Mortgage Calculator

Mortgage Glossary

Annual Percentage Rate (APR): A percentage figure, calculated by using a standard formula that takes into account interest rates and associated costs over the term of a mortgage, used to compare the mortgage rates charged by different lenders.

Base Rate: The Bank of England Base Rate, set by its Monetary Policy Committee every month, determines lending rates in the UK. Directly or indirectly, all mortgage rates are linked to the present or past Base Rate.

Buy-to-let mortgage: A special mortgage for a property that will be let to tenants.

Capital: The amount you have borrowed on your mortgage and on which interest is charged..

Current account mortgage (CAM): A flexible mortgage with daily interest calculation that has a bank account attached to the mortgage account. Money in the bank account is offset against the outstanding balance of the mortgage on a daily basis.

Early redemption penalty: The financial penalty that you would have to pay for fully repaying your mortgage or making a lump sum reduction of the balance within a particular period. Such penalties often apply to discounted, fixed rate, capped rate and cashback deals. Watch out for extended redemption penalties which apply beyond the rate-control period and tie you in for a number of years to a lender's standard variable rate.

Endowment: A form of life insurance that pays a tax-free lump sum at the end of its term or a guaranteed amount - usually the mortgage debt - in the event of the policyholder's death. Once a popular method of repaying an interest-only mortgage, but now out of favour. Economic changes since they were sold means that many endowments are now performing badly and may not grow enough to pay off people's mortgages.

Equity: The total value of your property less the amount of the mortgage. For example, if your house is worth £110,000 and you have a mortgage of £60,000, you have £50,000 equity.

Individual Savings Account (ISA): Tax-efficient investments that provide a way of repaying an interest-only mortgage. The type of ISA most suitable for mortgage repayment purposes is a maxi stocks and shares based one.

Interest: The money you are charged for borrowing.

Interest calculation: The frequency with which lenders calculate the outstanding balance on mortgages - annually, monthly or daily - is an important consideration if you have a repayment mortgage. Other things being equal, daily or monthly as opposed to annual calculation saves you money.

Let to Buy Mortgage : A special mortgage where the mortgage loan pays for a second property, allowing you to rent out the property on which you pay an existing mortgage.

Loan to value (LTV): A percentage figure indicating the size of the mortgage on a property in relation to its value. Thus, a house worth £120K with a mortgage of £60K would have an LTV of 50%. Better mortgage deals are available for lower LTVs - 75% and below.

Mortgage deed: The legal agreement which gives the lender a legal right to property.

Mortgage indemnity premium (MIP) or guarantee (MIG): Sometimes called a high lending fee, this is a one-off fee that borrowers may be charged if they want to borrow a high percentage of a property's value - usually above 90% or 95% loan to value. This fee pays for the lender to insure against potential losses should the house be repossessed and sold for less than the outstanding mortgage.

Mortgage term: The length of time over which the mortgage will be repaid.

Redemption: The paying off of a mortgage loan.

Release fee: Or sealing fee. An administrative charge imposed by lenders for releasing the title deeds of your property when you redeem your mortgage (repay it in full). It varies from lender to lender from as little as £20 to as much as £150.

Security: The property the mortgage is being used to buy is the lender's 'security' for the loan. This means that the lender has rights over the property. If the mortgage repayments are not kept up to date, the lender can repossess the property and sell it to recover the debt.

Self Cert Mortgage: A mortgage product where the lender does not verify the declared earnings of the applicant. See Self Cert Mortgages

Stamp duty: A government tax on buying properties costing more than £120,000.

Standard variable rate (SVR): Lenders' SVRs fluctuate at their discretion as economic conditions change. When the initial rate-control period on a mortgage finishes the SVR will be the payable rate.

Title deeds: the legal documents which set out the ownership of a property.

Tracker mortgage: These are schemes with a variable rate set above or below the Bank of England Base Rate.

Disclaimer: the-mortgage-calculator.Info is an independent website, proving information about self cert mortgage products. If you fail to keep up with your mortgage repayments, you may lose your home.