Sub-Prime Mortgages

Sub-Prime Mortgages
by Jane Smith

This guidance defined for the first time the criteria used to decide whether a potential borrower will be classified as "prime" or "sub-prime." It states that at least one of these issues will characterize a borrower as sub-prime when the person applies for a loan:

• Low credit score
  
• Bad credit history, including
  
• collection accounts
  
• repossessions
  
• late payments of invoices
  
• bankruptcy
  
• debts that have been written off as uncollectable, called "charge-offs"
  
• high ratio of debt to income
  
• decreased ability to pay off the loan
  

Further, the document describes these attributes of the sub-prime borrower:

• has a Fair Isaac Corporation (FICO) credit score of less than 660;
  
• has collection activity, liens, charge-offs, or judgments within the past two years;
  
• within the past year, has had two late payments;
  
• within the past two years, has made a payment that was more than 60 days late;
  
• has a ratio of debt to income of at least 50%;
  
• has declared bankruptcy in the past five years;
  
• has been assigned a score by another credit rating service that would equate to a FICO score of 660.
  

All lenders use these standards to identify sub-prime borrowers. Bear in mind that even if you have a FICO score that is better than 660, you will still be considered a sub-prime borrower if you possess a single one of the attributes listed above.

Expanded Guidance offers a clear definition of lending practices to be considered "predatory." The agencies in no way insinuate that predatory lending practices characterize all sub-prime lenders. In fact, it is their belief that benefits for both the borrower and the lender come from using sub-prime loans that are administered properly. Nonetheless, the public should be made aware that predatory lending practices do exist, and that borrowing at sub-prime may leave them vulnerable to such practices. In predatory lending, the exchange between borrower and lender is very unequal: the lender gets the borrower's money and the borrower gets not much of anything.

Most predatory lending practices fall into three categories.

• Many car loans and housing mortgages are made based on assets pledged by the borrower as collateral, rather than on the borrower's actual ability to fulfill the debt.
  
• "Loan flipping" occurs when a lender coerces or talks a borrower into refinancing a mortgage, at no advantage to the homeowner, but at great advantage to the lender, who may collect sizable fees for the transaction.
  
• Failing to reveal to the borrower all the hidden fees and costs of a loan, and concealing information or providing fraudulent information to the borrower.
  
• Very often, these practices are perpetrated on vulnerable borrowers, like the elderly, minority homeowners, or low-income families. In many cases, these people would actually have qualified for a mortgage at prime rates; but they are at a disadvantage because of their lack of knowledge.
  

If you are thinking of borrowing at sub-prime for a mortgage, you should familiarize yourself with the 2001 Expanded Guidance for Sub-prime Lending. It is available on the Internet, and is definitely worthwhile reading. It laid a fine foundation for further definition of the responsibilities of sub-prime lenders and the needs and rights of sub-prime borrowers.

Adjustable Rate Mortgages

Adjustable Rate Mortgages
by Landon McGehee

Conceived as a means for more affluent homeowners to keep your money tied up in investments which would produce greater returns than the interest rates they'd be paying, ARM (Adjustable-Rate Mortgages) have since come into much wider spread use, often as a means for people to live over their heads in homes they couldn't otherwise afford.

Speculative buyers who intended to resell their homes after they had appreciated are now stuck with depreciated homes instead, and feeling the pinch as well. With many of these Adjustable-Rate Mortgages reaching their recalculation points now, we're beginning to see the first wave of casualties, and the numbers will only continue to get worse from here.

Highlighting the first point are statistics recently released from the Federal Housing Finance Board. The generally accepted mortgage one can afford is on a house valued at 2 to 2.5 times their annual income. As the housing boom saw a drastic rise in prices this became next to impossible for the average family.

The average house was priced at $283,000, which would require an ideal salary range of $113,520 to $141,900, yet the median household income as of 2003 was just $43,350, meaning the average household can only realistically afford to mortgage a house valued in the $100,000 range. This has been circumvented by using an Adjustable-Rate Mortgage, providing initially lower interest rates and flexible payment options

Whether home owners of modest means truly understood the implications of what would happen with their rates down the line is unknown. As short-term rates rise and the loan eventually gets recalculated to include the principal, the minimum per month amount owed can jump drastically, often as much as 50% or more, and often eclipse the rates one would owe through a fixed-rate mortgage.

This would seem to be simple math, by paying less than a fixed-rate mortgage for a length of time, it's only natural that one would eventually have fees that surpass it to make up the difference, but many homeowners have been caught off guard by the jump nonetheless.

This isn't to say that Adjustable-Rate Mortgages can't be useful and used wisely. When used with their original intent in mind, they can be powerful tools. On a mortgage in the $1 million dollar range, an interest-only mortgage could save the homeowner as much as $1,000 or more per month over a fixed-rate mortgage.

Those savings can then be reinvested with the intention of earning more than the interest rate owing. For people who move around a lot they can also be a great way to pay a minimum monthly amount, allowing them in effect to 'rent' a house for a period of time at a very reasonable rate.

Taking out an Adjustable-Rate Mortgage or an interest-only loan is a risky proposition for those on the low end of the income bracket barely covering household expenses, and this is being proved in greater numbers as many home owners have been forced to abandon their homes with nothing to show for it due to being overwhelmed with readjusted rates.

As tempting as it can be to live above your means, the smokescreen and mirrors will eventually disappear, leaving you exposed and vulnerable. Be sure to plan ahead and take on a loan that will work for you both now and in the future.

Mortgage: Fixed Rate or Not?

Mortgage: Fixed Rate or Not?
by Adam Ferguson

Many folks across the USA are starting to realize why the interest rates on their home mortgages were lower if they took an ARM loan. The answer is simple. A loan that is fixed for a short period of time (ARM loan) has a much higher level of risk. This means a lower interest rate and lower monthly payments for those willing to take that risk. Many homeowners are now scrambling to find some way to keep their home as these low rates have now adjusted and are no longer low fixed interest rates. These consumers took an adjustable rate mortgage that may have been fixed for as short as one month and as long as 10 years. The risk is not simply related to what future interest rates will be; the risk is whether you will be able to refinance your mortgage at a future date. Many Americans are now starting to understand that risk, which they never even considered.

Self-employed homeowners are now finding out that a stated income loan is basically no longer available. Here is a quick example of a scenario for someone that is currently in a stated income ARM. A small business owner may have taken out an adjustable rate mortgage (ARM) and made all of their payments on time for the lower interest rate 7 year fixed period of their loan. This borrower now wants to refinance and can no longer get a loan without providing income documentation and/or qualifying under a full doc scenario. Ouch! This homeowner is now left to make payments on a loan that may have gone from 6.5% to 9.5% or higher. This loan may keep adjusting every 6 months or 1 year and may go as high as 12.5%. The change in payment is dramatic, thus affecting the entire economy for obvious reasons. Does this homeowner now sell their home? Do they ride it out? Do they change the way their income is documented and start paying themselves W-2's so that they can refinance in 2 years? These are tough questions and the answer will be different for everyone. These however are questions that could have been avoided.

Fixed rate mortgages are an ever stable and ever predictable product. It is a lesson that we can learn from our parents or even grandparents. The older generations were slow to act, fiscally conservative, and opted for things that they completely understood, things that did not have unknown future outcomes. The new generations of Americans dabbled in some slightly higher risk endeavors. I think and hope that we as a nation have grabbed the hot stove, and hopefully learned some tough financial lessons. The dot com bubble, Enron, the real estate bubble, all could have been avoided if we understood and listened to the lessons of history and the lessons of older generations.

There is plenty of blame to go around. The bottom line is very simple. Capitalist economies provide products that people will buy. If people do not like a product it goes away. The same applies to mortgages. There was a want for many mortgage products that held a high level of risk for both the consumer as well as the company providing them. Capitalism proves itself again as these loans become less available and guidelines get tougher. Products that prove themselves over time, have demand, and can make a company money will prevail. The fixed loan is the original mortgage in the United States for good reason. It has withstood recessions, booms, and it is still the safe, sensible, and I would argue "right" way to mortgage a loan. Fixed rate or no rate at all is the new calling for homeowners and new home buyers across the USA.

Mortgages: Fixed Mortgage Rate

Mortgages: Fixed Mortgage Rate
by Harley Rolland

Your mortgage loan has a significant role to play in your financial life. You might be already confused whether to go for fixed mortgage rate or adjustable mortgage rate. Well-wishers might also add to your confusion, when they advice you to go with fixed mortgage rate saying that it entails lower risk than a variable rate. Why is this so? Read on to know why it is considered the best mortgage rate.

• Advantages & Disadvantages:
  

In this program, the rate of interest remains fixed throughout the loan's term. The monthly repayments are also not affected by inflation. In comparison, the adjustable mortgage loan has an adjustable rate or interest that rises or lowers with the fluctuations in the economy.

Here is how you benefit if you choose a fixed mortgage rate:

• Interest rate of this program gives you the peace of mind to plan your repayment.
  
• As your monthly payment does not change, you can use your funds more effectively.
  
• If you take a program when the market offers high competition, you might even get offered the 'golden' chance of getting a fixed rate that is lower than adjustable rate (note that the fixed rate is always taken as higher than adjustable rate).
  
• Fixed loans are the best for salaried people on a tight budget. A fixed-rate mortgage is also a better option than an adjustable loan for young people and first-time buyers.
  

Like there are two sides to a coin, there are two sides to a fixed mortgage loan too. Yes, I am referring to its drawbacks. You should be aware of these as well:

• The interest rate of fixed loans is higher than that of the adjustable mortgage loan.
  
• The fixed loan's interest rate is fixed for about 2-3 years and then reviewed as per the market. So, your loan is also subject to changes in the future (and chances are high that the interest rate will only increase!).
  
• Another thing is that if you plan to switch your mortgage company, you will need to pay a higher fee to implement new loan as well as pay off the old loan.
  

Finally, to make the right choice, seek professional help. A financial advisor will be able to help you make the right choice as per your lifestyle, income and needs.

Glossary: Mortgage Terms

Glossary: Mortgage Terms
by Jon James

Additional Security Fee
An Additional Security Fee (Mortgage Indemnity Guarantee policy) is the fee taken to get an insurance policy that will cover your lender so that if you default on payments, he will not suffer any loss. You have to pay the Additional Security Fee and the premium along with your mortgage advance. Although you are paying the premium, remember that this policy is for the protection of your lender and not for you.

Administration Fee
The administration fee is the amount charged by your lender to start working on the documentation part of your mortgage application. It includes the home valuation fee as well. The administration fee will not be refunded even if your valuation is not done or if your application has been rejected.

Adverse Credit
Adverse credit occurs when you have a history of bad credit, bankruptcy, CCJ's, or loan arrears. Adverse credit can also be called as bad credit, poor credit, or it can be said that you have a low credit score.

Agricultural Restriction
An agricultural restriction is a rule which will restrict you from holding a property if your occupation is in any way related to agriculture.

Annual Percentage Rate
The Annual Percentage Rate is the rate at which you borrow money from lender. It includes all the initial fees and ongoing costs that you will pay throughout the mortgage term. As the name suggests, annual percentage rate, or APR, is the cost of a mortgage quoted in a yearly rate. The annual percentage rate is a good way to compare the offers from different lenders based on the annual cost of each loan.

Apportionment
Apportionment, or sharing out, is a facility that allows you to divide the responsibility for utilities, property taxes, etc. with the buyer or the seller of the property when you are either selling or buying the property.

Arrears
Arrears happen when you default on your mortgage payment or any other type of debt payment. If you have arrears on the record of your current mortgage, you will face problems when you want to look at remortgaging or getting a new mortgage.

Arrangement Fee
An arrangement fee is the amount you have to pay your lender to access particular mortgage deals. While searching for a fixed rate, cash back, or discounted rate mortgage, you will pay this fee at the time that you submit your application, it must be added to the loan upon completion of the term, or it will be deducted from the loan on completion.

Assignment
An assignment is the document transferring the lease of the property or rights of ownership from a seller to a buyer. It may be an endowment policy to the building society in connection with a mortgage.

ASU
ASU is Accident, Sickness, and Unemployment insurance which covers your mortgage payments in case of an accident, a sickness, or involuntary unemployment.

Auction
An auction is the public sale of a property to the person who quotes highest bid. The highest bidder has to sign a binding contract that ensures that he do all valuations, searches, etc. before the sale of the property.

Authority to Inspect the Register
An authority to inspect the register document is a document fro the legal or registered owner of a property allowing the solicitor of the purchaser to get information concerning the property.

Banker's Draft
A banker's draft is a way to make a payment. In appearance, it is the same as a cheque, but in effect it is a cash payment. The money is given to the bank, and they issue a cheque that is certified to be good for the given amount.

Base Rate Tracker
Base rate tracker is a type of mortgage in which the interest rate is variable, but it is set at a premium (above) the Bank of England Base Rate for a period or for the full term of the mortgage. The best part about this type of mortgage is that it has little or no redemption penalty. This means that by making overpayments, you will be able to save money on interest by paying off your mortgage earlier than the agreed upon date on the initial mortgage contract.

Booking Fee
A booking fee or arrangement fee is charged when applying for a fixed or a capped rate loan. Booking fees are normally non-refundable if charged upfront, but sometimes the booking fee is added to your final mortgage payment.

Bridging Loan
A bridging loan is useful when you want to purchase a property, but your ability to do so is contingent upon the sale of your old property. This is a very short term loan that is paid off as soon as your old property sells. Speak with a loan advisor before taking out a bridging loan to be sure it's the best option for you.

Broker's Fee
A broker's fee is paid to your debt advisor or other intermediary that assists you in finding the best mortgage or loan deal for your circumstances. BSAThe BSA, or the Building Societies Association, is a group that works in the interest of member societies.

Building Societies Commission
The Building Societies Commission is a regulatory organization for Building Societies. This commission reports to the Treasury Ministers.

Building Society
A Building Society is a mutual organization that gives you money to buy or remortgage residential properties. This money comes from individual investors who are paid interest on their funds. A portion of building society funds is also raised through commercial money markets.

Buy-to-Let
When you purchase a property for the sole purpose of renting it out, you can apply for a buy-to-let mortgage. The payments for this type of mortgage are calculated based on your projected rental income instead of your personal income.

Capital and Interest
Your monthly mortgage payments consist of two parts: the interest and the capital. The interest payment is a payment on the interest balance of your loan. The capital payment is a payment on the amount that you borrowed.

Capital Raising
Capital raising generally means remortgaging for a higher amount than you need to pay off your existing mortgage in order to use the excess money for other personal financial uses.

Capped Rate
A capped interest rate is an interest rate that will not exceed the standard variable interest rate for a set period of time (from 1-5 years) that is decided by you and your lender. If the standard variable rate falls below your capped rate, your interest rate will decrease accordingly.

Cash Back
Cash back is the amount you receive when you take out a mortgage, the amount may be fixed or a percentage of your mortgage amount.

CCJ
CCJ stands for County Court Judgment. This is a decision reached by a county court against you when you have defaulted on your debt payments. If you clear the debt in question in a set amount of time, a satisfactory note will be put on your credit report to signify that the debt is taken care of.

Centralized Lender
A centralized lender is a mortgage lender that does not rely on a branch network for distribution. "Centralized lending" is now provided by several building societies. These societies operate separately from their branch networks, and they rely exclusively on mortgages from intermediary sources.

Charge
A charge is any interest on a mortgage to which a freehold or leasehold property can be held.

Charge Certificate
A charge certificate is a certificate issued by HM Land Registry to you with your name as the registered title for a given property. This certificate contains details of restrictions, mortgages, and other interests. It has three different parts: a charges register, a property register, and a proprietorship register. If there is no mortgage on the property, it is called a Land Certificate, and it is issued to the registered proprietor.

Chattels
Chattels are moveable items in your house such as furniture or your personal possessions.Chief RentChief rent is paid by the owner of a freehold property. This is the same as the ground rent that is paid by a leaseholder.

CML
Council of Mortgage Lenders

Completion
Completion is a term that explains that you have become the owner of your house after finishing the formalities of the sale and the purchase of the property.

Conditional Insurance
When you take out a fixed or discounted rate mortgage, your lender may try to persuade you to take out an insurance policy that will cover any missed payments due to an illness, an accident, or unemployment.

Contract
A contract is a legally binding sale agreement. There are two identical copies signed by both the buyer and the seller, and each party keeps a copy for their records. Once both parties have signed the contract, they are committed to the terms of the agreement.

Conveyance
A conveyance is the deed by which a freehold, unregistered title is transferred. The deed is called an assignment if your property is unregistered or leasehold. If the property is registered, the deed is called a transfer.

Conveyancing
Conveyancing is the legal process by which the buying and the selling of a property take place.

Covenant
A covenant is an assurance given in a deed.Credit ScoringCredit scoring is the procedure by which a lender evaluates your paying capacity before offering a loan or mortgage.

Credit Search
A credit search is done by a lender and a credit bureau to search your records for CCJs and other indicators of bad credit.

Debt Consolidation
Debt consolidation is the process by which you take out a loan or mortgage in order to pay off a number of high interest debts. By doing this, you will only need to make one payment each month, and you will save significantly on interest charges.

Deed
A deed is a legal document that denotes the owner of a given property. You can transfer a title to both freehold and leasehold with a deed.DepositA deposit is the amount of money you put down toward buying a property.

Disbursements
Disbursements are any amount you pay to solicitors against land registry fees, searches, faxes etc.

Discounted Rate
Discounted rates are used to attract new borrowers to lenders by setting the interest rate below the standard variable rate for a guaranteed period of time. If you repay the entire discounted rate mortgage within the first few years, your lender may charge you early redemption penalties.

Early Redemption Penalty
An early redemption penalty is charged by your lender if you do a part or full payment of your mortgage amount before the completion of your mortgage term. These penalties will also be charged if you decide to remortgage and move your mortgage to a new lender. Early redemption penalties mainly apply to fixed rate, discounted rate, and cash back mortgages.

Easement
Easement is the right held by one property owner to make use of the land of another for a limited purpose, like a right of passage.

Endowment Mortgage
An endowment mortgage is an interest only mortgage supported by an endowment policy. During the term of the mortgage you will pay only interest to the lender, and your premiums are alternately paid into an endowment policy which will mature over the term of your mortgage. The endowment policy is designed to pay off your mortgage as well as act as life insurance. However, you cannot depend on this amount to be sufficient to pay all of your debt.

Endowment
There are different types of endowments, but here an endowment is a life insurance policy that will pay off your interest only mortgage.EquityEquity is the amount of value in your home. It is the value of your home less the amount left to be repaid on your mortgage.

Equity Release
Equity release is a means of releasing money from the value of your home either in a lump sum or in monthly installments. This money may be used for home improvements, debt consolidation, or other large expenses.

Exchange of Contracts
Exchange of contracts occurs when the buyer and the seller of a property sign and swap the contracts which detail the property, the price, the date, and the terms of the arrangement. When the contracts are signed, they become legally binding, and legal action can be taken against anyone who breaks the contract.

Existing Liabilities
Existing liabilities are all financial commitments outside of your mortgage. Existing liabilities may include bank loans, credit card debt, maintenance payments, etc.

First Time Buyers (FTB or FTP)
A first time buyer is one who has never owned property before.

Fixed Rate
A fixed rate is when you pay a fixed amount of interest on a loan for a fixed period of time. Lenders provide fixed rate loans for short periods of time (three-six months) all the way up to 25 years. Early redemption penalties apply if you pay off the mortgage before the end of the fixed rate term. Flexible SchemeA flexible scheme is a new way of calculating mortgage interest charges. Lenders calculate interest on a daily basis instead of on an annual basis. The new interest rates will only affect the remaining balance of the mortgage. By making regular overpayments, you can repay the loan faster thereby saving a lot on interest charges.

Fixture
A fixture is an item attached to your property, and therefore it is legally part of the property.

Freehold
Freehold means that you have ownership of a property for an indefinite period of time. This is in contrast to leasehold which means that the property is only under your control for a limited period of time.

Further Advance
A further advance is an add-on loan to your existing mortgage from your existing lender. The money from a further advance may be used for home improvements, to purchase a freehold property, or for personal purposes such as debt consolidation.

Guarantor
A guarantor is a person who guarantees the lender that the borrower is eligible for a loan or mortgage. If the borrower fails to make payments, the guarantor will make them.

Gazumping
Gazumping occurs when a seller agrees to sell a property to one person, and they proceed to decline that offer in favor of a higher one.

Ground Rent
Ground rent is the amount which a leaseholder needs to pay to the freeholder each year.

Home Buyer's Report
A home buyer's report is made by a lender after a mortgage valuation has been done and before the full survey takes place in order to give the borrower a complete understanding of the property they are thinking of buying.

Income Multipliers
An income multiplier is a type of calculation that a lender will use to calculate the amount a borrower can receive. The most common income multiplier is three times a single income or two and a half times joint income. The lender will choose the one that yields the higher figure. Lenders are more flexible if your LTV ratio is low.

Income Protection Insurance
With income protection insurance, your monthly payments will be covered in the case of illness, accident, or unemployment.

Intermediary
An intermediary is a mediator who finds the best mortgage for you, and they also arrange the mortgage for you on your behalf.

Land Registry Fee
A land registry fee is paid when you want to register your ownership of a property or when you want to change the registered title of a property.LeaseholdUnlike freehold in which a property is owned, leasehold is when a property is owned, but the land that it's built on is not owned by the leaseholder. Their control of the property is only for a set number of years.

Licensed Conveyancer
A licensed conveyancer is like a solicitor in that they specialize in the legalities of buying and selling property.

Local Authority Search
A local authority search is made by the solicitor of the people that plan to buy your property. They check to make sure there are no planned developments on the property such as roads or buildings. They will check for any planning permissions or enforcement notices posted on your property.

LTV
LTV, or loan to value, is the percentage derived from dividing the value of your property by the amount of your mortgage. A low LTV is much less risky for lenders than a 100% LTV.

Loan Consolidation
Loan consolidation happens when a loan is taken out to repay another loan with a higher interest rate or to repay a number of high interest debts. Loan consolidation is often achieved through remortgaging.

MIG
A MIG, or mortgage indemnity guarantee, is insurance one takes out to cover their lender in the case that their property is repossessed, and the lender is unable to get their money back. A MIG is paid for upon completion of a mortgage.

MIRAS
MIRAS, or mortgage interest relief at source, was a tax relief given to those with mortgages, but this relief was abolished by the government in April of 2000.MortgageA mortgage is a loan that allows someone to buy a property. The property itself is the security for the loan.

Mortgagee
The mortgagee is the company or organization that finances your mortgage.

Mortgagor
The mortgagor is the person taking out the mortgage to buy a property.

MPPI
MPPI, or mortgage payment protection insurance, is insurance one takes out in the case of an accident, an illness, or involuntary unemployment that would render them incapable of making their monthly mortgage payment.

MRP
MRP, or mortgage repayment protection, is insurance taken out through your lender during the term of your loan.

Negative Equity
Negative equity occurs when the money you owe to your mortgage lender is greater than the value of your property. People find themselves in negative equity situations when they take out 100% LTV mortgages.

Overpayment
Overpayment happens when you pay more than the regular monthly payment on your mortgage so that the mortgage is repaid before the end of the mortgage term. With overpayments, you can save money on interest, but you may also be charged an early redemption penalty.Payment HolidayA payment holiday is a period during which you make no mortgagee payments. This is normally available with flexible mortgages only.

PEP
A PEP, or personal equity plan, allows you to own shares or unit trusts without paying any taxes.

Personal Pension
A personal pension provides for your financial needs after retirement. You make structured payments into your pension savings during your working years. Often, some of this money may be taken out to pay off your mortgage liabilities.

Portability
Portability is a term used to describe a mortgage that can be transferred between properties when you move from one house to another.

Redemption
Redemption is when you pay off your mortgage, when you remortgage, or when you move to a new house.

Remittance Fee
A remittance fee is charged by a lender for sending the amount of a mortgage to your solicitor.RemortgageA remortgage is a loan taken out from a new lender or a loan renegotiated with your existing lender to pay off your existing mortgage. This is done to decrease the interest rate you're paying or to raise extra capital.

Repayment Mortgages
A repayment mortgage is when part of your monthly payment goes toward the interest and another part of the payment goes toward the principal. This is also known as a capital and interest mortgage. If payments are made regularly, the entire sum of the loan will be repaid by the end of the term.

Retention
Retention is the amount that your lender keeps pending until certain conditions of your mortgage are met.

Repossession
Repossession is a legal process by which your mortgaged property comes under the control of your lender due to incomplete repayment. Your property may then be sold at public auction.

Right to Buy
Right to buy means that you are legally able to purchase the property at a discounted rate if you've been a tenant for a long enough period of time.

Sealing Fee
A sealing fee is an amount charged by your lender when you repay your mortgage.

Self Certification of Income
Self certification of income means that you confirm how much you earn, and the lender does not need proof of your income from a third party. Self certification is useful for self employed people or contract workers.

Shared Ownership
Shared ownership is a scheme devised by housing associations that requires you to pay mortgage payments on the part of a property that you own while you also make monthly rent payments on the portion of the property owned by the building association.

Solicitors
Solicitors are the people who give legal advice and carry out all the legal work for mortgage and remortgage transactions.Stamp Duty Stamp duty is a tax paid to the government on the purchase of a property.

SVR
The SVR, or standard variable rate, is the lender's own base rate. It is subject to change at any time depending on the lender. The SVR will fluctuate based on the Bank of England Base Rate.

Structural Survey
A structural survey is the thorough inspection of a property carried out by a professional surveyor.

Tenure
Tenure means the type of rights a person has over a property or the land it stands on. Tenure could be freehold or leasehold, for example.

Term
The term of a mortgage is the number of years over which you plan to pay your mortgage off.

Tie-in Period
A tie-in period is an amount of time for which you are bound to a lender. Tie-in periods often exist with special mortgage deals like fixed, capped, or discounted rates. If you move your mortgage to a different lender during this period, you are subject to an early redemption fee.

Title Deeds
A title deed is a legal document that validates the ownership of your property. A title deed proves your true and legal right to your property.

Transfer Deed
A transfer deed is a legal deed used for transferring the ownership of your property to a buyer.

Unencumbered
The term unencumbered means that you own your property outright with no mortgages or loans against it.

Valuation
A property valuation is a survey conducted on a property by a qualified surveyor in order to assess the value of the property. This valuation is done on behalf of your lender so that they are able to confirm the value of your property.

Variable Rate
A variable rate means that your interest rate may change from month to month thereby causing your payments to fluctuate monthly.

Vendor
A vendor is the person from whom you purchase a property.