Glossary - Remortgages

Adverse Credit
Those individuals with a poor credit history fall into this category. Adverse credit may include CCJs, mortgage arrears, bankruptcy, IVAs or the repossession of a home.

CCJ (County Court Judgement)
The County Court issues CCJs to individuals who need to repay a debt. CCJs will show up on a Credit Report.

Equity
A mortgage’s outstanding amount less the property’s current market value equals the equity.

Arrangement Fee
Some lenders may charge an arrangement fee. This is the same as an administration fee, and is the charge that covers administration and reserves funds for fixed rate and/or discounted rate mortgages. Lenders may insist that this fee be paid separately, or they can add it to the mortgage loan.

Early repayment charge
This charge may be payable on certain discounted or fixed interest rate loans. It only applies if you redeem or part redeem the loan within the specified early repayment charger period.

Mortgage Deed
A mortgage deed is the legal document confirming that you have a mortgage on your home or property.

Payment Protection
This type of insurance is something that many lenders offer. It may cover accident, sickness and involuntary unemployment. Should any of these situations arise whilst under cover, the insurance will make the remortgage payments on your behalf.

There are alternative names for Payment protection: ASU Insurance (Accident, Sickness and Unemployment Insurance) or PPP (Payment Protection Policy).

APR (Annual Percentage Rate)
An APR is the true cost of a remortgage that includes the amount of interest charged with other charges such as arrangement fees.

Capped rate remortgage
This remortgage’s interest rate stays at a pre-determined figure for a certain period, even if the base rate should rise.

Discounted rate remortgage
An interest rate that charged on a mortgage, often at the variable base rate and one that applies to the mortgage less a discount for a set period. The rate and monthly repayment will fluctuate depending on the variable base rate changes.

Interest only remortgages
The borrower repays the interest that accrues on the mortgage debt. He or she would have to repay the full sum owed on the mortgage debt at the end of the remortgage term.

Long term remortgages
These type of remortgages are simply remortgages with extended repayment periods. A typical repayment period could be from 30 to 50 years instead of the standard 25 years remortgage period.

Self-employed remortgage
Being self-employed could often make it harder to get a remortgage. Should you be lucky enough you could be certified if you provide three year’s worth of accounts.

Negative Equity
This happens when the amount owed on a mortgage exceeds the value of the property.

Arrears
Loans become overdue when the owner has not made regular payments.

Completion
All the contracts have been signed, and the property is now legally transferred. This is also known as 'drawdown', which is the start of the mortgage.

Contract
The seller and buyer have a legal written agreement to transfer ownership.

Drawdown date
the mortgage starts on this date.

Freehold
The buyer has full ownership of the property, as well as the land on which it is built.