Glossary

APR This stands for Annual Percentage Rate and can be used to compare the cost of borrowing money from different lenders.

Basic valuation A check carried out on the property, by a surveyor, to determine its acceptability to the lender as security against the mortgage.

BDM Business Development Manager.

BBR This stands for Bank Base Rate, which is reviewed every month by the Bank of England's Monetary Policy Committee.

BTL Buy-to-let.

Buy-to-let mortgage A mortgage designed for property investors who purchase a property to rent out.

Capital and interest mortgage Also known as a repayment mortgage. With this type of mortgage the borrower pays off some of the capital (the amount of money borrowed) and some of the interest every month.

Capped rate The rate that the borrower pays is variable to a maximum limit set at the outset for a fixed period (it can go up and down).

Cashback Some mortgages offer cashback as an incentive. It is a cash sum that the borrower receives when their mortgage completes.

Conveyancing The legal process for buying and selling property.

DDM Direct Debit Mandate.

DIP Decision in Principle.

Discounted rate With this type of mortgage, the rate that the borrower pays is discounted from the lender's standard variable rate. This discount is guaranteed for a set period of time and the rate can go up and down.

ERC Early repayment charge. An amount of money that the borrower may be charged if they fully repay their mortgage before a set time, usually before the end of the incentive period.

FCA Financial Conduct Authority. The FCA regulates specific areas of the financial services industry including mortgage advice.

Fixed rate The rate the borrower pays is fixed for a set period of time.

Freehold The borrower owns the property and the land the property is on.

Full Structural Survey This survey is a more in-depth review of the condition of the property than a homebuyer survey. It does not incorporate a basic valuation.

HLC Higher lending charge. This is a fee that is payable if a "high percentage loan to value" is required. The HLC fee is used by the lender to purchase insurance to cover them in the event that you default on the mortgage and they make a loss on possession and resale of the property. The policy has no benefit to the borrower and offers no protection - indeed if your property is repossessed and the lender claims on the Mortgage Indemnity Insurance then the insurance company that has paid out the claim to the mortgage lender can still pursue you, the borrower, for repayment of that amount.

Homebuyers report This is a survey, which reviews the condition of the property, and incorporates a basic valuation.

Interest-only The borrower only pays off the interest every month, not the capital (the amount of money borrowed). The capital is paid back at the end of the mortgage term. A repayment vehicle, such as an endowment policy or Individual Savings Account, could be used, however the borrower should seek independent financial advice. TBMC does not advise on investments.

Leasehold The borrower owns the property for a set period of time but not the land the property is built on. After the set period of time, ownership of the property reverts to the freeholder. Many flats are leasehold properties.

LTV This stands for loan-to-value and denotes the relationship between the amount of money you want to borrow (the loan) and the cost of the property (the value) and is expressed as a percentage. For example, if you borrow £85,000 and your property costs £100,000, then the loan-to-value is 85%.

Repayment mortgage Also known as a capital and interest mortgage. With this type of mortgage the borrower pays off some of the capital (the amount of money borrowed) and some of the interest every month.

Stamp Duty Land Tax (SDLT) A tax that may be payable on purchases of flats, houses and other buildings in the UK.

Sub-prime mortgage A mortgage that is designed for someone with adverse credit.

Tracker mortgage The mortgage rate tracks the Bank of England base rate by a set amount for a specified period of time.

Variable rate A rate set by a lender, which can go up and down.


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© The Business Mortgage Company Limited: registered in England and Wales no. 5390573. Greenmeadow House, 2 Village Way, Greenmeadow Springs Business Park, Cardiff, CF15 7NE.
The Business Mortgage Company Services Ltd is authorised and regulated by the Finance Conduct Authority (No. 302764) to transact regulated mortgages and registered as a Consumer buy-to-let arranger. The FCA does not regulate some investment mortgage contracts.