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GLOSSARY
Cap
The condition in a capped rate mortgage that sets a maximum interest rate for a specified period.
Cap and Collar
A cap is a maximum rate of interest that can be charged for a specified period, while a collar is a minimum rate of interest that can be charged for a specified period. see Capped Rate.
Capital
The amount of the loan on which interest is calculated, or the amount of money either put into buying a property or the deposit placed on a property. also known as Equity.
Capital and interest (Mortgage)
In the context of mortgages, a capital and interest mortgage is also known as a repayment mortgage. It involves paying all of the interest plus repayment of a little of the capital each month; an interest only mortgage involves only paying off the interest. see Repayment Mortgage.
Capital Improvement
Any improvement, such as new structures or components, that permanently increases the value of the property.
Capital Raising
A term normally used for remortgaging (changing lenders) where additional funds are raised over and above the existing mortgage amount for non-specific purposes. Some lenders will also take into account home improvement projects as part of the remortgage, if they are likely to significantly raise the value of the property. Most lenders do not restrict the purpose of capital raising as long as the reason is legal.
Capped Rate
The mortgage interest rate is guaranteed not to rise over a given period, but which can fall during the specified term, usually for the first few years of the loan. known as Cap and Collar Mortgages.
Cash Back (Mortgages)
An amount of money or a percentage of the mortgage paid to the borrower by the lender at the end of a mortgage. A 'Cash Back mortgage' is one in which an amount of money is paid by the lender to the borrower at the start of the mortgage, typically to help with the costs of moving home.
Cash Back Remortgage
A remortgage that is structured so that the borrower receives a sum of money at the start of the new term.
Cash Buyer
Person(s) who do not need a mortgage in order to buy a property and who do not need a property to sell.
CAT Standard
These are a set of standards proposed by the government aimed at ensuring a certain level of standard amongst financial products. Whilst they are a sign that a lender or provider is a reputable business and offers products that are of a certain quality, a CAT mark does not ensure that a product is the most suitable one for you.
Caution
Entries on the land register protecting the interests of a third party. Any application for first registration of title is notified to him whereupon he can take appropriate action to protect his interests.
CCJ
See County Court Judgement
Centralised Lender
A general term applied to mortgage lenders, but not to high street banks and building societies, who mainly operate wholly from a head office location.
Certificate Of Deposit
Certificates from a financial organisation declaring you have the funds available to pay the deposit.
Chain
The situation that occurs when a buyer is reliant upon completion of the sale of his existing property, in order to complete on the purchase of his new property.
Charge
If a property owner uses his security in the property to service a loan, a charge is registered and certified. This entitles the lender to be regarded as a secured creditor to be paid out of the proceeds of a sale in the event of a default on the loan.
Charge certificate
A certificate issued to a lender by the Land Registry giving evidence of the lender's charge over the property.
Chief rent
A payment made on freehold land to the original freeholder forever. Distinct from ground rent which has a limited period.
Clear Title
A legal term that refers to the clear ownership of a property.
CML
Council of Mortgage Lenders, which as devised the Mortgage Code to ensure lenders treat customers fairly.
Code Of Practice
A group of principles and procedures individual employees of an organisation are expected to follow. This will cover such issues as client confidentiality, fairness and courtesy towards customers.
Collateral
An asset, such as a car or a home, which is used to guarantee the repayment of a loan. Should the borrower fail to repay the loan under the terms of the original contract, the asset may be seized by the lender.
Collection
Steps taken by a lender to bring a person's payments back up to date.
Commercial Mortgage
Where the loan is granted for commercial purposes, and is usually secured against commercial property, though residential property may be used. With a commercial mortgage there is a higher rate of interest, as it is a higher degree of risk for the lender.
Commission
The sum of money or a percentage of the overall sale price paid by the clients as full compensation for services. also known as Fee.
Commitments
Charges, such as car loan payments, family maintenance and mortgage payments, which a person has contracted to pay.
Common Areas
Sections of land or buildings, such as gardens, hallways, recreational facilities and parking areas, where more than one resident shares access.
Common Law Partner
A partner who cohabits with his or her partner, and who can gain a number of financial benefits from such partner, without actually being legally married.
Comparative Search
A search that looks at the actual sale values of similar properties in the same area as your property. This search is normally carried out by a surveyor, and should give an indicative sale price for a property.
Comparison Table
A table giving comparisons between leading financial or other products to demonstrate which are the best performers under certain criteria. Remember that many such tables are a "one size fits all" covering a range of scenarios, and that the best way to evaluate your own options may be to draw up your own comparison table.
Completion
The final stage of the house-buying process or mortgage. The completion date (normally agreed at Exchange of Contracts) is the date on which the buyer's solicitor forwards the money (less any deposit already paid) from your lender to the seller's solicitor or the vendor's bank account, keys are actually transferred and the purchaser has legal right of ownership to the new property. For mortgages, the date at which all the legal formalities of the purchase are finalised and the mortgage is transferred from one lender to borrower.
Completion Fee
An administration fee, payable to the lender on completion of the mortgage which can usually be added to the loan.
Compound Interest
Interest on the interest. An interest payment on both capital and on previously accrued interest. For example, ?100 borrowed for 5 years at 5% p.a. would become ?105 after 1 year, ?110.25 after 2 years, ?115.76 after 3 years, and so on.
Compounding
The process of adding interest to both the capital borrowed and any previously accrued interest.
Compulsories
This is shorthand for compulsory insurance.
Compulsory Insurance
Insurance that is required by a lender as a precondition of issuing a mortgage. The insurance will typically cover the building and contents, and some mortgage providers may insist that the insurance policy also be taken out with them. also known as Conditional Insurance
Compulsory Products
Aspects of a financial contract that must be adhered to as a condition of the loan. An example of this income payment protection.
Conclusion Of Missives
A Scottish term for exchanging contracts.
Concrete Construction
A property that has been built using conventional materials and practices. Some lenders may refuse to lend, or charge higher rates of interest, on properties built using unconventional materials or techniques.
Conditions of sale
The details which determine the rights and duties of the buyer and seller. These may be national, statutory, or the Law Society’s conditions.
Conditional Insurance
An insurance policy that has to be taken out as a condition of obtaining a loan. It must usually be taken out via the lender's agency. also known as Compulsory Insurance
Contents Insurance
Insurance to cover any loss or damage to the personal belongings your home contains, including electrical goods, carpets, furniture, curtains clothing, personal possessions etc. Contents cover is a separate type of insurance to buildings insurance, which covers the structure of your property. In the case of rented accommodation, the landlord is responsible for insuring those contents which he owns, but not those owned by his tenants.
Contract
A legally binding agreement between both parties.
Contract race
Involving two or more purchasers have made an offer on the same house. Usually instigated by the seller. The successful purchaser is the first purchaser to exchange contracts.
Contract Work
Many employers offer employment under fixed-term contracts as they have a greater control over staffing costs and are able to limit their redundancy payment liabilities.
Converted Flat
A flat or apartment that has been created by the subdivision of a larger property.
Conveyancer
A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.
Conveyancing
The legal documentation process transferring of a mortgage or ownership of a property from vendor to purchaser. Conveyancing includes proving the property is really owned by its seller, making sure that all the loans secured on it are discharged, establishing its legal boundaries and searching local planning information for upcoming developments which could affect the property's value. Typically, but not always, carried out by a solicitor or licensed conveyancer.
Conveyancing Fee
A fee charge by a solicitor or licensed conveyancer for arranging the necessary legal work in transferring the ownership of a property. The total cost of the legal work also includes profit cost, stamp duty, land registry fees and disbursements.
Co-Ownership
Shared ownership, a method of purchasing property in partnership with a housing association, where the borrower purchases part of the property and rents the rest from the housing association..
Corporate Relocation
The process by which a company relocates an employee to another district as part of the employer's normal course of business.
Council Tax
An annual fee paid to a local authority to cover essential services such as road maintenance, rubbish collection and leisure centres. Council tax is based on the value of the property according to set bands. In rented or buy to let accommodation, the tenants are usually responsible for the Council tax.
County Court Fee
Fee for when a lender provides information to solicitors regarding county court rules when payments are in arrears.
County court judgement (CCJ)
A county court judgement is a judgement for debt in the County Court or higher court. Whenever someone fails to pay his creditor for something and is subsequently taken to court, the magistrate may issue a County Court Judgement against that individual to pay the outstanding debt. It will only be removed once the debt is cleared. This debt does not appear in the credit register if this debt is settled within 30 days of the date of the judgement. The judgment will be recorded and the record will show up during any credit checks and may count against you in your mortgage application. Very few lenders are willing to offer loans to anyone with an outstanding or unsettled judgement, and even if the judgement has been settled many lenders are likely to refuse a mortgage or other credit application or be expected to pay a higher rate than other customers. The Scottish equivalent of an English CCJ is a Decree.
Covenant
A legal requirement of the owner to do, or not to do, something in relation to the property. For example; restrictions on its use, changes to its appearance.
Cover
In the context of insurance, the risk that an insurance policy protects against, such as third party, fire and theft.
Credit
An undertaking or agreement under which one party (the borrower) receives money or property on condition that they repay the other party (the lender) at a later date.
Credit Averse
If a borrower has been bankrupt or has outstanding county court judgements they would be described as credit adverse.
Credit Check
The procedure by which a check is made on the credit history of a mortgage applicant, usually conducted by one of the large dedicated credit check agencies on behalf of the prospective lender. The check will include items such as credit card repayments, outstanding debts, arrears, and County Court Judgments. All lenders undertake Credit Checks. This issue will determine the kind of interest rate you will pay on your mortgage.
Credit Checking Agency
See Credit Reference Agency
Credit File
A record held by a credit reference agency on an individual or a company. You can inspect your own credit file by writing to the agencies.
Credit History
The history of a borrowers financial record.
Credit Rating
Rating used to establish risk involved in lending money. This is used in conjunction with credit history and financial status.
Credit Reference Agency
An organisation that stores and updates financial and public records information payment history of individuals who have received credit. Almost always used by lenders to check payment records to establish a level of risk involved in leading money before they will offer a mortgage.
Credit Report
A report prepared by a Credit Reference Agency and which details the credit history of an individual. The credit report will be used by a lender to help assess the applications of prospective borrowers.
Credit Scoring
A generalised way of assessing the credit application, carried out by scoring the answers given on an application. It is important that there are no missing answers on an application otherwise the result for the question becomes a negative.
Credit Worthy
A description of someone who is deemed by a lending institution to be a low risk to lend to (colloquial term). As with blacklisting, there is no such thing as a "perfect credit score", or someone who is "completely credit worthy", as there is always some element of risk involved when loans are made, and different institutions use different criteria when evaluating such risk.
Creditor
Person or company to whom a debt is owed.
Critical Illness Insurance
An insurance policy, often combined with life insurance, which will pay out a lump sum following confirmed diagnosis of a critical illness as specified under the policy, such as cancer or heart attack. The number of critical illness definitions varies depending upon the insurer. also know as Critical Illness Cover (CIC).
Current Account
A bank account linked to a cheque book and/or debit card. In exchange for instant access and the ability use cheque or debit facilities, most pay little or no interest on the balance they contain.
Current Account Mortgage
A mortgage that also offers the same facilities, for instance a cheque book, as a bank current account. Combined with a fully flexible mortgage, this type of mortgage allows over- and under-payments as well as payment holidays.
Customer Specific Illustration (CSI)
An illustration for general insurance that when combined with a key features document (KFD) constitutes a key facts illustration (KFI). Please see entries under KFD and KFI.
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