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    Bank of England warns of tougher curbs on mortgage lending

    The Bank of England has warned that obtaining a mortgage is about to become even more difficult.

    by Myra Butterworth






Jargon Buster


A glossary of commonly used consumer finance terms


Within all aspects of consumer finance: Mortgages, Loans, Credit Cards or Savings the use of jargon and accepted industry terms is widespread. Our comprehensive jargon buster explains what those terms mean in an effort to demystify consumer finance.





Ability To Pay


A way of working out if a potential borrower can afford to take on the proposed debt. By estimating how much they will have left to make payments to a loan or mortgage after total monthly expenses are deducted from total monthly income (also known as affordability).


Accident, Sickness and Unemployment Insurance (ASU Insurance)


Insurance cover arranged by the borrower to protect against inability to meet mortgage payments.


Additional Security


When a mortgage exceeds a certain loan-to-value, lenders may require additional security. Other security such as cash or shares may be accepted as security.


Administration Charge


Some lenders will reserve a proportion of the fee charged for the valuation to cover their own costs. If an application does not proceed, this part of the valuation fee may not be refunded, even if the valuation has not taken place.


Advance


The amount of your mortgage/loan.


Affordability


A way of working out if a potential borrower can afford to take on the proposed debt. By estimating how much they will have left to make payments to a loan or mortgage after total monthly expenses are deducted from total monthly income (also known as ability to pay).


Agreement In Principle


This means you have been accepted for a mortgage or other financial product, but it will depend on issues such as a valuation report and confirmation of employment.


Annual Bonus


A bonus paid annually on an endowment mortgage or savings account.


Annual Equivalent Rate (AER)


The AER allows you to compare savings products on a like for like basis. It represents the total interest paid in one year.


Annual Fee


Some credit cards have a yearly charge for using their credit card.


Annual Percentage Rate (APR)


A method of identifying the true cost of borrowing and providing a method of comparing different loans.


Annuity Mortgage


Another term for a capital & interest repayment mortgage.


Application Fee


Any charges made for an application.


Applied or Nominal Interest Rate


Rate used to calculate interest due.


APR


See Annual Percentage Rate.


Arrangement Fees


The same as reservation, booking and product fees. A fee charged by a lender for setting up the loan.


Arrears


Payment or payments not made to a loan, credit card, mortgage or secured loan as agreed in the terms of the contract.


Arrears Fee


Charges for any late payments. See late payment fee.


Audited Figures


These are a set of business accounts that have been certified by an accountant.


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