There are many types of mortgages available on the market and it can be confusing to know which one is right for you, so we have outlined the basics below. To seek further advice from one of our qualified mortgage advisers, contact us today.


Repayment mortgages
With this type of mortgage, you repay part of the amount borrowed together with the interest being charged each month.

In the earlier years of your mortgage, the majority of your monthly repayment is made up of interest.

However, towards the latter part of your mortgage term, the situation is reversed and the majority of your monthly payment will deduct from the amount borrowed.

Interest-only mortgages
With this type, you are only paying interest each month. This means that although your payments will be lower, the amount you borrow will still be outstanding at the end of the mortgage term. You will need to have credible arrangements to pay off the mortgage, such as an Individual Savings Account (ISA), to avoid the property having to be sold.

Exclusive mortgage deals
We have access to exclusive deals, some of which are only available to our customers.  Our expert mortgage advisers will be able to let you know what the latest exclusive deals are and whether they fit with your personal circumstances. These deals are not available anywhere else on the high street.

Buy-to-Let
Apart from the purpose of the mortgage, the main difference with a buy-to-let mortgage is that the lender will use the rent you will receive for the property to assess affordability. Some may also take the landlord's personal income into account.

Standard Variable Rates (SVR)
With this type of rate, your payments should rise and fall in line with the Bank of England bank rate changes, but not necessarily at the same time or by the same amount.

Fixed rates
Fixed rates give you the security of knowing that your monthly payments will always be the same. With this type of mortgage, you pay a fixed rate of interest for a set period typically over two, three or five years.

Tracker variable rates
Tracker variable rates are usually linked to the Bank of England bank rate, which means they will change in line with this.

Capped rates
With a capped rate mortgage, you will know the maximum you will pay for a set period of time. This type of mortgage offers you the option of knowing the maximum monthly repayments you would have to make during a set period of, typically, two or three years.

Discount variable rates
Allows you to benefit from a discount on the lender's standard variable rate.  If the lender's standard variable rate (SVR) increases or decreases, so does the discounted rate. Typically, the shorter the discounted period the larger the discount.

Offset mortgages
Typically, a current account, savings account, or both, are linked to your mortgage and, each month, the amount in these accounts is then offset against your outstanding mortgage. You are unlikely to earn interest on your savings which are offset.

Flexible mortgages
You can vary the amount you pay each month and take payment holidays in some circumstances. It may help to reduce your mortgage with lump sum payments without incurring an early repayment charge.

 

Help to Buy - Jargon Buster

 

Affordable Housing

Affordable housing is housing built with a subsidy from the Government, Housing Association or other means. Because of the subsidy, the cost of renting or buying is lower and therefore more affordable for people who could not otherwise afford to rent or buy in the area.
 

Choice Based Lettings (CBL)

The process now commonly used by local authorities, under a variety of different names, to allocate social housing vacancies (council houses or housing association properties) in their area.  When a property becomes vacant it is advertised and potential tenants can bid for the property. Each property is then offered to the bidder in the highest priority band.
 

Completion

This means that the sales process is now finished and that your home is now legally yours. You can collect the keys on this day and you can move in.
 

Contract

The legal, written agreement between the vendor and the purchaser.
 

Conveyancer

A solicitor or a licensed professional who deals with the legal side of buying a property.


Data Protection

The law which protects your personal details held by others either in hard copy or on electronic files.


Deposit

A down payment on a property, usually calculated as a percentage of the value or the share being purchased.
 

Do It Yourself Shared Ownership (DIYSO)

A previous shared ownership scheme which allowed purchasers to choose a property from the open market.  This scheme is not currently offered by providers.
 

Early Repayment Charge

A charge to your lender if you pay back part or all of your mortgage earlier than the agreed term.
 

Equity

The amount of money either put into buying a property, or the deposit placed on a property,  which may increase if the property rises in value. It is also known as capital.
 

Equity Loan

An additional loan to top up your mortgage.  The amount you ultimately have to repay on this loan is linked to the value of your property. As the property's price increases or decreases, so does the amount of your loan. This loan is registered as a second charge against your property so you have to have a mortgage as part of buying a property this way.
 

Exchange of Contracts

The point at which you are legally bound to buy your property although you cannot take possession until you have reached Completion.
 

Extra Care Schemes

Extra Care schemes are usually aimed at people aged 55 or over and can be either for rent, shared ownership or outright purchase.  Care to support residents is provided and the level of care can be increased as people's needs dictate.
 

Financial Advisor (FA)

A qualified professional who can give you advice on mortgages.
 

First Charge

The principal loan or mortgage on the property.
 

FirstBuy

A Government scheme funded in partnership with private developers. This scheme is no longer available.
 

Freeholder

As a Freeholder, you own the property and the land on which it stands.
 

Ground Rent

An annual payment to the Freeholder of the land on which your property is built.
 

Help to Buy - Shared Ownership

You buy a proportion of a property, usually through a Registered Provider, and pay a subsidised rent on the portion that you do not own.   
 

HomeBuy

The umbrella term for all current homeownership schemes, such as Help to Buy - Shared Ownership and Help to Buy - Equity Loan. HomeBuy has now been rebranded as Help to Buy.
 

Homes England

The Government agency which provides funding for affordable housing and regeneration in England.  They also regulate Housing Associations. They were formally known as the Homes & Communities Agency.
Housing Association An independent, not-for-profit organisation which provides affordable homes for rent or shared ownership.
 

Income Multiplier

A formula used by financial advisors and housing associations to work out how much you can borrow with a mortgage.  Most income multipliers for Help to Buy schemes work on 3-4 times your household income after other financial commitments have been taken into consideration.
 

Intermediate Rent

A rent, calculated at 80% of the market rent.
Intermediate Rent Schemes A scheme where you rent a property at an intermediate rent for up to 5 years in preparation for moving onto home ownership.
 

Keyworker

Someone who works in a frontline post which is essential to the community, such as nurses, teachers, police, firefighters.


Land Registry Fee

The fee payable to HM Land Registry to register the ownership of your property.  This is usually paid via your solicitor or conveyancer.
 

Lease

The legal agreement which gives you the right to live in a property for an agreed period of time and under certain conditions (where you are not the freeholder).
 

Leasehold

A leasehold property is one where you buy the right to live in the property for an agreed period of time but you do not own the land the property is built on - this is owned by the Freeholder.


Lender

The organisation lending the mortgage or equity share loan.
 

Lessee

The person to whom a lease is granted ie the tenant.
 

Lessor

The person or company who grants a lease ie the landlord.
 

Loan to Value

The amount of mortgage required in relation to the value of the property.
 

Local Connection

Some schemes, particularly in rural areas, require potential purchasers to have family or other links with the local area to be eligible to purchase.
 

Market Rent

The rent charged by private landlords on the open market.
 

Mortgagee

The lender of a mortgage, such as a Building Society or Bank.
 

NHBC guarantee

A 10-year guarantee on newly built properties, provided by the National House Building Council.  If any serious defects appear within the 10 year period, the builder/developer should put them right.
 

Open Market HomeBuy

A scheme which allowed purchasers to buy a property with the help of an equity share loan, on the open market.  This scheme is not currently offered by providers.
 

Private Developer

A private company which develops and sells properties such as Barratts, Taylor Wimpey,

Persimmon etc.
 

Registered Provider

The term for a Registered Social Landlord.  This includes housing associations and local authorities.
 

Registered Social Landlord

Another term for a Housing Association.
 

Rent to Buy

A scheme which allows you to rent the property first for a period of 3-5 years on an intermediate rent.  At the end of the rental period, you can choose to buy the property under Help to Buy - Shared Ownership or move on.
 

Resales

A re-sale is a shared ownership property that has come back onto the market.
Reverse Staircasing Some RPs may buy back shares in a shared ownership property if the leaseholder experiences problems paying their mortgage or rent.  This is called Reverse Staircasing.
 

Second Charge

Your mortgage is the first charge and takes priority over every other loan (charge) secured against your home. Should you wish to take out another loan and secure it against your property, you will need the permission of your mortgage lender before you are able to do this. Once permission is given by the mortgage lender, the loan will become known as the second charge.  Should the bank that lent the money for your second charge wish to repossess you for the repayment of the loan, they will not receive any money until the mortgage (the first charge) has been repaid.
 

Service Charges

The money leaseholders may pay for services such as grounds maintenance, lighting, maintenance of common parts of a building and possibly the buildings insurance premium.  Your lease will specify.
 

Social Rent

A subsidised rent, usually provided by a Local Authority or Registered Provider.
 

Staircasing

Where you buy more of a share of your property or pay back part of your equity loan.
 

Stamp Duty

When you buy a property you may have to pay a tax to the government.  This is called Stamp Duty.
 

Survey

A surveyor's report on the condition of your property.  There are different types of survey, some more detailed than others.   A survey usually includes a Valuation.
 

Title Deeds

The legal documents which establish who owns a property and on what terms.  The title to the property is registered with HM Land Registry.
 

Valuation

As part of negotiating a mortgage, the lender will require the property to be inspected and valued (usually by a qualified surveyor).  The purchaser normally has to pay for this valuation. It may form part of the Survey of the property.


Vendor

The person selling a property.

THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR
PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY.

 

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP
REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT

 

CALLS ARE RECORDED FOR TRAINING AND MONITORING PURPOSES

Legal Information

.The Money Bee, which is a trading style of Promise Solutions Ltd and is authorised and regulated by the Financial Conduct Authority– Number 681423. Registered in England, company number 04822774. Data Protection Reference Z8661889
Registered Office: 2nd Floor, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG.

Terms and Conditions

There may be circumstances where we need to charge a fee.  In these instances, we will notify you at an early stage which could be £125.00 upon application and an arrangement fee up to 1% of the advance subject to a maximum of £2500.00, on receipt of the mortgage offer.

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2nd Floor, Fullard House, Neachells Lane, Wolverhampton, WV11 3QG.

2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:

 

Mortgages and Remortgages

Representative example

£80,000 over 240 months at an APRC OF 4.3% and a discounted variable annual interest rate for two years of 2.12% at £408.99 per month followed by 36 payments of £475.59 and 180 payments of £509.44. The total charge for credit is £39,873 which includes a £995 broker/processing fee and £125 application fee. Total repayable £119,873.

 

Secured / Second Charge Loans

Representative example

£63,000 over 228 months at an APRC OF 6.1% and an annual interest rate of 5.39% (Fixed for five years – variable thereafter) would be £463.09 per month, the total charge for credit is £42,584.52 which includes a £2,690 broker/processing fee. Total repayable £105,584.52.

 

Unsecured Loans

Representative example

£4,000 over 36 months at an APR OF 49.9% (fixed) and an annual interest rate of 49.9% would be £216.21, total charge for credit is £3,783.56. Total repayable £7,783.56.