Monthly Archives: May 2018

The Facts About the Mortgage Market in Canada

The facts about the mortgage market in Canada is that in the last forty years, it has undergone substantial changes. Depository institutions account for the majority of the market holding 69 percent of outstanding Canadian residential mortgage debt by the end of-2007. By the end of 2008, CAD 566 billion or 62 percent of the CAD 906 billion outstanding residential mortgage debt in Canada was held by depository institutions. The main reason for the growth in the bank share was due to the 1992 Bank Act changes, which permitted banks to own trust and loan companies that had been dominant players in the market. Prior to 1954, banks were not permitted to make mortgage loans. However gradually from the 1954 Bank Act amendments and thereafter, laws allowed banks an expanding share in the market over time. Yet, until 1992 conventional mortgages value could only be below 10 percent of bank deposits. Mortgage brokers have played a growing role in the market.

A mortgage consumer survey conducted by the Canada Mortgage and Housing Corporation in 2009 revealed that between June of 2008 and June of 2009, a quarter of all mortgage transactions were arranged through mortgage brokers. According to statistics, over 50 percent of the homebuyers accept the first rate their bank offers. This means that the majority are not using a mortgage broker who shops around for the best rate for its client. However, among first-time buyers and young women, a rising number are turning to mortgage brokers. In the last decade, mortgage brokers have seen a surge in business. Ten years ago, they comprised under 10 percent of the mortgage market; today, they comprise 25 percent of the share. Brokers bring personalized service and they can be used to get banks to offer more favourable terms.

There are several reasons for using an accredited independent mortgage broker. They educates you on your options. You get independent, unbiased advice. Unlike a bank employee, that is tied to a bank, an independent mortgage broker offers unbiased advice. As a freelancer, will not favour one lender over another based on anything other than rates. They will negotiate rates with lenders on your behalf and all their services are for free. Provincial laws require education, training and licensing standards for qualified brokers. A competent mortgage broker is licensed and in good standing with the provincial regulator.

The main difference between a mortgage agent and a mortgage broker is that to be a mortgage broker requires at least two years of working experience. The mortgage broker must pass an approved mortgage course. Mortgage agents must be supervised by a mortgage broker. Brokers work for a mortgage brokerage or on their own and bring together prospective borrowers and lenders. They do not administer the mortgage. After the client fills an application using the information contained therein, the brokerage scouts the market for the best mortgage. The mortgage request of the client is tendered through an electronic system to lenders.

A mortgage agent is an individual who carries out mortgage activities for a mortgage brokerage under the supervision of a licensed mortgage broker. The agent can only work for one mortgage brokerage. Under the Mortgage Brokerages, Lenders and Administrators Act you have to be licensed to deal in mortgages to be licensed, unless an exemption is applicable. To be licensed, a mortgage agent has to meet educational requirements. To meet these requirements, approved education courses must be taken. Application for a licence must be within two years of successfully completing the approved education courses. These courses are provided commercially, and tuition fees are set by the provider. The courses use the same curriculum, but different providers may use different formats. All approved courses are followed by a final examination.

The first step for obtaining a mortgage brokerage licence requires passing the mortgage agent education program. Then a mortgage agent licence should be obtained. The mortgage brokerage education course must be completed successfully. Thereafter application can be made for a mortgage broker licence. In the course of this process, the prospective broker should have worked as an agent for a year and worked under a broker.

Brokers and agents do your research and shop around for the best solution. Financing your home through a mortgage brokerage rather than a lending institution can save you both time and money. They work on behalf of their client to find the most suitable product at the best rate. Brokers provide access to virtually every mortgage product available. Consumers expect their own bank will give them the best rate and product. But, the bank does not have access to all the lenders and products available. The bank offers a limited number of mortgages. But, the brokers provide access to over 400 mortgage products on the market. Each of these products have their own distinctive features. They also have access to the new products launching frequently in this dynamic industry. Access to unique products also may only be offered through the mortgage broker.

Renewing and Renegotiating

When you bought your property, you almost certainly signed a mortgage agreement that continues to be in consequence for a specific period, referred to as term. Whenever your mortgage name comes to an end, you need to either pay off your mortgage loan or renew it for the next term. This is a good opportunity in order to reassess what you require in a home loan and to find mortgage choices that greater fit the needs you have today. You might also think concerning breaking a person’s mortgage contract before the concept of an ends, possibly because your own financial predicament has evolved or to use advantage of changes inside the interest prices that are offered from mortgage lenders. This is named renegotiating a person’s mortgage. Knowing what questions to ask can aid the very best mortgage available for you.

If ones mortgage understanding is that has a federally governed financial establishment such being a bank, the lender must supply you with a renewal declaration at very least 21 days before the finish of the existing term. This specific statement have to contain identical type of data that is in your current mortgage arrangement, such as the interest rate, payment regularity, term, along with effective particular date. It might be combined which includes a mortgage repair agreement. In case your lender establishes not to resume your home loan, they will have to notify a person at smallest 21 a short time before the conclusion of a person’s term.

Around four months before the conclusion of the mortgage period, you ought to contact a variety of lenders along with mortgage brokerages to get a new mortgage with the terms and conditions that are perfect for your wants. When that you are negotiating an interest rate, ask your current lender when they can offer you better conditions and terms than with your previous house loan term. Bring an effective approach to finding the mortgage in which best satisfies your wants. Remember that will for most people, the mortgage payment is one of the greatest chunks of their total household budget. Shopping around and discussing with your overall lender can save you money. Alternatively, if people don’t take charge of the practice, your mortgage loan might automatically be renewed for an additional pair term. Which means you may well not get the most beneficial interest costs and problems that you may.

You do not have to renew your mortgage with the exact same lender. You possibly can choose to transfer your home finance loan to a further lender whether or not this offers people terms and conditions that satisfy your desires better. Whenever you refinance your current mortgage with an all new mortgage bank, the fresh lender is going to process your mortgage app as when you are applying for any new mortgage loan. If you chose to switch your mortgage to a different lender, be sure you verify the expenses of switching lenders, like legal charges to sign up the new mortgage, costs to launch the preceding mortgage as well as other administration fees. You can ask if your new mortgage company will pay these expenses. You also have to meet with your lawyer (notary inside Quebec) so that you can sign a mortgage contract and determine your identity.

A large financial company is someone or company that provides mortgage goods of several different lenders. If you want to deal having a mortgage broker, it is critical to observe that the dealer may not automatically check whether your lender typically offer you an improved deal. To make certain that you receive the greatest offer through your current mortgage lender, contact the provider directly. It is your responsibility to check the new offers with the offer through the current loan provider. If you’ve questions with regards to mortgage brokerages, contact your current provincial govt, which oversees them.

While having mortgage term, if you find that your existing mortgage don’t meets your family needs or rates of interest go all the way down, you may choose to renegotiate ones mortgage arrangement? in other words, change the stipulations of your current mortgage. Prior to do, you need to determine whether renegotiating your mortgage is worth the potential costs, or maybe if solutions may superior meet your preferences.

Different brokers offer distinct terms and types of conditions. If you have a closed mortgage, your loan provider may or perhaps may never allow that you break your own mortgage contract. Read a person’s mortgage deal or contact your mortgage mortgage lender to discover. If the lender does allow you to break your mortgage settlement, they may well charge you a penalty and a few fees. Ones financial institution or the revolutionary lender may be willing to help waive and also pay portion or all of these fees if you ask them to achieve this.

If you spend a punishment to break your home finance loan agreement, ones mortgage deal will express how a penalty is actually calculated. It can be generally related to your house loan interest rate and could cost thousands regarding dollars. To uncover how much your charge will often be, read ones mortgage deal or contact your mortgage loan company. Keep at heart that this penalty can modify from every day because it really is based in current marketplace interest charges, the excellent balance eventually left on ones mortgage, as well as amount of their time left about the mortgage expression. However, the particular estimated amount that ones lender will give you should be close to this penalty.You will be able to reduce the number of penalty charges you have to cover by making a lump value prepayment just before renegotiating. Quite a few mortgage arrangements offer prepayment options without the need of penalty. If you’re able to do so, you may want to prepay part of your mortgage before you decide to renegotiate the item. Your penalty would in that case be computed on small balance remaining to pay.

Mortgage Alternative in Today’s Economy

Today’s economy is very different from the economic state of our country five years ago, and with drastic changes in the real estate market as well, choosing the right mortgage is a crucial decision. There are numerous mortgage options available for prospective buyers at the current time; however, figuring out the pros and cons of each mortgage alternative can be a little overwhelming. In an attempt to simplify the process of choosing a mortgage, this article will explain some of the benefits and drawbacks associated with the 5 year ARM, 15 year fixed mortgage, and the 203 FHA mortgage.

Adjustable rate mortgages (ARM’s) are quite popular for buyers looking to purchase a home, without breaking their bank account. An adjustable rate mortgage basically means that the borrower is obtaining a loan with an interest rate that is initially lower than the average interest rate offered in fixed rate mortgages. Where this type of mortgage gets a little risky, is in relation to the future of the loan. This type of loan can be a bit of a risk, in that as interest rates increase, so can the monthly mortgage. Adjustable rate mortgages are really a better option when interest rates are predicted to decrease in the future, not increase. Also, lenders can offer interested home buyers an initial interest rate discount to choose ARM’s. It is important for the borrower to do their homework to ensure that they will be paying enough of a mortgage to cover the monthly interest due. If the initial mortgage is too small, borrowers can end up causing their mortgage balance to increase, since their additional interest is accruing during this time period.

Though some of the drawbacks sound a little scary, there are benefits of ARM’s. The benefits of obtaining an adjustable rate mortgage all center around the lower initial mortgage while the interest rate remains stable. This can often times help a borrower qualify for a higher loan than they would be able to obtain with a fixed rate mortgage. Borrowers also choose ARM’s with the sole purpose of paying off other bills, such as credit cards debts, during the period of time prior to the interest rate changing. This can be a great way to get debts paid, as long as the borrower does not incur more debt during this time.

Though borrowers have numerous options when choosing adjustable rate mortgages, the 5 year ARM is often one of the wisest options. The 5 year ARM is a good balance between the 1 year ARM and the fixed rate mortgage. 5 year ARM’s are beneficial because the interest rate only changes every 5 years. After this time, the interest rate is recalculated and the mortgage is adjusted accordingly. Keep in mind that the interest rates are regulated by the federal government and there are limits as to how much an interest rate can increase in a given period of time. Also, borrowers always have the option to consider refinancing their mortgage after the initial ARM period is completed, should they decide the change in interest rate is too high.

This brings up to the topic of fixed rate mortgages. Fixed rate mortgages are popular because of the stability of the interest rate. There is no risk involved in a fixed rate mortgage, as the borrower understands that their interest rate will remain the same during the duration of their loan. This means that the borrower will have a fairly consistent mortgage, and will only see changes if they have their home insurance or taxes escrowed into the monthly payment. Changes in the cost of home insurance and home taxes will cause changes in the monthly mortgage amount for these individuals. Fixed rate mortgages are much more popular when interest rates are currently already low. One of the main drawbacks with fixed rate mortgages, however, is that borrowers cannot benefit from decreases in interest rates without refinancing, and this can be costly.

Of course, like other loan options, there are numerous types of fixed rate mortgages. Though the 30 year and 15 year mortgages are the most popular, there are 25 year and 20 year mortgages as well. Often times it can be difficult to decide the length of the loan that is best for you. Usually, interest rates on 15 year mortgages are slightly lower than with 30 year mortgages, which can really add up to a lot of money when an additional 15 years of monthly payments are added into the picture. 15 year fixed rate mortgages can also be beneficial for individuals looking to build equity in their home at a rapid rate. Also, many borrowers choose 15 year mortgages because they want to have their home paid for, before they retire from their employment. Of course, the obvious benefit is the financial freedom that comes with paying one’s home off faster, which is an important factor when choosing a 15 year mortgage over a 30 year mortgage.

Just as obvious, however, is the main drawback of a 15 year mortgage. Though the mortgage gets paid off faster, the monthly payment is a great deal more. This can cause strain on the monthly budget and leave less room for recreational spending.

When making a decision about a 15 year mortgage versus a 30 mortgage, an example is often beneficial. If a borrower plans to have a mortgage of $200,000, and using a 5% interest rate for both 15 and 30 years, the interest paid more than doubles as the life of the loan increases from 15 to 30 years. Instead of paying approximately $84,000 in interest, with a 15 year mortgage, borrowers pay approximately $186,000, with a 30 year mortgage. Also, keep in mind that we used the same interest rate for both loans in this example, and as mentioned previously, interest rates are generally lower for 15 year mortgages. It really comes down to whether or not the borrower is willing to sacrifice now, in order to benefit later in life, and delayed gratification is not something everyone enjoys.

Another mortgage option that is increasingly more popular is the 203 FHA mortgage, and it is unique, in and of itself. The 203 FHA loan is special in that it can be obtained as a fixed or adjustable rate mortgage. The key point here, is whether or not the borrower qualifies for this mortgage. The borrower needs to have reasonable credit and stable employment in order to qualify for an FHA loan. Normally, the employment has to have been stable for at least two years, and the borrower’s credit score must be a minimum of 620. But please do not become discouraged if your credit is less than perfect. Borrowers can qualify for FHA loans even if they have had a past bankruptcy or foreclosure, though there has to have been a sufficient length of time between these incidents and the new loan approval.

Of course, like other types of loans, there are multiple types of 203 FHA loans as well. There is the 203b loan, which is a fixed rate mortgage. Generally the borrower must be able to put down a minimum of 3.5% of the home cost in order to qualify for the loan. One good thing is that closing costs can often times be added into the mortgage, alleviating the borrower from having to come up with additional monies for closing. Also with FHA loans the interest rate may be slightly higher than with conventional loans, yet like conventional loans, borrowers can choose to set up their mortgage to be paid back in time spans from 15 to 30 years.

The 203k FHA loan is different from the 203b loan in a couple of major ways. First of all, a borrower can choose an adjustable or fixed rate mortgage with the 203k loan. More importantly, is the option for the borrower to obtain additional loan monies to fix broken things within the home. Because the Federal Housing Administrations (FHA) has such a strong commitment to the revitalization of various communities throughout the country, it allows borrowers to obtain money to make needed repairs in the home. This is extremely rare in that other loans often require the home owner to take out a second mortgage to make repairs. The 203k loan actually lends the borrower money based on the price of the home after the needed repairs have been made, making it a truly unique loan.

In searching for a 203 FHA loan, borrowers will also see the 203c FHA loan, which is for borrowers looking to purchase a condo, and the 203h FHA loan for individuals who have lost their home due to a natural disaster. Individuals looking to qualify for the 203h FHA loan need to make sure that the area in which their home was destroyed was designated a disaster area by the President. This loan is special in that it can be used to rebuild the home involved in the natural disaster, or to purchase a new home.

Glossary of Mortgage Terms

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, 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 Draft

A banker 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 adviser before taking out a bridging loan to be sure it is the best option for you.

Broker Fee

A broker 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.

Deposit

A 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.

Equity

Equity 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 Scheme

A 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 Report

A home buyer 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.

Leasehold

Unlike freehold in which a property is owned, leasehold is when a property is owned, but the land that it is 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.

Mortgage

A 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.

Remortgage

A 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 are 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 have 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 base rate of the lender. 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.