A

Advance

Relates to the amount of money that is lent under a loan agreement.

Annual Percentage Rate (APR)

The APR is the actual percentage of interest that is charged on your borrowings. It is always best to get a loan with the lowest interest rate possible, as the higher the interest rate, the higher the amount you pay back!

Arrears

These are the payments which a debtor has missed, underpaid or paid late. If you stay in arrears, this could lead to a County Court Judgement.

B

Bank of England Base Rate

The Base Rate is the amount of interest which is used to determine borrowing rates.

Bankruptcy

This should be seen as the final option for any debtor that is unable to make repayments. As your personal assets will be sold in order to make some form of repayment to you creditor, this includes your home.

Black Listed

If you have a poor credit rating then there will be a note against your account saying that you are likely to be a high lending risk.

Buildings Insurance

An insurance policy that covers the cost of most rebuilding or repairs, subject to the contract terms.

C

Capped Rate Mortgage

If you have a capped rate mortgage then, no matter how much the base rate changes, your interest will never go above a certain level.

County Court Judgement (CCJ)

A CCJ is the result of an individual not keeping up on their credit commitments. The order will ensure that all outstanding debts are made.

Credit

Credit will allow you to buy goods or services, and is commonly lent with an additional interest rate.

Credit Search

This is the check that is done through a Reference agency to see your credit rating and use it to judge whether a company should allow you to borrow from them.

D

Debt

The amount of money that you owe to a creditor.

Deeds

These legal documents prove ownership to a property or land.

Default

This means that you are more than 30 days behind the repayment date. If you remain in arrears then this could lead to further legal action such as a CCJ.

E

Early Repayment Charge

This is referred to the charge that is sometimes added to a loan or mortgage if it is repaid early. It is also called a Settlement Charge.

Equity

The difference between the amount you have to repay to your mortgage and the amount that your property is worth.

F

Fixed Rate

This usually applies to a mortgage, and means that you will be paying a fixed amount of interest for a set period.

H

High Risk Items

These are listed as items which are the most frequently stolen when a house is burgled, such as televisions, within your insurance policy.

Hire Purchase (HP)

This is when you hire an item over a certain period of time whilst paying monthly payments.

I

Impaired Credit

This is another term for a poor credit rating, and is perhaps because the individual has been unable to keep up repayments.

Interest Rate

The amount that you are being charged on your lendings. This is usually dependant on the type of borrowing and the lender.

J

Joint Loan Agreement

This is when more than one person is named on the contract.

L

Liability

This is another term for a debt.

M

Mortgage Guarantee Insurance (MGI)

This type of insurance is designed to help any financial shortfall to protect a mortgaged property.

N

Negative Equity

This is when the value of a property is worth less than the mortgage owed.

O

Overdraft

The amount of money that your bank lends you on your current account.

Q

Quick assets

These assets can be converted into cash quickly.

R

Redemption Penalty

A charge which will be issued if a financial agreement is settled early, this can vary with each lender.

Repossession

This is when a lender can take the legal ownership of a property, if the borrower falls behind on payments.

Right to Buy (RTB)

This is when a council tenant has the “right to buy” their council home.

S

Standard Variable Rate

This mortgage rate is changeable as it  falls in line with the fluctuating base rate.

Sub-Prime

A sub-prime lender is able to finance people this with a poor credit status.

T

Term

The period of your borrowings.

V

Variable Interest Rate

This interest rate fluctuates in accordance with normal interest rates throughout the lifetime of the borrowings.

LoanApplication.co.uk is a trading name of Ask Finance Ltd, which is registered in England and Wales (company number 4229724), Jackson House, Sibson Rd, Sale, Manchester, M33 7RR. Ask Finance is licensed under the 1974 consumer credit act to carry on the business of consumer credit, consumer brokerage, debt adjusting and debt counselling. Consumer Credit License No: 507130. Ask Finance is authorised and regulated by the Financial Services Authority (FSA) - FSA No: 300490 - for the provision of mortgage advice and arranging insurance.