1. Mortgage



A mortgage is a loan taken out in order to buy a home. The property that you buy is the security against which your repayments are held, so if you don't repay the loan, the home is repossessed.

2. Mortgage term

The period of time over which the mortgage loan is to be repaid.

N

1. Negative equity

You go into negative equity when the value of your home is less than the amount that you owe on your mortgage. Can happen very easily if you take out a 100% mortgage or if property prices fall.

2. Net annual income

Your Annual Income after Tax deductions and Pension and Health contributions but before personal expenses like Mortgage or Rent payments and Utility bills.

O

1. Online access

The ability to access your personal loan account via the Internet.

2. Online decision

The ability of the loan provider to issue an automated decision back to the applicant via their web browser or email address.

P

1. Payment protection

Insurance which pays your monthly mortgage payments, should you lose your income through sickness, injury or unemployment.

2. Penalty rate

A fee payable by you for making late payments as defined in your personal loan agreement. The penalty rate will normally be a few percentage points higher than your loan's standard APR and can go into affect after a single late payment.

3. Principal

The total amount of the loan on which interest is to be calculated.

R

1. Redemption penalty

Also known as Early Repayment Charge (ERC) is the charge payable to some loan providers should the loan be repaid in full before the full term of the loan has expired. For example, an arranged loan over 36 months may incur an ERC if it is repaid after 24 months, or any point before the 36 months has been reached. The average ERC can amount to the equivalent of 2 months interest.

2. Re-mortgage

Repaying one mortgage by taking out another new loan secured on the same property.

3. Repayment holiday/break

A pre-agreed point in time where you are allowed to skip a monthly repayment. Usually a maximum of one a year, often at Christmas.

4. Repayment mortgage

A mortgage where the capital borrowed is gradually repaid over the agreed term along with the interest.

5. Repayment period

Also called Loan Term, this is the time it takes to pay back the loan. A shorter period means higher monthly payments (there are fewer months over which to spread them), but less interest paid in total on the loan.