A

Advance

The amount of money that is lent under a loan agreement.

Annual Percentage Rate (APR)

This will be the actual percentage of interest that is charged on your borrowings. It includes the total interest rate as well as other charges, such as legal fees. This means that the higher the APR the more you will pay.

Arrangement Fee

The charge that is sometimes employed on your credit facilities.

Arrears

Payments that have been missed, late or underpaid on any loan or credit agreement. Staying in arrears could lead to a CCJ.

Autoscore

Using an online credit database to identify the credit status of a client.

B

Bad Credit

This describes any loan or credit which a person has not been paid in accordance to the borrowers credit terms and agreements. This is commonly called Poor Credit.

Balance Outstanding

The amount of credit that you need to pay back to your borrower at a certain time.

Bank of England Base Rate

The amount of interest that is set each month, which is used to determine borrowing rates.

Bankruptcy

This should be the final option for any debtor that is unable to make repayments. The lenders will take any existing assets, such as your house, in order to make some form of repayment.

Black Listed

If you have a really poor credit history then there will be a note against your account that you are a severe lending risk. Lenders will probably only lend on a high interest rate.

Bridging Loan

A short term temporary loan which can help you buy a new house, before the existing one is sold.

Bridging Loan

A short term temporary loan which can help you buy a new house, before the existing one is sold.

Buildings Insurance

An insurance policy that will cover the cost of any rebuilding or repairs, subject to your contract terms.

C

Capped Rate Mortgage

This means that no matter how the base rate changes, the interest rate on your mortgage will not rise above a certain level, or cap.

Consolidation Loan

A single loan which usually pays off multiple forms off debt, for example credit cards, store cards or car loans.

County Court Judgement (CCJ)

A decision taken against a person or company, which relates to the money owed to a lender. This order will ensure that any outstanding payments are met. It is the consequence of the debtor not keeping up repayments. A CCJ will affect your credit rating.

Credit

Allows you to buy goods or services, and is lent to you with an interest rate.

Credit Reference Agency

An organisation which is licensed under the 1974 Credit Consumer Act. It is allowed to hold the credit history of an individual.

Credit Search

This will be a check that a lender completes with a Reference Agency to see your credit history. It details any past or present credit activity.

D

Debt

The amount of money that you owe.

Debt Consolidation

This is usually one loan which probably consists of the majority of your outstanding unsecured debts, such as credit cards. This is usually one lower monthly amount expanding over a longer period of time.

Deeds

These are legal documents which prove your ownership of property or land.

Default

This means that you are in payment arrears and more than 30 days behind the repayment date. This could lead to further legal action such as a CCJ.

Depreciation

Refers to the decrease in value of your property or assets over a period of time.

Direct Debit

The ability for a bank to make regular payments from your account.

Discharged Bankrupt

This refers to a person who has been made bankrupt and then discharged from it, as they have either repaid it or their debt has been written off.

E

Early Repayment Charge

Otherwise known as a settlement charge, and this can sometimes be chargeable if a loan or mortgage is repaid early.

Equity

This is the difference between the amount that you have left on your mortgage and the amount that your property is worth. This amount can be remortgaged.

F

Financial Services Authority (FSA)

This is regulated by the UK Financial Services over a number of products. Lenders must follow the rules that are set out, which work in the public interest.

Fixed Rate

This can usually apply to a mortgage, and means that you will be paying a fixed amount of interest for a specific number of years.

Flexible Rate

Will usually apply to a loan or mortgage and means that it will allow you to make a variety of payments, which you can increase of decrease (in line with your terms and conditions) to suit your circumstances.

G

General Insurance Standards Council

An organisation that will monitor and enforce stands for general insurance across the board.

H

High Risk Items

These are usually stated in your insurance policy as items that are most frequently stolen when a house is burgled, such as laptops and televisions.

Hire Purchase (HP)

A form of credit where you hire an item for a certain period of time whilst paying monthly payments.

Homeowner Loan

Also referred to as a secured loan, meaning that the loan is secured against your house. So it will be at risk if you fail to keep up on repayments.

I

Impaired Credit

This is when an individual has a poor credit rating, perhaps because they are unable to keep up repayments or have been declared bankrupt.

Interest Rate

The amount that you are being charged to borrow money, usually dependant on the type of borrowing and the lender.

Interest-Free Credit

This type of credit means that you will be paying no interest on purchases for a certain period of time.

J

Joint Loan Agreement

Where there is more than one named person on the loan contract.

L

Liability

Another term for a debt.

Loan to Value (LTV)

The size of your loan or mortgage as a percentage of the property price.

M

Mortgage

A long term loan which is used to help buy a property. The loan is held against the property incase there are any repayment failures.

Mortgage Code Register of Intermediaries (MCRI)

A register which holds the names of mortgage brokers that adhere to the Mortgage Code.

Mortgage Guarantee Insurance (MGI)

Insurance which is designed to help any shortfall which may appear on a mortgaged property.

N

Negative Equity

When the value of your property is worth less than the mortgage.

Non-Status Mortgage

This is commonly used to refer to those with a poor credit history or have no proof of any history.

O

Ombudsman

An independent professional company which was set up to deal with any complaints about a financial service and company.

Overdraft

The money which you owe on your current account that has been leant by your bank.

P

Payment Protection

Insurance which covers monthly repayments on your credit card or loan, in the event of losing your job or being too ill to work.

Personal Loan

A loan which can be taken out by an individual with a fixed interest rate and number of repayments.

Q

Quick assets

These are assets which can be converted into cash rather quickly.

R

Redemption Penalty

This is a charge given by your lender for when a financial agreement is settled early. It dependant on your lender and will be stated in your conditions.

Remortgage

When you switch your mortgage without moving home. This is usually done so that you are able to achieve a better rate.

Repossession

When a borrower falls so far behind in their payments, that the lender can take a legal ownership of the property.

Right to Buy (RTB)

This refers to when a council tenant has the “right to buy” their council home.

S

Secured Loan

This is a loan where an asset, such as your house or car, is secured against it. So if you are unable to keep repayments then you will lose that asset.

Security Address

This will be property address which is being offered against your secured loan.

Security Address

This will be property address which is being offered against your secured loan.

Standard Variable Rate

This is the changeable mortgage rate which is charged the majority of lenders, which falls in line with the fluctuating base rate.

Sub-Prime

A sub-prime lender is one which is willing to finance people who have adverse credit status.

T

Tenant Loan

A tenant loan is called as an unsecured loan as the tenant does not have any property for a security of payment.

Term

The period of your borrowings.

U

Unsecured Loan

This is a personal loan which can be leant without having to provide any asset as security. However this usually comes with higher risk to the lender which means that there is a higher interest rate.

V

Variable Interest Rate

A rate of interest which fluctuates in accordance with normal interest rates throughout the lifetime of your loan.

Ask Finance Ltd is registered in England and Wales (company number 4229724), Jackson House, Sibson Rd, Sale, Manchester, M33 7RR. Ask Finance is licensed under the 1974 consumer credit act to carry on the business of consumer credit, consumer brokerage, debt adjusting and debt counselling. Consumer Credit License No: 507130. Ask Finance is authorised and regulated by the Financial Services Authority (FSA) - FSA No: 300490 - for the provision of mortgage advice and arranging insurance.