Glossary of Remortgage Terms
Affordability check: This is an assessment carried out by mortgage providers to determine how much you can afford and what your monthly payments should be over the loan term.
Agreement in principle (AIP): This is a document from a mortgage provider that will confirm that you can borrow a certain amount from them, and can be used as proof to a seller that you can purchase a property.
Annual percentage rate (APR): This is the entire cost of the mortgage or remortgage deal, including interest and other fees.
Arrangement fee: The set-up fee for arranging your mortgage. It could include a variety of different fees, such as application or booking fees.
Base rate: The interest rate defined by the Bank of England, and used to base certain mortgage deals on including tracker remortgages.
Booking fee: Refers to the mortgage set up fee. It may also come under the category of ‘arrangement fees’.
Broker: This is an introducer that works with a number of lenders or mortgage providers and can help you find the best product. Remortgages Quotes Online acts as a mortgage broker.
Buy to let remortgage: This is a mortgage that is specifically aimed at borrowers who have bought a property with the intent of then letting it out to tenants. See here for more information.
Capital: The amount you borrow on a mortgage is known as the capital. This usually covers the cost of the property and anything added to this by lender is known as ‘interest.’
Completion: Is the last stage of the property-buying process and comes after contracts have been exchanged amongst both parties. Completion takes place once the agreed sale price has reached the seller’s bank account.
Conveyancing: Refers to the legal process that you will be required to go through if you want to buy, sell or remortgage a property. Conveyancing can be carried out by either a solicitor or a licensed conveyancer.
CCJ: This is a County Court Judgement and occurs when you have been taken to court by a lender for missing payments for a long period of time. If you have CCJ on file, you may find it more difficult to get access to a mortgage or remortgage deal.
Credit score: A score that all consumers have and that mortgage lenders look at in order to determine your creditworthiness and eligibility.
Debt consolidation: This is the process of taking out a new loan in order to pay for a number of other debts, usually unsecured debt to make it one single debt, paid off in instalments.
Early repayment charge (EPC): Depending on the mortgage provider, you may have to pay penalty fees in the form of an early repayment charge, if you decide to leave your mortgage deal in a certain period of time (usually before the deal has ended).
Evaporating equity: When your property has decreased in its value since you purchased it.
Fixed rate: A mortgage deal that fixes your interest rate for a certain period of the mortgage deal. This is typically for the first 2-5 years of the loan.
Hard credit check: A mortgage provider checks your credit score to determine your eligibility for a mortgage, and this search of your file remains on your credit report for other lenders to see.
Higher lending charge (HLC): You may have to pay an insurance premium for certain mortgages, such as the Loan to Value is higher than a certain figure usually over 75% of the property’s value.
Intermediary: Refers to a financial advisor who can help to arrange a mortgage deal for you.
Introductory offer: A remortgage deal may come with more favourable terms or lower rates that usually last for a certain period of time, for example the first one or two years.
IVA: An Individual Voluntary Arrangement that is a legally binding contract between you and creditors that helps you to pay off outstanding debts in a manageable way. This will be recorded on your credit file and may affect your ability to get a mortgage.
Landlord mortgage: This is the same as having a buy-to-let mortgage, and refers to mortgages specifically for landlords who want to purchase a house and rent it out to other people. See landlord mortgages.
Loan to value (LTV): This is how much you are borrowing and considers the size of your mortgage as a percentage of the house’s value e.g 70% loan-to-value
Mortgage deed: Refers to the formal written document that states who owns the property and allows the transfer of property ownership from seller to buyer to take place.
Offset (mortgage): This type of mortgage links directly to your savings and potentially your current account too. Essentially any savings you put in can help reduce the overall amount of interest owed on your mortgage.
Overpayments: Some mortgage providers allow overpayments without a fee, which means you can make a repayment that is bigger than the loan’s minimum monthly payment. Overall, it will help you pay off your loan sooner and save money.
Payment holiday: Is when you have a short break, agreed with your mortgage provider, from your regular monthly mortgage repayments. This can provide some breathing space from your finances.
Procurement fee: The overall amount paid (or commission) by the mortgage lender to the intermediary or a mortgage advisor for providing customers.
Property valuation: Carried out by lenders in order to verify that the property is worth the amount that you have indicated, prior to a new mortgage deal being agreed upon.
Soft credit check: A soft search of your credit file by mortgage providers, that means it does not leave a lasting footprint on your credit report that could impact your credit score.
SVR: Is the standard variable rate and refers to the mortgage provider’s main interest rate.
Stepped (mortgage): Refers to a tiered interest rate on a mortgage that increases over time.
Tracker (mortgage): A mortgage that has an interest rate that tracks the Bank of England base rate. The interest rate will then be set at a margin either above or below it. See tracker remortgages.
Variable rate (mortgage): A mortgage that has an interest rate that could either increase or decrease according to your mortgage provider’s standard variable rate. See variable remortgages.