Jargon Buster
Failed valuation survey
When a lender declines a mortgage application based on
the contents of the surveyor's valuation report.
Financial adviser
Recommend products and services that help individuals
plan their income and expenditure. There are two types:
Independent work on behalf of the client and can choose
from any product or service; Tied advisors work on behalf
of their company to recommend their products only.
Firm commitment
A promise made by a lender when it agrees to loan money
for the purchase of property.
First charge
If your property is collateral for more than one property
and the borrower defaults on payments, the lender with
a first charge has the option to repossess the home.
First mortgage
The original loan taken out to purchase a home.
First time buyer
A person who does not already own a property and is therefore
not part of a chain.
Fixed rate mortgages
Fixed rate mortgages guarantee a specific rate of interest
for a set length of time. Most commonly, this is for between
one and five years, though it can be as long as ten or
even fifteen years. As a rule, the longer the fixed period,
the higher the starting rate of interest. A lender will
not want to commit to lending you money at a really low
interest rate for ten years when there is a fair chance
that during that period the general level of interest
rates may rise above the rate at which they are lending
you money. The lowest interest rates are often found with
deals that are fixed for two to three years.
Flexible mortgage
A mortgage that allows borrowers to make overpayments
when they have spare cash, and reduce or miss payments
altogether when times are tight. Often useful for self-employed
people whose income varies from one month to the next.
The most flexible form of mortgage is a Current Account
Mortgage (CAM), which can potentially save you money by
linking your current account and mortgage together.
Flood plain
Flat, flood-prone areas located along waterways.
Flying freehold
A flying freehold occurs when part of a freehold property
overhangs part of a different freehold property or land
and is usually formed when a property is split into two
or more freeholds.
For sale by private treaty
The sale of property by private treaty is the most common
method employed by estate agents and involves preparing
descriptive details of the property and quoting a definitive
asking price. Details can then be viewed by potential
buyers and viewings arranged.
Forbearance
A course of action a lender may pursue to delay foreclosure
or legal action against a delinquent borrower.
Foreclosure
The legal process that occurs when a buyer defaults
on a loan. The lending institution takes back the property
because of a lack of payments.
Foreign currency mortgage
It is possible to get a mortgage for your home in the
UK in a mortgage denominated in a foreign currency. It
sometimes gives you the opportunity to borrow money at
a lower rate of interest than is possible in the UK. You
do this by choosing a currency whose country has lower
interest rates than we have here. Lower interest rates
should mean lower repayments of both capital and interest
or a shorter mortgage term. The mortgage does not have
to be in any single currency. There are lenders who will
allow you to spread your mortgage across a range of different
currencies. This could be seen as spreading the risk
Forfeiture
The relinquishing of property rights by a delinquent borrower.
Fraudulent
Involving criminal deception or dishonesty.
Freehold
This means that you own the property outright, as opposed
to leasehold where you own the rights to occupy a property
for a specified period of time.
Freeholder
Owner of the freehold on the property.
Full status mortgage
A full status mortgage is for people who wish to make
a lender aware of any previous arrears or debt problems
they may have had. If they do not make the lender aware
of these facts and they are latetr discovered, his could
lead to all sorts of problems and the borrower could even
be forced to sell the home. If you have a bad credit record
some lenders will regard lending you money a high-risk
activity. Many will not lend you money at all and when
you can get a loan, you will undoubtedly have to pay a
higher rate of interest than you would otherwise.
Full with-profit endowment
The most expensive endowment plan with the highest guaranteed
returns. This type of endowment guarantees an annual growth
and also to pay off the full loan at maturity which is
the cause of the added expense. It also has built in life
cover. The future growth of your investment is assumed
to be at a certain rate, which determines the level of
your premiums. The portion of your premium that is being
invested is pooled with the premiums of other investors.
Annual bonuses are added to the maturity value each year
and are dependent on the performance of the investment
fund. There is a possibility that the bonuses will take
the maturity value above the level required to pay back
the loan. This would result in a tax-free cash surplus,
which you can spend on whatever tickles your fancy.
Further advance
You can sometimes have the facility to borrow further
funds once you have been paying your mortgage for a set
period of time, especially with a flexible mortgage. A
fee is charged by your lender to cover the cost of assessing
the merits of your application. Costs £50 - £100
Further advance legal fee
A fee that is normally charged when you apply for a further
advance of money on your mortgage. This covers the necessary
administration to ensure that the lender's legal charge
over the property is maintained when further money is
lent.
