Glossary of mortgage terms


Additional Features

To help you with the cost of moving home some of our mortgages come with additional features such as cashback, free legal service or free valuation. These are detailed on individual mortgage pages and factsheets.

Collar

A mortgage collar, commonly referred to as a mortgage floor, is the minimum limit a variable or tracker interest rate could fall to.

Early Repayment Charge

The Early Repayment Charge is the fee that we will charge you if you make a repayment of capital, transfer to another mortgage deal, or repay your mortgage entirely within the Early Repayment Charge Period. This period is shown on the mortgage deal factsheet and your mortgage offer.

End date

The end date refers to the date at which your mortgage deal ends and the interest rate on that deal no longer applies. Unless you pick a new mortgage deal you will usually be transferred to our Standard Variable Rate (SVR), although you should refer to the specific terms of your mortgage to confirm this.

Please note that despite deals referring to a '2 year fixed rate' for example, the rate of interest may last slightly more or slightly less than 2 years depending on the date your mortgage completes.

Equivalent savings rate

With an Offset mortgage (and the connected Offset savings account or accounts) your savings balance will achieve the equivalent rate being charged on your Offset mortgage. You don’t earn any interest on your savings but instead pay interest on the difference between your Offset mortgage balance and your Offset savings balance.

This differs between different Offset mortgage deals depending on interest rates and details are provided on individual mortgage pages and factsheets. The equivalent savings rate will also depend on your individual tax status.

Estimated Monthly Repayment

An estimated monthly repayment gives you an idea of how much you would pay back each month on a given mortgage deal for a repayment mortgage, using the property, deposit and term details you have provided. The payment includes money paid back towards what you've borrowed (the capital), as well as the interest on this sum.

Please note that the figures provided are for illustration purposes only, and assume that the initial interest rate will remain the same throughout the term of a repayment (rather than interest-only) mortgage.

Fees

Mortgage fee

Sometimes called a 'redemption fee' this is a fixed amount payable on the redemption of your mortgage loan. Our Mortgage Fee is £90.

Mortgage Application Processing fee

We charge a mortgage application processing fee of £130 on our mortgage deals to cover the cost of processing your application. This fee is payable on application and is non-refundable. From time to time this fee may be removed from selected mortgage deals.

Product fee

The Product fee is a fee we charge on selected mortgage deals. The fee is payable in full and the funds must be cleared before we can issue your mortgage offer. Alternatively you can ask for the fee to be added to your loan, which will increase both the amount you borrow and your monthly repayments.

Higher lending charge

The Higher lending charge is a fee sometimes payable by the borrower to the lender, to cover the higher risk on lending a higher proportion of the value of a property. This fee provides some protection to a lender against the risk of the borrower defaulting under the mortgage, and the lender being unable to sell the property for enough to cover the amount owed.

This fee does not, however, remove or reduce your responsibility as a borrower for repayment of the full mortgage balance.

More information about fees, costs and other charges.

Interest rate

The Interest rate is the percentage rate at which mortgage lenders calculate the interest they charge the borrower for the mortgage.

When the initial period ends you will usually be transferred to our Standard Variable Rate (SVR) for the remaining term of the mortgage.

Loan to Value

Loan to value is the size of the mortgage as a percentage of the value of the property or the price you are paying for the property whichever is the lower (a £180,000 mortgage on a house valued at £200,000 would have an LTV of 90%).

Loan size

Minimum loan amount

The minimum amount we will lend. This depends on the specific mortgage deal you choose. Details of these are displayed on factsheets and individual online mortgage deal pages.

Maximum loan amount

The maximum amount we will lend to a customer. The maximum loan amount depends on the specific mortgage deal you choose. Details of these are displayed on factsheets and individual online mortgage deal pages

Mortgage type

Fixed rate mortgage

A Fixed rate mortgage can offer the stability of a fixed rate of interest until an agreed date. This means that the interest rate remains the same throughout the term of the mortgage deal, as opposed to other types of mortgage (outlined below) where the rate may adjust.

Tracker mortgage

With a Tracker mortgage, the interest rate is set at a percentage above or below the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the BoE base rate. Tracker mortgages include a ‘collar’ which is the minimum limit that the interest rate of a tracker mortgage could fall to.

Offset mortgage

Offset mortgages are a great option if you have savings as you can link your mortgage and savings to reduce the interest payable on your loan. Offset is available on selected Fixed rate and Tracker deals.

Discounted Standard Variable Rate (SVR) mortgage

A Discounted SVR mortgage is a type of variable rate mortgage where we apply a discount at a specified level below our current Standard Variable Rate for a specified period of time. For example, if we offer a mortgage deal with a discount of 3%, the interest rate you would receive would be 1.74% (our SVR, which is currently 4.74% minus the 3% discount).

A variable rate mortgage is a mortgage where the interest rate goes up and down according to a mortgage providers Standard Variable Rate.

Overall cost for comparison/representative example

APRC (Annual Percentage Rate of Charge)

This is a figure which all lenders must quote when referring to mortgages and is intended to help customers compare the overall cost of different mortgages.

The overall cost of comparison and the associated representative example are designed to show the total yearly cost of a mortgage, stated as a percentage of the loan. The information shown includes rate information and costs like the interest rate payable at the start of the mortgage and after the initial rate period has ended, Mortgage Application Processing Fee, Product Fee, Valuation Fee and Mortgage Fee. It is the overall cost for comparing between different mortgage deals.

Overpayment allowance

The overpayment allowance is the amount you are allowed to pay off early on your mortgage – this can help to shorten your mortgage term and reduce your balance.

This varies between different mortgage deals so you should check the individual mortgage details to find out what the allowance is.

Standard Variable Rate (SVR)

When a mortgage deal comes to an end you will be usually be transferred to the Standard Variable Rate (SVR) - until you select a new deal. As the name suggests the SVR is a variable rate set by the lender, and can therefore be higher or lower than a mortgage deal rate - so it's worth exploring your options when the end date on a mortgage deal is approaching.

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