Cap
A maximum level of interest rate set by the lender for the mortgage with capped rate.
Cap and Collar
A maximum level of interest chargeable during an agreed period is called cap, whereas a minimum level of interest rate chargeable is referred to as collar.
Capital
Often referred to as Equity, represents the sum of money which there interest is calculated on or the sum of money used as a deposit or invested into the property.
Capital and interest (Mortgage)
Often referred to as a repayment mortgage whereby part of the capital (mortgage loan) along with the interest is repaid every month as opposite to the Interest Only Mortgage where only the interest is repaid every month.
Capital Gains Tax (CGT)
Capital Gains Tax is payable on the net gain made on the disposal of certain assets and the realisation of many financial assets, including shares and unit trust. Most disposals relate to the sale of an asset but the full definition of a disposal also includes transferring or giving an asset, or receiving compensation for its loss or destruction.
Capital Improvement
A property improvement, structural or otherwise, resulting in the increase of the property value.
Capital Raising
A process of obtaining further funds through remortgaging (usually involves changing lenders) whereby extra money is borrowed against the current property value.
Capped Rate
A set rate of interest that will not rise (but may fall) during the agreed period, usually first couple of years. Also see Cap and Collar
Cash Back (Mortgages)
A mortgage that offers a sum of money (percentage of the loan) being paid to the borrower at the start of the mortgage to assist, for example, with move in expenses, etc.
Cash Back Remortgage
A remortgage that offers a sum of money (percentage of the loan) being paid to the borrower at the start of the remortgage.
Cash Buyer
A person who has sufficient mortgage-free funds to purchase the property.
CAT Standard
The government proposed standard specifically set to ensure the certain quality of the financial products. A CAT marked product, however, does not necessary meant that it is the best suitable one.
Caution
A record entered on the property register that protects interests of the third party.
CCJ
See County Court Judgement
Centralised Lender
A term generally applied to the mortgage lenders with exception of the high street banks and building societies that tend to operate from their head offices.
Certificate Of Deposit
A document provided by the financial organisation confirming the availability of funds to cover the deposit.
Chain
Circumstances where the person needs to sell the old property and to purchase the new one simultaneously as he relies on the sale proceeds to be used towards his purchase, for example, as a deposit.
Charge
Lenders interest in the property as a result of a mortgage or a loan secured against the property.
Charge certificate
A document issued by the Land Registry confirming the lender?s charge (interest) over the property.
CML (Council Of Mortgage Lenders)
It is the trade association for mortgage lenders that has many useful functions such as establishing working relationship between lenders, government and other interested parties, providing relevant information, statistics etc.
Code Of Practice
A set of rules and procedures that are to be followed by the organisation and its employees to ensure fair, impartial and confidential treatment of customers.
Commercial Mortgage
Represents a higher risk to the lender and, as such, a rate of interest is usually higher that that of a residential mortgage. Could be secured against the commercial property itself or against the residential property of the borrower.
Commission
A term, often referred to as fee, pertaining to the sum of money (usually agreed percentage of the final sale price) payable by the vendors to the estate agents for their services.
Commitments
Another term for liabilities, payments for mortgage or other loan, such as car loan, maintenance or other payments that one is liable to pay.
Common Areas
A piece of land or part of building that enjoys shared access from other users (residents).
Common Law Partner
A person who you live with as a spouse without going through marriage formalities. Not being legally married may have a bearing on your financial situation, for example, rights to each other's pensions, parental responsibility, etc.
Comparative Search
A search, typically undertaken by the surveyor, to ascertain most recent sale prices of similar properties in the same area to give an indication of what the property in question is worth.
Comparison Table
A list of variety of financial products available from the range of lenders, drawn specially to show the most competitive financial products available generally. It is, however, advisable to draw an individual table to ascertain which products suits you best, taken into account your financial and other circumstances.
Completion
A term referring to the final stage in the process of the property sale and/or purchase. This stage follows the Exchange of Contracts stage when the actual date for the transfer of monies and legal rights to the property (completion date) is inserted into the agreement. On the agreed date of completion, the balance of funds (usually purchase price less deposit and any allowances) is transferred to the vendor's solicitors. The buyer becomes a legal owner of the property.
Completion Fee
A set sum of money payable to lender by the borrowers on the day funds transferred to the borrower and/or his solicitors. This fee is often added to the actual mortgage.
Compound Interest
A term referring to interest calculated on the balance of remaining capital and accrued interest.
Compounding
A term that refers to the process of calculating interest on the remaining balance of loan and interest, previously accrued.
Compulsories
Another widely accepted term used for compulsory insurance.
Compulsory Insurance
A type of insurance, often referred to as Conditional Insurance, that lender requires borrower to arrange before lender could release the funds. It usually refers to the policy to cover buildings and contents.
Compulsory Products
Financial products, such as income insurance, that lender requires borrower to arrange as one of the conditions of the mortgage.
Conclusion Of Missives
A term referring to the stage in the property sale-purchase process in Scotland when contracts are exchanged.
Concrete Construction
A type of property that was built from conventional materials, such as bricks or stone by using conventional methods.
Conditions of sale
Binding terms as stated on the property sale agreement pertaining to both purchasers and sellers rights and responsibilities.
Conditional Insurance
A type of insurance policy, often referred to as Compulsory insurance, which must be taken out before the mortgage funds are transferred to borrower.
Contents Insurance
A type of insurance cover to compensate for any damage or loss to the contents of one's property, such as personal belongings, carpets, curtains, furniture, property interior, etc.
Contract
An agreement that binds all the parties to it by its terms and conditions.
Contract race
A term referring to the process of property purchase where two or more prospective buyers make simultaneous offer and start the purchase process (ie searches, arranging mortgage, etc). First buyer who is ready to exchange contracts is the one who is to actually purchase the property.
Contract Work
Work undertaken under fixed-term contract that offers employer greater control over the costs associated with staffing and reduce redundancy liabilities.
Converted Flat
A self-contained apartment that was created by way of dividing larger property and creating two or more separate accommodation.
Conveyancer
A solicitors specialising in properties or licensed conveyancer who is qualified to deal with legal matters associated with property sale and/or purchase.
Conveyancing
A process defined by law of transferring the ownership of the property from one owner to another by way of sale/purchase or other as well as the process of transferring a mortgage to a new lender by way of remortgage.
Conveyancing Fee
A sum of money paid by the seller or buyer to their conveyancing solicitor/licensed conveyancer for their services. The total cost includes the actual legal fee and disbursements such as searches, registration fee, stamp duty.
Co-Ownership
A type of ownership where the person residing in the property belonging to a housing association buys part of that property and rents the other part from the housing association.
Corporate Relocation
A process where a company, in the course of its normal business, needs one or more of its employees to work in another location and assists these employees in moving to that location.
Council Tax
A type of tax collected by the local authority to assist with maintenance costs of local emergency services, waste collection, road surfaces, etc. The amount of tax varies from one area to another and depends on the value of the property and/or area the property is located.
County Court Fee
An amount of money payable to lender for providing a record of payment arrears to the solicitors.
County court judgement (CCJ)
A judgement reached in County Court or higher court in respect of one's debts. Creditor may take a person to court for failing to keep up with repayments. In these circumstances, this person will be issued with County Court Judgement against him and will be required to settle outstanding debt. CCJ is removed upon clearing of outstanding debt and it does not appear on one's credit file if paid within thirty days of the judgement date. The judgement itself, however, is recorded and may affect one's credit score when applying for mortgage and/or other credit. Known in Scotland as a Decree.
Covenant
A type of legal promise to do or not to do something in relation to land and/or property.
Cover
With reference to the insurance policy, circumstances specified insurance policy protects against, for example: theft, flood, fire, etc.
Credit
Release of funds (mortgage, loan, credit card, etc) to the borrower in exchange of his agreement to repay the balance and any accrued interest within the agreed period.
Credit Adverse
A term used to describe a borrower who has county court judgments that are still outstanding or has been declared bankrupt
Credit Check
A process of checking prospective borrower's credit history by the lender that will include checking for any financial liabilities to date, record of payments on his loan or credit card/s, arrears or County Court Judgements if applicable.
Credit Checking Agency
Often referred to as Credit Reference Agency, please see relevant entry.
Credit File
An entry on the Credit Checking Agency file pertaining to one's credit history. Details of the same could be obtained by making a written request.
Credit History
A record of individual's credit applications, payment maintenance, etc held by the Credit Reference Agency.
Credit Rating
A system of assessing prospective borrower's ability to pay his loans based on his credit history.
Credit Reference Agency
An Agency that holds up to date records pertaining to individuals history of credit applied for, payments made, etc. These records are supposed to be frequently updated. Lenders tend to rely on Credit Reference Agency's reports to ascertain their prospective borrowers' so called 'credit worthiness'. Please also see 'Credit Worthy'.
Credit Report
A report used by lenders to assess whether their prospective borrowers are credit worthy. It is undertaken by Credit Reference Agency, an agency that holds individuals' credit history details.
Credit Scoring
A method of evaluating one's credit application. It is calculated by allocating points for each answer on the application form. Missing answers attract negative points, so it is advisable no to leave any blanks.
Credit Worthy
A person who is considered by lenders as being of low risk to lend funds to. Lenders tend to use their own criteria to ascertain prospective borrower's credit score. As there is always some sort of risk involved in lending loans, no one is considered to have a perfect or absolute credit score.
Creditor
A term referring to a person or other who the borrower owes his debt to.
Critical Illness Insurance
A type of insurance policy that is often included into one's life cover and will pay specified sum of money upon official confirmation of specified illness, which is varied from one insurance provider to another. It is often referred to as Critical Illness Cover or CIC.
Current Account
A type of bank account that allows you instant access to the funds held in your account via debit card and/or cheque book. The typical rate of interest on the balance held on one's current account is either zero or quite low.
Current Account Mortgage
A type of mortgage which having the same features as your current account and in combination with a flexible mortgage, gives you an easy option to make overpayments, underpayments and/or take a break from regular mortgage payments.
Customer Specific Illustration (CSI)
An illustration of the general insurance policy pertaining to the borrower's individual circumstances and in combination with Key Features Document forming Key Facts Illustration. Please check information for KFI and KFD.
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