Confusing mortgage jargon?

If you can't find a specific word or term in our glossary below but want to know more about what it is, then please call our friendly team on 03300 244612 who will be pleased to help.

A

Additional borrowing

Also referred to as a 'further advance'. An additional loan secured against your property, which may be offered by the mortgage lender for a different purpose other than buying the original house. For example, for home extension or renovation works.

Agreement in principle

A document from a mortgage lender to show that you can borrow a certain amount. You can use this when putting an offer in on a house to show that you are serious and can afford to buy the property. Family Building Society do not offer an agreement in principle.

Annual Percentage Rate of Charge (APRC)

Also known as ‘Cost for comparison’. This is the annual cost (as a percentage) of a mortgage across its whole term, taking into account any charges that relate to the cost of borrowing, such as interest rates and fees.

Arrears

When a mortgage payment has passed its due date and has not been paid. Missing a mortgage payment can negatively impact your credit rating, and missing several payments could also lead to your mortgage lender repossessing your property. If you are experiencing payment difficulties, please contact us as soon as possible.

Application fee 

This is the upfront fee that is paid to process the mortgage application. This is paid when you apply for the mortgage and is non-refundable.

B

Base lending rate

The rate of interest set by the Bank of England, charged to mortgage lenders for borrowing loans. This is subject to change at any time.

Borrow back

When you have overpaid your mortgage, and can claim back the money further down the line. This is only available with the Offset Mortgage.

Broker

An agent who can advise you about, and sell you, products like insurance or mortgages. Brokers may be independent or tied to a larger network.

Buy to Let

Buying a property to rent out as an investment, these mortgages can be offered in your personal name and also as a Limited Company.

C

Capital Gains Tax

A tax on the profit or gain you make when you sell or dispose of an asset. For more information on the current rates and allowances please refer to gov.uk/capital-gains-tax 

Cashback

An incentive offered to mortgage applicants for certain products, where they can receive some money back.

Conveyancing

The legal process of buying or selling a property.

Credit score

Calculated by a lender to help assess the risk of lending to you (it’s also known as a credit rating).  We do not credit score at Family Building Society. Instead we have manual underwriters which review each case and look at everyone's individual circumstances.

D

Deed of consent

This is used when a mortgage is being registered against a property and there is an adult (anyone over the age of 18) living there but they are not the legal owner of the property. This means they can not claim squatters rights if the property may need to be repossessed.

Deposit

Discounted rate mortgage

A mortgage product where the interest rate payable is at a percentage discount from the mortgage lender’s base lending rate. You will normally pay the discounted rate for a set period, often between two and five years. Discounted rate mortgages are variable, so your payments may go up as well as down. See ‘Fixed rate mortgage’ for comparison.

Downsizing

Selling and moving to a cheaper property, to release some money to live on in retirement. This is sometimes used as a repayment vehicle to pay off an Interest-Only mortgage.

E

Early Repayment Charge (ERC)

A fee you may be charged if you repay some, or all of your mortgage before the end of an agreed term. Early Repayment Charges usually only apply during a specified period.

Energy Performance Certificate (EPC)

An energy performance certificate that gives a rating of how energy efficient a home is and also recommends how its efficiency could be improved.

Equity

The difference between what is owed on a mortgage and the current value of the property.

Equity release

Selling or mortgaging part of your home to release equity to live on in retirement. This is something that is not offered by Family Building Society.

Exchange of contracts

The legal transfer of a property between the buyer and seller. At this point the buyer should arrange building insurance because if something happens to the property between exchange of contracts and completion, the buyer takes legal responsibility for the property.

F

Family Offset Account 

This is an account that is linked to a Family Mortgage and reduces the amount of mortgage on which interest is charged.

Family Security Account

Fixed rate mortgage

A mortgage where the interest rate charged is fixed for a set period, usually between two and five years. This means that your mortgage payments will stay the same each month throughout the fixed rate period.

Follow on rate 

This is our base lending rate for our Owner Occupier mortgages. You'll be moved onto this rate once your existing mortgage product ends, unless you choose to switch to a new mortgage product. Follow on rates are typically more expensive than alternative mortgage products.

Floor rate

The lowest interest rate you will pay on a variable rate mortgage.

Freehold

You own the building and the land it stands on. See 'Leasehold' for comparison.

Full structural survey

Also known as a 'builder’s survey'. This is the most thorough type of survey and is used to uncover any structural issues with the property. It is often used in older properties.

Further advance

Also referred to as ‘additional borrowing’. An additional loan secured against your property, which may be offered by the mortgage lender for a different purpose other than buying the original house. For example, for home extension or renovation works.

G

Ground rent

A charge you may have to pay to the freeholder if you own a leasehold property.

Guarantor

A person (usually a parent or close family member) who guarantees to pay back someone’s loan if he or she is unable to repay it.

H

Homebuyers report

A survey done on the property by a registered surveyor. This is instructed by the buyer as a way of confirming if the property value is in line with the current market prices, and if there are any signs of work that are needed. They are usually less thorough than a full structural survey.

I

Interest-Only mortgage

A mortgage where you only pay back the amount you are being charged in interest each month. The amount of money you borrowed does not go down over the term of the mortgage and you will need to find another way to repay the original loan at the end of the mortgage term. See ‘Repayment vehicle’ for more information.

Investment

J

Joint Borrower Sole Proprietor (JBSP)

A mortgage arrangement that lets one or two owners plus up to two family members join the mortgage to support the owner(s) to improve the affordability for the buyer.

Joint tenants

Where the property is owned in equal rights by two or more people. If one person on the mortgage dies, the mortgage automatically transfers into the other person, or people’s names. All borrowers are jointly and severally liable, meaning that if there are two people named on the mortgage and one person misses the payments, the other person is legally responsible to pay the full amount of the mortgage each month, not just their share.

L

Leasehold

Often found with flats, you own the property for the length of time on the lease. The land that the property is on is owned by the landlord, also known as the ‘freeholder’. When the lease is up, the property returns to the ownership of the freeholder.

Properties that have fewer than 80 years on the lease can be difficult to get a mortgage on, and the lease can sometime be expensive to extend. It is important to check this before buying a leasehold property.

Loan to Income (LTI)

The amount you would like to borrow divided by how much you earn.

This is used to assess the monthly mortgage payments you can afford, and to make sure you can still afford them if the interest rate rises or your lifestyle changes, such as redundancy.

For example, if you would like to borrow £200,000 and your annual income is £50,000, your LTI would be 4 (200,000 / 50,000 = 4)

Loan to Value (LTV)

The size of your mortgage loan divided by the value of your property.

For example, if you’re buying a £100,000 property with a £10,000 (10%) deposit, you’ll need a 90% LTV mortgage.

M

Managed Flexi Mortgage Rate

Also known in the industry as Standard Variable Rate (SVR), this is our base lending rate for our offset mortgage. This is the rate your mortgage will go onto once your initial mortgage product with us ends, unless you select a new mortgage product.

Managed Mortgage Rate (MMR)

Also known in the industry as Standard Variable Rate (SVR), this is our base lending rate. This is the rate your mortgage will go onto once you have finished your initial mortgage product with us, unless you select a new mortgage deal.

Mortgage

A loan provided by a bank or building society (the “lender”) to a person buying a property (the “borrower”) and is secured against property.

Mortgage completion

Refers to the date your mortgage term begins, after your application has been accepted and the loan has been released.

Mortgage term

The length of time that have you have to pay back the mortgage. Most mortgage terms are between 5 and 35 years. A mortgage term is different to a mortgage product period, which is usually 2 to 5 years.

Mortgage Valuation fee

A fee paid to chartered surveyor to estimate how much a property is worth.

N

Negative equity

When the value of your home is less than the amount remaining to repay on your mortgage.

Non-occupying borrower

A person, such as a parent, who is willing and financially able to be a borrower on the mortgage, but who will not live in the home.

Non-owning borrower

A person who borrows money to buy a property that they do not plan to live in or own.

O

Occupying borrower

A person who borrows money to buy a property that they live in.

Overpayments

When you pay more than the minimum monthly repayment amount set by your lender. Overpayment can help you pay off your mortgage faster and pay less interest overall. However, you may be given an early repayment charge for doing so, depending on your mortgage offer.

Owner occupier

A person who owns the property that they live in.

Owning borrower

This relates to Buy to Let. A person who borrows money to buy a property that they own but do not plan to live in.

Offset mortgage

P

Part and part mortgage

A combination of both Interest-Only and Repayment mortgages.

For example, a part and part mortgage of £250,000 may have £175,000 on repayment and £75,000 Interest-Only. You’d then repay the £175,000 over the term of your mortgage. The remaining interest of £75,000 would be paid at the end of the agreed term.

Payment holiday (also called payment deferral)

An arrangement between yourself and the mortgage lender to allow you to stop or reduce your monthly payments for an agreed period.

Payment reduction

This is a lump-sum payment made by the homeowner to the mortgage lender, which goes towards reducing the amount owed by the borrower. This helps to reduce the amount of interest paid over the term of the loan.

Product fee

The main fee we will charge for arranging your mortgage.

Product switch/transfer

At the end of your mortgage product period, you can switch to another mortgage product with the same lender. You may also be able to switch to a new mortgage product before the period finishes (for example after 4 years into 5 year fixed term) if a more attractive mortgage product becomes available. However, this may result in additional charges such as Early Repayment Charges.

R

Reflection period

Once you receive your offer you will have a seven day reflection period, where you can check the terms and conditions and see whether the mortgage meets your needs and query anything with your solicitor. During this time, your solicitor is unable to complete your mortgage without your approval. You'll be able to cancel during the time, but be mindful that this may incur a fee.

Remortgage

This is the process of changing from one mortgage to another, possibly with a new lender.

Repayment mortgage

A mortgage has two parts, these being the money you borrow (known as the capital), and the interest charged by the lender on the amount you have borrowed. With a repayment mortgage, you’ll make monthly payments for an agreed term, until you have paid back both the capital and interest. This means that, as long as you keep up with the repayments, your mortgage will be repaid in full at the end of the mortgage term.

Repayment vehicle

What will be used to repay an Interest-Only mortgage at the end of the term. Examples of these can include downsizing, sale of another property (in England and Wales only), sale of other assets (for example second home) and existing investments or savings.

Representative example

An example of the costs associated with a mortgage, based on the mortgage lenders typical borrowers. This will show the monthly repayments, the total amount to repay, including the amount of interest, and any fees there are to pay. This allows you to make an informed choice when considering which mortgage product is best for you.

Repossession

If the borrower defaults on payments, the mortgage lender may take possession of the property. This is the last resort for mortgage lenders and they will usually try to come to an arrangement to have the mortgage paid back if the borrower is experiencing financial difficulties.

Residential investment Managed Mortgage Rate (MMR)

Also known in the industry as Standard Variable Rate (SVR), this is our base lending rate for our Buy to Let mortgage. This is the rate your mortgage will go onto once your initial mortgage product with us ends, unless you select a new mortgage product.

S

Security

When you take out a mortgage, the lender will take your property as security against the loan. This means that if you’re unable to pay your mortgage then your property may be repossessed by the mortgage lender.

There can also be additional security such as through a Family Security Account or Family Offset Account to improve your interest rate.

Stamp Duty Land Tax (SDLT)

Stamp Duty is a tax, paid by the buyer, on land and property transactions in England, Wales and Northern Ireland. For more information please refer to gov.uk/stamp-duty-land-tax

Standard Variable Rate (SVR) / Managed Mortgage Rate (MMR)

The rate your mortgage will go onto once you have finished your initial product with your mortgage lender. This is not always the most competitive rate, so it can be worth reviewing your options at this point, either with the same or another lender, to ensure you are getting a good deal.

T

Term reduction

If you are on a repayment mortgage, you can apply to reduce your mortgage term and this will allow you to pay off the loan quicker by increasing the amount you pay each month.

Title deeds/title document

Documents that officially states who owns the property, as well as information about the property and the land it is built on.

V

Mortgage valuation fee

A fee paid to a surveyor to estimate how much a property is worth.

Variable rate mortgage

A type of mortgage in which your interest rate, and therefore your monthly payments, can go up or down.

Vendor

The person selling a property.

Y

Yield

The yield on a Buy to Let property is calculated by dividing the annual rent you expect to receive by the purchase price of the property. It is a measure of the return for renting out the property.