Jargon buster

Our customer service team will explain everything to you, but if you want to check the meaning of a financial term, it should be listed below.

If you have any further questions, either call us free on 0800 083 9640. Or we can call you back

If you're a homeowner you can use the equity you have in your home to help you sort out your finances, finance home improvements and deal with your debts. The wide range of products we offer at Promise means we can help find an ideal, affordable solution to suit you.

Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

Adverse Credit

Credit not paid or not paid when agreed.

 

APR

Annual Percentage Rate of charge. The true rate of interest charged on a loan taking into account the total cost of interest and other charges e.g. brokers fees/legal fees. The calculation is set out in statutory regulations.

 

Arrears

Payments not made on borrowing when agreed.

 

Mortgage or Finance Broker

An intermediary who identifies, and places, customers requiring a loan or mortgage etc. with a company (Lender) able to provide it. The broker often carries out the administration to do with processing the loan.

 

BTL - BUY TO LET

A property that is bought with the intention of letting it out to tenants. We offer Mortgages for this purpose. Not all buy to let mortgages are regulated by the Financial Services Authority.

 

Capped Rate

Usually for a set number of months/years where the interest rate can go up and down but there is a maximum (capped) interest rate which it cannot go above.

 

Cashback

A type of loan where the borrower is given back a sum of money (usually a percentage of the loan). Used by lenders as an incentive to promote their products. Cashback may need to be repaid if the mortgage is repaid early.

 

CCJ or CCJs - County Court Judgement

An order of a court against a debtor to pay money owed.

 

Consolidation

Refinance of outstanding debts into one new agreement, normally at a reduced interest rate.

 

Debt

Money owing.

 

Discounted Rate

A discounted rate gives you a reduction of, for example, 2% off the standard variable rate (SVR) for a specific period. So, during this period should the SVR rise and fall, you will still qualify for the discount and therefore pay a lower rate. Therefore the discounted rate may still fluctuate, but in this scenario will always be 2% lower than the SVR.

 

Early Repayment Charges (also known as a repayment penalty)

When a loan is redeemed (paid off) early, either in full or in part, many lenders will charge a fee. This particularly applies to Fixed, Discounted or Capped rate loans or mortgages.

 

Exchange of Contracts

Agreement signed by house purchaser and vendor committing themselves to the transaction. Once the contracts have been exchanged a legally binding contract is in existence and the purchaser must complete the purchase within a specific period of time.

 

Endowment

A life assurance policy that is designed to produce a lump sum to pay off an interest only mortgage. There are a number of different kinds of endowment policies: 'with-profits', 'unit-linked' etc.

 

FTB -FIRST TIME BUYER

You are buying a property for the first time.

 

Fixed Rate

The rate is fixed for a specific number of years, so you know what your payments will be over that period. Following this period, the rate will usually revert to the lender's standard variable rate.

 

Flexible Mortgages

A more recent innovation, these give various benefits which usually include the ability to vary payments in line with your circumstances. They may also allow you to take "payment holidays" and to borrow back any overpayment you may have made. Because of their flexible nature and the variety of schemes available it is not possible to give a full description here, but your Promise Representative will provide more detail if you are interested in this type of loan.

 

High Street Mortgages

The term used where the lender offers cheap rates in line with High Street interest rates.

 

Home owner

The term used when the customer has purchased their home, normally with the aid of a mortgage.

 

IFA

Independent Financial Advisor.

 

Interest Only Mortgage

With this type of product, your monthly repayments will only cover the interest element of the loan. You will typically set up another repayment vehicle eg an endowment or ISA to repay the capital element of the loan.

 

Loan

Or advance, a sum borrowed.

 

LTV

Loan to value. This is the size of the loan or mortgage as a percentage of the value of the property or price being paid for the property e.g. A property valued at £50,000 with a mortgage of £45,000 would have an LTV of 90%.

 

Lender

The actual company that provides the finance to satisfy a loan or mortgage request.

 

Mortgage

A loan to purchase a home where the property is used as security in the event of non-payment of the mortgage.

 

Mortgage Deed

The formal document signed by the borrower(s) whereby they agree to the lender creating a charge over the property; the deed makes reference to the rights and obligations of both parties as detailed in the Mortgage Conditions Offer of Advance or Loan Agreement.

 

Negative Equity

The situation where the amount owed on a mortgage exceeds the value of the property.

 

Non Status

Where you have numerous CCJs or Mortgage Arrears

 

Offer of Advance

Sometimes informally known as a mortgage offer. This document details the terms and conditions upon which the lender is prepared to make a mortgage loan. The applicant must sign and return a copy of the offer indicating their acceptance of the proposed terms.

 

Past Arrears

Payments not made on borrowing when agreed that have occurred in the past, normally within the last 12 months

 

RTB - RIGHT TO BUY

A term associated with legislation that gives council house tenants the Right to Buy their homes.

 

Re-mortgage or Remortgage

Loan taken out by a borrower to replace another one secured on the same property. Typically taken out by borrowers switching lenders to achieve a better rate or more affordable monthly repayment. We specialise in this service.

 

Repayment Mortgage

With a repayment mortgage you pay part interest and part capital repayments to the lender each month and in this way the capital that you borrowed is reduced until the loan is repaid.

 

Secured Loan

A loan to be used for any purpose. The equity in the property is put up as security against not paying the loan back.

 

Security

When a loan is taken out it is 'secured' on a property, the borrower agrees to the lender creating a charge over the property; the deed makes reference to the rights and obligations of both parties as detailed in the Legal Charge, Standard Security or Loan Agreement. Thus the property is known as the 'security'.

 

Security Address

When taking a secured loan or mortgage, the security address is the address of the property which is being offered as collateral for the loan. Where property is offered as security in this way, lenders are generally prepared to offer more flexible terms and lower interest rates.

 

Self-Certified or Self Declared

Lenders that operate this type of scheme allow the applicant to confirm how much they earn by "Self-certifying" their income. Schemes are available to both employed and self-employed applicants. Typically for the employed, the schemes are designed to help those applicants with incomes that incorporate a large element of bonus or where they derive income from a number of jobs. Whereas for self-employed there is no need for full 3 years audited accounts to be provided.

 

Semi Status

Where you have CCJs or Mortgage Arrears.

 

Settlement Figure

The sum quoted in order for the loan to be repaid during the contracted term.

 

Sub-Prime Mortgage

Mortgage granted to a person who is unable to borrow money secured on a property from a normal lending source. The reasons the applicant may not be granted a mortgage by a high street lender, could fall into one of three categories:-

1. Adverse Credit information registered against them
2. Existing arrears on current mortgage facilities
3. An inability to satisfactorily prove the level of income required by a high street lender.

 

Tenant

Where the customer does not own a home, this includes living with parents.

 

Title Deeds

Set of documents relevant to present and past ownership of a property. Details names of owners and details of institutions that have registered a charge against the property. Held by the first mortgagee lender whilst their charge remains in existence.

 

Unsecured Loan

A loan to be used for any purpose. The credit rating or financial position of the applicant is such that no security for the loan is required.

 

Variable Rate

A rate of interest which may vary up or down during the lifetime of a loan. The circumstances causing any change are outlined in the loan conditions.

Promise can put you back in control