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UK Insurance directory  - Insurance Glossary A-D

Mortgage Protection Glossary A-D
          

Acceptance Terms ::             

These are documents detailing your insurance policy after the underwriting process has been completed.

Accident ::              

An unknown occurrence which happens beyond your normal control and leads to injury or damage.

ASU ::     

Represents accident, sickness and unemployment.

Accident or Accidental ::       

An unknown occurrence which happens beyond your normal control and  leads to injury or damage.

Additional Premium  ::             

A charge made by the insurance company or broker due to a material change in the insurance conditions or terms.

Adjustment ::          

A credit or debit to a previous payment made by the insurance company or insurance broker due to a material change in the insurance conditions or terms.

Advance ::             

A loan or mortgage agreed between the  lender and yourself as the borrowed amount for a maximum period agreed.

Age banded premiums ::        

Younger people, aged 18 or over will be paying less premiums.

Aggregate Limit  ::  

This represents the aggregate limit under a liability insurance policy which is the total cover for a defined period irrespective of the number of claims made.

Agreement ::          

This will be the printed mortgage contract terms and conditions.

All Risk ::                

An all risks insurance policy covers for all loss or damage perils which specifically excludes some defined events.

Amortization  ::       

Capital and interest payments of a loan obligation to be repaid in a series of instalments for a defined  period.

Annual Percentage Rate (APR) ::          

This represents the absolute total charge for the agreed loan amount inclusive of fees and the interest is represented as a percentage.

Annual percentage rate (APR)  ::          

This represents the cost of a mortgage as a annual (yearly) rate. 

Applied or Nominal Interest Rate ::         

This represents the rate of interest which is to applied by the lender.

Appraisal  ::            

An appraisal of a property is carried out by an expert property valuer in order to determine its value.

Arrears ::               

An unpaid overdue mortgage debt or an agreed payment holiday or some other agreed non-payment which must be repaid before the end of the maximum payment period.

Arrears Charges ::

This represents the lenders additional legal and administration charges which will be applied when the customer(s) has arrears on their account.

Arrears Costs ::     

This represents the lenders additional legal and administration costs which will be applied when the customer(s) has arrears on their account.

Assignment ::         

The benefits of the mortgage rest with the lender if you default for any reason and the lender will be paid first.

Assurance ::          

Here the insured will pass on its risk to the insurer for a given premium relating to specified risks.

Assured ::              

This will be the person or persons named under the policy.

Assurer ::               

Represents the insurance company.

 

Back to Day 1 cover ::           

The insurance claim will be back dated to the first day of the claim after a period of 30 days has lapsed on a rolling basis under the terms of policy.

Balance ::               

This represents the remaining amount left after all debits and credits are taken into account.

Bank of England base rate ::  

The Bank of England sets the interest rate which affects all lenders and sometimes referred to as the base rate.

Base Mortgage Rate ::           

The Bank of England sets the interest rate which affects all lenders and sometimes referred to as the base rate.

Borrower (Mortgagor)  ::       

This represents the person(s) who have taken out a loan from a lender with the intention of paying it back at a certain amount per month and at a certain interest rate.

Bridging loan ::       

This represents a short term loan taken out to assist purchasing a new property and selling the existing property.

Broker/ Intermediary ::            

This is usually the independent financial advisor who arranges a loan or mortgage for a fee.

Building survey ::   

This is the detailed inspection of property which is the subject of sale carried out by a professional qualified surveyor.

Buildings insurance ::             

The Owner has to take out property insurance to protect their interest in the case of possible harm or damage.

Business Interruption (Loss of Profits) ::

The loss of revenue to the business can be protected by insurance from day one until expiry of the insured period, normally 1 to 4 years.

Buyers market ::     

The property market is considered to be in recession and there are more sellers than buyers.

 

Capital ::

Wealth in the form of money or property owned by a person or business and human resources of economic value.

Capital ::

The actual tangible amount left after deductions for interest and related costs (money in hand).

Capital Repayments ::            

The monthly amount needed to pay off your loan or mortgage.

Capital and Interest  ::            

This refers to a repayment type mortgage which has two attributes of capital and interest.

Capped Rate  ::      

The rate of interest is set at a maximum level for a number of years from the start of the loan or mortgage.

Cashback  ::           

Certain loans and mortgages may have the option of giving a lump sum back at the end of the loan or mortgage period.

CAT standard ::      

Introduced by the Government (Charges, Access and Terms) for lenders to have fair and open fees or charges that customers have to pay. 

Ceased to Trade ::

This is a business which has gone into total liquidation or bankruptcy and is not temporary.

Certified ::               

A Doctor  or the Employer has to give a written notification based upon their original letter headed paper or stamped original documents.

Chain ::   

The dependency of sellers and buyers selling one home to buy another.

Chronic Condition ::

This is a health condition which occurred before the policy came into affect.

Claim ::    

The beneficial right of the policy holder or other interested parties to demand the value of the loss suffered from the insurer.

Closing  ::               

Closing or settlement occurs at a given date for all parties concerned with the transaction.

Closing administration charge ::             

When all mortgage debt has been paid, the lender will charge fees to cover their final administration costs.

Collateral / security ::             

This is normally the property asset, which can be sold by the lender in the case of default of payment.

Commitment  ::        

The lender normally makes a written statement as to what can be borrowed stating the conditions and terms.

Completion ::           

This occurs when your legal advisor informs you that the house has been purchased in your name and the seller has been paid by the exchange of contracts.

Compulsories  ::     

The lender may insist that as part of the loan or mortgage you take out additional insurance policies such as building insurance or mortgage protection or as required by law.

Concession ::         

The lender may agree to charge more or less as your personal circumstances change.

Condition ::             

This refers to medical conditions which are known.

Consequential Damage ::       

An indirect loss which may result from a flood, fire or accidentally.

Cooling off period ::                

This is normally a period of 14 days for you to consider and read the full insurance policy terms, clauses and exclusions; so that you make your decision whether the insurance policy is suitable for you or jointly with others named within the policy documents.

Construction Loan  ::              

The loan involves the lender making periodic payments to the contractor as the building is being constructed.

Consultant ::           

Normally a specialist recognised by the Royal College.

Contents insurance ::             

This policy provides cover for cases such as fire, theft and other damage to internal house hold belongings such as fixtures, fittings, furniture, white goods and other individual items which the occupier owns.

Contract ::              

A legal and binding document from the buyer to the seller which transfers the property.

Contract race ::

The person who can exchange contracts first will be the winner.

Contract Worker ::  

This is a person who is in full time employment under a fixed term of contract with a single employer.

Control ::

A person will have control if he has full management responsibility for the business or his own personal affairs.

Convertible Term Assurance ::              

This represents life assurance for a fixed period normally on a level basis and at the end of the term can transfer to an endowment policy or whole life assurance policy without a need for further medicals.

Conveyancer ::      

A person who manages the process of buying and selling a property such as a solicitor or licensed conveyancer

Conveyancing ::     

The legal process and papers involved in buying and selling a property which is carried out by a solicitor or licensed conveyancer.

Council Tax  ::        

Home owners, those on rent or buy to let have to pay local authority charges called the Council Tax.

County Court Judgement (CCJ)  ::          

A ruling will be listed in your credit record, if the court rules that you have defaulted on a debt.

Cover  ::

This represents a description of what your insurance is for such as contents cover or building cover.

Credit ::   

This represents amounts paid in a period which will reduce the outstanding debt or borrowing.

Credit reference agencies ::  

These are service providers who can report on your credit rating and histories. Lenders consult these agencies during the mortgage approval process. Also referred to as a credit report.

Critical Illness Only ::

A life insurance policy will normally pay out after confirmed diagnosis from a range of specified life threatening illnesses such as cancer, organ failure, transplant and stroke.

Current Account  ::                

This presents a type of bank account that does not pay interest and comes with a cheque book and debit card.

 

Daily interest ::       

Interest on a loan is calculated on a daily basis and payments are re-calculated from that day. It is more economical than monthly or yearly interest charges.

Death Benefit Only ::              

This type of policy pays out on the issue of a death certificate.

Death or Earlier Critical Illness ::             

This type of policy will pay on the issue of a death certificate or when a specified critical illness occurs.

Debit ::    

Opposite of credit and represents either an increase in assets or a decrease in liabilities. 

Debt-to-Income Ratio  ::          

It is the ratio of the monthly payment for a loan divided by the gross monthly income.

Decreasing Term Assurance ::              

Some times known as mortgage protection assurance and represents a life insurance policy linked to a fixed period of time or certain age where the premiums decrease per annum until the end of the term when it becomes zero.

Deeds  ::

A document which shows who owns the property with the lender being an interested party in the case of default.

Default  ::

This represents a failure on the part of the borrower to make payments on time.

Defective title policy ::            

This represents an insurance policy where cover is placed for any defect in the title of the property which is normally taken out by the lender.

Deferred Interest  ::                

If the borrower pays less than the monthly interest, the remaining interest is added to the outstanding loan value.

Deferred Period ::   

This is the period of disability or unemployment commencing from the first day of notification.

Delinquency  ::       

The lender can foreclose if there is a default by the borrower to pay on time.

Deposit ::                

A deposit can either occur at commitment to buy, normally 5 to 10% or at the exchange of contracts.

Deposit-based Savings  ::      

This represents cash which is deposited with a bank or lender on a variable interest basis.

Depreciation ::        

This represents the lowering value of a property due to age and condition.

Direct Debit ::          

This represents the amount that can be collected automatically by the lender from your bank account.

Disability or Disabled ::           

This is a medical condition which prevents you from going to work as supervised by your Doctor.

Disbursements ::    

The solicitor or conveyancers fees for dealing with stamp duty and the land registry.

Discounted Rate  ::

Represents a fixed discounted amount of interest for a mortgage for a certain period of time.

Diversification  ::    

Represents the spreading of money over a number or portfolio of investments, thus spreading the risk of failure of a single investment.

Doctor :: 

A person who is registered with the General Medical Council and is registered medical practitioner.

Down Payment  ::   

Represents the payment of the difference between the loan amount and the property value.

Drawdown / Borrowback ::   

In the case of over payment, the borrower can request monies to be repaid to the borrower and interest is adjusted according on the remaining balance.

Drawdown date ::  

This represents the date when the loan repayment will commence.

Drawdown deadline ::           

This represents a fixed date when the loan repayment will commence.

Due-on-Sale Clause  ::           

This represents a clause in the mortgage contract or deed of trust of the immediate payment of the outstanding balance on the sale of the property to the lender.

 

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