Finance & Loans Jargon Buster

APR - Annual Percentage Rate
The true rate of interest charged on a loan taking into account the total cost of interest and other charges and fees

(Level Term) Assurance
Life assurance which pays out a lump sum if you die during the term. Suitable for interest only loans as the amount owed on the loan remains the same throughout the life of the loan.

Broker
An intermediary who assists customers in the sourcing and arranging of a loan with a Lender able to provide it at the most competitive terms. The broker often carries out the administration to do with processing the loan as well as research to ensure the best loan is sourced for each customer.

Cashback
A type of loan where the borrower is given back a sum of money (usually a percentage of the loan). Used by lenders as an incentive to promote their products.

CCJ - County Court Judgement
An order of a court against a debtor to pay money still owed.

Creditscore
The process of using specialised online credit search databases, such as Experian or Equifax, to identify an applicants credit status.

LTV - Loan to value
This is the amount of borrowing secured against the property which is recorded as a percentage of the value of the property, e.g. A property valued at £100,000 with a mortgage of £80,000 would have a LTV of 80%.

Mortgage
A loan to purchase a home where the property is used as security in the event of non-payment of the mortgage.

Negative Equity
The situation where the amount of loan outstanding is greater than the value of the property.

Processing
The administration and paperwork related to a loan from the time a completed application form is received through to completion of the loan process.

Secured Loan
A loan where the equity in the property is put up as security against not paying the loan back.

Security
When a loan is taken out it is 'secured' on a property, the borrower agrees to the lender creating a charge over the property; the deed makes reference to the rights and obligations of both parties as detailed in the Legal Charge. Thus the property is known as the 'security'.

Security Address
When taking a secured loan or mortgage, the security address is the address of the property which is being offered as collateral for the loan. Where property is offered as security in this way, lenders are generally prepared to offer more flexible terms and lower interest rates.

Self - Certification
Certain Lenders will allow the applicant to confirm how much they earn by "Self-certifying" their own income. Schemes are available to both employed and self employed applicants.

Settlement Figure
The sum quoted in order for the loan to be repaid during the contracted term.

Single Insurance
Single insurance offers protection against sickness, accident and redundancy for the main wage earner. Cover is also available for self employed borrowers.

Status
The credit-worthiness of a potential borrower.

Term
Period of a the loan requested in years.

Underwriting
The process in which the Lender will assess the borrowers ability to repay a loan is assessed. The process takes into account various factors including employment history, financial status, previous credit history and current earnings.

Unsecured Loan
A loan where the credit rating of the applicant is such that no security for the loan is required. The borrower is in effect the security for the loan.

Valuation
A brief inspection of your property to verify the value for lending purposes.