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Our customer service team will explain everything to you, but if you want to check the meaning of a financial term, it should be listed below.

If you have any further questions, either call us on 01902 585020. Or we can call you back.

If you’re a homeowner you can use the equity you have in your home to help you sort out your finances, finance home improvements and deal with your debts. The wide range of products we offer at Promise Money means we can help find an ideal, affordable solution to suit you.

Adverse Credit

Credit not paid or not paid when agreed.

APR

Annual Percentage Rate of charge. The true rate of interest charged on a loan taking into account the total cost of interest and other charges e.g. brokers fees/legal fees. The calculation is set out in statutory regulations.

Arrears

Payments missed on borrowing.

Broker

An intermediary who identifies and places customers requiring a loan or mortgage with a lender able to provide it.

BTL – Buy To Let

A property that is purchased with the intention of letting it out to tenants. We offer Mortgages for this purpose. Not all buy to let mortgages are regulated by the Financial Conduct Authority.

Capped Rate

Interest rates can go up or down. A capped rate is one which has an upper maximum, but no lower minimum. It can go lower than the upper maximum but not higher, e.g. Capped rate of 5% – can be charged at 5% or below but not above 5%. The capped rate is normally set for a fixed period of time made clear at the outset.

Cashback

A type of loan where the borrower is given back a sum of money (usually expressed as a percentage (%) of the loan). Used by lenders as an incentive to promote their products. Cashback may need to be repaid if the mortgage is repaid early.

CCJ or CCJs – County Court Judgement

An order of a court against a debtor to pay money owed.

Compound Interest

Compound interest is one of the methods to calculate interest on a loan where interest is charged on a regular basis – monthly, weekly etc

Discounted Rate

A discounted rate gives a temporary reduction off the standard variable rate (SVR) for a specific set period made clear at the outset, e.g. – standard rate 5%, discounted rate 2% below = 3% is charged. If SVR went up to 7%, discounted rate would become 5%. Once the discounted rate period is over the customer is charged the normal SVR or given the option of considering some other deal from the lender.

Early Repayment Charges

When a loan is settled in full before it’s legal end date lenders make an early repayment charge. Full details of this amount or the basis for calculating it are made clear in the loan offer.

Exchange of Contracts

Agreement signed by house purchaser and vendor committing themselves to the transaction. Once the contracts have been exchanged a legally binding contract is in existence and the purchaser must complete the purchase within a specific period of time.

Endowment

A life assurance policy that is designed to produce a lump sum to pay off an interest only mortgage. There are a number of different kinds of endowment policies: ‘with-profits’, ‘unit-linked’ etc.

FTB – First Time Buyer

You are buying a property for the first time.

Fixed Rate

The rate is fixed for a specific number of years, so you know what your payments will be over that period. Following this period, the rate will usually revert to the lender’s standard variable rate.

Flexible Mortgages

These give various benefits which usually include the ability to vary payments in line with your circumstances. They may also allow you to take “payment holidays” and to borrow back any overpayment you may have made.

High Street Mortgages

The term used when the lender offers rates in line with High Street interest rates.

Home owner

The term used when the customer has purchased their home, normally with the aid of a mortgage.

IFA

Independent Financial Adviser.

Interest Only Mortgage

With this type of product, your monthly repayments will only cover the interest element of the loan. You will typically set up another repayment vehicle e.g. an endowment or Individual Savings Account (ISA) to repay the capital element of the loan.

LTV

Loan to value. This is the size of the loan or mortgage as a percentage of the value of the property or price being paid for the property e.g. A property valued at £100,000 with a mortgage of £90,000 would have an LTV of 90%.

Mortgage

A loan secured on a property. The lender registers a legal charge over the property as security for it.

Mortgage Deed

The formal document signed by the borrower(s) whereby they agree to the lender creating a legal charge over the property. The deed makes reference to the rights and obligations of both parties as detailed in the mortgage offer / loan agreement.

Negative Equity

The situation where the amount owed on a mortgage exceeds the value of the property.

Offer of Advance

Sometimes informally known as a mortgage offer. This document details the terms and conditions upon which the lender is prepared to make a mortgage loan. The applicant must sign and return a copy of the offer indicating their acceptance of the proposed terms.

RTB – Right to Buy

A term associated with legislation that gives council house tenants the Right to Buy their homes.

Remortgage

A mortgage which pays off the one already in place. Often used to raise additional funds or to achieve better terms.

Repayment Mortgage

Payments on this type of mortgage cover interest and capital. Providing all payments are made in full and on time the mortgage will be settled at the end of the term agreed.

Secured Loan (otherwise known as a second charge mortgage)

This is a loan secured by a property. The property is usually a home or business. It is called a 2nd mortgage because the 1st mortgage is left in place. The legal charge needed by this type of loan ranks 2nd to the main mortgage.

Security

When a loan is taken out it is ‘secured’ on a property, the borrower agrees to the lender creating a charge over the property; the deed makes reference to the rights and obligations of both parties as detailed in the Legal Charge, Standard Security or Loan Agreement. Thus the property is known as the ‘security’.

Security Address

When taking a secured loan or mortgage, the security address is the address of the property which is being offered as collateral for the loan. Where property is offered as security in this way, lenders are generally prepared to offer more flexible terms and lower interest rates.

Settlement Figure

The amount needed to settle the loan.

Sub-Prime Mortgage

A mortgage from a lender not regarded as being from the mainstream / High St. Loans of this type normally attract a higher than average rate of interest and are becoming increasingly rare in the UK. Reasons why a sub prime mortgage might be considered appropriate include:

  1. A history of adverse credit
  2. Someone unable to evidence their income by traditional means e.g. payslips, audited accounts.

Tenant

Someone who pays rent to a landlord and does not own the property.

Title Deeds

A set of documents showing past & present owners of a property. Includes names and details of parties that have registered a charge against the property. Held by the first mortgage lender whilst their charge remains in existence.

Unsecured Loan

A loan which does not demand any security.

Variable Rate

A rate of interest which may vary up or down during the lifetime of a loan.