Mortgage jargon buster
Taking the mystery out of mortgages
Your home may be repossessed if you do not keep up repayments on your mortgage.
Ulster Bank mortgages are available for over 18s.
Capital and Interest Payment
Your monthly payment covers the interest and also reduces the total balance outstanding.
CHAPS Fee
A fee to cover the cost of electronically transferring the mortgage funds to the borrower.
Conveyancing
Is the legal process of buying and selling property. This can be done by a solicitor or specialist-licensed conveyancer.
Cost of Credit
The difference between the amount you borrow and the amount you’ll end up paying back taking into account interest and other charges.
Deeds
The difference between the amount you borrow and the amount you’ll end up paying back taking into account interest and other charges.
Deposit
The amount you need to pay yourself towards the cost of the property. This varies depending on the product and lender. Some lenders offer mortgages with a minimum 5% deposit for First time Buyers.
Early Repayment Charge (ERC)
Some mortgages, such as a fixed rate mortgage, charge a fee if you pay back the loan early. This can vary, so check your original letter of approval or terms and conditions for the amount. This is known as an Early Repayment Charge (ERC).
Equity
Is the difference between the current value of your home and the amount outstanding on your mortgage.
Exit Fee
This is an administration fee payable to service providers when you fully repay your mortgage.
Gazumping
Gazumping occurs when a seller accepts an oral offer (a promise to purchase) on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase.
Guarantor
A third party who agrees to meet the monthly mortgage repayment if you are unable to. This is more common with first-time buyers, with the guarantor likely to be their parent or guardian.
Higher lending charge (HLC)
This is sometimes charged by your mortgage lender if you are borrowing more than 75% of the property’s value. It protects the lender against you defaulting on your mortgage.
Interest Only Mortgage
With an interest only mortgage your monthly mortgage payments only pay the interest element of the loan and don't pay off any of the amount you borrowed. To repay the mortgage some borrowers pay into an investment such as an ISA, pension or an endowment. Others sell their property at the end of the mortgage term.
Joint Applicants/ Joint Mortgages
This is where you hold property ownership rights equally with another person or persons. If one person dies, ownership reverts entirely to the surviving person or persons. This legal agreement supersedes any Will the deceased may have made.
Land Registry
The official body that holds the details of property ownership.
Leasehold
You own the property but not the land it is built on for a specific number of years. Flats are usually owned on a leasehold basis. You may find it hard to get a mortgage if there are fewer than 70 years left on the lease of the property you want to buy. Leases are renegotiable, but the shorter remaining terms, the more expensive it will usually be.
LTV (Loan to Value)
LTV means Loan to Value. The size of your mortgage as a percentage of the value of your property. for instance, if you have £50,000 mortgage and your home is worth £100,000, your LTV is 50%.
Maturity Date
The date the mortgage must be repaid in full, or by which a new agreement needs to be taken out.
Monthly Repayment
The amount you pay to your lender for your mortgage each month.
Mortgage Illustration
A Mortgage Illustration should be given to you before you make a mortgage application. It describes the key things you need to know about your mortgage such as payments and fees.
Mortgage Offer
This is your guaranteed offer. Once your mortgage is approved you'll get a formal offer setting out the terms and conditions.
Mortgage Term
The amount of time you are repaying your mortgage over (e.g. 25 years).
Negative Equity
When the value of your home falls below the amount of your mortgage.
Overpayment
This is when you pay extra, over and above your monthly mortgage payment. You could choose to make a one-off lump sum overpayment or overpay a regular amount with your normal mortgage payment. Overpayments save you interest and will shorten your mortgage term.
Portability
Where an existing mortgage can be transferred between properties when you move house.
Payment Holiday
This is a period during which you make no payments on your mortgage. While you make no payments interest will continue to be charged. This feature is usually only available on a flexible mortgage.
Product Fee
This is a set-up fee for your mortgage. Lenders will charge different product fees so do shop around.
Stamp Duty
This is a tax you pay when you buy a property. You don't have to pay stamp duty on a property purchase of up to £125,000 but any amount over this you will have to pay a percentage of the price. As the price you pay for a new property increases, so do the rates of stamp duty ranging from 1% to 4% for properties up to £1million. Read more about stamp duty.
This link is to a non Ulster Bank website. Ulster Bank is not liable for the accuracy of the information provided on this website.
Standard Variable Rate
The default mortgage interest rate your lender will charge you after your initial mortgage deal ends. See variable rate below.
Service fee
The fee charged by a lender who, with the customer's written consent, requests details from their existing mortgage lender.
Tracker Rate Mortgage
The mortgage interest rate is set at a fixed percentage above the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the BoE base rate.