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You can use our glossary
to find the definitions of many terms you will come
across when arranging a unsecured personal loan
Click on a letter A to Z for terms beginning with that letter
K
L
Late charge
A fee a lender imposes on a borrower when the borrower does not make a payment on time.
Late payment
A payment a lender receives after the due date has passed.
Lender's arrangement fees
Fee for arranging a loan passed on to the buyer by lender.
Lenders fees
Administration costs incurred by a lender to secure a loan, paid by the applicant.
Lessee
The individual or company to whom a lease is granted.
Lessor
The individual or company who grants a lease.
Liabilities
Basically, liabilities are debts that you have and the regular outgoing payments that you make.
The reason you must show your bank statements is usually to help the underwriters identify anything in your current
expenditure that may impinge upon your ability to repay the loan. They may want to know about any other mortgages,
debts, credit cards, HP agreements, loans, overdraft facilities, maintenance and court orders.
Lifetime cap
A limit on how high the interest rate on a variable rate mortgage can rise over the lifetime of the loan.
Loan application
The first step toward in submitting a home loan requires the borrower to itemize basic financial information.
Loan application fee
A fee charged by lenders to for making a loan application.
Loan consolidation
When one large loan is taken out to pay off a variety of smaller loans held with different providers.
A mortgage can be used for this purpose and in some cases can work out cheaper as mortgage rates tend to be cheaper
than personal loan interest rates.
Loan to Value Ratio (LTV)
The ratio of your mortgage to the market value of your property. Expressed as a percentage.
For example, if you have a mortgage of £95,000 on a property worth £100,000, the loan to value is 95%.
Lock in
Allows the borrower to be assured a given rate of interest for a mortgage. This usually involves paying a fee to the lender.
Mortgage rates not "locked in" are subject to changing market conditions.
M
Mandatory products
These are supplementary products that some lenders insist you purchase along with the core product
that you are buying. This is often loan protection or
.
Margin
The lender's "retail markup" on the loan. For example, if the index rate for an variable rate mortgage
is 5 percent but the lender has a 2.5 percentage-point margin, the rate the borrower will pay is 7.5 percent.
Modification
A change in any of the terms of the loan agreement.
Monthly fee
A fee charged once a month.
Monthly repayment
This is the amount you pay to your lender each month towards the cost of your loan.
Mortgage
The name given to a loan used to buy a property.
Mortgage acceleration clause
A clause which allows a lender to demand that the entire of a secured loan be repaid
in a lump sum under certain circumstances. The acceleration clause is usually triggered if the home is sold,
title to the property is changed, the loan is refinanced or the borrower defaults on a scheduled payment.
Mortgage application
Forms used to assess whether you meet the lender's underwriting criteria. These criteria are set
to ensure that barring any unforeseeable change in circumstances, you will be able to support the mortgage and
meet the repayments. Questions relate to such things as your personal details, existing loans secured against the property,
etc.
Mortgage code
The mortgage code is a set of standards defined by the Council of Mortgage Lenders, that lenders
voluntarily subscribe to. It sets out codes of conduct on how a lender or intermediary should act when arranging
your mortgage, as well as how you should be dealt with once your mortgage is in place. It also tells you how to complain
in the event of a lender not keeping to the code and who to complain to.
Mortgage code arbitration scheme
An arbitration service between members of the public and lenders.
Mortgage debt
The amount outstanding on your mortgage.
Mortgage payment protection insurance (MPPI)
An MPPI policy pays your mortgage or other loan repayments for you if you become unable to work
for an extended period of time, as a result of redundancy, accident, sickness or disability. It should provide
enough income to cover all your monthly mortgage expenses. If you have a repayment mortgage, this should be your
capital and interest repayment and if you have an interest-only mortgage, the MPPI should cover your interest
payment as well as your normal monthly contribution to the investment vehicle that will repay your loan.
Mortgagee
A bank or other financial institution that lends money to the borrower. The borrower is considered the mortgagor.
Mortgagor
The mortgagor is another term for the borrower.
MPC
Monetary Policy Committee of the Bank of England. Meets monthly to discuss and alter interest rates etc.
N
Net
After the deduction of tax.
Net monthly repayment
Monthly repayment made to the lender.
Notice of default
A lender's initial action when a mortgage payment is late and attempts to reconcile the issue out of court have failed.
O
Outstanding balance
The amount to be repaid at any point in time.
Overpaid funds
The amount you have paid in excess of your regular monthly payments.
Overpayment
The difference between your regular monthly repayment and a higher amount that you choose to pay.
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