Mortgage Glossary

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 additional features such as cashback, free standard legal service or free standard valuation. These are detailed on the individual pages and factsheets for our mortgage deals.


APRC (Annual rate percentage of charge)

Also referred to as ‘overall cost for comparison’

APRC is now commonly used across the mortgage market (in place of Annual Percentage Rate) to illustrate the entire cost of your mortgage, including fees. It tells you how much you would pay, in theory, if you kept the mortgage loan for the entire term of your mortgage. The APRC provides you with the total amount you would repay for the loan (depending on the mortgage interest rate and the term of your mortgage) plus interest and including any fees.


Arrears

Understanding mortgages is vital when it comes to payments. If you miss a payment on your mortgage, this means you have gone into arrears or ‘defaulted’ on your mortgage. This can potentially lead to issues with your credit worthiness in the future so you should make every effort to pay your mortgage on time. We have help and advice on what to do if you are having trouble paying your mortgage.


Base Rate

This is the interest rate set by the Bank of England. Some mortgages, like Tracker or Standard Variable Rate, follow this rate of interest which means that your mortgage interest rate and mortgage repayments could be affected by changes in the Base Rate.


Collar

A mortgage collar, commonly referred to as a mortgage floor, is the minimum interest rate a variable or tracker rate could fall to.


Conveyancing

This is the legal process of buying or selling property. In order to buy or sell a property you must have a legal representative acting on your behalf – usually a solicitor or licenced conveyancer. Find out more about the legal aspects of mortgages by reading about conveyancing and the legal process.


Early Repayment Charge (ERC)

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 date at which your mortgage deal ends and the interest rate is no longer applicable. Unless you pick a new mortgage deal you will be transferred to a reversionary rate which in most cases will be the Standard Variable Rate (SVR). You should know that although mortgages refer to a '2 year fixed rate' for example, the rate of interest may last slightly more or slightly less than 2 years depending on the date your mortgage completes.


Equity

This is the value of your ownership of a particular property – usually calculated by taking the current market value of a property and subtracting the remaining mortgage payments. This value is built up over time as the market value of the property changes and you pay off more of your mortgage.

See also negative equity.


Equivalent savings rate

If you have an Offset savings account linked to an Offset mortgage, you do not earn interest on any of your Offset savings. However, by linking your savings to your mortgage, you will only pay interest on the difference between your Offset mortgage balance and Offset savings balance(s). The money in your Offset savings account(s) therefore benefit from the equivalent of the interest rate charged on your Offset mortgage.

The equivalent savings rates differ between individual Offset mortgage deals depending on interest rates and details are provided on the individual pages and factsheets for our mortgage deals. The equivalent savings rate will also depend on your individual tax status.


Estimated Monthly Repayment

An estimated monthly repayment gives you an idea of how much you would pay back each month on a given mortgage deal for a repayment mortgage, using the property value, deposit and loan term details you have provided. The payment includes money to repay the amount you’ve borrowed (the capital), as well as the interest on this sum.

Please note that the figures provided are for illustration purposes only.


Existing Borrower Transfer (EBT)

The process by which a customer transfers to a new mortgage deal with the same provider. This differs to remortgages which is taking out a new mortgage on a current property with a new provider. View our changing your mortgage deal guide for more details.


Fees

Mortgage fee

Sometimes called a 'redemption fee' this is a fixed amount payable on the redemption of your mortgage loan. Our mortgage fee is £90.

Product fee

The Product fee is a fee we charge on selected mortgage deals. The fee is payable in full and the funds must be cleared before we can issue your mortgage Offer. Alternatively you can ask for the fee to be added to your loan, which will increase both the amount you borrow and your monthly repayments.

Valuation fee

A fee charged by us for commissioning a mortgage valuation to provide us with a property's estimated market value.

More information about fees, costs and other charges.


Fixed rate

A Fixed rate mortgage offers the stability of a fixed rate of interest until an agreed date, with the interest rate remaining the same throughout the term of the mortgage deal. This is different to other types of mortgage where the rate may adjust.


Initial period

The initial period is how long your mortgage deal will run for before switching to a reversionary rate, usually our SVR (Standard Variable Rate). The exact length of time the original mortgage deal will run for is detailed by the mortgage deal end date.


Insurance premium

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


Interest Only mortgage

This is the mortgage definition for a type of mortgage where your monthly repayments go towards paying the interest of your mortgage only, and not towards repayment of the capital. With an interest-only mortgage you have to repay the total cost of the mortgage loan at the end of the term via alternative methods, called ‘repayment vehicles’. These can be pension endowments, dividends from investments or other sources of income.

Accord Mortgages don’t currently offer interest only mortgages.


Interest rate

The interest rate is the rate you will pay during the term of the mortgage deal. You will usually be transferred to our SVR (Standard Variable Rate) for the remaining term of the mortgage.


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.


Loan size

Minimum loan amount

The minimum amount we will lend. This depends on the specific mortgage deal you choose. Details of these are displayed on factsheets and individual online mortgage deal pages.

Maximum loan amount

The maximum amount we will lend to a customer. The maximum loan amount depends on the specific mortgage deal you choose. Details of these are displayed on factsheets and individual online mortgage deal pages.


Monthly repayment

How much you would pay back each month on a given mortgage deal for a repayment mortgage, using the property, deposit and term details you have provided. The payment includes money paid back towards what you've borrowed, as well as the interest on this sum. On our mortgage listings pages you will sometimes see Estimated Monthly Repayment shown – this provides an illustration of how much your repayments would be on a specific mortgage deal, depending on the amount borrowed, property and mortgage term.


Mortgage fee

Sometimes called a 'redemption fee' this is a fixed amount payable on the redemption of your mortgage loan. Our Mortgage Fee is £90.


Mortgage part(s)

Sometimes your mortgage may be made up of different ‘parts’ – these are separate mortgage deals that combine to make up your total mortgage.

If you are an existing customer and would like to switch to a new mortgage deal, you will need to check which parts of your mortgage are eligible for an Existing Borrower Transfer. When doing this online, we will show you.


Mortgage term

The length of time you take a mortgage out for, usually 20, 25 or 30 years. This shouldn’t be confused with a fixed rate period or initial period, which is a lot shorter. If you are an existing mortgage customer, your remaining term is the total length of time before your mortgage is repaid in full.

Mortgage types

Fixed rate mortgage

A Fixed rate mortgage offers the stability of a fixed rate of interest until an agreed date, with the interest rate remaining the same throughout the term of the mortgage deal. This is different to other types of mortgage (outlined below) where the rate may adjust.

Tracker mortgage

With a Tracker mortgage, the interest rate is set at a percentage above or below the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the BoE base rate. Tracker mortgages include a ''collar'' which is the minimum rate that the interest rate of a tracker mortgage could fall to and a ‘cap’ which is the maximum rate your interest will rise to if there is an increase in the Base Rate.

Offset mortgage

Offset mortgages provide you with the opportunity to use your savings to reduce the cost of your mortgage, meaning that instead of earning interest on your savings you can reduce the amount of interest you pay on your mortgage. This can help to reduce the length of time it takes to repay your mortgage or to lower your monthly payments now or in the future and you retain access to your savings should you need it.

Find out more about Offset


Negative equity

Negative equity occurs when the value of a property according to the market, falls below the remaining mortgage amount. This is usually an effect of falling house prices


Outstanding balance

The total amount of the mortgage that is currently outstanding, inclusive of any repayable interest. As you continue to make repayments, your mortgage balance will get smaller and, as long as you keep up these repayments, your mortgage will be repaid at the end of the term.

Please note, if you wish to redeem your mortgage in full, the payment required may differ from this so you should contact us and we will send you a redemption statement with an exact figure.


Overall cost for comparison/representative example

See also 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 is designed to show the total yearly cost of a mortgage, stated as a percentage of the loan. The information shown in a representative example 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 Fee, Product Fee and Valuation Fee. It is the overall cost for comparing between different mortgage deals.


Overpayments / 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.


Porting

The process by which your mortgage is moved from one property to another i.e. when you wish to move to a new property but would prefer to keep your existing mortgage deal. Sometimes it’s possible to change the amount you’re borrowing when moving home – either borrowing more if you think you may needs funds for some home improvements, or borrowing a bit less if you are downsizing.

Read more about Moving Home and taking your mortgage with you


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.


Redemption

Mortgage redemption refers to the repayment of a mortgage loan in full, usually when the mortgage term ends and all scheduled repayments have been made. There are some circumstances depending on the type of mortgage deal you have, whereby you can pay a lump sum to repay your mortgage (although there is sometimes a fee to pay for this).

With most mortgage providers you can obtain a redemption statement that provides you with a settlement figure.


Remortgage or remortgaging

The process by which you switch your mortgage to one with a new provider when your existing deal ends. This is not the same as an existing borrower transfer which refers to switching to a new mortgage deal with the same provider.


Repayment mortgage

With a repayment mortgage (sometimes called a ‘Capital & Interest’ mortgage), you will make monthly repayments for an agreed period of time (known as the term) until you’ve paid back both the original capital amount you borrowed and all the interest you were charged.

If you already hold a mortgage with us, it may be the case that part of your mortgage is on an interest-only basis. If this is the case we don’t currently offer the transfer of interest-only mortgage parts online. To discuss repaying your interest-only mortgage or transferring to a repayment mortgage, please contact us.


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.


Stamp duty

Stamp duty is a tax imposed when a property or piece of land is purchased in England, Wales and Northern Ireland. Currently the threshold for payment of stamp duty is £125,000 for residential properties and £150,000 for non-residential land and properties.

In Scotland the rules are slightly different – there is no stamp duty to pay but instead there is a Land and Buildings Transaction tax which works in a very similar way.

You can find out more about stamp duty on the Gov.uk website and information on the Land and Buildings Transaction Tax on the Revenue.scot website.


SVR (Standard Variable Rate)

The Standard Variable Rate (SVR) is a mortgage lender's 'default' rate. When a mortgage deal comes to an end you will be automatically transferred to a reversionary rate (usually the SVR) until you select a new deal. As the name suggests the SVR is a variable rate set by the lender, and can therefore be higher or lower than a mortgage deal rate - so it's worth exploring your options when the end date on a mortgage deal is approaching.


Title deed

Title deeds are paper documents showing the ownership of a particular property or land. Title deeds are created when a piece of land or a property are registered for the first time with the Land Registry. Most title deeds are now stored only as digital copies but you may be able to request scanned paper versions.


Tracker mortgage

With a Tracker mortgage, the interest rate is set at a percentage above or below the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the BoE base rate. Tracker mortgages include a ''collar'' which is the minimum rate that the interest rate of a tracker mortgage could fall to and a ‘cap’ which is the maximum rate your interest will rise to if there is an increase in the Base Rate.


Transfer of equity

A transfer of equity occurs when someone is either added to, or removed from, the title deeds of a property. This can sometimes occur when joint holders of a mortgage are separating or when there has been a bereavement.


Variable rate mortgage

A type of mortgage where the interest rate goes up and down according to your provider’s standard variable rate. This is opposite to a fixed rate mortgage, where the rate is the same throughout a set period.

Disclaimer

Your property may be repossessed if you do not keep up repayments on your mortgage.

If you have a Buy to Let property, then alternatively a receiver may be appointed (except in Scotland) to receive the rent and/or to sell the property. After sale, you will remain responsible for the payment of any mortgage shortfall debt.

 

 Useful information

Our downloadable guides have all the information you need on our products, how to manage your account and much more.

Need some help?

To get advice on moving home with your current mortgage (porting), call one of our friendly mortgage advisers:

0345 1200 891*

9am - 5pm : Monday to Friday
9am - 1pm : Saturday

Important things to remember

  • We only offer our own products

  • You can obtain an illustration on any product you may be eligible for by calling us on 0345 1200 891