Additional Borrowing
When you borrow additional funds from your existing mortgage lender or secured
loans provider. You may usually borrow the extra money for any purpose including;
home improvements, car purchases, holidays or school fees, debt consolidation
etc.. The amount you are allowed to borrow usually depends upon the amount
of Equity you have in your property and your income and outgoings.
APR
APR stands for ‘Annual Percentage Rate’. The APR attempts to estimate the
real cost of borrowing, this allows you to compare different Secured Loans.
The APR takes into account most upfront fees and ongoing fees and costs
of Secured Loans. The APR is an important element of the costs comparing
loans.
Base Rate
The Base Rate is set by the Bank of England, and represents the cost of
borrowing from the money market. The Base Rate is reviewed monthly (usually
the first Thursday of every month).
Discounted Rate
A reduction on the lender’s standard variable rate. Discounted rates are
often only applicable for a set period of time after which it reverts to
the standard variable rate. Some companies may insist that you remain on
the standard variable rate for a certain period or face redemption penalties.
Charges
Some Secured Loans providers charge fees for arranging your Secured Loan.
You should ensure that all fees are fully explained and reasonable. Shop
around for Secured Loans as fees can vary widely. You should ensure you
read all the terms and conditions that are placed upon Secured Loans.
Equity
The difference between what your property is worth and your outstanding
mortgage. For example, if your property is worth £250,000 and you have a
mortgage on the property of £150,000 your Equity would be £100,000. Often
Secured Loans can be secured up to 85% of property value less any existing
mortgage. Using the same example this would mean £250,000 X 85% less £150,000
= £62,500.
Equity Release
This can stand for a number of things however, is not usually a term used
for Secured Loans. It can refer to releasing equity from you home by remortgaging
or additional borrowing or it is a term more commonly used in relation to
a type of mortgage offered to the elderly.
Fixed Rate
An interest rate which is guaranteed at a certain rate for a fixed period.
At the end of the fixed period the interest rate normally reverts to the
standard variable rate. Some Secured Loans companies may have lock-ins where
the customer is obligated to pay the standard variable rate for a further
fixed period.
Flexible Features
Flexible features are common for mortgages they allow you to alter the amount
and frequency of mortgage repayments, within certain limits. You may also
be able to overpay, underpay and take payment holidays. However, these types
of features are NOT common with Secured Loans.
Freehold
If your property is Freehold it means that you own both the land and the
property, as opposed to leasehold where the land does not belong to you.
Land Registry
The Land Registry is the government agency where records are held as to
the ownership of property and a record legal charges placed upon individual
property.
Leasehold
If you buy a leasehold property you own the property for a set number of
years but not the land the property is built on, as opposed to freehold
where you own both the property and the land.
Legal Charge
The legal document held by the Land Registry that identifies who has a claim
on your property. The main lender will normally be identified as the first
charge. Secured Loans are often classified as second mortgages
Mortgage
A loan used to buy your home, where your home is used as security until
the loan is repaid. Secured Loans are secured against your home so it is
a mortgage.
Mortgage Deed
The legal document that you must sign to say that the Secured Loan lender
has a legal charge over your property.
Offer Letter
The letter that is sent to you which states the terms and conditions associated
with your Secured Loan.
Quotation
A document which illustrates the cost of Secured Loans.
Redemption Penalties
A charge levied by some Secured Loans lenders if you decide to repay your
Secured Loan early such charges are usually payable.
Redundancy Protection Insurance
An insurance policy that meets your Secured Loans repayments for a limited
period should you be made redundant. Whilst it is always advisable this
type of insurance should not compulsory. You should also read all terms
and conditions carefully to ensure that the cover is suitable for your personal
needs.
Remortgage
A remortgage is when you change your existing first mortgage in some way
without moving house.
Repossession
This is when a borrower fails to repay the loan in accordance with the terms
and conditions associated with it. The lender can exercise their legal right
to take legal ownership of the property.
Stamp Duty
The tax a house buyer pays when purchasing a property. This is not payable
on Secured Loans.
Term
The length of time agreed by which to repay your Secured Loans.
Title Deed
A legal document that identifies the owner of a property and also denotes
details of the property and the land it is built upon. The lender keeps
this until the Secured Loan and interest have been paid.
Valuation
A survey and report carried out by a professional surveyor that establishes
how much the property is worth and whether it is suitable security for the
Secured Loan.
Variable Rate
A rate that can move down or up at any time at the Secured Loan lenders
discretion.
The content, advice and
any recommendations given on this page or any page of our website is given
without legal responsibility. For specific advice about your own personal
circumstances you should seek independent advice for example from your local
citizens advice bureau, a solicitor or an accountant. Home
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