Welcome to our Mortgage Glossary. Here you will find definitions for more commonly used mortgage terms, making the jargon clearer. If you're unsure of any words or phrases, simply use the guide below.
Capital and Interest Repayment
With a capital and interest repayment mortgage, the monthly mortgage payment covers both the repayment of the amount borrowed (capital sum) and the interest due on the loan. It is calculated to pay off the loan over the mortgage term.
During the early part of the mortgage, your payments will be geared more to paying off the interest; whereas in later years, most of your payments will be repaying the capital sum.
Providing all monthly repayments are made, you can be certain that the whole of the loan will be repaid at the end of the term.
Cashback is an amount of money that the Society will pay you back after the mortgage has completed. If you are entitled to cash back on your mortgage, it will be detailed in our mortgage product literature, your Key Facts Illustration (KFI) and your mortgage offer.
CHAPS (Clearing House Automated Payment System) is a same-day automated payment system for processing payments made within the UK, that enables same day fund transfers.
They are normally used for high value payments such as releasing money on completion of a mortgage.
Completion is the point at which the mortgage deed is signed and executed and all mortgage conditions come into effect. It is usually at this point that the mortgage funds are released and interest becomes payable.
Contents insurance protects the items that you have in your home, it can also often be upgraded to cover items that you take out with you such as mobile phones. Unlike Buildings insurance it is not compulsory to have it in order to get a mortgage, but it is strongly recommended.
It is important to us that you have conducted any current or previous credit agreements satisfactorily. In order for us to do this, we need to look at a number of things: your previous mortgage payment record; payment of rent to landlord; payment of other credit cards, loans etc. We do this by carrying out a credit search using a credit reference agency. The information we receive relates to financial information registered at current and previous addresses. The 'credit search' will highlight county court judgements, property repossessions and defaults as well as credit agreements. The credit reference agency will keep details of the search we make.