Jargon Buster

Agreement in principle: - An indication of the likely outcome of a loan application. This is not a formal offer but includes a credit check with a credit reference agency and an assessment of your ability to repay the loan amount requested.

APR: - The annual percentage rate of the total charge for credit as laid down by the Financial Services Authority Mortgage Conduct of Business rules. By law, the APR has to be shown by all lenders alongside their quoted interest rates for each mortgage term, to enable potential borrowers to make comparisons between offers made by different lenders.

Capital Repayment: - With a capital repayment mortgage, the capital and interest elements of the loan are paid off with each monthly instalment so that the balance reduces over time. At the end of the mortgage term the balance will be nil.

Conveyancing: - Is the term used to describe the legal process involved when buying or selling property.

Decreasing Term Assurance: - A life assurance policy which should repay your mortgage if you die during the term. The amount repaid on this policy reduces over time.

Discount Rate: A reduced interest rate discounted from the published bank standard variable rate for an agreed period from the start of the mortgage.

Early Repayment Charge: A fee imposed by some lenders on some mortgages to cover administration costs in the event of a loan being repaid before the due date.

Endowment Mortgage: A type of interest only mortgage. Only interest is paid throughout the term so the balance never changes. The mortgage is designed to be repaid at the end of the term with the proceeds of an endowment policy.

Equity: The value of your home minus any outstanding loan.

Please remember that your home may be repossessed if you do not keep up repayments on your mortgage or other loans secured upon it.