Mortgage Terminology F-L

There is a wide range of standard and industry jargon underpinning the mortgage and house buying process. The purpose of this series of articles is to try and provide an understanding of what it all  means.

So what follows will be an A-Z, or glossary of terms.
This will be spread across several posts for ease of access
This first section goes from F-L


Failed Valuation Survey
Here the lender declines to lend on the property after seeing the surveyor's valuation report.

Fixed Rate Mortgage
This is a mortgage which has a 'fixed' rate of interest for a set period of time normally between 1-5 years.

Fixtures and Fittings
Any items not included or included in the sale of the property. For instance curtains, carpets, wall lights, cooker etc. These are generally agreed on a document sent by the sellers solicitor to the seller to complete, this document is then passed over to the buyers solicitor for the buyer to read.

Flexible Mortgage
These are mortgages  with flexible payment options. Such an example of this are mortgages that allow over payments so the loan can be paid off early.

Flying Freehold
A flying freehold is formed when part of a freehold property overlaps onto a different freehold property or land.

Freehold
This is when the property owner has complete ownership of a piece of land and the property that resides on it.

Full Status
This describes a borrower who has a good credit history and who is not self-certifying his income.

Gas Safety Regulations
A landlord must ensure that a gas safety check is carried out prior to letting out any property.  This is an annual requirement and a copy of the record must be given to the tenant. This check must be carried out by an authorised CORGI register engineer.

Gazumping
Here a vendor accepts an offer from one person only to later reject it in favour of a higher offer they receive from someone else.

Gazundering
The term used when a buyer reduces his offer moment before exchange.

Gifted Deposit
This means that someone has gifted the buyer the deposit on a property. Examples include developers on new build properties. In essence it is an incentive to encourage buyers to purchase the property.

Ground Rent
Applicable to leasehold properties it is a sum paid annually to the Freeholder of the property, by the leaseholder. There may be additional service charges over and above this fee.

Guarantor
This is a person who agrees to guarantee that they will repay a loan or debt should the borrower default on the payments. Such an example may be where the parent guarantees the mortgage will be paid on their son/daughter’s first property purchase.

High Rent Tenancy
This indicates a tenancy agreement when the annual rent on a property is over £25,000 and is known as a contractual tenancy.

HMOHouse in Multiple Occupation 
Bedsits come under this category. They are the subject to more rules and regulations than the average property

Home Information Pack
This is also known as a seller pack and have been legally required on all properties that are sold in on the open market since Dec 14th 2007. You have to have one as you cannot sell most properties without one so whether you question their value as most do or not its best to get one in plenty of time.

Independent Financial Advisor
A finance professional who has undergone specific training and has obtained specific qualifications to give financial advice. Without being tied to only recommending the products of any particular lender.

Improvement Grant
This is a grant given by the local authority towards the repair or the improvement of a property.

Income Multiples
These are the criteria used by the lender to assess how much funding the borrower’s income can support. It is worked out based on of multiples taking into account, both single and joint incomes. The main ones used to 3x main income plus one times a secondary income. The second standard was 2.5 times joint incomes. In more recent years multiples of 5 or even 6 times a salary have been available.

Indemnity Guarantee Premium/Mortgage Indemnity Guarantee Premium
An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value. Also known as MIG and Mortgage Indemnity Premium.

Individual Savings Account (ISA)
They are a way for people to save cash or shares without paying tax. They are also seen as a savings vehicle associated with interest only mortgages so you can repay the loan amount at the end of the term.

Inheritance Tax
Also known as Death Duties it is a tax on everything contained on the deceased estate after death.

Instruction
This is when the vendor gives an estate agent or auctioneer the right to sell their  property. The resulting agreement confirms the terms under which the  the estate agent or auctioneer can act

Interest only Mortgages
This mortgage method uses a split payment system to pay up the mortgage. Mortgage payments consist of two elements. The money borrowed,  or the capital element plus the interest charged on it. Interest only loans  pay back only the interest element to the lender. Not the capital originally borrowed. For this reason Interest only mortgages are often tied in with some other type of investment vehicle which is set up to cover the initial loan amount at the end of the mortgage term. This investment vehicles include things like, ISA,s endowment policies and personal pensions.

Intestate
In the event of a death where no will has been made out. The deceased estate will be placed on hold until all legalities have been cleared.

Introducer Fee
Common business practice where lenders pay commissions for new business referred via an introducer. Insurance companies solicitors etc.

Inventory
This is a listing of the contents of any given property. Will include a list of contents and conditions

Joint Tenants
This is when two or more people are co-owners of a property. When one dies, their share of the property automatically passes to the other/others.

Land Certificate
Issued by the land registry. This is a certificate that proves ownership of land.

Land Registry
This is a government department where details of the ownership of properties and any charges against these properties are held.

Landlord
A landlord can be a person, group of people, company or some sort of body that has a formal interest in a property and has the right to let that property out to tenants.

Lease
Document in which the owner of a freehold property lets out their premises to a named party at a certain price and for a specified time.

Leasehold
This when a leaseholder is granted the right to use land/property for a fixed period of time. This ownership is subject to the annual payment of ground rent to the owner of the freeholder.

Lender
A company or person who lends you money for an agreed time period. Interest is generally charged.

Lessor
This is the person etc. that grants a lease.

Let to Buy Mortgage (LTB)
This is a mortgage that allows a borrower to borrow money to buy a new property while their current property is let out to tenants. The maximum amount of borrowing will generally be calculated without taking the buyers existing mortgage into consideration, as long as the rent covers the mortgage on the current property.

Libor-Linked mortgage
Basically a variable rate mortgage that is linked to the London Inter-Bank Offered Rate. Normally set at a certain percentage above the Libor rate within a given period of time. The Libor rate is often associated with lenders that offer Loans to borrowers with some sort of adverse credit history.

Life Assurance
An insurance policy which pays out a fixed lump sum on death of an individual.

Life Policy
This is a policy/insurance that repays the mortgage in the event of the insured person’s death. (This can also be known as Term Assurance).

Loan-to-Value
A percentage expressing the size of mortgage against the value of house. For example, if a House Value is £100,000, with a Mortgage Size of £75,000, the loan-to-value = 75 %.

Local Authority Search
A search carried out by the Solicitor to find out if there are any Local Authority Notices, This is to find out if the building and the surrounding areas are subject to any local authority notifications. Things such as industrial/motorway developments. Building condition etc.

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