Mortgage Glossary
Understand some common mortgage terminology with trusted brokers at Fortier Finance.
Arrangement Fees
The fees the mortgage lender will charge for administrative costs to set-up and secure a mortgage loan. This is typically paid for by the client.
Buy-to-Let (BTL) Mortgage
A mortgage for landlords who want to purchase a property to rent out.
Capital
The amount of money borrowed, excluding any interest payments.
Deposit
The amount of money you have to put down for a property purchase, before you can secure a mortgage. The higher the deposit you can put down the less you have to borrow as mortgage.
Early Repayment Charges
Charges you must pay if you pay off, or over pay, your mortgage before the end of an agreed interest rate period. These can apply to fixed rate mortgages.
Euribor
Euribor, or the Euro Interbank Offer Rate, is a reference rate that is constructed from the average interest rate at which Eurozone banks offer unsecured short-term lending on the inter-bank market.
Equity
Equity is the share of property you own, as you pay off more of your loan, your equity increases.
Fixed Rate Mortgage
The interest rate on a fixed rate mortgage stays the same for a set period of time. A fixed rate mortgage can safeguard you from high payments if interest rates, but if interest rates fall you wont benefit from lower payments either.
Interest
The amount that is added to the total you’ve borrowed each month, until the entire loan is paid off. The interest is essentially the cost of the mortgage.
Interest-Only Mortgage
This is a mortgage that consists solely of monthly interest payments. This type of mortgage does not increase your equity in the property and has to paid in full at the end of the mortgage term. Most lenders will need evidence of a repayment strategy based upon the individuals’ circumstances.
Libor
The basic rate of interest used in lending between banks on the London interbank market and also used as a reference for setting the interest rate on other loans.
Loan-to-Value (LTV)
The loan-to-value ratio of a loan is the difference between the amount borrowed and the total value of the property.
Mortgage
A mortgage is a sum of money that is borrowed from a bank or other lender and secured against an asset.
Mortgage Lender
A financial institution such as a bank or building society that offers mortgages.
Repayment Mortgage
Unlike interest-only mortgages, a borrower with a repayment mortgage makes monthly repayments that both pay the interest, and reduce the capital owed.
Valuation Fee
A fee charged by lenders for the valuation of a property to be used as security for the mortgage.
