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.
