Last Updated: 23rd November 2024
Navigating the mortgage world can feel overwhelming, especially when unfamiliar terms start cropping up. At AIMS-NI, we’re here to simplify the process and guide you every step of the way. Our Mortgage Jargon Buster breaks down the key terms you’ll encounter, helping you make informed decisions with confidence.
An Agreement in Principle is an initial indication from a lender about how much they are willing to lend you. Sometimes called a Decision in Principle or Mortgage in Principle, it’s an essential early step to understanding your borrowing potential and shows sellers that you’re serious.
The APRC combines the interest rate and any associated fees into a single percentage. This standardised measure makes it easier to compare mortgage offers across lenders, helping you identify the best overall deal.
Falling behind on your mortgage payments puts you in arrears, which can have serious consequences if not addressed promptly. If you’re struggling with payments, contact your lender or advisor immediately for support.
The Base Rate, set by the Bank of England, is the benchmark for many mortgage rates. Tracker and standard variable rate mortgages typically move in line with changes to this rate.
These mortgages are tailored for those buying properties to rent out. Buy-to-let mortgages often have higher deposit requirements and different affordability criteria than standard residential mortgages.
This is the legal process of transferring property ownership. Your conveyancer handles key tasks such as reviewing contracts, managing stamp duty payments, and registering your ownership with the Land Registry.
Lenders perform a credit check to assess your financial reliability. It’s essential to keep your credit history healthy, as multiple hard checks in a short time can lower your credit score.
When buying a property, you’ll need a deposit, which typically ranges from 5% to 20% of the property’s value. This upfront payment demonstrates your commitment to the purchase.
If you pay off your mortgage earlier than planned, you may face an ERC. This penalty is most common with fixed-rate mortgages, so it’s important to check your terms before making early repayments.
Your equity is the difference between your property’s current market value and the remaining balance on your mortgage. Building equity can provide options for remortgaging or releasing funds in the future.
Some mortgages come with a fee-saver option, which eliminates the product fee but may come with a slightly higher interest rate. It’s worth comparing both types to see which is better for your circumstances.
A fixed-rate mortgage locks in your interest rate for an agreed period, typically 2–5 years. This provides predictable monthly payments, making budgeting easier.
Flexible mortgages allow you to adjust payments to suit your needs. Options might include overpayments, underpayments, payment holidays, or borrowing back funds you’ve overpaid.
A guarantor is someone, often a parent or guardian, who agrees to cover your mortgage payments if you cannot. This can be especially useful for first-time buyers with limited credit history.
With an interest-only mortgage, you only pay the interest on the loan each month. The full balance is due at the end of the term, so it’s crucial to have a repayment plan in place.
The LTV ratio compares your mortgage amount to your property’s value. For example, borrowing £80,000 for a £100,000 property gives an LTV of 80%. Lower LTVs often attract better interest rates.
This is the fixed amount you pay each month towards your mortgage. It includes both the repayment of the loan balance and interest charges.
Before applying for a mortgage, your lender will provide a Mortgage Illustration detailing key information like fees, interest rates, and total costs, so you know exactly what to expect.
Making an overpayment means paying more than your monthly repayment. This can reduce the total interest paid and shorten your mortgage term. However, check for any fees before overpaying.
A payment holiday allows you to temporarily pause your repayments, often offered with flexible mortgages. Note that interest continues to accrue during this time.
Porting allows you to transfer your existing mortgage to a new property, keeping the same lender and terms. This is a useful option if you’re moving home.
The product fee is the upfront charge for setting up a mortgage. These fees vary between lenders, so it’s worth factoring them into your cost comparisons.
To remortgage is to replace your existing mortgage with a new one, either with the same lender or a different one. This can help you secure a better rate or release equity from your property.
An SVR is the default rate your lender charges after any introductory or fixed-rate period ends. SVRs tend to be higher, so many homeowners choose to remortgage before reaching this stage.
A tracker rate mortgage follows the Bank of England’s base rate, meaning your monthly payments can fluctuate depending on rate changes.
Lenders will carry out a valuation to ensure your property’s value aligns with the requested mortgage amount. For a deeper insight into a property’s condition, consider arranging a private survey.
At AIMS-NI, we are committed to making your mortgage journey as smooth and stress-free as possible. Here’s why so many people across Northern Ireland choose us:
With AIMS-NI, you’re not just getting a mortgage broker; you’re gaining a trusted partner to support you through one of life’s biggest financial decisions.
Understanding mortgages doesn’t have to be complicated. Whether you’re starting your journey or need help with the next steps, our experienced advisors are ready to help you navigate the process. Get in touch with us today for a friendly, no-obligation chat and discover how we can help you secure the perfect solution for your needs.
At AIMS-NI, we’re committed to taking the stress out of the mortgage process and finding the right options for you. Let’s make it happen together!
Disclaimer
A MORTGAGE IS A LOAN SECURED AGAINST YOUR PROPERTY. YOUR PROPERTY MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
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