AER
Annual Equivalent Rate illustrates what the savings interest rate would be if interest was paid and compounded once each year.
APR
The Annual Percentage Rate is an interest rate which all lenders must quote on mortgage related financial promotions when an interest rate is mentioned. The APR is intended to help borrowers compare the interest rates on different products.
Borrower(s)
The person(s) taking out a mortgage.
Capital
The amount outstanding on a mortgage (from time to time) being the sum on which interest is calculated.
Capped Rate Mortgage
Whatever happens to interest rates, the borrower pays no more than the capped rate during the specified period. The standard variable interest rate will apply, if lower than the capped rate during the capped rate period.
Cashback
A cash sum paid on completion of a cashback mortgage. Cashbacks are available on selected products available from time to time.
Certificate of Title
A certificate given to us by a solicitor or licensed conveyancer, confirming that the title to a house is good.
Completion
The act of completing a mortgage - usually on the same day as the purchase is completed.
Contract
The written legal agreement between the house seller and purchaser.
Conveyancing
The legal process of buying and selling a house.
Covenant
A legally binding obligation between a borrower and lender.
Declaration by Occupier
A declaration signed by someone over the age of 17 who will also reside in a property. It postpones any rights or interest in the property pending full repayment of the mortgage and any further advance.
Discounted Rate Mortgage
The standard variable interest rate is discounted for an initial period. At the end of the discounted period, the interest rate reverts to the standard variable rate.
Early Repayment Charge
An early repayment charge sometimes applies if all or part of a mortgage is paid (over and above the usual monthly payments) during a pre-determined initial period. Any early repayment charge will be confirmed in the Key Facts Illustration (KFI).
Endowment Mortgage
Interest only is paid to us on the amount borrowed. In addition to the interest payments, life assurance premiums are paid to a life assurance company for a policy designed by the assurance company to repay the mortgage at the end of the term or death of the borrower.
Equity
The difference between the value of the property and the total amounts of any loans secured against it.
Fixed Rate Mortgage
The interest rate is fixed - usually for an initial period of years, after which the interest rate will revert to our standard variable interest rate.
Freehold
A house owned with no rent payable to anyone else.
FSA
Independant non-governmental body, given statutory powers by the Financial Services and Markets Act 2000, that sets standards for all financial institutions to adhere to.
Further Advance
An additional amount borrowed after completion of the mortgage - possibly for an extension or home improvements.
Gross Interest
Interest paid on a savings account without any deduction of income tax.
Gross Rate
The contractual rate of interest paid on a savings account before the deduction of income tax at the appropriate rate.
Guarantee/Guarantor
A Guarantee is a legally binding commitment given by someone other than a borrower (known as a Guarantor) to pay the mortgage and comply with other obligations owed to us.
Higher Lending Charge
A higher lending charge is normally required by us where a loan is over 75% of the purchase price or valuation of a property. See our mortgage product information leaflet for the fee scale. The higher lending charge is used to purchase insurance for our benefit only, intended to cover part of our loss if we have to enforce the mortgage and sell a house for less than the amount outstanding on a mortgage. The higher lending charge does not release the borrower from any liability to us to make good any loss or shortfall.
Intermediary
An individual, firm or organisation which introduces mortgage applications to lenders (for example, estate agents, mortgage brokers, independent financial advisors, solicitors, accountants and life assurance companies).
Joint Representative Borrower
Where there is more than one borrower, the person entitled to vote and receive notices from the Society on behalf of all borrowers.
Key Facts Illustration (KFI)
An illustration confirming the cost of a regulated mortgage and any fees associated with borrowing the money.
Leasehold
A house owned where ground rent is paid to a landlord.
Maturity Date
The date when an investment placed in a fixed term account reaches the end of its term.
Monthly Payment
The monthly sum payable by a borrower to us.
Mortgage
A loan made by us which is secured on property.
Mortgage Deed
The legal document which secures the loan against property.
Net Interest
Interest paid on a savings account after deduction of income tax at the appropriate rate.
Offer of Advance
The document sent to the borrower confirming financial and other terms and conditions of our mortgage offer.
Pension Mortgage
A mortgage where interest only is paid on the amount borrowed. In addition contributions are paid into a pension scheme intended to be sufficient to pay off the amount borrowed at the end of the repayment period. This method of repaying a mortgage reduces the amount of pension and borrowers must therefore seek professional advice. The borrower will be required to take out life assurance cover so that the mortgage is repaid if the borrower dies during the mortgage term.
Possession Proceedings
In the last resort we will ask the court for possession of a property if the borrower fails to maintain the mortgage payments or breaks other mortgage covenants to us. After we obtain possession we will sell the property and repay the mortgage with the proceeds. Any surplus will be paid to the borrower after all costs have been paid. If the proceeds from the sale are insufficient to repay the mortgage including interest and costs, we will claim the shortfall from the borrower.
Principal Sum
The initial amount borrowed when a mortgage commences.
Property
This means the property used as security for the mortgage.
Re-inspection
When we ask our valuer to check that repairs or other work has been carried out on a property.
Redemption
The full repayment of the mortgage.
Repayment Mortgage
A mortgage where the borrower pays interest and capital on the amount borrowed. The mortgage will be repaid in full by the end of the repayment period as long as payments are adjusted when interest rates change. No life assurance cover is included in a repayment mortgage. Separate arrangements should be made to provide life assurance cover, critical illness, unemployment cover, etc.
Retention
An amount held back from the agreed advance until repairs or other works have been carried out to our satisfaction.
RICS Housebuilding Cost Index
The index to which buildings insurance cover is sometimes linked to ensure that cover keeps pace with current rebuilding costs.
Rules
The Society's rules which regulate the relationship between us and our investors and borrowers. All borrowers receive a copy of the rules. The rules are available to savers on request.
Society
This means us.
Solicitor/Licensed Conveyancer
The person who deals with conveyancing matters.
Standard Variable Rate
Our normal variable interest rate which also applies at the end of any fixed, discounted or tracker mortgage period.
Tax Certificate
Confirms the amount of interest on savings accounts and the amount of tax paid in a tax year. Tax certificates are available on request.
Tenancy
When a house in mortgage to us is let to a tenant. This must not be done without our prior written consent.
Tenure
The type of ownership of property i.e. Freehold or Leasehold.
Term
The length of time taken to pay off a mortgage, assuming all contractual payments are paid on time. It is sometimes called the repayment period.
Title
The Deeds or Land Registry certificate for a property.
Vacant Possession
The right to insist that anyone living in a house leaves before the purchase and mortgage are completed.
Valuation Report
The report which we obtain on the value of a house before we approve a mortgage - this is a brief report not a detailed survey report.
Vendor
The person selling the property.