Mortgage terms explained
The Swansea Building Society sets out key mortgage terms below with a brief explanation.
Annual Percentage Rate, a figure which all lenders must quote when referring to mortgages. It is designed to show the total yearly cost of a mortgage stated as a percentage of the loan. It includes items such as the interest rate paid at the start of the mortgage, valuation fee and other charges commonly paid at the end of a mortgage.
The term "in arrears" is used to describe a mortgage account if a borrower has failed to keep up the monthly mortgage payments.
This is used in two ways:
(1)It means the legal transfer of a property so that you own it and are able to move in.
(2) (whether you are buying or remortgaging), it is the time when we actually pay over the money we are lending to you.
Another word for the legal term for transferring ownership of a property from one person to another.
All of our regulated mortgage products charge interest on a daily basis.
Early Repayment Charge
If you pay off part or all of your loan before the end of your mortgage term, you may have to pay an Early Repayment Charge. This usually applies in the early years of a mortgage and details of the charge will be given in your mortgage offer. The period during which the charge is known as the Early Repayment Period.
If your house is worth more than the mortgage on it, the difference is known as the 'equity'.
A freehold gives a purchaser complete ownership of land.
Leasehold properties have been leased from the freeholder for a specified period of time.
The full amount of the money which we lend you
Loan to value (LTV)
The amount of your loan compared to the valuation or purchase price of your property (whichever is the lower), shown as a percentage. For example, a loan of £80,000 on a property valued at £100,000 would have an LTV of 80%.
The whole arrangement between us including the loan and all terms and conditions. It is also a legal document under which the owner of a property agrees that the property will be security for repayment of a loan which a lender makes.
The period over which the loan is to be repaid.
Another name for the lender (us)
Another name for the borrower.
If we approve your mortgage application, we will make you an 'offer' of a loan. Remember that the offer will be subject to conditions.
These are repayments over and above the monthly mortgage payments.
You redeem - or repay - a mortgage when you have paid back all of the loan and all interest, costs or other charges which are due on it. The mortgage is brought to an end.
A loan provided to an individual who gives the lender a first charge on his/her home as security for the repayment of the loan.
Repaying one mortgage by taking out another with a new lender which is secured on the same property.
Society's base rate
This is a variable rate of interest set by the Swansea Building Society.
A government tax payable if the purchase price of property is more than £125,000. The tax is charged at a marginal rate on each slice. The previous 'slab' system where the top rate was applied to the whole purchase price has been abolished. The current rates are:
- Nil if the property is £125,000 or less.
- 2% on any amount over £125,000 up up to £250,000
- 5% on any amount over £250,000 and up to £925,000
- 10% on any amount over £925,000 and up to £1,500,000
- 12% on any amount over £1,500,000
*The above rates apply to residential property only.
*Please refer to www.gov.uk/stamp-duty-land-tax-rates for Stamp Duty Land Tax rates for non-residential and mixed-use properties.
Standard variable rate
This is our standard mortgage rate which may be changed by us from time to time.
Property release fee
A fee charged by us for releasing property following repayment of your mortgage.