Mortgage Glossary Index

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Acceleration clause
A provision that gives the lender the right to collect the balance of a loan if a borrower misses a payment.

Access
Any means by which a person can enter property.

Accident, Sickness and Unemployment insurance
Income protection incorporating cover for loss of earnings arising from accident, sickness or unemployment. Usually paid out in the form of a monthly tax-free income to cover a portion of lost earnings and restricted to two years from the date of the first payment.

Actual age
The number of years a structure has been standing.

Addendum
An addition or change to a contract.

Additional principal payment
Extra money included in the monthly payment to help reduce the principal and shorten the term of the loan.

Additional security fee
An up-front, one-off fee paid to the lender to protect against the borrower defaulting on the loan. This is usually charged on mortgages of more than 75% of the property value. Also known as Indemnity Guarantee Premium and Mortgage Indemnity Premium.

Add-on interest
The interest a borrower pays on the principal for the duration of the loan.

Adjustment date
This is the date on which the interest rate changes for a variable rate mortgage.

Administration fee
An administration fee often charged for not taking a building and contents insurance policy, or some other product offered by the lender in conjunction with a mortgage. These fees are usually less than £50.

Administrator
A person given authority to manage and distribute the estate of someone who died without leaving a will.

Administrator's deed
A legal document an administrator of an estate uses to transfer property.

Advance
Loan from a bank or building society in the form of a mortgage.

Adverse possession
The acquisition of title to property through possession without the owner's consent for a certain period of time.

Adverse possessory title
If a piece of land is occupied without permission for at least 12 years, the occupier can become the legal owner.

Adverse use
The access and use of property without the consent of the owner.

Affiant
A person who makes a sworn statement.

Affidavit swear fee
Charged when a mortgage lender is required to swear an affidavit (written legal statement) to a solicitor in connection with mortgage arrears.

Affiliate tradesmen
Your insurance provider may insist that any repair work on your home is carried out by a tradesmen with whom they have negotiated favourable rates and who have been approved as meeting certain standards of workmanship.

Agency closing
The process in which a lender uses a title company or other firm as an agent to complete a loan.

Agent recommendation
A product or service provider recommended by estate agents, mortgage brokers or building societies with whom they have often negotiated favourable terms and so can offer a special deal as part of the package. It should never be a mandatory requirement that you must use their selected firm or product, and if they do insist, then it might be worth complaining. Companies often receive financial incentives to recommend one particular firm, product or service - whilst this is perfectly legal, it means they don't necessarily have your best interests at heart.

Agreement in principle
The first document provided by an mortgage lender which shows any prospective seller that you can actually get a mortgage to cover the purchase price. It also provides a handy reference for some of the key features of your mortgage, and what your repayments will be for the introductory offer period, if there is one.

Alienation clause
A provision that requires the borrower to pay the balance of the loan in a lump sum after the property is sold or transferred.

Amortisation term
Expressed in months, this term states how long it will take to pay off a mortgage.

Amortization
The process through which the mortgage debt is altered, usually declining, as payments are made to the lender. "Negative amortization" occurs when monthly payments are too small to cover either the principal or interest reductions.

Amortization schedule
A schedule of how mortgage debt is changed over time.

Amortization tables
Mathematical tables lenders use to calculate a borrower's monthly payment.

Annual bonus
A bonus paid annually on an endowment mortgage which is dependent on the performance of the investment fund you are using to repay your mortgage.

Annual mortgagor statement
A yearly statement to borrowers that details the remaining principal and amounts paid for taxes and interest.

Annual Percentage Rate
This is an indicator used to compare interest rates. It takes into account the costs involved in setting up the mortgage, any discount periods, how often interest is calculated and calculates what the average rate of interest will be over the life of the loan. All lenders that comply with the consumer credit act must ensure that the the borrower is informed of the APR.

Annualised payment scheme
Although the borrower pays interest at a variable rate, which can change from month to month, the lender charges a set amount of interest each month and then adjusts the balance at the end of the year.

Application
A document detailing a potential borrower's income, debt and other obligations to determine credit worthiness.

Application fee
The fee a lender charges to process a loan application.

Applied or nominal interest rate
The rate used to calculate the interest due.

Appointed representative
Salesperson, company or organisation that advises on the investment products specific to one life assurance or investment company.

Appraisal
A professional evaluation of the value of a home or other piece of property. It is often required by a lender.

Appraisal fee
The fee an appraiser charges for an estimate of the market value of the property.

Appraisal report
A detailed written report on the value of a property based on recent sales of comparable sites in the area.

Appraised value
A surveyor's estimate of the value of the property.

Appreciation
An increase in the value of a home or other property.

Approved tradesmen
Your insurance provider may insist that any repair work on your home is carried out by a tradesmen with whom they have negotiated favourable rates and who have been approved as meeting certain standards of workmanship.

APR
This is an indicator used to compare interest rates. It takes into account the costs involved in setting up the mortgage, any discount periods, how often interest is calculated and calculates what the average rate of interest will be over the life of the loan. All lenders that comply with the consumer credit act must ensure that the the borrower is informed of the APR.

Arrangement fee
It is quite common for an arrangement fee to be charged by the lender when applying for a mortgage. Arrangement fees are usually paid on completion of the mortgage and anything from £100 to £350 is fairly common. They are most likely to be charged in conjunction with particularly competitive rates such as discounted, fixed and sometimes capped rate mortgage products. It could be the case that the lender is trying to offset some of the long-term cost of offering you such a competitive mortgage rate and you must weigh up which is most important to you, especially if you must pay the fee upfront.

Arrears
These are the sum total of late or overdue payments for a mortgage, ground rent and maintenance charges, or any other regular payment. Some insurance policies will automatically be voided if you fall into arrears.

Arrears
Arrears occur when the borrower misses one or a series of monthly payments. Arrears can lead to the repossession of the property. 

Arrears breakdown
A month-by-month breakdown of any arrear balance and charges for your mortgage. A fee for this service is often added to your account once you have been sent the breakdown. Costs £10 - £30

Arrears fee
This is charged on a monthly basis to cover additional administrative costs where your mortgage account is one or more monthly payments in arrears. Costs £15 - £45. You may well be charged arrears fees in connection with other products.

Assessed value
A determination by a tax assessor of the value of a home in order to calculate a tax base.

Assumable mortgage
A mortgage that can be transferred to another borrower.

Assumption
When a buyer assumes the loan payments and obligations of the seller. If the buyer defaults, however, both the buyer and seller are responsible for the debt.

Assumption clause
A clause stating that the seller has passed to the buyer full responsibility for the mortgage on the property. Often, an assumption fee must be paid to the mortgage lender.

Assumption fee
A fee the lender charges for processing new records for a buyer assuming an existing loan.

ASU
A form of income protection incorporating cover for loss of earnings arising from accident, sickness or unemployment. Is usually paid out in the form of a monthly tax-free income to cover a portion of lost earnings and is usually restricted to two years from the date of the first payment.

Available funds
The difference between the initial amount you wish to borrow (initial mortgage balance) and up to 90% of the value of your home (Loan Limit). This is the amount you can take as extra borrowing throughout the term of your loan.