Jargon
What does that mean ?
APR
Annual percentage rate. This figure is provided so you can compare the
true cost of borrowing between different loan products.
Advance
Amount of money being lent under the loan agreement. Adverse Credit
Credit or a loan that has not been paid well by the borrower in accordance
with either a loan or credit agreement. Arrears
Payments on a loan or credit agreement which have been missed or are over
30days due. Bad Credit
Bad credit is the term used to describe a loan or credit which a person has or has had in the past, which has not been paid in accordance with the lender loan or credit agreement. This covers personal loans, secured loans, mortgages, and also commercial loans and finance Bankruptcy
Bankruptcy is the final option a borrower used in order to control their finances which are in major arrears and totally unaffordable to the borrower. Assets the borrow has may be used to settle some of the outstanding loans and credit cards, and other debts. After a period of time, some or all of the remaining debts may be written off by the lenders concerned. When a person is declared bankrupt by the courts, they are unable to obtain credit in the normal way, and their credit rating can be impaired for several years afterwards. Bridging Loans
The term bridging loan is used for a product which is meant as a short term loan secured on property to cover buying for example a new property where the sale on an existing property has not yet completed. Bridging loans are usually set out over moths rather than years, and the interest rates are higher than long term mortgages as the borrowing is only over a relatively short period. Broker
A company which searches a range of lenders for available loan products
and matches against the borrowers circumstances. A broker introduces a
borrower to a lender who is able to help with the loan that is required. Commercial Finance
Commercial finance is for people of companies looking to borrow money for business purposes. Commercial finance is normally secured on commercial property and can be used for may different purposes including, business expansion and business cashflow. Consolidation Loan
A consolidation loan is a loan which is used to pay off all or a majority
of your existing credit which may comprise of secured loans, unsecured
loans, car loans, and credit cards or store cards.
A consolidation loan is often used to reduce the amount of interest you
pay by having your various pieces of credit with separate companies, paid
off and having a lower interest rate on one larger loan.
This also gives the benefit in most cases of a reduced monthly outgoings
amount which means you have more free income each month, and it is much
easier to have just one payment rather than 7 or 8 separate ones for example. Consumer Credit Act
The consumer credit act governs loans and other credit agreements. The law is intended to protect borrowers, and covers many aspects of how lenders and other finance companies must operate to be within the law. All lenders and other finance companies must be registered to provide financial services under the act. Loan and finance companies operate by means of a consumer credit licence. Loans4 is fully registered under the consumer credit act, and accordingly holds a consumer credit license. Cooling off period - Consideration Period
Amount of time given by law to allow a borrower time to consider a loan
offer made to them, in which time the borrower is able to cancel their
application if they so wish. Cooling Off Period
A cooling off period is the period of time given to a person after agreeing to a loan or other credit. This protects people from high pressure salesmen, and ensures people to not enter in to loan or credit agreements in haste. Credit File
A credit file is the term used to describe a file of a persons credit activity both past and present. This is used by lenders as part of their decision process when approving or declining a loan application. Credit files are held by credit reference agencies, and list details of a persons loans outstanding, any missed payments, defaults, or county court judgements. It also shows details of loan and other credit payments which have been paid on time and in full, and may also show past loan and credit agreements which have been fully paid and are now settled. Credit History
A credit history details a person credits activity both past and present. This is used by lenders as part of their decision process when approving or declining a loan application. Credit history's are held by credit reference agencies, and list details of a persons loans outstanding, any missed payments, defaults, or county court judgements. It also shows details of loan and other credit payments which have been paid on time and in full, and may also show past loan and credit agreements which have been fully paid and are now settled. Credit Rating
A term used to assess a borrower's credit worthiness based on their previous
repayment history. Credit Reference Agency
A credit reference agency holds details of a person credits activity both past and present. This is used by lenders as part of their decision process when approving or declining a loan application. A credit reference agency holds details of a persons loans outstanding, any missed payments, defaults, or county court judgements. It also shows details of loan and other credit payments which have been paid on time and in full, and may also show past loan and credit agreements which have been fully paid and are now settled. Credit Scoring
Used by many banks and high street lenders to associate a number to certain
elements of a loan application and credit search which added together
give what is known as a credit score.
In order for the borrower to be approved by the lender for a loan, they
must reach a set score that the particular lender requires as a minimum. CCJ's - County Court Judgements
A county court judgement is registered against a person or company who
owes money to another. Where the person who owes to money has been unable
to or refused to pay and the person who is owed to money has gone to court
to recover the debt. Debts
Amount of money owing. Debt Consolidation
Debt consolidation is used by a borrower in order to bring all their loan and credit agreements together, and consolidate (bring together) all the persons borrowings in one place, ie a loan agreement. This helps perople organise and manage their finances and make just one repayment each month instead of many diferent ones at differing amounts which are hard to organise and manage. Because consolidation loans simplify a persons borrowings, this can help to ensure a person does not miss any payment as they only have one payment to concentrate on instead of many smaller ones. Taking out a consolidation loan may though mean that a borrower has to spread existing loan and credit agreements that you would have paid, over a longer period, which means a person could incur more interest. Usually though, consolidation loans are at a lower interest rate than a persons existing loan and credit agreements, this is because the amount being borrowed for a consolidation loan is much higher and lenders will charge a lower rate of interest the higher the amount of money a person is borrowing. Debt Management
A debt management programme is used when a person is having difficulty in managing their loans and credit cards, and even mortgage payments. Using a professional debt management programme provider will help you to take some of the stress out of the debt situation. A debt management programme can be used to arrange lower payments on your existing credit, and can even arrange with some creditors (lenders) to freeze interest charges on your loans and other credit whilst to try to regain control of your finances. A debt management programme can be of assistance to those severely struggling with their debts, paying lower payments to creditors will however affect your credit rating both at the time when you commence the programme, during, and for a period after it ends. A debt management programme can though help you restructure your finances before you may get in to even a worse situation. Default
If a borrower goes into payment arrears, they have defaulted on their
credit or loan agreement. It is known as an account in 'default' if the
lender has issued a 'notice of default' to the borrower. This is usually
the stage before a county court judgement is applied for, and often seen
as a 'final demand' for payment. Deeds Case
Where a property is owned outright and there is no mortgage remaining
or any other secured loans owing, which are by way of a security against
the property. Discahrged Bankrupt
A discharged bankrupt is a person who has been made bankrupt who has now either paid off or had their debt written off, or a combination of the two, and now is free from bankruptcy. Once discharged, a person applies to the court which dealt with their bankruptcy, for a discharge certificate. A bankruptcy will stay on a persons credit file for a number of years, however some lenders will provide loans for people who are discharged bankrupts. This though may be at a higher than average APR which reflects the lenders risk in lending money to someone who has previously been bankrupt. Equity
The difference between the amount of money secured on a property in the
way of a mortgage, and the current value of that property. Fixed rate
A rate of interest which is fixed for the entire term of the loan or mortgage
for a specific period from the date when the loan is taken out.
Fixed rates are more common on mortgage products. Loan Advance
Amount of money being lent under the loan agreement. LTV - Loan To Value
Similar to the equity calculation, but also includes the loan advance
amount.
The mortgage balance is added to the loan advance, then divided by the
property value to give the LTV.
Eg. £65,000 mortgage balance + £10,000 loan advance = £75,000
divided by property value of £135,000 = a LTV of 56%
The closer the margin is between the two values will mean a higher LTV
%.
Most lenders will only offer loans up to 90% LTV, however we have high
LTV up to 110% (Up to £15,000) which means you can apply for a secured loan even if you
do not have equity available in your property. Negative Equity
This is where your mortgage balance is higher than the current value of
your property.
Because we have loan products available that mean you are able to use
more than 100% of your property value; we are able to help in most cases. Non Status
This is a term usually associated with mortgage companies who are not
a recognised and well known high street lender, and the mortgage products
they offer are classed as non status mortgages or loans. RTB - Right To Buy
This is the term used when a council tenant is able to buy the property
they live in from the council, or have already done so in the past.
The purchaser will have a discount from the council and be able to buy
at a value less than its current sale value. Redemption Penalty
Most lenders charge a redemption penalty when a loan or other finance
agreement is settled early.
The amount of the penalty varies between lenders, and is usually calculated
in a number of months interest forward, that you would have paid if you
had chosen not to settle the loan. Secured Loan
A loan secured on property by way of a legal charge until all Moines owing
on the loan agreement are paid in full.
Secured loans are lower risk for lenders so rates a much lower than unsecured
loans. Self Declaration - Self Certified Income
This is used when a person or persons cannot provide proof of how much
they earn.
It is mainly used in instances of people who are self employed, sole traders,
or even partnerships or directors of limited companies can not provide
accounts, proof of earning, or it is difficult to assess, or in cases
where a person does not have an accountant. Settlement Figure
This is an amount that is calculated by a lender in accordance with the
terms of the consumer credit act which is the amount required for you
to pay in order for you to settle your loan in full.
All lenders must send you this promptly following you making a request
to them. Shared Ownership
A shared ownership property means you own a certain percentage of it,
and another person or company owns the remaining percentage which could
be more or less than the percentage of the property you own or have a
mortgage on.
Shared ownership properties are usually owned partly by a housing association,
and partly by you. Sub - Prime
This term is associated with lenders who offer finance to people who have
had credit problems in the past.
An example of a sub - prime lender would be Welcome Finance. We are able
to consolidate Welcome finance loans and in most cases greatly reduce
the interest that you are currently paying. Variable Rate
As the term suggests, a variable rate of interest means the rate can go
up or down in relation to the Bank of England base rate. Slight increases
or decreases in the Bank of England base rate will not normally effect
your loan payments. Lenders use variable rate agreements as a safeguard
in case the Bank of England base rate increases by large amount.
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