Building Society Terms & Definitions

APR
(Annual Percentage Rate)
The interest charge based on interest payable over the loan’s duration, plus the entire amount of associated fees.

Administration Fees
Amount charged by your lender to pay for the cost of processing your application.

Asset
This refers to property with cash value (e.g. real estate, savings, investments)

Capped Rate Mortgage
Mortgage with an interest rate limit or “cap” that prevents your rate from increasing should the Base Rate go up. Any market fluctuations within the threshold of the cap will still affect your interest rate.

Credit Check
This refers to a credit history check made by a finance provider with a credit reference agency such as Experian. Lenders use these to help assess your loan application.

Deposit
This is money placed into your account.

First Time Buyer
Person that has not purchased a property before.

Fixed Rate Mortgage
Mortgage with a fixed interest rate over a set duration (5 to 25 years for example).

Interest-only Mortgage
Monthly payments based only on interest payments, with the principal of the loan left at the same amount for the entire term. To settle the amount at the end of the loan period, an associated fund such as a pension plan or an ISA is a prerequisite to taking this type of mortgage.

Legal Fees
Amount collected by solicitors serving on both you and your lender’s behalf.

Mortgage Broker
A paid agent who sources your mortgage options for you.

Mortgage Payment Protection
Insurance for protecting your payments over a set duration in case of redundancy or disability.

Redemption Penalties
(or Early Redemption Fees, or Pre-payment Penalties)
Amount charged by your lender for paying your loan entirely before the term is over.

Repayment Mortgage
(or Capital and Interest Mortgage)
Monthly payments based on interest plus a portion of the principal. For the first few years the loan is slowly reduced until eventually the payments are mostly capital repayments. This ensures that the mortgage will be settled by the end of the term.