The Better-Mortgages uk mortgage terminology glossary (C)

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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Capital adequacy

The requirements laid down by regulators to comply with a specified capital requirement (i.e. reserve position), determined by looking at the risk profile of the institution's assets.

Captive insurer

An insurance company set up for the purpose of providing insurance services for its parent organisation is called a Captive insurer. In 1994 the Treasury permitted building societies to set up captives to write their own MIG business. Groups of societies can set up a captive between them for this purpose. Though societies can wholly own a life insurance company, they cannot own more than 15% of a general insurer, except in connection with MIG business.

Capital reduction

When a borrower makes a lump sum payment to reduce the capital amount owed on a mortgage, a Capital reduction occurs.It is commonly called a part redemption. Some institutions specify minimum amounts they will consider as capital reductions.

Capped Rate Mortgage

A mortgage which has a maximum interest rate for a given period is called a Capped Rate Mortgage . The interest rate you pay will not go higher than the agreed capped rate during the period, but may rise or fall underneath the capped rate. At the end of the period the rate reverts to the lenders standard variable rate.
 
A variant, called 'Cap & Collar' is where you only pay an interest rate between a maximum (the Cap) and a minimum rate (the Collar or 'floor').

Cash-Back Mortgage

A mortgage which provides a cash rebate on completion of the property purchase is called a Cash-Back Mortgage . The sum is either a percentage of the advance or a fixed amount.

Centralised lenders

These are organisations which lend from a single office or through a network of introducers. Their mortgages are mainly funded from wholesale sources.

Chattels

A term used to describe moveable possessions, such as furniture, consumer durables and fittings (but not fixtures). The word Chattels is a corruption of `cattle', from the times when livestock formed the bulk of a household's possessions.

Cherry picking

The practice of some financial institutions through which business is targeted at specific market segments to the exclusion of others. Less desirable business is either refused out of hand or offered at high, uncompetitive prices or rates of interest.

Classification of business assets

The Building Societies Act 1997 requires that not less than 75% of a society's business assets are loans fully secured on residential property.

Clogging the equity of redemption

The act of preventing a borrower from redeeming a loan early is called Clogging the equity of redemption. Though it is possible for a lender to impose charges for early redemption, it is a common law right of any mortgagor to be able to redeem a loan at any time.

Closing

A term sometimes used instead of completion - the point at which the mortgage contract is signed and executed.

Closing date

In Scottish conveyancing, the Closing date is the date by which offers to purchase a property have to be received by the vendor's solicitor

Common property

In Scottish law, property held by two or more persons, with each person's share of it specifically defined is called Common property. On the death of one person, the assets pass to the estate, not the other parties. It is the Scottish equivalent of 'tenancy in common'. 

Completion

The point at which the mortgage is signed and executed and all its conditions come into effect is called Completion. In the sale and purchase of property, it is when the balance of the purchase price is paid by the purchaser to the seller and, in exchange the seller hands over the deeds.

Consent to mortgage form

Lenders require a ' Consent to mortgage form ' to be completed by any occupier of the property in question aged 17 or over who is not party to the mortgage. The form waives any rights of residence that the third party might have, enabling the lender to obtain vacant possession in the event of default. Consent forms were introduced following the Boland and Brown cases.

Consolidation

The right of a person (the lender) in whom two or more mortgages are vested to refuse to allow one mortgage to be redeemed unless the other or others are also redeemed. Consolidation can be used, for example, to prevent the redemption of the loan on a property of worth. while leaving a property of little value still mortgaged, thus leaving the lender exposed.

Consumer Credit Act

The Consumer Credit Act is the law which regulates certain secured and unsecured lending. Regulated loans require set procedures for both pre-loan administration and default arrangements. The Consumer Credit Act also sets out requirements for `cooling-off periods' - these provide the opportunity for borrowers to change their minds.

Contract

An agreement for the sale of property, goods, or services between the seller and the buyer. In the case of a property sale in England and Wales, a Contract is binding once the contractual documents have been exchanged.

Contributory mortgage

This is a mortgage where there is more than one lender. A Contributory mortgage is often used in inner-city partnership projects.

Conveyance

The act of transferring the ownership of property from one person to another is a Conveyance of property.

Conveyancer

The person who carries out the legal tasks of transferring ownership of a property from one person to another. Most often the Conveyancer will be a solicitor but any trained professional conveyancer should be able to perform conveyancing.

Cooling-off periods

A period in which the Lender cannot contact the borrower, allowing the latter to reconsider prior to finalising a loan. Cooling-off periods were introduced by the Consumer Credit Act 1974.

Corporeal property

Tangible property i.e. physical things which can be seen and touched, such as land, physical belongings and so on, are called Corporeal property.

Council of Mortgage Lenders

A trade body representing banks, building societies and other mortgage lenders. It provides a forum for exchange of views on common issues confronting lenders, as well as acting as a powerful lobby group on their behalf. The Council of Mortgage Lenders operates from the London premises of the Building Societies Association.

County Court Judgement ( CCJ )

A form of legal judegment, a County Court Judgement (or CCJ ),  requires a person to make good on a non-payment of an outstanding debt.

Court of Protection

A court which appoints a person to represent the interests of those who are mentally incapacitated (England and Wales only) is called a Court of Protection.

Covenants

Promises contained in deeds are called Covenants and are enforceable. There are basically two types. A positive covenant requires the person bound by it to do something, for example, to build or maintain something. A negative covenant prevents the person from doing something, for example, NOT building or NOT erecting a fence.

Credit bureau

An organisation maintaining a database on the credit history of data subjects is called a Credit bureau. Lenders and other interested parties will use a Credit bureau to advise on matters relevant to the credit status of the prospective customer.

Credit scoring

A technique based on probabilities, Credit scoring is used by lenders to assess the degree of risk exposure arising from a potential lending situation.

Critical Illness Insurance

An insurance providing a tax-free one off payment on the first diagnosis of one from a range of specified illnesses. The illnesses need not be terminal, but most terminal diseases are covered under the terms of the Critical Illness Insurance policy. 

Curator bonis

In Scottish law, a Curator bonis is a person who is appointed by a court to represent the interests of a person of unsound mind.

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