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UK Mortgage Terminology
This article gives descriptions of mortgage terminology in the United Kingdom. Introduction The UK mortgage market is one of the most innovative and competitive in the world. Most borrowing is funded by either mutual organisations (building societies and credit unions) or proprietary lenders (typically banks). For a number of years the market operated with minimal state intervention, although this changed at least temporarily following the 2008 nationalisation of Northern Rock, which at the time was one of the country's largest mortgage banks. Since 1982, when the market was substantially deregulated, there has been substantial innovation and diversification of strategies employed by lenders to attract borrowers. This has led to a wide range of mortgage types. Mortgage types Ways to repay the capital * Repayment mortgage – in principle, and other things being equal, a flat amount is paid to the lender each month, which covers the interest due for that month on the outstan ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Building Societies
A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking and related financial services, especially savings and mortgage lending. Building societies exist in the United Kingdom, Australia and New Zealand, and used to exist in Ireland and several Commonwealth countries. They are similar to credit unions in organisation, though few enforce a common bond. However, rather than promoting thrift and offering unsecured and business loans, the purpose of a building society is to provide home mortgages to members. Borrowers and depositors are society members, setting policy and appointing directors on a one-member, one-vote basis. Building societies often provide other retail banking services, such as current accounts, credit cards and personal loans. The term "building society" first arose in the 19th century in Great Britain from cooperative savings groups. In the United Kingdom, building societies actively compete ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Flexible Mortgage
The term flexible mortgage refers to a residential mortgage loan that offers ''flexibility'' in the requirements to make monthly repayments. The flexible mortgage first appeared in Australia in the early 1990s (hence the US term Australian mortgage), however it did not gain popularity until the late 1990s. This technique gained popularity in the US and UK recently due to the United States housing bubble. The term mortgage acceleration is also used, as the mortgage loan can be paid off faster than standard mortgages if the borrower is in a position to do so. With traditional mortgages, borrowers often face large penalties for additional capital repayments or if payments were not made on time. A specific type of flexible mortgage common in Australia and the United Kingdom is an offset mortgage. The key feature of an offset mortgage is the ability to reduce the interest charged by ''offsetting'' a credit balance against the mortgage debt, with interest charged based on the outstanding ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mortgage Industry Of The United Kingdom
The mortgage industry of the United Kingdom has traditionally been dominated by building societies, the first of which opened in Birmingham in 1775. But since the 1970s, the share of new mortgage loans market held by building societies has declined substantially. Between 1977 and 1987, the share fell drastically from 96% to 66%, and that of banks and other institutions rose from 3% to 36%. The major lenders include building societies, banks, specialized mortgage corporations, insurance companies and pension funds. During the four years after the financial crisis of 2008, the UK mutual sector provided approximately 80% of net lending to the housing market. There are currently over 200 significant separate financial organizations supplying mortgage loans to house buyers in Britain, with Lloyds Bank and the Nationwide Building Society having the largest market share. Mortgage lenders Over the years, the share of the new mortgage loans market held by building societies has declined. Be ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Remortgage
A remortgage (known as refinancing in the United States) is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. The term is mainly used commercially in the United Kingdom, though what it describes is not unique to any one country. Often the purpose of ''switching'' is to secure a more favorable interest rate from a different lender. The process of remortgaging does not usually involve moving house or taking out a second mortgage on the property; it is in effect the transfer of a mortgage from one lender to another. Homeowners may choose to remortgage for various reasons, usually to reduce the overall monthly mortgage payment amounts. However, other reasons may include to reduce the size of repayments, to pay off a mortgage earlier, to raise capital, or to consolidate other more expensive short term debts. Home buyers often misuse the expression remortgage when they are simply switching from one product to another with the ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Mortgage Loan
A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is " secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property ("foreclosure" or " repossession") to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word ''mortgage'' is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Loan To Value
The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. In Real estate, the term is commonly used by banks and building societies to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property. For instance, if someone borrows to purchase a house worth , the LTV ratio is or , or 87%. The remaining 13% represent the lender's haircut, adding up to 100% and being covered from the borrower's equity. The higher the LTV ratio, the riskier the loan is for a lender. The valuation of a property is typically determined by an appraiser, but a better measure is an arms-length transaction between a willing buyer and a willing seller. Typically, banks will utilize the lesser of the appraised value and purchase price if the purchase is "recent" (within 1–2 years). Risk Loan to value is one of the key risk factors that lenders assess when qualifying borrowers for ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Negative Equity
Negative equity is a deficit of owner's equity, occurring when the value of an asset used to secure a loan is less than the outstanding balance on the loan. In the United States, assets (particularly real estate, whose loans are mortgages) with negative equity are often referred to as being "underwater", and loans and borrowers with negative equity are said to be "upside down". People and companies alike may have negative equity, as reflected on their balance sheets. History The term negative equity was widely used in the United Kingdom during the economic recession between 1991 and 1996, and in Hong Kong between 1998 and 2003. These recessions led to increased unemployment and a decline in property prices, which in turn led to an increase in repossessions by banks and building societies of properties worth less than the outstanding debt. Since 2007, those most exposed to negative equity are borrowers who obtained loans of a high percentage of the property value (such as 90% or ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
First Time Buyer
A first-time buyer (FTB) is a term used in the British, Irish, Canada property markets, and in other countries, for a potential house buyer who has not previously owned a property. A first-time buyer is usually desirable to a seller as they do not have to sell a property, and as such will not involve a housing chain. There are many factors a first-time buyer may need to consider before purchasing their first property; how much initial cash they will need for stamp duty and any solicitors fees, and if they need to arrange a mortgage how much are they able to afford. In many countries such as United Kingdom, Canada and Australia home ownership is seen as a natural step in the life cycle and the natural form of property tenure. Canada and Australia have some of the most ownership rate in word (all above 65%) home ownership. Ireland has one of the highest proportions of owner-occupiers in the EU at around 80%. In the UK in the 1980s almost half of all mortgages were taken out ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Higher Lending Charge
{{Unreferenced, date=December 2014 A higher lending charge (HLC) is a charge made by mortgage lenders in the UK when the loan-to-value ratio of a mortgage is higher than they are prepared to accept at standard rates. Typically, HLCs are applied to loans in excess of 90% of the property value although, until the 1990s, the limit was usually 75%. A number of mortgage lenders do not charge HLCs. They avoid this by either restricting the availability of their mortgages to lower loan-to-value ratios, or charging higher rates on loans with a higher loan-to-value. Differential pricing of this nature is also referred to as "pricing for risk". See also *UK mortgage terminology *Mortgage loan *Remortgage A remortgage (known as refinancing in the United States) is the process of paying off one mortgage with the proceeds from a new mortgage using the same property as security. The term is mainly used commercially in the United Kingdom, though what it ... * Subprime mortgage lending Mort ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Financial Services Authority
The Financial Services Authority (FSA) was a quasi-judicial body accountable for the financial regulation, regulation of the financial services industry in the United Kingdom between 2001 and 2013. It was founded as the Securities and Investments Board (SIB) in 1985. Its board was appointed by the HM Treasury, Treasury, although it operated independently of government. It was structured as a company limited by guarantee and was funded entirely by fees charged to the financial services industry. Due to perceived regulatory failure of the banks during the financial crisis of 2007–2008, the Cameron–Clegg coalition, UK government decided to restructure financial regulation and abolish the FSA. On 19 December 2012, the ''Financial Services Act 2012'' received royal assent, abolishing the FSA with effect from 1 April 2013. Its responsibilities were then split between two new agencies: the Financial Conduct Authority and the Prudential Regulation Authority (United Kingdom), Prudent ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Foreign Currency Mortgage
A foreign currency mortgage is a mortgage which is repayable in a currency other than the currency of the country in which the borrower is a resident. Foreign currency mortgages can be used to finance both personal mortgages and corporate mortgages. The interest rate charged on a Foreign currency mortgage is based on the interest rates applicable to the currency in which the mortgage is denominated and not the interest rates applicable to the borrower's own domestic currency. Therefore, a Foreign currency mortgage should only be considered when the interest rate on the foreign currency is significantly lower than the borrower can obtain on a mortgage taken out in his or her domestic currency. Borrowers should bear in mind that ultimately they have a liability to repay the mortgage in another currency and currency exchange rates constantly change. This means that if the borrower's domestic currency was to strengthen against the currency in which the mortgage is denominated, then it ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Offset Mortgage
The term flexible mortgage refers to a residential mortgage loan that offers ''flexibility'' in the requirements to make monthly repayments. The flexible mortgage first appeared in Australia in the early 1990s (hence the US term Australian mortgage), however it did not gain popularity until the late 1990s. This technique gained popularity in the US and UK recently due to the United States housing bubble. The term mortgage acceleration is also used, as the mortgage loan can be paid off faster than standard mortgages if the borrower is in a position to do so. With traditional mortgages, borrowers often face large penalties for additional capital repayments or if payments were not made on time. A specific type of flexible mortgage common in Australia and the United Kingdom is an offset mortgage. The key feature of an offset mortgage is the ability to reduce the interest charged by ''offsetting'' a credit balance against the mortgage debt, with interest charged based on the outstandin ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
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