Jargon Buster

APR stands for Annual Percentage Rate. A lender is always required to quote the APR when advertising a loan or borrowing rate. The lender will usually quote the headline rate and the APR next to it. The headline rate states the rate of interest you pay per month or per year on the mortgage, while the APR is based on the total amount that will be paid over the entire period of the loan. It also takes into account any charges that the borrower has to pay during the loan period.

Public sale of a property to the highest bidder. The purchaser must immediately sign a binding contract and should ensure that all valuations, searches etc are carried out prior to the sale.

AVM stands for Automated Valuation Model.  It is a search used by some lenders to establish the value of your property based on recent local sales and value trends.  This is instant and means that they do not have to send a surveyor to your property.

A method of payment of funds which has all the appearances of a cheque, but in effect is a cash payment.

The UK's core interest rate, set by the Bank of England. The lender's Standard Variable Rate (SVR) is higher than the Base Rate, but is often adjusted by reference to it.

An agreement by members of a profession or trade to establish a central compensation fund which consumers can draw on in cases of fraud or insolvency.

Short term loan to facilitate the purchase of one property prior to the sale of another releasing funds that are required for the purchase. Professional advice should always be taken prior to considering any bridging finance as it can be a solution which is worse than the problem.

Insurance cover which protects the holder against damage to the property itself (although it can be linked with contents insurance in a combined policy). The amount insured may vary from the purchase price/valuation of the property depending on the type of location of the property. The valuer will usually provide a rebuild cost for insurance purposes.

The practice of buying a house or flat for investment purposes. Income is provided by the tenants' rent, and capital growth (if any) by the property's increasing resale value.

In the context of mortgages, a capital and interest mortgage is also known as a repayment mortgage. It involves paying all of the interest plus repayment of a little of the capital each month; an interest only mortgage involves only paying off the interest.

A mortgage which allows your interest rate to climb no higher than a specified level, usually for the first few years of the loan.

A cash amount paid by a mortgage lender to a customer (typically at the beginning of a contract) as an inducement to enter into a mortgage contract with the mortgage lender.

County Court Judgment. A decision reached in the County Court which can be for not paying debts. If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this.

The final stage of the house-buying process, which comes after exchange of contracts. The sale must proceed after Exchange, but Completion occurs when the property's agreed sale price (less any deposit already paid) safely reaches the seller's bank account.

This is shorthand for compulsory insurances. Some lenders, at least for certain mortgages, insist that you take out their buildings insurance - which needn't necessarily be the most cost effective on the market.

Insurance cover which protects the personal belongings your home contains. In the case of rented accommodation, the landlord is responsible for insuring those contents which he owns, but not those owned by his tenants.

Legally binding agreement for sale. In two identical parts, one signed by seller and one by purchaser. When the two parts are exchanged (exchange of contracts) both parties are committed to the transaction.

Normally carried out by a solicitor or licensed conveyancer on the buyer's behalf, conveyancing includes proving the property is really owned by its seller, making sure that all the loans secured on it are discharged, establishing its legal boundaries and searching local planning information for upcoming developments which could affect the property's value.

A local authority charge which replaced the Community Charge in 1993/94. Generally speaking, the more valuable your property is, the higher your Council Tax bill will be, although the amount for an identical property can vary considerably between different local authorities. In rented or buy to let accommodation, the tenants are usually responsible for the Council tax.

If a County Court rules against you for defaulting on a debt, that ruling is listed on your credit record. Having such a judgement listed against you may mean you are turned down for future loans, or be expected to pay a higher rate than other customers. The Scottish equivalent of an English CCJ is a Decree.

A promise contained in a deed.

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

This is a way in which a lenders assess whether you are a good risk to offer a mortgage to.

A bank account linked to a cheque book and/or debit card. In exchange for instant access and the ability use cheque or debit facilities, most pay little or no interest on the balance they contain.

The formal written document which lists exactly who owns a property and enables transfer of a property's ownership from seller to buyer. A mortgage lender will record details of their mortgage on these deeds (which means they can take ownership of the property if you default on the loan payments).

In the context of mortgages, the deposit is the initial lump sum payment which the buyer must contribute to the property's total purchase price. Commonly set at around 5% to 10%.

A method of saving which pays regular, usually variable interest based on the amount invested (instead of relying, for example, on the unpredictable returns from stock market investment).

A mortgage which has an interest rate below the lender's standard variable rate (SVR), Bank Base Rate or Libor rate, typically for the first few months or years of the loan. The rate payable may move up and down, but the discount on SVR remains constant.

Mortgages completed at distance - namely not face-to-face - are classed as a distance contract.

The principle that wise investors should spread their risk among many different types of investment. A properly balanced portfolio will contain elements of share, deposit-based and property investments. Fund performance and objective achievement are not guaranteed.

A document which meets the following criteria is said to be in a durable medium:

• Capable of being used by the recipient.
• Enables the recipient to store the information in a way accessible for future reference for a period of time adequate for the purposes of the information.
• Allows the unchanged reproduction of the information.

A charge levied by the mortgage lender on the customer in the event that the loan is repaid in full or in part before a date specified in the contract. Fixed-rate, capped-rate, cashback and discount rate mortgages commonly carry early repayment charges that can in some cases persist long after the initial special rate itself has expired. This can make it prohibitively expensive to move to a rival lender in the first few years of the loan. The Sidstone.co.uk shows you the size of any early repayment charge and how it changes over time.

A term used by lenders to describe potential borrowers' working arrangements. Self-employed applicants are sometimes seen as a greater risk than employees are. But many specialist lenders and mortgages have emerged in recent years designed specially for different types of employment status, and the John Charcol website has a wide variety of these in its database.

A mortgage funded by an insurance-based savings plan. The borrower only pays interest during the mortgage term and the savings plan is designed to repay the mortgage at the end of the mortgage term. As the returns payable under the savings plan depend on stock market performance, shortfalls and in some instances overpayments can occur.

The terms of a property's purchase become legally binding for both parties when contracts are exchanged. The buyer is then committed to buying, and the seller to selling. As a buyer, you should normally ensure that you are covered by building insurance from this date, because even if the property were damaged badly, you would still have to buy it.

A service which offers no advice, but merely carries out the customer's orders.

A mortgage which fixes your interest rate at a specified level, typically for the first few years of the loan.

A fixed rate mortgage charges a set interest rate over an agreed period of time, which could be anything from 1 year, 3 years, 5 years, or occasionally even longer. At the end of the fixed rate, the mortgage will normally revert to the lender's standard variable rate.

Usually you will find that a fixed rate mortgage offers very favourable terms, but early repayment charges will limit any flexibility to switch away from it.

The good thing about a fixed rate mortgage is that you know how much you'll be repaying each month for the length of the fixed period, which can make budgeting much easier. Where fixed rate mortgages don’t necessarily work is if the standard rates begin to fall - and you end up fixed on a higher rate with prohibitive early repayment charges.

A mortgage which allows borrowers to make overpayments when they have spare cash. Other features could include the option to reduce or miss payments altogether when times are tight, and to reborrow any overpayments. Not all flexible mortgages offer all of these features. Often useful for self-employed people whose income varies from one month to the next. The most flexible form of mortgage is a Current Account Mortgage (CAM), which can potentially save you money by linking your current account and mortgage together.

This is when the person selling the property accepts an offer and then accepts a new, higher offer from another buyer before exchange of contracts.

Some lenders offer specialist graduate mortgage products. These tend to require no deposit and in some cases can lend up to 100% of the value of the property.

If you would like to find a competitively priced graduate mortgage and get out of the renting game, take a look at the options today.

Before tax or deductions.

A fee that a leaseholder has to pay the freeholder every year.

A growth strategy is one which seeks to maximise the capital value of your investment without the requirement to generate any minimum level of income. Any income may be reinvested.

This is an insurance premium that you have to pay for some mortgages, usually when the Loan To Value is higher than a certain figure. It protects the lender to some extent if you default on the mortgage for any reason. It is important to understand that although you have to pay the premium, the lender benefits from any payout, and that if the payout doesn't cover their costs they may seek further money from you. With many mortgages you can add the Higher Lender Charge to the loan, unless this takes your Loan To Value over a certain figure. The insurer may pursue the defaulter for reimbursement of any monies which have been paid out in respect of lenders claim.

A joint term, referring to both buildings cover and contents cover. The two policies may or may not be bought from the same insurer, but buying them together can sometimes save money or make life simpler.

In the context of mortgages, a lender's estimate of the monthly payments you would have to make under a particular loan arrangement, together with the costs to set it up.

Impaired credit mortgages are specialist loans for customers whose credit problems disqualify them from using mainstream lenders' standard products. Some lenders specialise in loans like these, which are also known as adverse credit loans.

An income strategy for investments is one which seeks to achieve a minimum level of income from the investment to fund day-to-day spending (often used by retired people).

Independence in regard to mortgage advisers is defined by the FSA as advice given in respect of the whole of the market, and offers the client a fee-only option, in other words is able to accept no other payments apart from those levied on the client, thereby eliminating any conflict of interest that could arise.

The premium which a borrower must pay a lender in return for use of the lender's money.

An interest only mortgage or interest only remortgage is where you simply pay the lender the minimum amount to cover the interest on your loan and invest enough each month in an investment vehicle to build up a large enough fund to pay off the capital part of the mortgage, when it becomes due at the end of the agreed term.

A mortgage loan funded by contributions to an Individual Savings Account. ISAs provide tax-free growth, generated mainly by stockmarket investment. The ISA aims to repay the loan's capital at the end of its term, but the interest element must be paid separately as you go along. It's important to remember that past performance is not necessarily a guide to future performance.

This is the fee paid to the Land Registry to register ownership of an area of land.

A property agent who can help landlords locate suitable properties for purchase, and who finds tenants to occupy those properties and can manages the rental process which follows.

This is the amount you want to borrow divided by the purchase price. In other words, it reflects the size of your deposit. Generally, the lower the loan to value, the safer the lender will view the loan.

A local authority search is an examination of local planning records to uncover details of any upcoming developments near the property which could affect its future value or existing restrictions on the site.

The interest rate at which leading banks lend to one another. Sometimes used as an alternative to base rate in setting the benchmark for a tracker mortgage. There are separate LIBOR rates for different periods up to a year but either "1" or "3" months LIBOR is what is normally used in setting mortgage rates.

The wholesale markets in which banks and other financial institutions lend money to one another. Mortgage lenders often borrow money in these markets, particularly for funding fixed rate mortgages.

A firm/ individual with permission for advising on regulated mortgage contracts.

Mortgage refinancing typically refers to using a lower rate mortgage to consolidate other loans and reduce monthly outgoings.

The mortgage refinancing rate – as long as you choose carefully – should be a great deal less than you are paying for credit cards, unsecured loans or other finance and can therefore save you a significant amount each month. However, you may pay more over the term of the loan.

After tax or deductions have been deducted.

This is where your income is not disclosed.

Most mortgage borrowers also have savings, even if they are small, and using this money to cancel out mortgage debt makes sense. This is the basic principal behind offset mortgages.  With interest only paid on the balance between savings and mortgage debt you achieve the same effect as overpaying a home loan: but you retain the ability to get the money back if you need it.

A mortgage repayment bigger than the one needed to meet the loan's minimum requirements. Mortgages that allow these without penalty are often useful for people whose type of employment means that from time to time they receive significant bonuses or other influxes of money.

A short break from regular mortgage repayments, sometimes offered with flexible mortgages. This can sometimes be a useful feature for self-employed people or others with irregular income.

A mortgage whose capital repayment is funded by using a personal pension. The generous tax breaks given to pension saving boost contributions by making them gross instead of net of tax. There is an option available to take a lump sum, of up to 25% of the value of the accumulated pension fund. This lump sum aims to repay the loan's capital at the end of the term.

Personal Equity Plan. This is a tax free way to own shares or unit trusts. You can also use PEPs as a way to repay an interest only mortgage with some lenders.

In the context of insurance, a premium is the regular sum you pay to keep your cover in force.

The total amount paid by the mortgage lender to a mortgage adviser/ intermediary, whether directly or indirectly, in connection with providing applications from customers to enter into regulated mortgage contracts with the mortgage lender.

The process of switching your mortgage loan from one lender to another without moving house.

A mortgage loan funded by simple monthly repayments, calculated to repay capital and interest usually over a term of 25 years (less if preferred).

The means by which a mortgage loan's capital is repaid. Examples include endowment policies, ISAs, and personal pensions.

A local authority search is an examination of local planning records to uncover details of any upcoming developments near the property which could affect its future value or existing restrictions on the site.

If you should default on your mortgage, the lender can ultimately repossess your property to recover their money. The loan is hence said to be "secured" on the property.

A self build mortgage is designed to help you finance the building and ownership of a house that you are about to build. The UK self build mortgage market is a specialist area, because you are asking lenders to put forward money against an asset which does not exist at the beginning of the project.

A self certification (sometimes called self-cert) mortgage is a mortgage for self-employed people who do not have pay slips or do not necessarily have a regular income to confirm their earnings to a lender.

It used to be the case that the UK self certification mortgage rate tended to be substantially higher because lenders perceived this as a more risky sector to deal with. These days, by shopping around, it is possible to get a competitive self-cert mortgage, with just as many of the benefits regularly employed people enjoy.

Stamp Duty is the tax you pay when you buy property or shares. You pay 'Stamp Duty Land Tax' when you buy property and either 'Stamp Duty' or 'Stamp Duty Reserve Tax' when you buy shares.

A mortgage lender's main interest rate. Fixed-rate and discount loans usually switch to SVR when the special offer period expires. Conversely, tracker mortgages switch to a fixed percentage above Bank Of England Base rate (or LIBOR)

A shorthand term for the borrower's credit record and employment situation. See "Non-Status Loan".

The process of cashing in an unwanted endowment policy with the insurer who sold it to you. Doing this often produces a poor return for the money invested to date in the policy's early years.

An expert examination of the property you are considering buying, aimed at discovering any structural flaws or repairs needed which you may have failed to notice yourself.

The period of time over which your mortgage will run. Typically 25 Years or to expected retirement date if that comes first.

Tracker mortgages link your interest rate to a benchmark, such as Bank of England base rate. The rate you pay moves up and down in line with the benchmark selected.

A mortgage repayment smaller than the regular agreed sum. Some flexible mortgages have this feature, which can be useful for people with irregular income.

An Additional Security Fee (Mortgage Indemnity Guarantee policy) is paid to take out an insurance policy designed to indemnify the mortgagee (lender) against loss in the event of default on the mortgage repayment. It is normally taken out by the lender at the start of the mortgage and the mortgagor (borrower) is made to pay the premium! The premium is normally calculated as a percentage (5.8% is typical) of that part of the loan above a certain percentage of the property value, normally 70 - 75%. It is charged as a lump sum to the borrower and can usually be added to the mortgage advance. It should be understood that such policies are for the protection of the lender and NOT the borrower.

This is the term used if the borrower has suffered a poor credit history. This could include previous mortgage or loan arrears, CCJ's or bankruptcy. Other terms used to describe an adverse credit mortgage include:

• Non status mortgage
• Credit impaired mortgage
• Bad credit mortgage
• Poor credit mortgage
• No credit check mortgage
• No credit mortgage
• Low credit score mortgage

A Freehold covenant restricting the occupancy of a property to those engaged in agriculture.

Dividing the liability for property tax, water charges etc between the seller and buyer of a property.

An interest rate reflecting the cost of a mortgage as a yearly rate. This rate is likely to be higher than the stated note rate or advertised rate on the mortgage, because it takes into account point and other credit cost. The APR allows home buyers to compare different types of mortgages based on the annual cost for each loan.

This is a fee you pay to your Lender in return for providing you with a mortgage. Usually paid on completion or with application , these fees usually apply when you take out a fixed rate, discount or cashback mortgage.

Document transferring rights of ownership from one person to another, such as an endowment policy to the building society in connection with a mortgage. Can also be the document transferring the lease on a property.

Accident, Sickness and Unemployment insurance (See also MPPI). This insurance is designed to cover the borrowers mortgage payments in case of accident, sickness or involuntary unemployment.

Document from registered proprietor of land allowing another party, such as the purchasers' solicitor, to be given information from the register of a property.

The newest type of mortgage. The interest rate is variable but set at a premium (above) the Bank of England Base Rate for a period or even the term of the mortgage. The biggest advantage of this type of mortgage is that, usually there is little or no redemption penalty. This also means that interest can be saved on the mortgage without penalty, by overpayments, and these savings can be quite significant.

Arrangement fees, are charged in connection with some mortgages, often they are charged in connection with a fixed or capped rate loans. The fee is normally non-refundable if charged upfront, some times it is added to the mortgage debt on completion.

A fee charged by an intermediary or advisor for locating the most appropriate mortgage for the borrower.

Regulatory organisation for Building Societies. Reporting to Treasury Ministers.

Mutual organisation specialising in lending money to individuals to purchase or remortgage residential properties. Most of this money comes from individual saving members who are paid interest. A proportion of building society funds is also raised on the commercial money markets. Since the early eighties there has been a progressive relaxation of the rules governing the allowable sources of building society funds for lending to allow societies to compete more effectively with banks and there is now no restrictions as between the allowable proportions of 'retail' and 'wholesale funding'.

This is a mortgage designed for people who wish to purchase a property to rent out to others. The ability to repay this type of mortgage is often based on the projected rental income from the property as opposed to the personal income of the borrowers.

Your monthly payments are partly to pay the interest on the amount you borrowed and partly to pay the outstanding mortgage and ongoing costs involved in a mortgage.

An interest rate charged on a mortgage where there is a guarantee from the mortgagee that the rate will not exceed a certain amount usually for a set period of 1 - 5 years but which will reduce if the standard variable rate falls below the capped rate.

A payment you receive when you take out a mortgage. It may be a fixed amount, or a percentage of the amount of the mortgage.

"Term used to describe a mortgage lender who does not rely on a branch network for distribution. Originally applied to specialist lenders who entered the mortgage market in the mid-late eighties (National Home Loans, The Mortgage Corporation, First Mortgage Securities, Mortgage Express and many others). This followed some de-regulation, which made the securitisation of mortgage loans a viable and potentially profitable option for lenders. (See SECURITISATION). Several building societies now have ""centralised lending"" operations which operate quite separately from their branch networks and rely exclusively on mortgages from intermediary sources."

Any right or interest, especially a mortgage, to which a freehold or leasehold property may be held.

The certificate issued by HM Land Registry to the mortgagee of a property with registered title. Contains three parts - charges register, property register and proprietorship register. Contains details of restrictions, mortgages and other interests. Where there is no mortgage it is called the Land Certificate and issued to the registered proprietor.

Moveable items such as furniture or personal possessions.

A rent payable by the owner of a freehold property similar to the ground rent payable by a leaseholder. Normally only found in the North of England. Can be bought out by freeholder.

Council of Mortgage Lenders

When the sale and purchase of the property are finalised and you become the owner of your new house.

The deed by which freehold, unregistered title changes hands. If the property is leasehold and unregistered it is called an assignment. If the title is registered the deed is called a transfer.

A check the lender makes with a specialist company to find out whether you have any CCJs or a bad credit record.

This is a means to repay high interest debts (such as credit cards and personal loans) by incorporating them into a new mortgage to benefit from lower interest rates and lower monthly payments.

A legal document which is 'signed, sealed and delivered' not just signed. This has special significance in law. Title to both freehold and leasehold property can only be transferred by deed.

The amount of money you put towards buying your property.

A solicitors expenses for example: land registry fees, searches, faxes etc.

An interest rate which is set at a set margin below standard variable rate usually for a period of 1 - 5 years. Used as an incentive to attract potential new borrowers.

This a fee charged by a lender if you pay off part or all of your mortgage before the agreed date, or you move your mortgage to another lender. These charges mainly apply to fixed rate, discounted rate and cashback mortgages.

A right, such as a right of way, which the owner of one property has over an adjoining property.

A life assurance policy that is designed to produce a lump sum to pay off an interest-only mortgage. There are different types of endowments.

The amount of value in a property that isn't covered by a mortgage - simply take the amount of the mortgage from the valuation to work out the equity.

You take a new, larger mortgage, or increase a mortgage you already have and use some or all of the extra money you have raised for home improvements, holidays and so on.

This is the point at which you and the person selling the property sign and swap identical contracts that show the price and which fixtures and fittings are being sold, as well as the date on which everything is to be completed. When contracts are signed, everything becomes legally binding and if you or the seller pull out before completion you or they will have to pay compensation.

The interest charged on a mortgage is set for an agreed period.

Any item that is attached to a property and so legally is part of the property.

This type of mortgage is relatively new. The interest rate is variable but has the big advantage that it is calculated daily instead of annually. This means that any capital repayment of the loan will affect the interest charged on the outstanding balance immediately. By making regular overpayments, the interest saved on the mortgage over the term can be quite significant. Also, most lenders will allow funds to be drawn from the account up to the original mortgage balance or even allow payment holidays.

This is where you own the property and the land that it is on.

This is the amount you must repay to the lender before tax relief (see MIRAS) had been applied to the interest Charges. MIRAS was abolished in April 2000 and so there is now no tax relief applied to mortgages.

This is the person liable for the repayment of a mortgage if a borrower fails to maintain their mortgage payments. This is usually a parent or close family relative.

This is a property survey which lies between a mortgage valuation and a full survey. It is a multi-page report which gives the buyer some piece of mind about the property they are purchasing.

The size of the mortgage that the lender will offer is usually worked out by multiplying your income by a set figure. Most lenders will take 3 times the gross salary of the first applicant plus 1 times the income of the second applicant or 2.5 times the joint salaries. Some lenders will allow you to borrow more than this.

This covers accident,sickness and unemployment. It provides a monthly payment if you cannot work for an extended period due to an accident,sickness or unemployment.

This is confirmation from your employer that you earn the amount you stated when you made your mortgage application. If you are self employed, the lender may require confirmation from your accountant.

With this type of mortgage, the borrower is only required to pay inerest on the amount borrowed during the mortgage term. It is the borrowers responsibility to ensure that enough funds will exist (either through an investment policy or other means) to repay the mortgage at the end of the term.

A mortgage broker like Sidstone.co.uk or an advisor who locates the most appropriate mortgage for borrowers and arranges the mortgage on their behalf.

If you buy a leasehold property, you own the property for a set number of years but not the land on which the property is built, as opposed to freehold where you own both the property and the land indefinitely.

An alternative to using a solicitor. This people specialise in the legal side of buying and selling property.

This refers to the size of the mortgage as a percentage of the value of the property i.e. A £45,000 mortgage on a house valued at £50,000 would mean that the LTV would be 90%.

A check carried out by the buyer's solicitor to check that there are no proposed developments in the area of the property such as roads, railways or other buildings. The check also includes details of the planning permission for the property and whether the council has served any enforcement notices on the property. A fee is charged for this service.

Loan to Value. This refers to the size of the mortgage as a percentage of the value of the property i.e. A £45,000 mortgage on a house valued at £50,000 would mean that the LTV would be 90%.

Mortgage Indemnity Guarantee. This is insurance that covers the lender in case your property is repossessed and the lender cannot get back their money. Although this insurance protects the lender, you have to foot the bill. Some lenders will add the MIG on completion of the mortgage, whilst others will deduct the relevant amount at completion. This usually applies to high percentage mortgages of over 75% loan to value.

Mortgage interest relief at source. This was tax relief on your mortgage but was abolished by the government with effect from April 2000.

A loan to buy a property where you put up the property as security against you paying back the loan.

The Company or Organisation that lends you the money.

The person taking out the mortgage.

Mortgage Payment Protection Insurance (See also ASU). This insurance is designed to cover the borrowers mortgage payments in case of accident, sickness or involuntary unemployment.

Mortgage Repayment Protection. This is insurance you take through the lender when you take out the loan.

This is where the money you owe on the mortgage is greater than the value of your property.

This is where a lender may not require income details from you or may accept some previous poor credit history i.e. CCJs or previous mortgage arrears.

When monthly payments to a mortgage are increased so that the mortgage is repaid before the end of the mortgage term. Flexible mortgages allow overpayments to be made without penalty allowing significant interest savings over the mortgage term.

A period during which the borrower makes no mortgage payments. Normally only available to borrowers with a flexible mortgage who have previously overpaid their monthly repayments.

This is a structured savings and investment plan to provide for your financial needs after you retire. You can use some or all of the proceed from a personal pension to pay of an interest only mortgage.

A term used to describe a mortgage that can be transferred between properties when you move house.

The process of paying off your mortgage either when moving house, remortgaging or at the end of the mortgage term.

Penalties levied by the lender when a borrower pays off the mortgage before the end of the agreed redemption period. These are often charged on fixed, capped or discounted rate mortgages.

A charge made by the lender for sending mortgage funds to your solicitor just before the purchase is completed.

The process of paying off one mortgage with the proceeds from a new mortgage using the same property as security.

Your monthly payments are partly to repay the amount you borrowed and partly to pay the interest on the outstanding mortgage. This is also known as a capital and interest mortgage.

The legal process by which a borrower in default under a mortgage is deprived of his or her interest in the mortgaged property. This usually involves a forced sale of the property at public auction with the proceeds of the sale being applied to the mortgage debt.

A tenant in a council owned property may purchase the property at a discount depending on length of their tenancy.

This is a charge made by lenders when you repay a mortgage.

These are checks carried out during the conveyancing process. These checks are made with local authorities and other official organisations to check planning proposals and other matters that may affect the value of the property and it's saleability in the future before making a loan.

Normally when a borrower applies for a mortgage he or she will be asked to provide pay slips or company accounts to prove their income. If it is difficult or extremely inconvenient for you to provide this documentation, you can choose to self-certify your income. This involves signing a declaration which states your income sources and amounts. Lenders will charge you higher rates than average and offer you a more limited range of mortgages if you choose to self-certify your income, so it's not a good idea to self-certify just to avoid some paperwork.

A scheme operated by a developer where the developer retains a percentage equity of around 10% in the property. Thus the developer holds a second charge over the property. The 10% owing may be interest free or may incur interest and be added to the total amount owing on the property.

A scheme operated by a housing association where a person owns part of the property and pays a mortgage on this, while the housing association owns the rest of the property and the person pays rent on this.

This is a tax payable on the purchase of a property by the purchaser.

This is the interest rate that the lender charges. The rate goes up and down and your repayments are adjusted accordingly.

This is the most wide ranging check of the outside and inside of a property. This is carried out by professional surveyor and it should pick up all but the most hidden faults.

Standard Variable Rate. This is the interest rate that the lender charges. The rate goes up and down and your repayments are adjusted accordingly.

The period of years over which you take the mortgage and when you have to repay it.

This is an insurance policy designed to repay the mortgage on the death of the insured person. Level Term Assurance covers a principal sum throughout the policy term and pays out the full amount on death. Reducing Term Assurance is designed to repay the balance outstanding on a repayment type mortgage upon death. Term Assurance may also pay out early on the diagnosis of a terminal illness.

As a condition of a special mortgage deal, you may have to agree to stay with the lender for a period of months or years after the deal has ended. If you move your mortgage elsewhere during this period, you may have to pay an early redemption charge.

Documents that show proof of who owns the freehold and leasehold property.

This is a document that, once you sign it, transfers the ownership of a property to you.

This is where the property is owned outright and no mortgages or loans are secured against it.

A simple check of the property in order to find out how much it is worth and whether it is suitable to lend a mortgage on.

A fee paid by a borrower to cover the cost of the lender checking that the property is suitable security for the mortgage loan.

The interest rate the lender charges. it goes up and down and your repayments change accordingly.

The person selling the property.

A legal term that appears in insurance policies. It usually refers to something for which no individual can be held responsible, such as a tree falling on a car in a high wind. If something is an "Act of God" it doesn't necessarily mean your insurance won't cover it - just that it isn't possible to say whose fault it was.

Also referred to as a claims adjuster or loss adjuster, this is the person who checks some claims on behalf of your insurer. Their job is to make sure that the value of claims is accurate.

The ABI represents the UK's insurance companies and promotes high standards of customer service. It produces guidelines and standards for the industry.

Buildings insurance covers damage to your property and its permanent fixtures and fittings, such as bathroom suites, fitted kitchens and central heating systems. It usually also includes sheds, garages and greenhouses, as well as fences, gates, terraces, driveways and outdoor swimming pools.

The formal request you make to your insurance company when you need them to pay for a loss covered in your policy.

The items in your home that you would take with you if you moved, such as furniture, furnishings, stereo and audio equipment, clothing and jewellery. You can insure these separately from the building itself - for example, if you rent your home and your landlord insures the building.

The financial protection provided by an insurance policy.

The reasonable steps you have to take to prevent loss or damage - for example, locking your car or closing the windows in your home.

An endorsement is either:
• a written amendment to an insurance policy that becomes a legal part of it, or
• a record on your driving licence of any driving convictions you have

The amount you agree to pay before your insurance cover pays the rest (for example, the first £50 of a claim). You are normally given the option to increase or reduce the excess within the terms of your policy, which has an impact on your premium.

Items, events or circumstances not covered by your insurance policy.

The time and date your cover starts.

A basic insurance principle that states that you shouldn't profit from a claim. After payment you should be in exactly the same financial position as immediately before the loss or damage took place.

The word liability refers to fault. If you are liable to someone, it means you're legally responsible for causing loss because you've injured them or damaged something that belongs to them.

The loss is the event that causes you to make a claim on your insurance policy - for example, damage to your car or theft of your property.

The amount of time that your insurance policy is active and valid.

The contract between you and your insurer setting out the terms of your cover.

The amount you pay for insurance cover, either annually or monthly.

See Due care.

Otherwise known as new for old cover, this type of policy may put you in a better financial position after your claim. This is because the new item is likely to be worth more than the one that was lost or damaged.

Your premiums will be decided once your insurer has calculated your risk - how likely you are to make a claim and how much that would cost to settle. Your risk is based on many factors such as your age, where you live and what you do for a living.

The amount you receive when the insurer pays your claim.

The maximum amount of money your insurance will pay if you make a claim.

An insurance company's underwriting department calculates your premiums, based on their assessment of your risk.

If the cost of repairing a car or other vehicle after a crash is more than its market value, it is known as a write-off (or sometimes a total loss). Most insurance policies will only pay for repairs up to the market value of the vehicle.