Spanish mortgages - a glossary of terms
Additional Security Fee: This is sometimes called a "mortgage indemnity guarantee policy" and is paid to take out an insurance policy, which will reimburse the mortgage lender if the mortgage borrower defaults on their payments for any reason. The mortgage lender normally starts the insurance policy at the same time the mortgage is agreed but the mortgage borrower has to pay the premium.
Adverse Credit: This is also known as "bad credit" and is a term used when a person has had credit problems in the past. These problems could include previous mortgage loans, which have been unpaid, unpaid debt consolidation loans or credit card arrears. They could also include CCJ's or bankruptcy.
Agricultural Restriction: This is a freehold covenant, which restricts the occupancy of a certain property to people engaged in agriculture.
Apportionment: This is sharing the responsibility for property tax and water charges etc between the buyer and the seller of a property.
APR: This is an interest rate reflecting the cost of a mortgage as a yearly rate. Using the APR, borrowers can compare different mortgages more easily.
Arrangement fee: This is a fee the borrower pays to the mortgage lender when the mortgage is arranged. This fee is normally only required when taking out a fixed rate, discounted or cash back mortgage.
Arrears: This is the term used to describe a situation where someone has fallen behind with their payments.
Assignment: This is a document transferring the ownership of a property from one person to another.
ASU: This stands for "Accident, Sickness and Unemployment" and is an insurance policy, which will pay the mortgage for the borrower if they are unable to earn their wages normally due to an accident, sickness or unemployment.
Auction: This is a public sale, where the property is sold to the highest bidder. If you purchase a property via an auction you should ensure that all of the necessary valuations and land searches have been completed prior to bidding as you will be required to sign a contract as soon as you win the auction.
Authority to Inspect the Register: This is a document signed by the registered owner of a property to allow another party to access information from the register of a property.
Bailiff: A person appointed by the Courts to take possession of a person's goods if they fail to keep up the payments of a loan or mortgage.
Bankers Draft: This looks like a cheque, however, it is in fact a cash payment as there is no clearing time when it is presented for payment. The purpose of it is to avoid carrying around large sums of cash and anyone can obtain a bankers draft from their bank.
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Bridging Loan: This is a loan designed to allow a person to purchase a new property before their old property has been sold.
Brokers Fee: This is a fee, which could be charged by a mortgage broker in return for finding a person the best mortgage for their needs.
Building Society: This is an organisation, which can lend you money to purchase a property or re-mortgage a property
Buy to Let: This is a term used to describe a situation where a person purchases a property specifically to rent it out to a tenant.
Calculator: Mortgage calculators are designed to work out how much a person could afford to borrow after they have entered details of their income and outgoings.
Capital and Interest: This means that your monthly payments are made against both the original amount you borrowed together with the interest accumulating on that debt.
Capped Rate: This is an arrangement where your mortgage rates will not rise above a specified amount regardless of how high interest rates rise.
Cash Back: This is a one-off payment you may receive when initially taking out your mortgage.
Cash Buyer: This is the term used to describe a person who dies not require a mortgage to buy a property and does not need to rely on the sale of another property to fund their purchase.
CCJ: This stands for "County Court Judgment", which is a decision made by the County Court regarding unpaid debts a person has.
Chattels: This means items, which can be transported such as furniture or other personal possessions.
Completion: This is a term to describe a situation when the sale of a property is finalised and the new buyer legally owns the house.
Contract: This is a legally binding agreement.
Conveyancing: This is the legal process of buying or selling a property.
Covenant: This means something, which has been promised within a deed.
Credit Scoring: This is how lenders decide whether or not they will offer a mortgage to a person applying.
Credit Search: This is a search of your past and present debts to ascertain if you have a bad credit record.
Debt Consolidation: If you incorporate other debts such as car finance or credit card debts into your mortgage, you will only have one monthly payment to make and the interest rate you are charged is likely to be lower.
Deed: This is a legal document, which is signed, sealed and delivered. The transfer of a property can only be made by deed.
Dependants: The term used to describe a person who relies on another person financially.
Deposit: This is the amount of money you pay in cash towards the purchase of a property.
Disbursements: This is the name for the expenses incurred by the solicitor, such as fees for searches etc.
Discount Rate: This is a term to describe an interest rate, which is set lower than the standard rate.
Early Redemption Charge: Within some mortgage agreements there is an early redemption charge mentioned. This means that if you pay off your mortgage early or transfer the mortgage to a different lender, you will be responsible for a charge.
Endowment: If a person opts for an interest only mortgage, they will also need to pay towards an endowment, which is an insurance policy designed to mature over the years and pay off the majority of the mortgage at the end of the contract.
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Equity: If you deduct the amount of your mortgage from the sum your property has been valued at, the remaining figure is the amount of home equity you have.
Equity Release: This is a scheme whereby the lender awards the homeowner a lump sum of money in exchange for taking the rights to a percentage of the value of their home.
Exchange of contracts: This is when the buyer and seller of the property sign their contracts and the sale becomes legally binding.
First Time Buyer: A person who does not already own a property, therefore, is not part of a chain.
Fixed Rate: This is when the interest rate is agreed at the beginning of the mortgage and guaranteed not to rise or fall for a set amount of years.
Fixtures: An item that is attached to the property.
Flexible Mortgage: This is a type of mortgage where the interest rate is variable, however it is calculated daily instead of annually therefore, every payment made affects the interest charged on the outstanding balance.
Gazumping: This is when someone selling a property accepts an offer and then accepts a second, higher offer before the contracts are exchanged.
Gross Income: Your total income before any taxes or other expenses are deducted.
Guarantor: If a guarantor is named on a mortgage agreement, they are personally responsible for payment of the mortgage if the borrower does not keep up the repayments.
High Street Lenders: Banks and Building Societies, typically classified as “High Street Lenders” as their branches were mainly situated on the High Street of a town in the past.
Home Loans: The term home loan is another way of describing a mortgage. This is a way of financing a purchase of property.
IFA: This stands for Independent Financial Advisor. An IFA should be able to give advice about all mortgages available and not have any personal financial interest in selling one mortgage over another.
Income Multiples: The size of the mortgage you are offered will normally be calculated by multiplying your annual salary approximately 3 times.
Income Protection Insurance: This is an insurance policy designed to pay your mortgage if you cannot work due to an accident, illness or unemployment.
Interest only mortgage: With this type of mortgage, you will pay the interest on the total figure only. You would have to pay the lump sum outstanding at the end of the contract.
Intermediary: This is an advisor or broker who will find the best mortgage for a particular client.
Joint Mortgage: A mortgage in the name of two people rather than one.
Land Registry Fee: This is a fee, which needs to be paid to the Land Registry to register ownership of a piece of land.
Licensed Conveyancer: This is a person who specialises in selling and purchasing real estate. You could opt to use the services of a Licensed Conveyancer instead of a Solicitor.
Life Assurance: This is an insurance policy, which would pay out a lump sum or pay off a person's mortgage if they died.
Local Authority Search: This is a search conducted by the Solicitor working for the potential buyer to ensure there is now building work scheduled close to the property in the future.
MIG: This stands for "Mortgage Indemnity Guarantee". It is an insurance policy paid for by the borrower to protect the lender in case they cannot keep up the repayments of their mortgage.
Mortgage: A loan to purchase a property, with the property used as security in case the payments are not continually met. Mortgages can also be known as real estate loan or home financing.
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Mortgage Calculator: A system designed to calculate how much a person can afford to borrow after they enter their salary details and outgoings.
Mortgage Incentives: These are bonuses such as free valuations or discounted rates, which are designed to encourage a person to choose one particular mortgage lender over another.
MPPI: This stands for "Mortgage Payment Protection Insurance" and is an insurance policy taken out to pay the mortgage payments if the borrower cannot work due to an accident, illness or redundancy.
Negative Equity: This is a term used to describe a situation where the borrower owes more money to their mortgage lender than their property is worth.
Net: The term net, means a sum of money after tax has been deducted. For example, your net monthly wages would be the total amount you are paid after tax has already been deducted.
One Hundred Percent Mortgage (100%): This is the term used to describe a mortgage, which is taken out to pay the full purchase price of the property. With a one hundred percent mortgage, the purchaser does not need to pay any deposit.
Overpayment: If you pay more than you are required to against your mortgage, you will pay less interest over the mortgage period and your loan will be paid off earlier.
Payment Holiday: This is a period of time where borrowers can opt not to make any payments against their mortgage. This would normally only be allowed if they had overpaid previously.
Portability: This is a term used to describe a mortgage, which you can transfer to a new property if you decide to move house.
Premium: The word "premium" used when discussing insurances or mortgages means the regular monthly payment you need to make.
Quotations: When taking out a mortgage, a person should research a number of different options and obtain quotations from different lenders to ascertain which mortgage would suit them best.
Redemption: This means to pay off a mortgage completely either at the end of the agreement, when you have a lump sum of money to use or when you refinance your home.
Redemption Penalties: As part of your mortgage agreement, you may be responsible for a charge if you pay off your mortgage earlier than agreed.
Re-Mortgage: If you are not intending to move homes but want to choose a different mortgage lender, you can pay off your original mortgage by taking out a new mortgage. This is also known as refinancing.
Repossession: If the borrow fails to keep up their mortgage payments, the lender can repossess the house and sell it at auction.
Retention: This is a term used to describe a situation where a lender holds back some of the money from the mortgage until certain conditions are met such as repairs or improvements which are considered essential.
Searches: During the process of purchasing a new home, many different searches may need to be carried out by your solicitor such as a Land Registry Search or Local Authority Search.
Self Certified: This is when a person who cannot provide proof of their income via pay slips or accounts must make a declaration stating exactly how much they earn.
Stamp Duty: This is a tax, which needs to be paid by the person purchasing the property. If the property is under £60,000.00 no payment is required, however, for properties selling at between £60,000.00 and £250,000.00 1% of the purchase price needs to be paid. If the property is valued at between £250,000.00 and £500,000.00, 3% applies and for properties over £500,00.00, the charge is 4%.
Structural Survey: A surveyor carries this survey out. They will check the property for any faults and report them.
Standard Variable Rate: With a variable rate mortgage, your payments would rise and fall depending on the level of the interest rates at that time.
Standing Order: This is an arrangement you can set up with your bank to pay a regular amount of money into another person's account on a regular basis.
Surrender: In mortgage terms, this means to cash in an endowment policy early to raise funds.
Term: This is the amount of years; you take out your mortgage for.
Term Assurance: This is an insurance policy taken out by the borrower at the time of taking out the mortgage, which would pay the mortgage off completely if they were to die before the end of the contract.
Terminal Bonus: This is the sum of money paid out when an endowment matures.
Tie in Period: When taking out a mortgage, the lender may specify a number of years that you have to stay with them to avoid paying any penalty charges.
Title Deeds: These are documents which show who legally owns a property.
Transfer Deeds: These are documents which when signed; transfer the legal ownership of a property to another person.
Unencumbered: This is a term to describe a situation where a person owns a property outright without having any mortgage attached to it.
Unmortgagable: This is a term used to describe a property for which no lender will supply a mortgage.
Unregistered Land: Land, which is not yet mentioned within the records, held on the HM Land Registry Database.
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Valuation: An inspection of the property is carried out to verify how much it is worth.
Valuation Fee: This is a fee, which needs to be paid by the borrower to fund the valuation.
Variable Rate: If you take out a mortgage with a variable rate, your payments may raise and fall each month depending on the interest rates at that time.
Verification Of Employment: A lender may ask a person to supply verification of their employment in the form of pay slips.
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