This is one of the most usual types of mortgage. The monthly repayment made by the borrower includes a repayment of capital borrowed and an amount for the interest charged. At the beginning of the mortgage most of the payment is used to cover the interest and only a small amount is paid towards reducing the mortgage. Over the term of the mortgage more and more of the monthly payment is comprised of paying back the capital borrowed. As long as the monthly payments are always made on time the mortgage is guaranteed to be paid off at the end of the term.

A capped rate mortgage is a cross between a fixed rate and a variable rate mortgage. The interest rate will never rise above a certain rate within what is known as the capped rate period. If the usual variable mortgage rate is less than the capped rate then the borrower is charged that variable rate. Such a mortgage is attractive as the borrower may benefit from falling interest rates but will not have to pay more than the capped rate.

Along with the term capped rate the phrase cap and collar mortgages may be encountered. The ?collar? is the minimum interest rate, whilst the maximum interest rate payable is known as the ?cap?. As these mortgages involve the lender having to source funds it is usual for early redemption penalties to be imposed if the mortgage is redeemed within a capped rate period.

With these schemes once a mortgage is completed a lender will pay a percentage of the mortgage as a lump sum to the borrower. The higher the percentage of cash paid the greater the amount of strings attached. These may be reflected in higher redemption penalties if the mortgage is redeemed in the early years and/or reflected in a less favourable rate of interest on the mortgage. It should be noted that if the cash back is large then this could result in a capital gains tax liability for the borrower.

When an individual takes out a mortgage the bank take a charge or a legal charge over the property. This means that they are registering the interest in the property.

This is the last stage in the purchase of a property. The legal documentation is finalised and the lender has sent the mortgage funds to the purchaser?s solicitor. Once the purchaser?s solicitor forwards the funds to the seller?s solicitor the property is now owned by the Purchaser.

see Conditional insurance?s

This is where a lender insists that certain insurance products be taken out before a mortgage is granted. The lender will insist on buildings insurance and, in rarer cases, may require accident, sickness and unemployment cover as well.

This is insurance which should be considered by all householders whether or not they have a mortgage. It covers items such as furniture; carpets, curtains; electrical goods and many policies also cover personal possessions, which may be removed from the home. This is separate to buildings insurance.

With the labour force becoming more flexible and employers having to meet different business needs, many workers are now employed on fixed term contracts. Fixed term contracts means that the individual is not employed directly by the company and is often not included in company benefit schemes, such as pensions and life assurance. As the company does not employ the individual they are not included in any redundancy schemes. Contract working has become popular as some individuals are paid a higher salary than those who are directly employed by companies to make up for the lack of company benefits. In some cases contract work is also suitable for those also who do not wish to be tied to one employer. Mortgage lenders will wish to see a consistent pattern of employment before they will lend.

This is a flat, which has been created out of a larger house or property.

This is the fee charged by a solicitor or licensed conveyer after the legal paperwork for transferring a property has been completed. It should be remembered that as well as this fee, stamp duty, land registry fees and legal disbursement fees also require to be paid.

This is a judgment for debt lodged in a County Court. Such judgments are recorded and will be shown when a credit check is run. An individual with CCJ?s will not easily be able to get a mortgage. Lenders will normally insist that such CCJ?s are satisfied or have been satisfied for some time before a mortgage will be granted.

This is where the mortgage lender evaluates the credit history of an applicant by referring to one of the major credit agencies.

Assessing the ability of borrowers to be able to meet the mortgage payments from answers entered on a mortgage application form.

These are the standard terms and conditions of a lender.

This is the usual mortgage rate charged by a lender. This rate moves up and down in line with interest rates and the general movement in mortgage rates.

A capped rate is a mixture between a fixed rate and a variable rate. The interest rate is guaranteed not to rise above a set level within the capped rate period but if the normal variable mortgage rate is below the capped rate then the variable rate is charged. This gives the 'best of both worlds' as the interest rate can fall but will not rise above the capped rate. However, the level at which the cap is fixed is usually higher than for a fixed rate mortgage for a comparable period of time. The lender will normally impose early redemption penalties if the mortgage is redeemed within the first few years (see Redemption Penalties ).

The annual rate of interest that will be earned if interest is credited to an account monthly, quarterly or bi-annually and allowed to remain on the account for that year. The rate will therefore be higher then the quoted standard rate and will enable comparisons with other accounts quoting annual rates.

Plastic cards used for withdrawing cash from ATMs, or hole in the wall machines, with a personal identification number (PIN) to confirm validity of the user. These cards are commonly combined with credit or debit cards

This refers to the group of lenders, other than high street banks and building societies, who operate without a branch network, normally from one location.

Enables purchases and spending similar to a credit card but the debt has to be settled in full each month.

Member bank of a national cheque clearing system.

Property or securities pledged to secure a loan, sometimes referred to as the 'security' for a loan.

Remuneration for work done as an agent or broker, paid by the product provider.

This refers to insurance products which some lenders will impose as a condition of their mortgage offer. This could mean that the lender insists that accident, sickness and unemployment cover is taken out or that combined buildings and contents insurance is taken. If looking for a fixed or discounted product then these conditions should especially be watched for.

Monthly index that measures the changes in a cost of a basket of consumer essentials and acts as a major indicator of a nation's inflation rate.

Collates information from a variety of sources on the borrowing habits of adults in the UK. This information, such as details of credit agreements, payment records, court judgements etc is supplied to lenders who use it in their credit scoring or underwriting systems. Details of personal records can be obtained by writing to the agency and enclosing a fee, normally of ?2-?3.

Overall credit worthiness of a borrower. For companies there are rating agencies that give ratings described in terms of 'AAA' or 'triple A'.

Another name for an instant access account offering banking facilities such as cheque book, cash card, guarantee card and automated payments (standing orders, direct debits etc).