The number of new mortgages approved by British banks hit a six-month low in September, according to a survey that adds to signs the housing market is slowing again ahead of the October Brexit deadline.
Industry body UK Finance said banks approved 42,310 loans for home purchase in September, compared with 42,527 in August, according to seasonally-adjusted data. However, the number of approvals for remortgaging rose to the highest level since November 2017 at 32,649.
UK Finance said annual growth in consumer credit rose to a 19-month high of 4.5%, driven by personal loans and overdrafts rather than credit card lending.
Things you must know before getting a mortgage in the UK. Explained in alphabetical order are some key words and phrases you should be aware of before taking out a mortgage loan to buy a property in the UK.
Agreement in principle – A certificate or document that some lenders give you, showing the amount they will probably be willing to lend you. This isn’t a guarantee, but can be helpful when dealing with estate agents.
APR (Annual Percentage Rate) – This shows the overall cost of a loan, taking into account the term, interest rate and other costs.
Bank or Base rate – The rate at which the Bank of England lends to other financial institution.
Buy to let mortgage – A loan you take out to buy a property that you intend to rent to tenants.
Capital – The amount you borrow to help buy your home.
Capped mortgage – A mortgage with a maximum limit on the interest rate you’ll pay during the deal period.
Cashback mortgage – A mortgage that comes with a cash sum which often is a percentage of the amount you’re borrowing.
Collared mortgage – A mortgage with a minimum interest rate you’ll pay during the deal period.
Conveyance – The transfer of rights and legal ownership of property which is carried out by a conveyance solicitor.
Credit Score – A credit score is a tool used by lenders to help determine whether you qualify for a particular credit card, loan, mortgage or service.. Using the information on your credit report and any additional information you supplied as part of your application, lenders use a mathematical model to calculate a numerical score that represents your credit history.
Deposit – The amount of money you put into buying a home which is not included in the mortgage money you’re borrowing.
Discounted mortgage – This has a lower variable rate of interest for a set period, after this the rate increases.
Early repayment charge – A charge you may have to pay if you pay back a mortgage early which includes if you move to another lender.
Energy Performance Certificate – The government legally requires sellers and renters of all homes in England, Wales and Scotland to provide this. It gives a rating of how efficiently the property uses energy.
Fixed rate – An interest rate that is fixed, in order words it doesn’t move up or down for a set time.
FCA Register – This is a Financial Services Register which is a public record that shows details of firms, individuals and other bodies that are, or have been, regulated by the Prudential Regulation Authority (PRA) and/or the Financial Conduct Authority (FCA). You can check online to see whether a firm is on the FCA Register @ register.fca.org.uk
Freehold – A property in fee simple absolute in possession with no limits on ownership
Home Reports (Scotland) – The Scottish government requires sellers of most properties in Scotland to provide this pack. It must contain a single survey, an energy report and a completed property questionnaire for the property for sale.
Income multiples – The number by which a lender multiplies your earnings to find out how much you can borrow.
Individual Voluntary Arrangement (IVR) – A formal agreement between a debtor and their creditors to make reduced payments towards their total debt over an agreed period, typically five years, after which the debt is deemed to be settled.
Interest – The charge that lenders make when you borrow their money.
Interest-only mortgage – A mortgage in which you pay only the interest charges of the loan each month. You are not reducing the loan amount (the capital), and you must repay this in some other way.
Interest rate – The figure that determines how much interest you pay. Usually linked to the Bank of England’s rates and move up or down.
‘Key Facts’ Documents – Standard documents that all regulated lenders and advisers must give you. They explain their services and detail the mortgage you’re interested in.
Leasehold – A property for a term of years absolute (ownership) which has a limited duration that must be fixed and certain.
Loan-to-value (LTV) – The amount of money you want to borrow compared (as a percentage) to the value of the property.
Mortgage – A loan secured on your property.
Mortgage Adviser or broker – A mortgage adviser or broker helps you get a mortgage from their available range. They may recommend a mortgage or give you information to help you choose.
Prime lending – Lending to borrowers who meet the lender’s standard criteria and present a normal risk.
Remortgaging – Changing your mortgage from a different one, without moving home.
Repayment mortgage – A mortgage in which you pay off both the loan (capital) and interest at the same time.
Secured – If you do not repay your loan, the lender can sell your home to get its money back.
Stamp duty land tax – A government tax that home buyers must pay on properties above a set amount.
Standard variable rate mortgage – The lender’s normal interest rate, ie without any discounts or deals.
Sub-prime lending – Lending to borrowers who represent a higher risk than normal.
Survey – A report on the condition of the property you are planning to buy.
Tracker mortgage – A mortgage with an interest rate linked to a particular base rate and moves up and down with it.
Tenure – Denotes the way in which title to a property is held; it is taken from the French tenir, meaning ‘to hold’.
Term – The length of your mortgage, normally expressed in years.
Valuation – A brief inspection of the home you hope to buy, so the lender can ensure it is suitable security for the mortgage.
Vendor – The seller of the property.
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