Glossary of mortgage terms


Adding fees to your loan

Where a mortgage deal has a product fee, you can choose to add this to the loan amount. If you decided to add the product fee to the loan amount, you should be aware that this will increase your monthly payment, the total amount that you borrow and the amount of interest you will repay.

If you choose not to add the fee to your loan, you will need to pay this in full before we will switch your mortgage to a new deal.

Additional Features

Some of our mortgage deals come with added extras like such as cashback, free legal service or a free valuation. These are known as ‘additional features’ and can be found on our mortgage details pages and factsheets.

Collar

The collar (also sometimes referred to as a ‘mortgage floor’), is the minimum limit a variable or tracker interest rate could fall to.

Early Repayment Charge

The fee which we will charge you if you make a repayment of capital, switch to a new mortgage deal or repay your mortgage entirely within the Early Repayment Charge Period, which is detailed in the mortgage deal factsheet and your mortgage offer. See Capital Repayment.

End date

The end date refers to the date at which your mortgage deal ends and the interest rate on that deal no longer applies. When this occurs you will usually be transferred to our Standard Variable Rate (SVR), unless you are transferring to another mortgage deal. You should refer to the specific terms of your mortgage to confirm what your end date is and what happens at this point.

Please note that although our mortgage deals refer to ‘2 year fixed rate’, ‘3 year fixed rate’ for example, the actual interest rate may last slightly more or slightly less than 2 years depending on your mortgage completion date.

Equivalent savings rate

If you have an Offset mortgage linked to an Offset savings account (or accounts), you will not earn any interest on your savings balance. Instead your savings will achieve the Equivalent savings rate you are being charged on your mortgage. This is calculated using the difference between your Offset mortgage balance and your Offset savings balance.

This rate can differ between individual Offset mortgage deals depending on interest rates and also depends on your individual tax status. Details of equivalent savings rates are provided on individual mortgage details pages and factsheets.

Estimated Monthly Repayment

The estimated monthly repayment shown for each of our mortgage deals provides you with an estimation of your monthly mortgage payments. We use the property, deposit and term details you provide to display this for specific deals. The estimated payment amount includes payments towards your mortgage capital as well as the interest.

You should be aware that the payment figures shown are an illustration only and assume that the initial interest rate will remain the same throughout the term of a repayment (rather than interest-only) mortgage.

Fees

Mortgage fee

You will need to pay a fixed Mortgage Fee of £90 when you redeem your mortgage loan – this is sometimes known as a 'redemption fee'.

Mortgage Application Processing fee

In most cases we will charge a Mortgage Application Processing Fee of £130 to cover the costs associated with processing a mortgage application. This fee is payable on application and is non-refundable (although sometimes it may be removed from selected mortgage deals).

Product fee

The product fee, or arrangement fee, is the fee we charge you for your selected mortgage deal. The fee is payable in full and the funds must be cleared before we can issue your mortgage Offer. Alternatively you can choose to add the fee to your loan, which will increase both the amount you borrow and your monthly payments.

Higher lending charge

The Higher lending charge is a fee sometimes payable by the borrower to the lender, to cover the higher risk on lending a higher proportion of the value of a property. This fee provides some protection to a lender against the risk of the borrower defaulting under the mortgage, and the lender being unable to sell the property for enough to cover the amount owed.

This fee does not, however, remove or reduce your responsibility as a borrower for repayment of the full mortgage balance.

More information about fees, costs and other charges.

Insurance premium

This is the monthly payment that is collected for your CBS buildings and/or contents insurance policy.

Interest rate

The Interest rate is the percentage rate at which mortgage lenders calculate the interest they charge the borrower for the mortgage.

At the end of the initial period you will usually be transferred to our Standard Variable Rate (SVR) for the remaining mortgage term.

Loan to Value

In simple terms this is the size of your mortgage as a percentage of the value of the property you wish to purchase (or your own property if you are remortgaging or changing mortgage deal).

For example:

Purchase price of £200,000, mortgage of £180,000 + deposit of £20,000 = Loan to Value of 90%.

You may sometimes find that mortgage deals with a lower LTV have a lower interest rate, although this varies from provider to provider.

To determine what your current LTV is, we use the latest valuation of your property that we hold on our records combined with any House Price Index (HPI) changes.

If you believe that the valuation of your property, and therefore the LTV of your mortgage, is incorrect, we can arrange for a new revaluation to take place for a cost of £75. However, please note that this will delay your application and you will not be able to select products with a lower LTV limit until that valuation has been received, and your application will be subject to that valuation figure.

Minimum loan amount

The minimum amount we will lend for a mortgage, which depends on the specific mortgage deal you choose. The minimum loan amount is shown on our mortgage details pages and factsheets.

Maximum loan amount

The maximum amount we will lend to a customer for a mortgage, which can differ depending on the specific mortgage deal chosen. The minimum loan amount is shown on our mortgage details pages and factsheets.

Mortgage type

Fixed rate mortgage

The interest rates on Fixed rate mortgages remain the same for an agreed period of time and can offer the stability of a fixed payment amount each month. These mortgage deals differ to other types of mortgage (outlined below) where the rate may adjust.

Tracker mortgage

Mortgages where the interest rate follows (or ‘tracks’) the Bank of England (BoE) Base Rate and is set at a percentage above or below this rate. The rate charged on a Tracker mortgage rises or falls in line with changes to the BoE base rate. Tracker mortgages include a ‘collar’ which is the minimum limit that the interest rate of a tracker mortgage could fall to.

Offset mortgage

A mortgage which links your mortgage to any savings you may have, to reduce the amount of interest charged on your mortgage. Offset is available on selected Fixed rate and Tracker deals.

Discounted Standard Variable Rate (SVR) mortgage

A Discounted SVR mortgage is a type of variable rate mortgage where we apply a discount at a specified level below our current Standard Variable Rate for a specified period of time. For example, if we offer a mortgage deal with a discount of 3%, the interest rate you would receive would be 1.90% (our SVR, which is currently 4.90% minus the 3% discount).

A variable rate mortgage is a mortgage where the interest rate goes up and down according to the Standard Variable Rate of the lender.

Overall cost for comparison/representative example

APRC (Annual Percentage Rate of Charge)

This is a figure which all lenders must quote when referring to mortgages and is intended to help customers compare the overall cost of different mortgages.

The overall cost of comparison and the associated representative example are designed to show the total yearly cost of a mortgage, stated as a percentage of the loan. The information shown includes rate information and costs like the interest rate payable at the start of the mortgage and after the initial rate period has ended, Mortgage Application Processing Fee, Product Fee, Valuation Fee and Mortgage Fee. It is the overall cost for comparing between different mortgage deals.

Overpayment allowance

The overpayment allowance is the amount you are allowed to overpay (that is, pay off from your mortgage) in each 12 month period without incurring any Early Repayment Charges.

This varies between different mortgage deals so you should check the individual details of our mortgage deals to find out what the allowance is.

Unavailable to switch

Although the majority of our mortgages are eligible for switching in full to a new deal, there are some circumstances in which all or part(s) of your mortgage may not meet our eligibility rules, for example, where the remaining term or outstanding balance are below the minimum qualifying amount. Please contact us for further details.

Payments when deals end

When your mortgage deal ends, unless you switch onto a new deal, your mortgage payment will be calculated using our Standard Variable Rate (SVR) of interest. This is normally higher than the interest rate on the deal that has expired, so your monthly mortgage payment is likely to increase. Also, as our SVR is variable, it may change (either increase or decrease) at any time.

Product Fee

The product fee, or arrangement fee, is the fee we charge you for your selected mortgage deal. The fee is payable in full and the funds must be cleared before we can issue your mortgage Offer. Alternatively you can choose to add the fee to your loan, which will increase both the amount you borrow and your monthly payments.

Repayment type

This is the basis on which you repay your mortgage and your payments are calculated. This could be either Repayment (also known as ‘Capital & Interest) or Interest Only, or both – called a ‘Part-and-Part’ mortgage.

For further details, please see Repayment mortgage and Interest Only mortgage.

Standard Variable Rate (SVR)

When a mortgage deal comes to an end you will be usually be transferred to our Standard Variable Rate (SVR) unless you select a new mortgage deal. The SVR is a variable rate that we set independently and can therefore be higher or lower than a mortgage deal rate - so it's worth checking this when the end date is approaching on your mortgage.

Capped Standard Variable Rate

If the SVR on your mortgage is capped, the rate you will pay will not exceed a specified rate for a set period of time.

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