Tie-in Period This is the period during which you are 'locked in' to your mortgage deal. You'll have to pay an early repayment charge if you leave your mortgage during this period.
Title Deed A legal document that formally states who the owner of a property is, as well as details about the property and the land upon which it is built.
Tracker Mortgage A tracker mortgage is a type of variable rate that follows (or tracks) the movements of another rate – typically either the Bank of England Base Rate, LIBOR or the lenders own SVR.
Transfer of Equity This applies when you transfer part of the property ownership. For instance, you may wish to add/remove a spouse or partner from your mortgage. A transfer of equity is the legal document that confirms the switch.
Unregulated Loan If you are looking to secure finance against a property you do not live in, or in which none of your family reside, then you will typically only require an unregulated loan. FCA regulated finance is only relevant when a borrower or their family live in less than 40% of the floor space in a property.
Valuation Administration Fee This fee is charged by a mortgage lender for them to deal with the administrative costs of processing the mortgage valuation.
Valuation Fee The fee charged for the valuation of the property.
Valuation or Survey Lenders always carry out a valuation survey to check whether the property is worth the amount you're paying for it. This is done for the lenders purposes, however you may wish to have your own done for your own peace of mind.
Variable-Rate Mortgage The interest rate on your mortgage can go up or down according to your lender’s standard variable rate.