Homeowner Loans Jargon Buster in Northern Ireland
Last Updated: 14th October 2024
At AIMS-NI, we believe that understanding the terminology used in the mortgage and loan industry is crucial for making informed financial decisions. As Northern Ireland’s leading mortgage and home-owner loan advisory service, we want to empower you with knowledge. Below is a comprehensive glossary of commonly used terms in the homeowner loan sector, providing clarity on concepts that may seem overwhelming at first.
APRC is the total annual cost of a homeowner loan, unsecured loan, or mortgage, expressed as a percentage. This figure incorporates all associated fees, interest rates, and other costs, allowing you to compare the overall cost of loans from different lenders effectively.
Arrears refer to the situation where you have fallen behind on your loan payments as per the agreed terms. If you’re unable to make regular payments, your account may go into arrears, which can have serious implications for your credit score.
The base rate is the minimum interest rate set by the Bank of England that banks and building societies use when lending to one another. If you have a variable interest rate loan, your repayments may increase if the base rate rises, affecting your monthly budget.
A loan broker, like AIMS-NI, acts as an intermediary between you and potential lenders. Our role is to provide expert financial advice and to help you find the most suitable loan tailored to your unique needs and circumstances.
Collateral refers to an asset that a lender uses to secure a loan. In the context of homeowner loans, your property can serve as collateral, meaning that if you default on your loan, the lender may take ownership of your home.
A credit check is a process through which lenders assess your credit history and financial behaviour. This includes your credit score, which is a three-digit number reflecting your creditworthiness, and your current debt obligations. A positive credit history can significantly improve your chances of loan approval.
Debt consolidation is the process of combining multiple debts into a single loan, simplifying repayments. This approach can often lead to lower monthly payments and can be an effective strategy for managing your finances more efficiently.
An early repayment fee (or early repayment charge) may be imposed if you pay off your loan earlier than agreed or exceed specified repayment limits. This fee can also apply if you wish to switch lenders to secure a better interest rate.
Equity represents the portion of your property that you own outright. To calculate your equity, subtract any outstanding mortgage balance from the current market value of your home. Building equity can provide you with more borrowing options in the future.
A fixed rate interest means that your interest rate remains constant for a specified period or throughout the loan term. This can provide financial stability, allowing you to plan your budget without worrying about fluctuating interest rates.
A guarantor loan is a type of unsecured loan where a third party agrees to repay the loan if you cannot. This can be an excellent option for individuals with little to no credit history or those who have a poor credit score.
A homeowner loan is a secured loan where your property serves as collateral. The amount you can borrow typically depends on the equity you have in your home, making it a viable option for homeowners seeking to access additional funds.
Some loans offer a loan payment holiday, allowing you to skip a payment during an agreed period without penalty. This can provide financial relief during challenging times.
A mortgage is a specific type of secured loan designed to finance the purchase of a property. Typically, mortgages last around 25 years, and the property serves as collateral until the loan is fully repaid. Failing to make payments may result in the lender reclaiming ownership of the property.
A personal loan allows you to borrow a fixed amount, which is repaid in monthly instalments. These loans can be secured against assets or offered unsecured, generally catering to individuals seeking flexibility in borrowing.
Remortgaging involves transferring your existing mortgage to a different lender, often to secure a better interest rate or more favourable terms. You may also choose to remortgage with your current lender if they provide a competitive offer.
The standard variable rate (SVR) is the default interest rate set by your lender. This rate typically applies once any introductory offers have expired, so it’s essential to understand how it might impact your future payments.
Also known as a homeowner loan or second charge mortgage, a secured loan uses your property as collateral. These loans can be particularly beneficial for individuals with poor credit or those needing to borrow substantial amounts.
Navigating the world of homeowner loans can be complex, but AIMS-NI is here to simplify the process for you. Whether you’re a first-time borrower or looking to remortgage, our experienced advisors are dedicated to finding the perfect loan solution tailored to your unique circumstances.
Contact us today for a no-obligation chat, and let’s start your journey toward financial empowerment.
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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