A

Advance: The amount you borrow from us to buy your home.

Advice: Our Advisers provide a full advice service and at the end of the mortgage interview will make a recommendation on the most suitable mortgage for you. We do not charge for any advice given by our Mortgage Advisers.

Annual Percentage Rate of Charge (APRC): This shows the total cost of your mortgage as a percentage and takes into account the interest rate, term, product fees and any other related fees. The calculation is the same across the market, making it an effective way to compare mortgages. The lower the APRC, the cheaper the cost of borrowing.

Annual statement: We will send you this each year showing you how much you have paid off your mortgage and what you still owe.

Arrangement fee: This is a charge to set up your mortgage. The fee can be paid up front or added to the mortgage.

Tipton & Coseley Mortgage Advisers, Matt and Zoe, looking at computer screen

B

Bank of England Base Rate: This is the Bank of England’s official interest rate and is also known as Base Rate. It is set by the Monetary Policy Committee.

Booking fee: This is a fee charged to secure the funds needed on your mortgage. We require this fee to be paid when you apply for your mortgage.

Buy to let: Where you buy a property with the specific intention of renting it out.

C

Capital repayment:  A lump sum payment off your outstanding mortgage balance, on top of your normal monthly repayment.

Capped rate: An interest rate that has a maximum limit, meaning if rates increase it can only rise to a certain amount. Capped rates can still reduce if rates decrease.

Cashback: An incentive where you will receive a cash amount on completion of your mortgage.

Collateral charge: When taking out a mortgage we will use your property as security by placing a charge on it. If you fail to keep up with your repayments on your mortgage we can repossess the secured property. Taking a property into possession is always a last resort and we will work with you to determine more suitable repayment terms if you ever fall in to financial difficulty.

Completion: The date where you become the legal owner of the property, the mortgage funds are released to your solicitor and you get the keys to your new home.

Conveyancing: The legal process involved with buying and selling a property, this is carried out by a legal expert who will look after your interests. There will be a fee payable to your solicitor or licensed conveyancer for this work.

Credit check: This is a search that will assess your previous borrowing record. It will look at debts, repayment history, repossession and bankruptcy.

Young couple with their new house key

D

Deed : A legal document that shows who legally owns a property. These are more recently known as a Title Information Document.

Deposit: Many lenders will only lend you a percentage of the property price, meaning you will need to have some money to put towards buying your home. This is known as a deposit.

Discounted rate: An interest rate that is discounted from the Standard Variable Rate (SVR), meaning that if the SVR changes, so will the rate you pay meaning your payments can go up and down.

E

Early Repayment Charge (ERC): A charge for paying your mortgage off early, remortgaging to another lender before your current mortgage product end date or repaying more than the maximum amount allowed.

Equity: The difference between the value of your property and the amount of any borrowing secured against it. For example, if you owe £75,000 and your home is worth £100,000 you have £25,000 equity in the property.

Exchange of contracts: The stage where the sellers and your legal representatives swap contracts and begin to finalise the purchase of the property. At this point both of you will be legally bound to the transaction.

Exit fees: A group of charges payable when your mortgage is paid off in full. At the tipton, these fees include a deeds release fee of £35, a sealing fee of £65 and a redemption statement of £25.

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F

First time buyer: We class a first time buyer as someone who has never previously owned a property.

Fixed rate mortgage: A mortgage where the interest rate is fixed for an agreed period of time, meaning your monthly repayments will be the same even if the SVR increases.

Freehold: Where you own the property and the land that it stands on.

G

Ground rent: Where you have a leasehold property, you will have to pay an annual fee to the freeholder, known as ground rent.

Guarantor: A person that agrees to pay your mortgage if you fail to do so.

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H

Higher lending charge: This is a charge for borrowing over a certain loan to value (LTV). At the Tipton, a higher lending charge will apply for any mortgages over 75% LTV, however we cover the cost of on any charge for higher lending.

House Insurance: You must consider insurance when taking out a mortgage. There are two parts to household insurance:

  • Buildings insurance You are required to have this as a minimum when taking a mortgage. It is designed to protect your property's structure, fixtures and fittings.
  • Contents insurance This is an optional extra and is designed to protect the things inside your home, for example your furniture.

House Price Index (HPI): This is used to give you an idea of the current value of your home and provide general information regarding the property market. This can be found on the Government's website.

I

Initial interest: Interest is charged from the date we transfer the funds used to buy your property to your solicitors. The interest from this date to the end of that month is known as initial interest and is paid with your first mortgage repayment. Due to this your first repayment will be higher than your normal monthly repayment.

Interest: This is the amount we charge you for borrowing and is payable on the full amount of your outstanding mortgage balance.

Interest only: This is where you only pay back the interest charged each month, meaning at the end of your mortgage term you will still owe the amount you borrowed on your mortgage. In order to have an interest only mortgage you must have a suitable repayment vehicle in place such as:

  • an endowment policy;
  • a stocks & shares ISA;
  • a pension; or
  • a second property that you can sell.

Interest rate floor: This is a minimum amount that a discounted interest rate can reduce to.

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K

Key Facts Illustration (KFI): A document provided by us detailing all the important information you need to decide if the recommended mortgage is suitable for you. This should be in the same format across all lenders, making them easy to compare.

L

Leasehold: Where you own a property but not the land it stands on. You will need to pay ground rent for the lease on the land.

Lender: The bank or building society who lends you the money for your mortgage.

Life cover: With a life cover policy you will be paid a lump sum on the event of death. There are two forms of life cover you can choose from:

  • Decreasing term assurance designed to protect a repayment mortgage, with the pay-out decreasing in line with the amount you have outstanding on your mortgage.
  • Level term assurance your pay-out remains the same throughout the term of the policy.

Loan to value (LTV): This is the size of your mortgage as a percentage of the property price. For example if you want to borrow £90,000 on a property valued at £100,000 your LTV would be 90%.

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M

Monthly repayment: The amount you pay each month towards your mortgage.

Mortgage: A loan which is secured against your property.

Mortgage Certificate: A document given to you by one of our Mortgage Advisers that gives an idea of how much we may be willing to lend to you. This provides an indication only and will be subject to full affordability and underwriting checks.

Mortgage Adviser: A Mortgage Adviser will assess your individual needs and circumstances to recommend a mortgage best suited to you.

Mortgage Offer: We will provide you with this once a valuation and full checks have been carried out. The document will detail how much we will be prepared to lend you, how long for and any other conditions.

Mortgage term: The length of time over which you agree to repay your mortgage to us.

N

Negative equity: When the amount you owe on your mortgage is more than the value of your property.

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O

Offset mortgage: This is where your savings are used to reduce interest charged on your mortgage. You will need to be saving with your mortgage lender and will only be charged interest on the difference between your mortgage and your savings. For example if you have a mortgage for £100,000 and save £25,000 you will only be charged interest on £75,000 of your mortgage.

Overpayments: An additional repayment to your mortgage, above your required monthly repayment.

P

Part and part mortgage: This is where your mortgage repayment type is a combination of repayment and interest only. At the end of your mortgage term, the remaining balance must be repaid.

Portability: This is when the terms and conditions of your mortgage product can be transferred to a new property.

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R

Rate switch: This is the process of switching to a new mortgage product when the term on your existing product has come to an end.

Redemption: The point where your mortgage has been repaid in full.

Remortgage: When you move to a new lender, without moving home.

Repayment mortgage: Where your monthly repayments cover the interest charged each month but also reduce the total mortgage amount that you owe. At the end of your mortgage term you will have fully repaid your mortgage.

S

Security: When you take a mortgage out, your property is used as security. This means that if you do not keep up with your monthly repayments, we have the right to repossess your property. Repossession is a last resort and we will work with you if you ever get in to financial difficulties. This is not limited to mortgages as any form of borrowing may be secured against your home or possessions.

Stamp duty: A tax that may be payable on properties valued over a certain amount. Further details can be found on the Government website.

Standard Variable Rate (SVR): The SVR is set individually by each mortgage provider and reflects their cost of lending.

Subject to contract (STC): This is where an offer has been accepted on a property, but a formal contact has not yet been completed.

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T

Tariff of charges: These are different fees you may be liable to pay throughout your mortgage application and term. You can click to view our tariff of charges.

Telegraphic transfer fee (TT fee): This is a charge for the electronic transfer of your mortgage funds from us to your solicitor or licensed conveyancer.

Tracker mortgage: This is where the interest rate on your mortgage follows an external reference rate, usually the Bank of England base rate.

U

Unencumbered property: A property that you own outright where there are no loans or borrowings secured on it.

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V

Valuation: This is a legal requirement in the buying process, where a valuer is sent out to assess the property's value. There are different types of valuation reports:

  • Standard valuation is a basic report on the state and valuation of the property that satisfies our minimum requirements to provide a mortgage.
  • RICS Homebuyers report is an in depth report on the property that will give you more detail into structural problems.
  • Structural survey is a full detailed report on the soundness of the structure of the property. This type of survey is beneficial if the property you are purchasing is old or of a non-standard construction.

Vendor: The seller of the property.