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A range of useful guides and help content to make the journey to purchasing your next home easier.
The words and phrases often used in the mortgage market or house buying process can often be full of jargon and sometimes complicated. We’ve listed out the most common ones in our mortgage glossary to help provide clearer definitions.
Accessibility is the degree to which a product, device, service, or environment is available to as many people as possible.
We are committed to ensuring that all our products and services are easily and equally accessible to all our members, enabling disabled people to conduct their business with us without difficulty.
Sometimes called a further advance. This is the term used when an existing mortgage customer wishes to increase their mortgage borrowing, which can be done 6 months after the main mortgage loan has completed. Additional borrowing is often used to fund home improvements but can be taken for any purpose (except capital raising).
Add fee to loan
You can add the product fee to the loan and spread the cost over the remaining term of the mortgage.
A recommendation to enter into or vary the terms of an existing mortgage based on your individual needs and circumstances.
Agreement in principle
An initial document from your lender that gives you an idea of the amount they are likely to lend you. This certificate is not a guarantee, but is often needed when dealing with estate agents, so they have an idea of the size of your mortgage and if you can afford the property. Also known as a ‘lending decision’ or ‘decision in principle’.
Annual Equivalent Rate (AER)
AER stands for Annual Equivalent Rate and shows what the interest rate would be if interest was paid and compounded once a year.
Annual Percentage Rate of Charge (APRC)
The APRC is the total cost of the mortgage shown as an annual percentage (%). We provide the APRC to help you compare different products across different lenders.
This is a temporary agreement for those who have previously had payment difficulties, allowing you to pay more than the normal monthly payment. This allows you to pay arrears, or the shortfall that arose during a period when you were making concessionary payments, without incurring any charge for overpayments which might otherwise arise under the terms of an early repayment charge.
Bank of England
Responsible for issuing bank notes and maintaining a stable financial economy; the Government bank and also a lender for commercial banks.
Banker's draft (also known as a counter draft)
A cheque drawn on the bank or building society itself against either a cash deposit or money taken directly from your own bank account. A banker's draft is a secure way of receiving money from someone you don't know and where cash is inconvenient. Banker's drafts are commonly used for large purchases such as homes and cars.
The interest rate set by the Bank of England Monetary Policy Committee which is used as a benchmark by lenders to set their own rates, which would generally be higher. This is reviewed each month throughout the year and can fluctuate (go up and down)
Base Mortgage Rate
A variable rate, guaranteed to be no more than 2 percent above the Bank of England base rate. You have the flexibility to make overpayments without incurring an early repayment charge.
The Base Mortgage Rate is not available for new mortgage deals and only applies to customers coming to the end of their deal where the product was reserved on or before the 29 April 2009.
If you choose to switch to a new Nationwide mortgage product, the new product will currently revert onto our Standard Mortgage Rate (SMR) not the Base Mortgage Rate (BMR). The SMR has no upper limit or cap and you wouldn’t be able to revert to the BMR at a later date.
A binding offer means once we make the offer, we're bound by its terms. However, because your offer is based on the information you've provided and our assessment of your mortgage application, if there is a material change in your financial or personal circumstances or your solicitor raises any issues which make the property unacceptable to us, it could still be withdrawn. You're free to cancel your application at any point up to the time you receive your mortgage funds.
A special type of loan which is taken out to overcome a short term cash flow problem, usually needed when you buy a property before you sell.
A feature of a mortgage where any overpayments made may be withdrawn and borrowed back. Any overpayments will have already reduced the balance outstanding, so when it is borrowed back the balance will increase. Interest will be charged on the higher balance and monthly payments will also increase. All requests to borrow back overpayments are subject to an eligibility assessment and current lending criteria. (Consent from all applicants is required.)
Not all of our products have the borrow back feature, for example Consumer Credit Act 1974 regulated accounts do not benefit from this feature.
All mortgages reserved on or before 3rd March 2010 include the option to borrow back, subject to eligibility. Any mortgages reserved after this date do not include this facility.
This is insurance cover for a building which pays out an insured amount, in the event of a claim, for an insurable event under the policy terms, such as fire, flood and wind. In most cases, buildings insurance is needed as part of a mortgage terms.
Specific mortgages that are aimed at those that buy property to rent out.
The amount of money you have actually borrowed, or still owe on your property (not including interest or other charges)
Capital Gains Tax
A Capital Gains Tax is a tax on the gain or profit you make when you sell, give away or otherwise dispose of something. It applies to assets that you own, such as shares or property. There's a tax-free allowance and some additional reliefs that may reduce your Capital Gains Tax bill. Sometimes you may have no tax to pay.
Capital and Interest mortgage
Where you pay off part of the ‘capital’ (amount borrowed) as well as interest each month (as opposed to ‘interest only’). This usually means that everything (capital and interest) will have been fully paid off by the end of the agreed term. Also known as a repayment mortgage
Something of value that is given as a guarantee to the lender that you are able to pay back the loan; in the case of mortgages it is the house itself
The final stage of the sale when the ownership changes hands from the seller to the buyer.
Consent to Let
Permission from your mortgage provider will be required if you wish to let/rent out your property if your current mortgage is arranged on a residential basis.
The material used to build the wall of the insured property i.e. brick or other material.
Varying the terms of an existing mortgage, for example reducing/extending the term or converting the repayment type.
The process of transferring ownership from one person to another.
Credit rating is a rating system used by financial institutions, to judge an individual or company's creditworthiness. Depending on how many points the applicant gets when his/her personal details are run through the rating system, the financial institution will either accept or reject the risk. Financial institutions rely on computerised credit rating systems, and co-operate with each other in providing details of bad credit risks.
Credit reference agency
Credit reference agencies are organisations that gather information about people and businesses across the UK. This information comes from lenders such as banks, credit card companies and fraud prevention agencies, as well as records in the public domain.
Credit report is a report issued by a credit agency usually for a small fee which highlights someone's past purchase behaviour and credit rating.
Credit scoring is a way of assessing someone’s financial status. This is used to decide which credit facilities can be offered to customers.
A credit search is when we carry out a search with a credit reference agency to help us understand more about your credit history. Each time a search is done it is noted on your credit record to let other organisations know that we have asked for information about you.
Where your interest is calculated daily, which means you only pay interest on what you owe.
Taking out one loan to pay off a number of other debts. You may be able to spread the loan over a longer period, which may reduce your monthly payment, but by increasing the term you may pay more interest overall.
It may be possible to increase your mortgage or personal loan to pay off debts, but it’s important to seek advice before doing this.
You need to think very carefully before securing other debts against your home as your home may be repossessed if you do not keep up repayments on your mortgage.
A Direct Debit is an agreement between you and a company you want to pay on a regular basis. The agreement you make authorises the company to collect varying amounts from your account on a regular basis. Because you’re covered by the Direct Debit Guarantee, the company should always tell you what these amounts are - and when they’ll be collected.
Early Repayment Charges
If you repay a loan or a mortgage early or make an overpayment of more than your overpayment allowance, an early repayment charge may be payable.
The monetary difference between the current market value of a property and the mortgage loan held against that property.
Execution Only (Mortgages)
A mortgage transaction completed by a firm upon the specific instructions of the customer where the firm does not provide advice relating to the suitability of the mortgage transaction.
Exit fees (also known as redemption charges)
Charged by some lenders when you exit a credit agreement early.
First Time Buyer
A person buying their first property.
Fixed rate mortgage
A fixed rate mortgage provides the security of fixed mortgage repayments until the end of the deal period, no matter what happens to interest rates.
Nationwide offers the following flexible mortgage features as standard:
Forces Help to Buy
This scheme allows eligible members of the Armed Forces to apply for an advance of pay up to 50% of their salary (to a limit of £25,000) which can be used towards their deposit. This is then paid back over a period of up to 10 years through their monthly salary. The pilot scheme is running for three years and is intended to encourage home ownership amongst eligible Armed Forces personnel.
Where the sale includes the property and the land on which the property is built, and you have complete ownership of both for an unlimited time.
Higher Lending Charge
Some lenders impose a Higher Lending Charge if you only have a small deposit. At Nationwide, we don't.
This is a type of property insurance that covers a private residence. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.
Premiums and payments are not linked to your mortgage and are payable to a separate policy.
A person selling one property and purchasing another property.
Borrowing: This is the rate at which the lender calculates the interest they charge the borrower, expressed as a percentage.
Saving: This is the rate at which is paid to an investor for money that they have invested in a savings account.
Interest only mortgage
With interest only mortgages, your monthly payments only cover the interest on the amount you owe (so you're not reducing the outstanding sum each month).
You will need to put additional money aside to repay your mortgage at the end of the term, for example into an investment such as an endowment policy or ISA.
A Government department that records registered land in the UK (or ownership), along with details of that land such as mortgages or sales.
Someone who has a financial interest in your property such as a mortgage provider.
Lending Into Retirement
When the mortgage term exceeds beyond the customers retirement age.
These are the debts you owe to creditors, which may include your mortgage, car loan, credit card debt, etc.
Loan to Value (LTV)
The loan to value represents the amount you are looking to borrow (or the remaining amount of your existing mortgage) as a percentage of the value of the property. For example, if a property is valued at £100,000 and you have a £80,000 loan, the LTV is 80% (80,000/100,000 x 100 = 80%).
Mortgage Payment Protection Insurance (MPPI)
This insurance can cover your mortgage payments if you can’t work because you’ve become unemployed, or can’t work because of an accident or illness.
New Build Property
The definition of a 'new build' means a property that has not been occupied within two years of being newly constructed, converted or refurbished.
No Extended tie-ins
You won't be tied-in to any extended Early Repayment Charges.
Notice of default
Legal notice given by the mortgage lender detailing a payment default (missed payments) by the borrower. This notice will also contain details of the steps the borrower must take to pay this off and by what date, otherwise the property may be taken over by the lender (see Claim for possession).
A type of mortgage that allows you to save on the interest you will pay on your mortgage debt by ‘offsetting’ any savings you (or perhaps family/friends) have linked to your mortgage. For example if you have a mortgage of £120,000 and put savings of £20,000 with your lender, in this type of mortgage you would only pay interest on £100,000.
This is when you pay more than your required minimum monthly payment and build up an overpayment reserve. This enables you to pay off your mortgage or personal loan earlier, or make underpayments in the future (conditions apply).
'Per Annum', which means 'each year'.
Part and part mortgage
Where you choose to split your loan so that you repay part of it on an interest-only basis and part of it on a repayment (capital and interest) basis each month.
For mortgages reserved on or before 3rd March 2010 you can apply for a payment holiday of between one and twelve months, if you match our eligibility criteria.
If you want to find out more information or apply for a payment holiday please call us on 08457 30 20 10
To be considered a Permanent Resident of the UK, you must have Indefinite leave to remain in the UK and you should consider the UK as your home.
Most of the mortgage products available through Nationwide are "portable" which means that they may be transferred from one property to another when you sell one property and buy another (terms and conditions apply).
A fee charged on some mortgages to secure a particular mortgage deal. For mortgages reserved on or before 3rd March 2010, this was known as a reservation fee.
When you apply for a mortgage we may ask you to pay a valuation fee to cover the cost of valuing your property. The valuation fee is payable prior to valuation and is non-refundable if the valuation is carried out. The valuation is very basic and is carried out for our benefit. We strongly recommend that you have a more thorough survey undertaken, such as a HomeBuyer Report.
This will tell you about the quality and condition of the house you want to buy. There is an additional fee for this service, which can be arranged through Nationwide.
If you enter into a new mortgage with Nationwide and subsequently repay your mortgage more than ten years before the natural term, you will pay a charge (currently £90) unless you are taking a new Nationwide mortgage at the same time.
A reflection period is the amount of time you have to consider the terms of a mortgage offer before accepting them. Usually this will be at least 9 days from the day we issue your mortgage offer. However, you don't have to wait for the reflection period to end before you accept the offer.
When you move your mortgage to another lender (adding to or replacing your existing mortgage) without moving home. Usually people remortgage to save money by taking a better deal with another lender, and sometimes also to get cash for e.g. an extension, car or other purchase.
Repayment (capital & interest) mortgage
Each month you pay off part of the ‘capital’ (amount borrowed) as well as interest. This usually means that everything, capital and interest, will have been fully paid off by the end of the agreed term of the mortgage
This is where a property is ‘taken back’ by the lender if the borrower fails to make the mortgage repayments. The property is then sold so the lender can get their money back. Always let them know as soon as possible if you are struggling with repayments.
Standard Mortgage Rate
A variable rate, which is not subject to any upper limit or a cap and has the flexibility to make overpayments without incurring an early repayment charge.
The Standard Mortgage Rate is not available for new mortgage deals and only applies to customers coming to the end of their deal where the product was reserved on or after the 30 April 2009. The Standard Mortgage Rate is not available for new mortgage deals and only applies to customers coming to the end of their deal where the product was reserved on or after the 30 April 2009.
This is a regular payment arrangement you have set up with your current account provider to make a payment or transfer to someone.
An inspection of the property by a qualified surveyor carried out before buying a property. (Structural Survey also known as ‘building survey’.)
When a customer switches from one product to another with the same provider, i.e. current account types, or mortgage products.
Switch and Fix
Our tracker products offer the option to switch to a fixed rate within our 'Switch and Fix' range at any point in the deal period, without paying Early Repayment Charges on the tracker mortgage.
Telegraphic Transfer fee
Also known as a CHAPS transfer, this term is used to refer to sending funds from one bank to another electronically. There is usually a fee involved.
As the name suggests, this is banking over the phone. You can get details of your balance, pay bills, or report lost or stolen cards.
The documents held at the Land Registry that prove legal ownership of a property and all other dealings with that land; England and Wales, Scotland and Northern Ireland all have their own Land Registries.
Tracker mortgages often have a lower limit called a tracker floor or a collar. This means that if the Bank rate falls past this point, any cut will not be passed on to customers.
Tracker Rate Mortgage
With a tracker mortgage, the interest rate you are charged tracks the Bank of England's (BoE) base rate up and down by an agreed percentage.
Thus your payments will go up and down in line with the rate changes, except where the BoE base rate goes below the tracker floor.
By making overpayments to your mortgage account, you can improve your flexibility when it comes to underpaying in the future. Any overpayments you make during each calendar year, within your product’s annual overpayment allowance, will contribute to and build up an overpayment reserve. For example, if you have an overpayment allowance of £10,000 over the course of a year and make a £1,000 overpayment in one month, you can use the £1,000 to pay reduced monthly payments at any time up to the value of the credit balance you have built up, provided all of your accounts are up to date. So if you find you want some flexibility with your monthly payments for a few months, your overpayment reserve can cover your monthly payments, or allow you to ‘underpay’ to reduce your monthly mortgage payment.
The charge for obtaining a valuation report of a property, also known as a valuation cost. Usually the fee increases with the value of the property.
Variable Rate mortgage
This is where the interest rate offered by the provider varies and can move up and down with market fluctuations
Another word for the person selling the property.
When you buy a property, the process of legally transferring ownership from the seller to the buyer, as well as the various checks and searches that need to be completed, is known as conveyancing.
With Nationwide, you can arrange for your conveyancing to be carried out through our Nationwide Conveyancing Service. We've teamed up with a company called Legal Marketing Services (LMS) who provide the Nationwide Conveyancing Service on our behalf. LMS work with various conveyancers up and down the country who will work as hard as we do to meet your needs.
The work your conveyancer carries out ensures that the seller has the legal right to sell you the property, that your new home has the rights you would expect, and these aren't subject to any restrictions you’d find unacceptable (such as a public footpath through the garden).
Your conveyancer will also ensure you're legally bound to buy the property through the exchange of Contracts, and that the purchase is completed for you by transferring your mortgage funds.
The option to instruct Nationwide's Conveyancing Service is offered as part of the mortgage application. You can apply for a mortgage online, speak to your mortgage adviser in your local branch or call us on 0800 111 44 10.
The solicitor instructed for you will then take over the case and contact you directly.
Want to know more?
Download our Nationwide Conveyancing Service leaflet
YOUR MORTGAGE IS SECURED ON YOUR HOME. THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
Mortgages are subject to underwriting and criteria. Minimum age 18, UK residents only.