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UK Insurance directory  - Insurance Glossary E-M

Mortgage Protection Glossary


Early redemption fee/ early repayment charge ::   

This is a charge made by the lender on the early payment of the loan or the coming to a end of a beneficial period or offer.

Earnest Money  ::   

Represents an amount of money given by the buyer to a seller to ensure that a transaction can be binded.

Effective Date or Inception Date ::         

Represents the date the insurance policy begins its term.

Elective Surgical Procedure ::                

This is normally a non-essential medical requirement carried out solely for the benefit of oneself.

Employment ::         

A person who is fully employed under an employment contract and not registered as unemployed with any government department.

Employment Status  ::             

Represents whether the borrower is fully employed, part time or self employed.

Employment, Employed ::        

When you are in work for at lease 16 hours a week.

End Date ::              

This is the date on which your insurance policy ceases and does not apply anymore.

Endorsement ::       

This occurs when the policy needs to be amended with the addition and deletion of clauses.

Endowment mortgage ::         

Is a combination of an endowment policy and an interest only loan.

Endowment payments ::        

These are separate payments made by the borrower for the endowment policy

Endowment policy ::               

This represents an investment and life assurance policy. The investment is usually with a unit trust life assurance company.

Equities  ::               

Represents ordinary shares in a company.

Equity ::  

Represents the difference between the market value of the property and outstanding loan.

Escrow  ::              

A lender's  account for the depositing of  money needed for insurance or other taxes.

Essential repairs ::

Represents repairs required to a property before the lender will lend the money.

Excess  ::               

Represents an amount of money that will not be paid in any successful insurance payment.

Excess (or Deductible) ::       

For any given claim the insurance company will have stated an amount of money that will not be reimbursable

Exchange of contracts ::       

Represents a point in time when  the sale of the property becomes final and binding.

Exclusion Period  ::

This represents a number of days within which you cannot claim.

Exclusions ::           

These usually are a list of items which will not be covered by the insurance policy.

Execution-only  ::   

The service provider will not give any advice when carrying out any transactions.

Expiration ::            

This represents the date when a loan policy will cease to have effect or the coming to an end.

Exposure ::             

Represents the degree of risk applicable in a transaction.

 

Fees & Charges ::  

Redemption fees and arrears charges will occur within the loan period.

Final reminder ::      

Before the lender can approach the court for any additional arrears and charges, a letter is sent out by the lender as a demand for outstanding payment.

Financial Services Authority (FSA) ::    

Is a government body set up to regulate the financial services industry and protect consumer rights. All mortgage lenders must be registered with the FSA.

Fire Insurance ::     

Is a type of insurance cover for cases of fire damage to a property.

First mortgage payment ::      

This payment covers interest for the first month and the normal monthly instalment.

Fixed rate ::            

This is a special mortgage policy in which interest is fixed for the initial few years or an extended period.

Flexible Mortgage  ::               

A special type of mortgage which allows underpayment, over payment, miss payments, payment holidays and borrow back from over payments.

Flood Insurance ::  

This type of insurance protects the home owner in the case of flood damage and is usually accompanied by a government flood insurance plan.

Foreclosure  ::        

Sometimes called repossession where the borrower cannot meet their repayment obligations to the lender and the lender has to sell or auction the property to realise its financial amount.

Fortuitous Event ::  

This represents an event which is totally unforeseen.

Freehold ::              

A property which has no outstanding debt.

Freeholder ::           

A person who has no debt for the property and land owned by him.

Future Increase Benefit  ::     

A lump sum payment is not made and any payback is made at regular intervals.

 

Gazumping ::          

The case where the seller accepts a higher offer before the exchange of contracts.

Gross  ::

Is payment for which no tax has been deducted.

Gross Monthly Income ::        

This represents your monthly salary or income before tax is deducted.

Ground rent ::         

The freeholder of the property will receive frrom the lease holder a charge payable per annum.

Guarantor ::            

Represents the debt that will be paid by another person other than the borrower, if the debt is not paid back in time.

 

Heave  ::

The water table may rise or water in the soil may increase and lead to the expansion of the ground.

High lending fees or charge ::                

This occurs on higher risk mortgages where funds borrowed are excessive and the lender has to take out additional insurance to protect themselves from any debt problems. The lender will not insure the borrower and the borrower has to take out their own insurance know as mortgage protection insurance.

Home Insurance  ::

This type of insurance policy will cover both building and contents insurance and may be purchased independently of the lender.

Home-buyer's report ::           

This is prepared by a competent approved surveyor at the seller's cost but is not a fully detailed or structural survey.

Hospital ::               

A place of public or private treatment by medical experts.

Housing Expenses-to-Income Ratio  ::   

Represents the percentage ratio of the borrowers net expenses divided by net income.

 

IFA ::       

Is a government body set up to regulate the financial services industry and protect consumer rights. All mortgage lenders must be registered with the Financial Services Authority.

Illustration  ::           

The borrower will provide a written document showing the amount of loan, period of loan, interest rate charges and policy key terms.

Impaired Credit  ::   

These are sometimes called adverse credit loans and apply to customers who have credit application defaults or problems with a lender or several lenders.

Impound  ::              

These are sometimes called reserves which are held by the lender to pay for monthly expenses as they occur.

Incapacity, Incapacitated ::    

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

Incident Date ::       

This is the date when a person becomes sick or unemployed.

Increasing Benefit: ::              

This represents an inflation linked product which matches the inflation rate and monthly payments are adjusted accordingly.

Indemnification Basis ::          

Any losses need to be repaid by the borrower before the lender pays the borrower the cost of the claim.

Indemnity ::             

The insurer will restore the insured to the same position before a specified insurable event occurred.

Individual Savings Account (ISA) ::       

Relates to a government saving scheme which is tax free.

Initial interest ::       

Represents the interest to be paid within the first monthly instalment.

Insolvency policy ::                

This is a type of insurance taken out by the lender to protect case where the property has been sold below market value in the form of a gift or a personal interest.

Insurability ::           

The insurer will determine the suitability of the insured before entering into a insurance agreement.

Insurable Interest ::                

Represents a dependency of one party by another.

Insurance(s) ::       

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

Insurance Policy  ::

The insurer will issue legal insurance documents, terms and conditions illustrating the full extent of the policy.

Insurance Premium Tax (IPT)  ::             

This is a type of taxation charged on the full policy amount.

Insurance to Value  ::             

This represents an amount equal to the market value of the property.

Insured (or Policyholder) ::

Represents the person named in the policy terms and conditions, whose specified risks are covered by the insurer.

Insured, Joint Insured ::          

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

Insurer ::

Represents the insurance company.

Interest ::                

Represents the amount of money charged for borrowing the money from the lender.

Interest rate ::         

The lender will charge a certain charge in the form of interest whether daily, monthly or per annum (annual percentage rate) for the duration of the loan.

Interest-only mortgage  ::       

This type of mortgage only covers the interest charged by the lender and the borrower will need another product to pay the capital at the end of the mortgage period.

Interim Financing  ::                

Represents a type of loan to cover construction costs and upon completion of the building works, a mortgage loan will normally apply.

Investor  ::              

This represents a source of money for the lender.

ISA ::      

This represents a tax efficient growth based upon investing in the stock market and past performance may not represent future performance.

 

Joint Applicants ::   

There may be two or more people who have the mortgage under their combined names.

 

Key Features Documents ::   

This document contains the concise main features, fees and charges of the mortgage terms.

Key Notes Letter  ::               

This document contains the concise main features, fees and charges of the mortgage terms.

Keyperson ::          

Represents a key decision maker or operator of a firm or company without whom the company or firm may not function at its optimum level.

 

Land Registry Certificate ::    

The government land registry office holds property details and a layout of the site.

Land Registry fee ::               

This fee is paid to register ownership of the property with the Land Registry.

Lapse ::  

The non payment of instalments will lead to the termination or lapse of the borrowers terms of agreement.

Lease or leasehold ::             

Represents a contract between the lessee and the lessor of the ownership of the property or land for a fixed period of time. At the end of the period the property or land reverts back to the freehold owner.

Leasehold ::           

Represents a contract between the lessee and the lessor of the ownership of the property or land for a fixed period of time. At the end of the period the property or land reverts back to the freehold owner.

Leaseholder ::        

Represents a person who does not own the freehold of the property but leases it from the owner for a fixed period of time.

Legal Expenses ::  

This is type of insurance policy covers your costs associated with legal proceedings such as court or solicitor fees. 

Legal Protection  ::

This is type of insurance policy which covers personal and family costs associated with legal proceedings such as court or solicitor fees. 

Lender ::

The term refers to banks and building societies who give mortgage loans to their customers at a certain interest rate and terms.

Lessee ::                

Usually a tenant who is granted a lease.

Lessor ::

Usually a landlord who gives a lease to the lessee for rental accommodation.

Letting Agent  ::      

Is a firm or individual who manages the buying, maintenance and letting process for a landlord.

Level Term Assurance ::       

This type of policy applies for a fixed term and ceases to exit after this term.

Liability Insurance ::               

Is a type of insurance which takes into account claims for negligence and breaches of contract or law.

Liability Limits ::      

This represents the maximum limit beyond which the insurance company will not pay a claim.

LIBOR  ::

This represents the interest rate that major banks lend money to each other known as the London Inter Bank Offered Rate.

Lien  ::    

This is a charge on the property for monies due such as a loan or debt. 

Life assurance  ::   

This a type of insurance policy which pays out a lump sum upon death of the insured.

Limit of Liability ::    

This represents the maximum limit beyond which the insurance company will not pay a claim.

Limits ::   

This represents the maximum limit beyond which the insurance company will not pay a claim.

Loan to Value (LTV) ::           

This represents the ratio of the property value compared to market value.

Loan-to-Value Ratio  ::           

This represents the ratio of the property value compared to market value.

Local authority search ::

This is normally carried out with the local authority planning department to ascertain future development affecting the property and its land.

Local Search  ::      

This is normally carried out with the local authority planning department to ascertain future development affecting the property and its land.

Loss ::    

Represents the loss occurred due to a financial transaction or decrease in the value of a property.

Loss Adjustment Expenses ::                

These expenses represent costs related to the management and settlement of losses.

Loss Adjustor  ::   

This is normally a person who assesses a claim made by the claimant.

Loss Ratio  ::          

Is the ratio of actual losses versus earnings.

LTV - Loan to Value  ::           

This represents the ratio of the property value compared to market value.

 

Market Value  ::      

This represents the property price where the buyer and seller are in agreement.

Maximum Benefit Period ::      

This is classified as the period after the Deferment period.

MIG  ::     

These are insurance premiums paid to the lender when the loan to value is high.

Misconduct ::          

This occurs when you have been dismissed by your current employer due to a breach of contract or character.

Money ::

This represents cash in hand, cash in a bank account which can ready retrieved in the form of bank notes and cheques.

Money Markets  ::   

This represents the wholesale financial institutions which commonly lend money to each other.

Monthly Benefit ::   

This is equal to your monthly payments for a maximum period as stated in the policy documents.

Monthly Premium ::

This is the amount of premium which you have agreed to pay every month to cover your insurance policy.

Mortgage ::             

The borrower will obtain a loan from the lender to purchase a property in the form of a mortgage and upon default of repayments the lender can repossess the property for resale to realise its loss.

Mortgage application fees ::   

The lender will charge an administrative fee to setup your mortgage.

Mortgage deed ::    

This is a legal document by which the lender ensures that they have a vested interest in the property.

Mortgage Exit Administration Fees (MEAFs) ::       

The lender will charge an administrative fee to close your mortgage upon full payment of the loan or mortgage.

Mortgage in Principle ::           

Based upon the information provided by the borrower, the lender gives a conditional offer that a mortgage will be made available.

Mortgage Insurance  ::           

This is a type of insurance policy which will pay out following death, accident, sickness or unemployment in accordance with the policy conditions.

Mortgage Insurance Policy ::  

This is a type of insurance policy which will pay out following death, accident, sickness or unemployment in accordance with the policy conditions.

Mortgage lender ::  

This represents the major high  street lenders such as banks and building societies who service mortgages for the customer to purchase property.

Mortgage Payment ::              

This is the monthly amount of instalments that your have to pay your mortgage lender.

Mortgage Protection ::            

This is a type of insurance policy which will pay out following death, accident, sickness or unemployment in accordance with the policy conditions.

Mortgage term ::     

This represents the period within which the mortgage has to be paid.

Mortgage(s) ::        

The lender has given you a mortgage which is secured on your home in the case of non payment.

Mortgagee  ::          

This is normally the lender such as a bank or building society.

Mortgagor  ::           

This is normally the person taking out a mortgage loan to purchase a property.

MPPI ::     

Means mortgage payment protection insurance.

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