The Better-Mortgages uk mortgage terminology glossary (A)

As with any industry, the world of mortgages has it's own language and definitions. Use the definitions in this glossary to look up uk mortgage terminology you are not familiar with.

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100% Mortgage

This offers you a borrowing of 100% (sometimes more) of the value of the property, so no deposit is required. Rates may be fixed, variable, discounted or capped. It depends on the prevailing economic conditions as to whether any lender is prepared to offer a 100% Mortgage.

Absolute title

This is one of the four classes of title which can be registered at the Land Registry. Absolute title is the strongest title that the registered uk owner can have.

Additional security

Sometimes referred to as 'other security', this is any security for a mortgage in addition to the property. The main type of Additional security is a single premium insurance policy, or mortgage indemnity guarantee (MIG). A MIG is usually required for loans in excess of 75% loan-to-value.

Adverse credit

This means that a person has a poor credit history. A person may still be able to obtain an Adverse credit mortgage even if they have defaults on debts or county court judgments ( CCJ ) against them.

All monies deed

An All monies deed is a mortgage deed used by some lending institutions whereby the deed secures all borrowings by the customer, not just the amount borrowed by way of mortgage.

Allodial land

Land in Scotland which is held outside the feudal chain - that is, with no superior claim. Allodial land comprises of Crown property, some church land and udal land (a type of Viking tenure) in the Orkney and Shetland isles.

All risks

This is an extra layer of contents insurance offered by most insurance companies. All risks cover usually provides for accidental damage and loss of personal belongings whilst off the premises. It covers all risks except those specifically excluded.

Annual review scheme

This applies to variable rate mortgages. The borrower's capital repayment is set once a year, with interest charged to the account at the going rate. If the review period happens during a period of interest rate volatility, an Annual review scheme could result in a larger than average change in total repayment each year.

Annual rest

A common method of accounting for interest due on a mortgage. Under the Annual rest method, the lender charges a full year's interest to the account annually If a part capital repayment is then made the account is adjusted accordingly at the next review period.

Annuity linked mortgage

An Annuity linked mortgage is a repayment method aimed to help older borrowers raise capital on their personal dwellings. The annuity raised, using the house as security, typically provides income for the 'annuitant' (borrower), a part of which pays the interest on the loan raised to purchase the annuity.

Annuity method

The Annuity method is the once-common name for the traditional capital and interest mortgage.

Annual Percentage Rate ( APR )

This is the rate of charge on a loan calculated to a set formula. It includes not just the rate of interest, but also associated costs. The Annual Percentage Rate was introduced to provide a meaningful comparison of rates charged by different lenders. However in recent years more sophisticated repayment systems have made APR much less meaningful than in the past.

Arrangement fee

This is a charge levied by the lender. The Arrangement fee covers the cost of setting up your mortgage.

Articles of association

The Articles of association are description of the internal constitution of a limited company, setting down conditions relating to officers, meetings, etc.

Assignment

In the context of mortgages, an Assignment means the assignment to the lender of life policies taken out to repay the capital at the end of the mortgage term, or on prior death of the borrower. A deed of assignment is required. This gives the lender the legal right to cash in the policy in the event of default by the borrower. It also requires the life company to inform the lender of lapsed payments or the policy being `paid up'. Many lenders no longer require assignment of life policies, though some take a deposit of the policy document instead.

Assured tenancy

This is a method of creating a tenancy which provides the tenant with some security of tenure for the agreed period. For most uk Buy- to- Let rentals, the Assured tenancy is a an 'Assured Short-term Tenancy' (AST) which is normally renewable every six months.

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