Alexander Hall Mortgages Mortgage jargon buster Mortgage terms beginning with C

Mortgage jargon buster

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Cap

The condition in a capped rate mortgage that sets a maximum interest rate for a specified period.

Cap and Collar

A cap is a maximum rate of interest that can be charged for a specified period, while a collar is a minimum rate of interest that can be charged for a specified period.

Capital

The amount of money either put into buying a property or the deposit placed on a property. Also known as equity.

Capital Improvement

Any improvement, such as new structures or components, that permanently increases the value of the property.

Capped Rate

A capped rate mortgage sets a maximum rate of interest that the lender can charge, but only for a specified period.

Cash Back

An amount of money paid to the borrower by the lender at the end of a mortgage. A 'Cash Back mortgage' is one in which an amount of money is paid by the lender to the borrower at the start of the mortgage, typically to help with the costs of moving home.

Cash Back Remortgage

A remortgage that is structured so that the borrower receives a sum of money at the start of the new term.

Centralised Lender

A lender that operates from a central location rather than from a network of branches. Examples would include telephone or Internet banks.

Clear Title

A legal term that refers to the clear ownership of a property.

Collateral

An asset, such as a car or a home, which is used to guarantee the repayment of a loan. Should the borrower fail to repay the loan under the terms of the original contract, the asset may be seized by the lender.

Commission

A fee levied by a broker or agent for services relating to either the negotiation of a mortgage or the purchase of a property.

Commitment Letter

A letter detailing a formal offer from a lender and setting out the terms and conditions of the prospective loan. Also known as a 'loan commitment'.

Commitments

Charges, such as car loan payments, family maintenance and mortgage payments, which a person has contracted to pay.

Common Areas

Sections of land or buildings, such as gardens, hallways, recreational facilities and parking areas, where more than one resident shares access.

Company Representative

A person with authority to deal for and on behalf of an organization.

Comparative Search

A search that looks at the actual sale values of similar properties in the same area as your property. This search is normally carried out by an estate agent, and should give an indicative sale price for your property.

Completion

The completion date is the date on which your solicitor forwards the money from your lender to the solicitor of the vendor. It is the date that you become the legal owner of your new property.

Compound Interest

An interest payment on both capital and on previously accrued interest. For example, �100 borrowed for 5 years at 5% p.a. would become �105 after 1 year, �110.25 after 2 years, �115.76 after 3 years, and so on.

Compounding

The process of adding interest to both the capital borrowed and any previously accrued interest.

Compulsory Insurance

Insurance that is required by a lender as a precondition of issuing a mortgage. The insurance will typically cover the building and contents, and some mortgage providers may insist that the insurance policy also be taken out with them. Also known as Conditional Insurance

Concrete Construction

A property that has been built using conventional materials and practices. Some lenders may refuse to lend, or charge higher rates of interest, on properties built using unconventional materials or techniques.

Conditional Insurance

See Compulsory Insurance

Contents Insurance

Insurance that covers the contents of your home, including electrical goods, carpets, furniture and curtains.

Contract

A legally binding agreement, either oral or written, to do or not do something.

Converted Flat

A flat or apartment that has been created by the subdivision of a larger property.

Conveyancing

The legal procedure surrounding the transfer of ownership of a property between buyer and seller, typically carried out by a solicitor or licenced conveyancer.

Conveyancing Fee

The charge made by a solicitor or conveyancer for undertaking the legal procedures necessary for the transfer of ownership of a property.

Corporate Relocation

The process by which a company relocates an employee to another district as part of the employer's normal course of business.

County Court Judgement (CCJ)

A ruling for bad debt issued by a County Court or higher court. The judgement will be recorded and the record will show up during any credit checks and may count against you in your mortgage application.

Covenant

A clause in a mortgage contract or in a contract for the sale of a property that obligates or otherwise restricts one of the parties (buyer/lender, or buyer/seller). The contract should detail any penalties, including repossession, which will be incurred if the covenant is broken.

Credit

An undertaking or agreement under which one party (the borrower) receives money or property on condition that they repay the other party (the lender) at a later date.

Credit Check

The procedure by which a check is made on the credit history of a mortgage applicant, usually conducted by one of the large dedicated credit check agencies on behalf of the prospective lender. The check will include items such as credit card repayments, outstanding debts, arrears, and County Court Judgements.

Credit History

A history of an individual's open and fully repaid debts. Checking a credit history helps a lender to assess the likelihood that a prospective borrower will maintain their mortgage repayments.

Credit Rating

An assessment of a person's likelihood of keeping up - or otherwise - on the repayments on their loan. A credit rating is usually based on a person's credit history.

Credit Reference Agency

A company that collects and stores financial and public records dealing with the payment history of a prospective borrower. Most lenders will employ a Credit Reference Agency to check your payment records as part of their assessment of your application.

Credit Report

A report prepared by a Credit Reference Agency and which details the credit history of an individual. The credit report will be used by a lender to help assess the applications of prospective borrowers.

Credit Scoring

The procedure by which lenders assess the likely ability of an applicant to meet and maintain their mortgage repayments.

Current Account Mortgage

A mortgage that also offers the same facilities, for instance a cheque book, as a bank current account. Combined with a fully flexible mortgage, this type of mortgage allows over- and under-payments as well as payment holidays.

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