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Jargon Master

Confused by all the talk of valuations, products and repayment vehicles? Our Jargon Master might just help.

Use the alphabetic groups to click to the word you are looking for.

A - C   D - F   G - I   J - L   M - O   P - R   S - U   V - Z

A - C
APR
(Annual Percentage Rate)		 This is a figure which all lenders must quote when referring to mortgages. It is designed to show the total yearly cost of a mortgage stated as a percentage of the loan. It includes items such as the interest rate paid at the start of the mortgage, product fee, valuation fee and other charges commonly paid at the end of a mortgage. It is the overall cost for comparison purposes. This figure is intended to help customers compare the overall cost of different loans.
Application fee / Product fee The amount that we charge when an application is made for a certain mortgage product. A portion is payable on application and is non-refundable even if the loan does not complete. The balance is payable on completion and can be debited to your mortgage account and will be subject to interest charges. Details of how you can repay it will be included in your mortgage offer.
Arrears A term used when payments have been missed. The term "in arrears" is used where a borrower has failed to keep up the monthly mortgage payments.
Bank of England Tracker A mortgage product where the interest rate is variable and is linked to the Bank of England Base Rate for a fixed period of time (e.g. 2 years).
Capped Rate

A mortgage product where the interest rate is variable and is set with an upper limit on the interest rate payable on the mortgage. This allows you to take advantage of any fall in the variable rate while giving you the reassurance that the rate will not rise above the pre-set limit if the variable rate goes over that limit. 

Completion

This is used in two ways:

  1. It means the legal transfer of a property so that you own it and are able to move into it.
  2. It is the time when we actually pay over the money we are lending to you (whether you are buying or remortgaging).
Conveyancing

Another word for the legal side of transferring ownership of a property from one person to another

Credit Scoring

Our method of assessing how likely each mortgage applicant is to keep up their monthly mortgage payments. It is not unique to us but it is a proven statistical method of assessment. It is based on the performance records of customers with similar characteristics.

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D - F
Daily Interest Charging  Interest is charged on the balance outstanding at the end of each day. An immediate benefit is gained from any payments of capital. This also means that if you miss or are late with your payments, interest will be charged.
Discount Rate

The interest rate is a set amount under a specified rate (for instance our Standard Variable Rate) for a given period of time. Your monthly payments will still alter in accordance with the terms of the loan.

Early Repayment This means repaying (redeeming) your loan before the end of the mortgage term.
Early Repayment Charge This is a charge which is made if you repay (redeem) your loan (in full), repay in excess of any overpayment limits, or transfer to another product (in full or part) during the Early Repayment Charge period. Details of the charge will be set out in your mortgage offer.
Endowment Policy A combined life assurance and investment policy which can be taken out at the start of a mortgage to run for the term. Premiums are paid by you direct to the policy provider, usually monthly. The company invests a proportion of the premiums with the aim of providing a lump sum at the end of the policy term - or earlier in the unfortunate event of death - which can then be used towards repayment of the loan.
Equity If your house is worth more than the mortgage on it, the difference is known as the 'equity'. So for example, if your outstanding mortgage is £50,000 and your home is worth £60,000 you have equity of £10,000. (Also see Negative Equity).
Equivalent Savings Rate If you choose an offset account, you will not be paid any interest on your offset savings account. In effect, the money in your savings account will achieve the equivalent rate as you are being charged on your mortgage. Where we quote an equivalent rate it assumes that the basic/lower rate tax payers pay 20% tax, and the higher rate tax payers pay 40% tax.
Fee Assistance A feature that applies to some of our mortgage products where there is a refund of part of the fees you may incur when setting up your mortgage, i.e. valuation, legal fees.
Financial Advice

Advice available from financial advisers who are authorised to give advice and make recommendations on products regulated under the Financial Services and Markets Act. We have decided to introduce customers exclusively to Legal & General for financial advice.

Fixed Rate

This is a specified interest rate in a special product in which the interest rate is fixed for a given period of time. During this period the monthly payments may alter as a result of changes in insurance premiums, or because fees have been charged to your account.

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G - I
Gross Payment This is where you choose to make the same monthly mortgage payment as would be payable without taking account of the benefit from any offset savings account. This allows any offset savings balances to work harder by reducing the outstanding offset mortgage balance faster. This option only applies to our offset account.
Higher Lending Charge (HLC)

Lending a higher proportion of the purchase price of a property brings with it a higher risk to us, making this type of payment necessary. The HLC may be used by us to arrange additional insurance with a specialist insurer. The additional insurance gives us some protection against the risk of selling a repossessed property at a loss, but may not cover all of that loss. If we ask for this payment or take out additional insurance you will still be responsible for repaying the the loan as your obligation to repay the loan is not removed or reduced.

Whether you need to pay an HLC depends on the amount of the loan you are seeking compared to the valuation or purchase price of the property (whichever is the lower). This amount is shown as a percentage and is described as being the loan to value (LTV).

Income Multipliers How much we will lend you in comparison to your annual income.
Initial Interest The interest charged from the working day before the completion date notified to us by our legal adviser to the end of that calendar month.
Interest Only Mortgage A mortgage where the capital is repaid at the end of the mortgage term, usually from the proceeds of an investment plan such as an endowment policy, pension or ISA. Throughout the mortgage term, the borrower has to pay interest on the full amount owing. It is important that you ensure there is a suitable repayment vehicle in place because it is your responsibility to repay the loan at the end of the mortgage term.
Introducer / Intermediary This is somebody other than another lender or us who advises you about the choice of your mortgage. As we are authorised and regulated by the Financial Services Authority (FSA) for mortgage activities, all the mortgage intermediaries with whom we deal must be authorised and regulated by the FSA. We are not responsible for their actions and advice even if they are advising on our products and services.
Individual Savings Account (ISA) A tax efficient savings product made up of 3 elements - cash, insurance product, equity/shares. You can have Cash ISA which can be one of each of these elements or a Stocks & Shares ISA which offers investment in all 3 types. You cannot have both Cash and Stocks & Shares ISA in the same tax year.

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J - L
Key Facts llustration (KFI) This is the illustration that contains all of the important information you need to help you decide if a particular mortgage is right for you. It is important, therefore, that you take the time to consider it and the implications of it.
Lending Criteria The rules we have covering how much you can borrow and what type of property we will lend money on.
Loan The full amount of money which you borrow from us.
Loan to Value (LTV) The amount of your loan compared to the valuation or the purchase price of your property (whichever is the lower), shown as a percentage.

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M - O
Mortgage

The whole arrangement between us including the loan and all terms and conditions. It is also a legal document (which can be referred to as a Legal Charge or, in Scotland, a Standard Security) under which the owner of a property agrees that the property will be security for repayment of a loan which a lender makes.

Mortgage Reserve

A facility providing a reserve of cash which allows you to increase your borrowing up to 95% of the value of the property, subject to normal income multiples. Such borrowing is added to your existing mortgage which you can repay over the term of your mortgage or over a shorter term if you wish.

Please note: this additional lending option is temporarily unavailable until further notice.

Mortgage Term

The period over which the loan is to be repaid. This period will be in the mortgage offer.

 Mortgagee Another name for the lender (us).
 Mortgagor Another name for the borrower (you).
Negative Equity If your house is worth less than the mortgage still outstanding on it, you have 'negative equity'. So, for example, if you still owe £60,000 on your mortgage but your home is only worth £50,000, you have 'negative equity' of £10,000.
'Net' Payment If you have an offset mortgage, you make a monthly mortgage payment that takes into account your offset savings balances before calculating the interest charged on your offset mortgage.
Offer  If we approve your mortgage application, we will make you an 'offer' of a loan. This is also known as a "mortgage offer". Remember that the offer is often subject to conditions and can be withdrawn by us (usually only in exceptional circumstances) at any time up to completion of the mortgage.
Offset Account With an offset account you have both a mortgage product and a savings account. Your mortgage and your savings will remain separate, but we calculate the amount of daily interest we charge on the difference between your mortgage balance and your savings balance. We offer both fixed and variable rate offset mortgages. No interest is paid on the offset savings account.
Overall Cost for Comparison This is a figure which all lenders must quote when referring to mortgages. It is designed to show the total yearly cost of a mortgage stated as a percentage of the loan. It includes items such as the interest rate paid at the start of the mortgage, product fee, valuation fee and other charges commonly paid at the end of a mortgage. It is the overall cost for comparison purposes. This figure is intended to help customers compare the overall cost of different loans.
Overpayments

You may make overpayments either as regular additional payments or as lump sums (subject to any overpayment limits). These overpayments will be credited to your account on the same day therefore reducing your account balance straight away.

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P - R
Parts This term refers to different parts of a mortgage. It could be part interest only and part repayment. Also a part may refer to separate borrowing from the original loan, i.e. an additional loan.
Payment holidays Any amounts that you pay in addition to your usual monthly payment - either as lump sums or as regular additional payments - will accumulate as a 'surplus'. If you have accumulated such a surplus and subsequently find that you need to reduce your monthly outgoings for a period of time, you may stop your monthly payments for a period until the accumulated surplus has been used up, subject to agreement. Interest continues to be charged during any payment holiday.
Portability The ability to take your existing special product with you when you move house. The portable product can form the whole or part of a new loan secured by a new mortgage on your new house. Further details about portability are set out in our section on moving home.
Product A word which we use to describe any one of our full range of mortgages, including our special products such as fixed, discounted, tracker, offset or capped rates.
Product fee / Application fee The amount that we charge when an application is made for a certain mortgage product. A portion is payable on application and is non-refundable even if the loan does not complete. The balance is payable on completion and can be debited to your mortgage account and will be subject to interest charges. Details of how you can repay it will be included in your mortgage offer.
Product Transfers A term used to describe the process of changing an existing customer's mortgage product to a new mortgage product.
Redemption You redeem - or repay - a mortgage when you have paid back all of the loan and all interest, costs or other charges (such as insurance premiums) which are due on it.
Remortgage

Repaying one mortgage by taking out another with a new lender which is secured on the same property.

Repayment Methods

There are two repayment methods:

  1. Repayment where the capital is repaid over the mortgage term together with interest.
  2. Interest only where only interest is paid to the lender over the mortgage term and a suitable repayment vehicle is arranged and maintained by the borrower to provide the necessary lump sum to repay the capital and interest at the end of the term.
Repayment Vehicle This term is used to refer to an endowment policy, ISA or other investment intended to provide a lump sum to be used to pay off the mortgage at the end of the mortgage term. As one of the main obligations in a mortgage is that you will repay all the money at the end of the term, it is important that you arrange, and then maintain, a repayment vehicle if you have an interest only mortgage.

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S - U
Settlement

In Scotland, completion is known as 'settlement'. If you receive a mortgage offer and you decide to go ahead with your mortgage, the final agreement between you and us is known as settlement. It's when we actually pay over the money we are lending to you and when you will usually be able to move into your home.

Special Product

This is a product which usually involves:

  1. A fixed, discounted or capped rate of interest; or
  2. Other special deals such as cash-back or fee payment.

Special products are available for limited periods.

Standard Security This is a Scottish document which sets out the terms of the mortgage.
Standard Variable Rate (SVR) This is our standard rate of interest which is usually charged on most mortgages at some time during the mortgage term. It is variable and can go up or down.
Terminal Illness Terminal Illness Cover ensures that your life insurance, or mortgage life insurance policy will pay out the full amount if you are diagnosed with a terminal illness, rather than when you die.
Underpayments

Any amounts that you pay in addition to your usual monthly payment - either as lump sums or as regular additional payments - will accumulate as a 'surplus'. If you have accumulated such a surplus and subsequently find that you need to reduce your monthly outgoings for a period of time, you may reduce your monthly payments for a period, subject to agreement, until the accumulated surplus has been used up.

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V - Z
Valuation Report The report produced for us, which gives an indication of the value of your property as security for the loan you are asking us to make. You will normally be asked to pay for this as part of your application. The valuation is only produced for us and is not a survey. For further details see 'The Costs Involved' section.
Waiver of Premium Waiver of premium means you do not have to pay your premiums if you suffer an illness or accident which stops you working for more than six months.
Vendor Another name for the person selling a property.

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Yorkshire Building Society is one of the largest building societies in the UK. We offer a range of financial products and services including: savings & investment accounts, insurance products, loans, mortgages and more.

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Yorkshire Building Society is authorised and regulated by the Financial Services Authority (FSA).