The Better-Mortgages uk mortgage terminology glossary (B)

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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Bankruptcy

Occurs when an individual is deemed insolvent by a County Court under the provisions of the Insolvency Act 1986. A bankruptcy petition can be initiated by the individual himself or his creditors. Once granted, it remains in force for three (sometimes two) years. Most lenders have a clause in their mortgage conditions which provides a right to possession on bankruptcy, though this is seldom pursued unless the account goes into arrears. A mortgage lender can require mortgage payments to be made direct by the bankrupt person rather than via an Official Receiver or Trustee in Bankruptcy.

Base rate

The Bank of England (BoE) Base rate is the national 'cost of borrowing' interest rate set and reviewed by the Bank of England. A lenders Base rate is the lenders interest rate upon which all other product lending rates are based. Most lenders Base rates are higher than the BoE Base rate.

Base Rate Tracker Mortgage

A mortgage which is based on the lenders base rate which is usually close to the Bank of England base rate is called a Base Rate Tracker Mortgage. The interest rate is usually guaranteed at a fixed rate above the lenders base rate, unlike the lenders standard variable rate. Your mortgage interest rate will alter in line with any change to the lenders base rate, while maintaining the fixed rate gap.

Betterment clause

In the context of property insurance, a Betterment clause reserves the right of the insurance company to reduce the amount paid in respect of a claim so that the claimant is no better or worse off. This is an application of the principle of indemnity.

Bridging Loan

A short term loan designed to cover the costs of temporarily owning two properties (the one you're buying and the one you're selling) in order to help the property chain move. Because of the short term nature of the loan, interest rates will be higher for a Bridging Loan than a normal mortgage.

Building Societies Commission

The Building Societies Commission is a body established under Section 1 of the Building Societies Act 1986 to regulate the activities of building societies. Its powers to regulate and issue guidance to societies passed to the Financial Services Authority with the coming-into effect of the Financial Services and Markets Act 2000.

Building society

A mutual savings and loan institution established under the Building Societies Act 1986 is called a Building society. The principal purpose is to create loans secured on residential land, funded by savings of members and depositors.

Buildings and Contents Insurance

Your Buildings and Contents Insurance policy covers damage to both the fabric of the building caused by events such as fire, flooding or storm, and also damage to the contents of your home from events including those described above, and also theft or other events causing loss or damage. It is a condition of a mortgage that Buildings insurance is taken out, and this can be purchased separately. Contents insurance can also be purchased separately for those cases where you do not own the property but only rent it.

Buildmark

The Buildmark is a defect protection scheme offered by the National House Building Council (NHBC).

Buy-to-Let 

Buying a property for the purpose of renting (or letting ) it out is called Buy-to-Let.

Buy-to-Let Mortgage

To purchase property as an investment in the private rental sector you will need a Buy-to-Let Mortgage. Your finances are assessed as though you are the person occupying the property. The assessment can be based on projected rental income and/or your earnings dependent on the lender’s lending policy. Where the assessment is based on rental income, most lenders would expect rental income to be at least 30% higher than the mortgage repayment value. You will probably not be lent more than 80% of the property value.

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