Glossary of Finance Terms
The Homeowner Loans marketplace is full of jargon and we bring you this Homeowner Loans Glossary, a small selection of Plain English definitions for Loan terms.
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Adverse Credit
This term is used to describe Credit Problems due to a poor credit
history. The borrower may have CCJ's, Mortgage Arrears and other credit
debt repayment. Abusing credit or failing to meet credit repayments
leads to Adverse Credit. When used to describe:
Adverse Credit
Homeowner Loans they mean Loans for people with
Credit Problems or
Poor Credit Rating
Secured Homeowner Loan.
APR
APR or Annual Percentage Rate is the actual cost of interest on a
loan/mortgage and takes into account the amount of interest you will pay
and the term of the loan/mortgage. So the higher the APR the more you
will pay, the lower the APR, the less you pay. This is the easiest way
to compare loans to gain the best rate for you.
Arrears
Mortgage Arrears is used to describe missed, late or under paid mortgage
repayments. If you stay in arrears you are likely to end up with a
County Court Judgment or CCJ. This can also be described as defaulting
on your mortgage or Mortgage Defaults. A limited number of lenders will
consider lending credit to people with previous credit problems.
Bad Credit
This another term used to describe Credit Problems due to an adverse
credit history. CCJ's, Mortgage Arrears and other credit debt repayment
problems leads to a Bad Credit Rating. Bad Credit is more of an American
term with the UK more commonly using Poor Credit. When used to describe:
Bad Credit
Homeowner Loans they mean Loans
for people with Credit Problems or a
Poor Credit History
Secured Homeowner Loans.
Bankruptcy
Discharged From Bankruptcy - After a period of time a Bankrupt
Individual can be discharged from bankruptcy. This then releases them
from their financial obligations. There are some lenders that will
provide mortgages for ex-bankrupts.
Black Listed
All your credit history will be stored on databases by credit reference
companies. A lender will check these to find out your credit status. If
you have a severe credit history and your record will be black listed to
note severe risk. Some lenders will still lend on this but the interest
rate will be high until you can improve your credit history.
Bridging loan
This is a short term loan provided by a bank or building society which
covers you if you need to pay for your next home, while still waiting
for the money to come through from the sale of your current home. If you
do require a
Bridging Secured Loan, you must ensure that the funds to repay the
loan will be in place when the loan period expires.
CCJ or County Court
Judgment
If you have not made payment on any debt you have then you will be taken
to Crown Court. If the debt isn't satisfied then a decision or judgment
made in the County Court, normally for the non-payment of that debt will
be registered on your credit file as a CCJ. If the debt is paid or
satisfied and a satisfaction certificate obtained it will be noted on
your credit file. Having unsatisfied CCJ’s will seriously effect your
credit rating and limit the lenders available to you.
Credit Check
Before lenders consider lending you credit they will undertake a credit
check. A credit check determines your credit history whether you have
any CCJ's, defaults or outstanding credit card bills using the services
of a credit agency (Experian or Equifax). Most high street lenders don't
want anyone with a poor credit history.
Credit Scoring
This process is used by most lenders to determine what level of credit
risk you are. They use a scoring system based on credit history; good or
bad, length at current address, security, employment, income and
answering these questions gives them a score or Credit Rating.
Mainstream lenders only want high scores. However there are lenders who
will find credit to suit your score even if it is a poor credit rating.
The majority of your credit history and suitability will be on a
national credit database but it is up to individual lenders whether the
risk is acceptable.
Credit reference
agency
When assessing your application, a mortgage lender will study your
records. These records are held centrally by credit reference agencies,
and contain information for many different aspects of your life.
Debt Consolidation
To consolidate your debts means instead of several debts where you are
struggling to meet all the repayments you have just one manageable debt
with a repayment you can afford. However you are actually increasing
your debt with a
Debt
Consolidation Secured Loan and paying it over a longer period allowing lower monthly
repayments.
Defaults
If you have defaulted on a loan or mortgage it means that you are more
than 30 days behind the date your repayment was due. This will be marked
on your credit record and would lead to a CCJ if no payment was received
or received very late.
Equity
This is the difference between the amount you owe on your current
mortgage and the current value of your property. This amount can be used
in a remortgage to allow money for home improvements, a new car, holiday
of a lifetime or reduce your monthly premiums.
Impaired Credit
This refers to the credit rating of an individual who may have CCJs or
maybe behind with payments to personal loans or a mortgage. This phrase
is also applicable to someone who has
been declared bankrupt.
Interest rate
This is the percentage of your loan that a lender charges you each year
for the privilege of borrowing money. The prevailing level of interest
charged by lenders depends largely on the economy and the Bank of
England base rate.
Negative Equity
This means the value of your property is lower than the amount you owe
on your mortgage or secured on it. This will be a problem if you want to
move or maybe considering either a Remortgage or a Secured Loan.
Non Status
This another term used to describe Credit Problems due to an adverse
credit history. CCJ's, Mortgage Arrears and other credit debt repayment
problems leads to being classed as Non Status rather than Status. When
used to describe:
Non Status
Homeowner Loans they mean Loans for people with Credit Problems or a
Poor Credit
History Secured Loan.
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Personal Loan
A personal loan is a term used to cover secured loans and unsecured
loans. This is a loan taken out by a person or persons hence the name
Secured Personal
Homeowner Loan.
Poor Credit
This another term used to describe Credit Problems due to an adverse
credit history. CCJ's, Mortgage Arrears and other credit debt repayment
problems leads to a Poor Credit Rating. Poor Credit is more of an UK
term with America more commonly using Bad Credit. When used to describe:
Poor Credit
Secured Loans they mean Loans
for people with Credit Problems or a
Poor Credit History
Homeowner Loan.
Secured Loan
This is a Homeowner Loan that uses equity in your home for security to
allow better interest rates than being an Unsecured Loan. You can use
this loan for debt consolidation or home improvement. However, your home
is at risk if you fail to keep up repayments secured on it.
Sub Prime
This is a term used by lenders to describe the sector of Loan
Problems. A sub prime loan is the same as a
Non Status
Secured Loan, a
Non Standard Loan, an
Adverse Secured Loan, a
Poor Credit
Homeowner Loan or a
Bad Credit
Secured Loan. Put simply, it is a Loan for
People with Credit Problems.
Security
When a loan is taken out it is 'secured' on a property, the borrower
agrees to the lender creating a charge over the property; the deed makes
reference to the rights and obligations of both parties as detailed in
the Legal Charge. Thus the property is known as the 'security'.
Self Employed
An individual who works for himself/herself. This will include partners
in businesses and professional practices such as lawyers. You will be
best to apply for a
Self
Employed Homeowner Loan.
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Tenant Loan
A Non-Homeowner or Tenant will take out an unsecured loan because they
have no home to act as security for the Loan. This is a Personal Loan
for Tenants and Non-Homeowners. Interest Rates are usually higher than
Secured Loans.
Unsecured Loan
A Homeowner will take out an unsecured loan because they
don't want to use their home for security against the Loan. They might
not be able to use the house due to negative equity. Interest Rates are
usually higher than Secured Loans.
Wedding Loan
This is Secured Homeowner Loan to cover wedding expenses. An average church
wedding with all the trimmings can cost about £10,000. A wedding loan
can be used to make your or your daughters special day a memorable one.
