Mortgage Facts . . .

An ISA is a tax-free savings account. Adults living in the UK can invest a maximum of £7,000 per each tax year or up to £3,000 in a mini cash ISA. Savers can invest into three components; equities, cash and life assurance. Stock and share investments that can be held in an ISA include unit trusts, open-ended investment companies (OEICs), investment trusts, ordinary shares, preference shares and fixed interest corporate bonds. Income from some ISA investments (corporate bonds) is tax-free and you do not have to report it on your tax return. Capital gains are also exempt from Capital Gains Tax. Stockbrokers, IFAs, fund managers, banks and other authorised financial institutions, provide ISA plans. You can buy a plan and take advice on what to put in it, or you can have a 'self-select' ISA and make your own decisions.

This type of ISA allows an individual to invest up to £7,000 in a tax year.

An alternative type of ISA allows an individual to invest up to a maximum of £3,000 in a tax year. The investment must be held in cash and, as it is not possible for an individual to take out more than one ISA per year. It is also not permissible for the investor to also take out a Maxi ISA, even to top up to the £7,000 limit. It is allowable however to take out an additional Mini Stocks and Shares ISA to the value of £3,000 and an insurance ISA of £1,000, making a total of £7,000.

This is used to describe the total assets of a person or organization minus their total liabilities. If the figure is negative the person or organisation is considered to be insolvent.

This is used to describe the total amount a person or organization owes.

This is a form of insurance policy to guard against any legal liability to pay compensation and court costs where the insured has been found negligent in respect of injuries sustained by another person or damage to property.

This is the generic term for investing directly into stocks & shares, bonds or gilts.

This is essentially, where an investor contributes to a large investment fund by either lump sums or regular savings. The pooled investment comprises of many different investors' money and is run by a skilled investment manager. The benefit of which is that the costs of this expertise is spread amongst the investors and the investors do not need to do their homework on particular companies as the 'expert' will take care of it for them. The investment fund manager will spread the fund over a large number of companies thus reducing the risk; if one company fails, the whole investment will not be compromised.

Bonds are essentially chunks of debt. When an investor obtains a bond, they are lending money to the bond issuer. The investor will generally know what sort of return they will be getting on their investment and owing to this; bonds are usually considered a low risk investment. Government bonds are known as Gilts and loans to companies are known as Corporate Bonds. Corporate bonds are an attractive way for a company to raise cash.

Gilts are bonds that are issued by the government, so in effect the investor is lending money to the government. As the UK is generally considered a safe bet to honour its commitment to the investors, Gilts are regarded as one of the safest forms of investment.

A Unit trust is a pooled investment. An investor can contribute by lump sum or regular payments or both. The investor will ‘buy’ a number of ‘units’ rather than shares. Each unit representing a fraction of the trusts total assets. A unit trust is open-ended meaning that the ‘fund manager’ can create more units if needed.

These are collective investments of shares. Investment Trusts are public limited companies whose business is investing, in most cases, in the stocks & shares of other companies. Investing in an investment trust is usually done by buying shares of the investment trust company on the stock exchange.

These are pooled investments offered by a company who buy and sell the shares of other companies and also have dealings in other investments. The OEIC will issue shares (commonly redeemable preference shares) that can be bought and sold by investors. Unlike an investment trust an OEIC cannot, other than for short term purposes, borrow money to finance its activities.

This is the most common form of investment offered by life assurance companies. It is essentially a savings plan that will pay out a lump sum of money, known as the sum assured, at the end of the policy term or on earlier death of the individual. The investor regularly contributes to the plan throughout the term of the policy and there are a number of variations of endowment policy, namely; non-profit endowment, with profit endowment, unit linked endowment, and unitised with profit endowment.

It is becoming increasingly popular to buy or sell second hand endowment policies. An endowment policyholder may get more money in selling an endowment than they would by cashing it in. It can sometimes (depending on personal circumatance) be more suitable for an individual to purchase a second hand endowment policy. A qualified financial adviser will be able to assist you in these areas.

An investment bond is a collective investment available from life assurance companies. The investor will pay a lump sum payment to a life company and in return will receive a whole of life insurance policy together with a policy document to show the premium has been applied to purchase a certain number of units in a chosen fund. These units have then been allocated to their policy. To cash in the investment, the policyholder would take the surrender value of the policy (which is equal to the value of the units allocated), based on the sale price on the day surrendered. If the event of the investors death, the policy would cease & a slightly enhanced value (usually 101% of the value) is paid out.

This, is as the name implies, is a life policy designed to cover the life assured for their lifetime. It will pay out the amount of life cover whenever death occurs, provided of course that the policy remains in force. Premiums are usually payable regularly throughout the life of the insured person or in some cases limited to a fixed term or age. Like endowments whole of life policies can be set up on a number of different basis, namely; non-profit, with-profit, unit-linked, unitized with profit, low cost, flexible & universal. A financial adviser will be able to guide you through the advantages & disadvantages of each.

This quite simply means the amount of life cover for which an individual is protected.

This is commonly used for inheritance tax planning. This is a policy that will pay out on the death of the second life or survivor. In most families the estate of the first spouse to die passes onto the surviving spouse, the inheritance tax becomes due only when the surviving spouse dies, and the estate passes onto the family or others.

This is a life policy where the sum assured reduces to nothing over the term. Premiums are usually payable throughout the policy term & there is no investment element. This type of policy is commonly used to repay a decreasing debt such as a repayment mortgage or may be used for inheritance tax planning.

Some life companies offer a policy whereby the sum assured increases each year by a fixed amount or a percentage of the original sum assured. This is most commonly used where temporary cover of a fixed amount is needed but where the cover needs to increase to take account of the effects of inflation.

This essentially is a term assurance policy that includes the option to convert it into a whole of life or endowment policy without further medical evidence or additional underwriting.

This is a term assurance policy that includes the option, which can be taken at the end of the policy term, to renew the policy for the same sum assured without the need for further medical evidence. The new term is the same as the original & the new policy usually includes a renewal option again.

This is essentially a policy that will provide a regular tax-free income for the family, on the death of the breadwinner.

This policy is designed to provide a tax-free lump sum payment on the diagnosis of one of a range of specified illnesses. The illness need not be terminal and the main purpose of the policy is to provide a lump sum to meet the additional costs that someone faced with a serious illness may encounter. The range of illnesses varies from one insurance company to another but broadly speaking cover the following illnesses, most types of cancer, heart attack, stroke, coronary artery disease requiring surgery, major organ transplant, Multiple Sclerosis and kidney Failure. In addition the following are covered by many insurers; paralysis, blindness & loss of limbs.

This policy is designed to pay a regular income to the policyholder when an accident or sickness prevents them from earning a living from their normal occupation. Many companies also offer this insurance to homemakers. Although not technically earning an income, there is usually a clear need to provide an income in the event of their illness. This income could then be used to pay for housekeeping or childcare.

This is a general insurance policy designed to repay loan repayments, (usually a mortgage) in the event of accident, illness or loss of employment. A level of income approximately equal to the monthly mortgage payments is paid for a limited period of time usually a maximum of 2 years.

PMI is a pure protection policy designed to provide cover for the cost of private medical treatment. Policies can be arranged on an individual basis or as part of a group scheme. Many employers provide this benefit to their employees & account for the majority of PMI provision in the UK.

This policy is designed to provide funds to meet the costs of care which arise in later life & when a person is no longer able to competently take care of the basic activities involved in day to day life & therefore needs assistance.

company to invest your money in their funds. Retirement benefits can be taken from a personal pension at any time between the ages of 50 & 75. It is not necessary for the person to retire in order to reap the benefits. On retirement the ‘pensioner’ may take up to 25% of the fund as a tax free lump sum, the remaining 75% must then be taken in the form of a regular lifetime income, which is taxed as if it were income.

Stakeholder pensions are essentially private pensions, although there are certain circumstances by which the government makes it compulsory for stakeholder pension facilities to be provided by employers. They were initially set up by the government to encourage people on lower incomes to start saving for their retirement. It is not necessary for the pension holder to have a certain level of earned income & can even be taken out by people with no earnings. In addition, tax relief is available at the basic rate even to no tax payers. Money invested in stakeholder pensions are invested on the stock market and on retirement a quarter of the capital can be taken out as a tax free cash lump sum. The rest is then used to provide a regular income.

Different to a traditional private pension in that you or your appointed fund manager is directly responsible for choosing where to invest your money. You are able to invest in shares of any company listed on a stock exchange recognized by the Inland Revenue. Ideally targeted at those with good financial acumen.

There are a number of areas whereby the loss of a colleague or other ‘key worker’ can have severe implications to a business, namely the death of a key employee such as a MD or someone with specialist knowledge, experience or contacts, or the death or sickness of a business partner or small business shareholder. There are many ways in which you are able to prepare for these events & speaking to a financial adviser is imperative.

All advisers must provide customers with ta 'Keyfacts' document, explaining their status, be it tied, multi-tied or independent, the services they offer and a menu of their charges. This will enable you to properly understand the value and cost of the adviser. These are legal documents that the FSA have set out to protect borrowers & investors.

Professional advisers may charge a fee for their advice and/or they may take commission from the company whose products you buy. In investment cases, some commission might be deducted from the money you pay into an investment. Professional advisers may also be paid further commission in each year that you keep an investment going.

Investment Advisers & Mortgage Advisers wishing to call themselves 'independent' must give you the option to pay by fees if you want to.

If the adviser receives commission, this is usually a payment from a the product provider for services rendered & is based on a percentage of the value of the "deal".

If an adviser charges fee’s a payment is made by the client for services rendered. This is fixed and agreed before the service is performed.

It is a Legal responsibility of an adviser to notify you in advance & in writing of any fees they may charge you; this will be made clear to you in the Keyfacts document he/she gives you on your first meeting.

The Financial Services Act 1986 came into effect to offer protection for investors. This required the registration and monitoring of investment businesses under the ultimate control of the Treasury. This Act was superseded by the Financial Services and Markets Act 2000, which formed the Financial Services Authority (FSA) as an independent non-governmental body with the authority to regulate investment business. As from the beginning of 2005, the FSA also took over the responsibility for the regulation of General Insurance and Mortgages. The FSA has four statutory objectives, which are; to maintain confidence in the financial system, promote public understanding of the financial system, secure the appropriate degree of protection for consumers and reduce the extent to which it is possible for a business carried on by a regulated person to be used for a purpose connected with financial crime. More information, including the ability to search for regulated firms or individuals, is available on their website, http://www.fsa.gov.uk/.

A government tax charged on the gains from the sale of an asset over a set annual level. The main exemptions being owner occupied property & chattels, pension funds & charities & assets of an individual on death. CGT is charged at up to 40%.

A government tax payable on all forms of income received by UK residents. Usually deducted from employees earnings via PAYE (Pay as you earn). Other incomes are declared on a tax return & assessed by the Inland Revenue. Tax is a complex area & professional advice is encouraged. More information is available at  www.inlandrevenue.gov.uk.

A government tax charged on the value added in the production of a good or service. A company or trader registered for VAT pays suppliers VAT additionally to the cost of goods or services purchased, which is known as input tax. VAT is also added to the sales cost of their product to customers, which is known as output tax, the consumer pays for this. The difference between output tax and input tax is then paid to the government through Customs and Excise. There are exemptions to paying VAT on certain items in the UK, namely: basic foods, housing, books, education, health services, exports and some financial services. Vat is currently set at 17.5% (tax year 2006/2007).

Offshore investing is when you make investments that are situated in low tax areas outside of the UK. There are certain tax advantages to investing offshore but is a hugely complex area & important to talk to a qualified financial adviser before acting.

In addition to the usual day to day costs of bringing up a child there is the consideration of financial planning for a child's future. There are many savings plans available from National Savings Bonds, with profits policies through to tax efficient ISA's. It is interesting to know that children also have their own tax allowance currently at £5,035 per year with a capital gains tax allowance of £8,800 (tax year 2006/2007).

The Child Trust Fund is a government savings scheme that came into effect on 2005 to provide all children born on or after 1st September 2002 with a minimum of £250 in the form of a voucher to allow parents to start investing in their child's future. It provides a tax free savings account & there are a number of areas in which this money can be invested. A qualified financial adviser will be able to guide you through the maze of it all.

Premium bonds are a tax efficient way of saving money. A premium bond is a returnable £1 deposit entered for monthly draws for tax-free prizes of between £50 and £1,000,000. There is a maximum holding limit of 30,000 premium bonds per person. Premium bonds are eligible for prize draws once they have been held for a complete calendar month, following the month in which they were bought. The well-known ‘ERNIE' (Electronic Random Number Indicator Equipment) machine draws out bonds at random. Statistically speaking, if you have the maximum allowance of £30,000, with what National Savings calls 'average luck', you can expect to win 10 to 12 times a year. If you win the minimum prize of £50 twelve times a year that's an effective return of two percent on your capital. If you have £5,000 of bonds, statistics from National Savings show you have a 1 in 6.5 chance (or 13 to 2 if you prefer bookies' odds) of winning any of the 550,000 prizes every month.

This type of account rquires regular contributions in order to qualify for higher interest rates or other beneficial terms. The growing breed of easy access savings accounts provide no notice or other barriers to access your own money and offer pretty much the same levels of return.

Some savings and deposit accounts require one months or more notice to withdraw funds in order that you qualify for higher interest rates or other beneficial terms.

A will is a written declaration of an individual's wishes as to what they want to happen after they die. Although primarily considered preparation of how to dispose of their assets, a will can also deal with other matters such as giving instructions on burial etc. To make a will the will must be made in writing & it must be properly executed. The minimum age for making a will in the UK is 18.

To die without leaving a valid will is to die intestate. This can cause more heartache for the family of the deceased as there are complex rules laid out to determine the distribution of a person's assets known as rules of intestacy. A Qualified Adviser will be able to guide you through this minefield in full.

A Repayment mortgage is probably the type of mortgage most people would think of these days. Quite simply, the borrower makes monthly repayments to the lender and each monthly amount consists of partly interest & partly capital. The total mortgage gradually decreases each month, however in the early years of the mortgage there is likely to be very little of the capital repaid owing to the fact that most of the interest is usually front loaded, meaning that only a small proportion of the monthly payment is going towards paying off the original loan (or capital) early on. On a typical 25 year mortgage it would not be uncommon to still owe over half of the original debt after the first 15 years. It is difficult to say how a repayment mortgage is calculated as lenders have to take into account the interest rate, APR, fee's, associated costs & redemption charges applicable to a particular scheme & obviously this varies tremendously from lender to lender.

A repayment mortgage is a very flexible loan which allows you to increase your monthly payments at any time (subject to the lenders criteria and your mortgage scheme), thus giving the opportunity to shorten the mortgage term. If it is likley that you will want to overpay your mortgage, this is something that should be discussed with a qualified adviser that would explain the advantages & implications and find a suitable mortgage scheme.

With a repayment mortgage, the higher the interest rate, the higher the monthly repayments. A mortgage is spread over a period of time known as the “Mortgage Term”, usually 25 years, but this can be as little as 5 years or as long as 40 years today. Obviously the longer the term of the mortgage the lower the monthly repayments & vice versa, the shorter the term, the higher the monthly repayments.

One huge advantage to a repayment mortgage is that the mortgage is guaranteed to be repaid in full at the end of the term (assuming all the contractual monthly repayments are met), as you are simply paying the mortgage off as you go, so essentially it is a safe option. Your lender will send annual mortgage statements, (some lenders send these more frequently) to inform you of how much capital & interest has been repaid over the year & the total debt still outstanding.

Lenders will often advise that a suitable life insurance plan is taken out to run alongside this kind of mortgage, typically a decreasing term assurance policy. A qualified mortgage specialist will be able to advise you on this & give guidance as to the most suitable mortgage for you.

The borrower makes monthly payments to solely pay the interest on the loan. No capital repayments are made to the lender during the term of the loan & the capital amount outstanding does therefore not reduce at all. The Borrower still has the responsibility of repaying the amount borrowed at the end of the term and this is usually achieved through the borrower making regular contributions to an appropriate savings scheme such as an Endowment, ISA or Pension. Lenders often advise that suitable life insurance is also in place, typically a level term assurance policy is used to run alongside an interest only mortgage, an endowment will usually however have this element built in. A qualified mortgage adviser will be able to guide you through the advantages & disadvantages of choosing the right payment method & life assurance to suit your needs.

This is the basic method with monthly payments going up or down without limit as interest rates change. One disadvantage is that you cannot easily predict the level of future payments, which may cause budgeting problems in the future.

A fixed rate mortgage will offer an interest rate that remains the same for a set period of time, typically between 2 & 5 years, (although some lenders offer upto 25 year fixed rates). At the end of the fixed rate period, the interest rate will usually revert back to the lenders standard variable rate at that time. The fixed rate mortgage is particularly popular amongst the first time buyers, & those who want to be able to budget accurately, as you would know exactly how much your payments would be for a set period of time (the fixed rate period). There is often an arrangement/administration fee charged by the lenders to set up a fixed rate in order to allocate funds onto that product, this is something that will vary from lender to lender. There could also be early repayment charges for redeeming your mortgage early or switching to another lender during the fixed rate term & sometimes after.

A Capped rate mortgage is essentially where the lender will have set an upper limit, known as the Cap. The lenders standard variable rate would apply unless the interest rates increased beyond this ‘cap’ limit, in which case the Capped rate would apply & be the maximum interest rate you would pay. This offers peace of mind & the advantage of knowing you would not be paying more than the capped rate during its time.

If a lender chooses to also offer a fixed lower limit, this is known as a ‘Cap & Collar’ mortgage.

Most lenders will today offer a discounted rate, which is basically a true discount off of the lenders standard variable rate (eg; 1.5% discount for 2 years). The reduced mortgage payments are not deferred for later payment in any way, it is purely an incentive and another form of interest rate a lender will offer new customers. There may with some lenders, be early repayment charges if the mortgage was to be repaid early or on leaving the mortgage.

As the name may suggest, these mortgages are linked to the Bank of England base rate. This base rate is reviewed once a month by the Bank of England, after taking into consideration the cost of borrowing money. A base rate tracker mortgage will allow your monthly mortgage payments to rise and fall in line with these base rate alterations. Lenders will vary on the percentage above or below the bank of england base rate they will offer, but a typical example of a base rate tracker would be for instance 0.55% above Bank of England base rate for 2 years. There may be early repayment charges to these rates during the tracker period or even longer in some instances, so if you were to repay your mortgage early or leave that particular lender, this should be considered.

A relatively new concept to the UK mortgage market. As the name suggests this type of mortgage will give increased flexibility when compared to traditional types of mortgage. Flexible mortgages may be set up on a fixed, capped, discounted, variable or base rate tracker basis when it comes to the interest charged to the account. The added advantage of a flexible mortgage is that you are able to vary your mortgage payments. For example you may wish to overpay on your mortgage when there is surplus income available. This can provide benefits in two ways:

1. Earlier repayment of the mortgage when compared to just paying the regular monthly amount. Potentially saving thousands of pounds in interest.
2. The facility to utilize the overpayments made by taking a payment holiday or reducing regular payments when money is tight. This again gives you extra flexibility in terms of budgeting for your mortgage.

Some types of flexible mortgage may not require that overpayments have been made prior to taking payment holidays or making underpayments on the mortgage. This will depend on the lenders policies.

Other types of flexible mortgages offer additional features to a mortgage such as;

• Facility to borrow more money within agreed limits, for lump sum expenditure such as home improvements for instance.
• Current account with cheque book & an agreed overdraft facility.
• Credit card with an agreed spending limit.
• Debit card.

A Cashback is a relatively common incentive offered by many lenders. A lump sum is paid to you immediately after completion of your mortgage, either as a fixed amount or a percentage of the loan size. For example a 5% cashback on a mortgage of £100,000 would give you £5,000! It is usually a condition of the mortgage that some or all of the cashback must be repaid if the loan is redeemed within a specified period.

Offered by some lenders on Remortgage schemes to encourage borrowers to switch mortgage to another lender. Some lenders will also offer a free valuation in addition in order that 'remortgagers' incur minimum costs.

This is essentially a repayment mortgage designed to assist borrowers who want to keep down the costs in the early years. The low initial repayments are achieved by deferring the capital installments in the first few years. The payments will increase at the end of the initial period and no capital will have been paid.

In the early years, some of the interest is not paid, but is added to the outstanding capital. This is useful for those expecting an increased income & wish to maximize the loan whilst minimizing the costs in the early years.

The government introduced specified CAT (charges, access, and terms) standards that can be applied to mortgage products, although lenders do not have to offer CAT standard mortgages and there is no guarantee by either the government or the lender that a CAT standard mortgage will be the most suitable product for a particular borrower. CAT standard mortgages are likely to appeal to borrowers who wish to have clearly stated limits on charges. For example:

1. The variable rate must be no more than 2% above Bank of England base rate and must be adjusted within one calendar month when the base rate changes.
2. Interest must be calculated on a daily basis.
3. No arrangement fees can be charged on variable rate schemes and no more than £150 may be charged for fixed or capped rate schemes.
4. Maximum early redemption charges apply to fixed rate and capped rate loans.
5. No separate charges can be made for a higher lending charge.
6. All other fees must be disclosed in cash terms before you enter into any commitment.

Other rules relating to access & terms include:

1. Normal lending criteria must apply
2. You, as a customer can choose which day of the month to pay.
3. All advertising and paperwork must be clear & straightforward.
4. The purchase of related products (i.e.; buildings insurance) cannot be made a condition of the mortgage.

This is essentially where you would already have a mortgage in place but wish to move home & obtain a new mortgage.

You will have not bought a property before. Finding the deposit money can sometimes prove difficult for first time buyers. To overcome this, some lenders will offer 100% mortgages where you will not need a deposit. Similarly, mortgages where only 3% deposit is required as opposed to the usual 5% or 10%. are available. If income is a little tight, you may also be able to obtain a guarantor or other mortgage based on not only your earnings but also that of a family member. Choosing a longer mortgage term may also make the monthly payments more manageable in the early days. Typically mortgages are available from 5-40 years. A qualified Mortgage Adviser will be able to discuss these options & give you the best advice to suit your circumstances.

Buying a property & obtaining a mortgage usually involves putting down a 'deposit'. With the average house price rising, this can be a costly affair and some people, often first time buyers simply do not have enough funds to buy their home as standard lending criteria suggests. Standard mortgage criteria usually dictates that the borrower must pay at least 3-5% of the purchase price. 

To overcome this, some lenders will offer 100% mortgages. This is where the potential homeowner borrows 100% or more of the value of the property. As the mortgage lender is taking all the risk if there is a fall in house prices, interest rates may be slightly higher.

A homeowner may also wish to borrow more than the value of the house to pay for associated costs of moving home such as stamp duty, fee's charged by lenders, solicitor’s bills or decorating and furnishing costs. This is possible with some lenders. It is important however, to be aware that there is a danger in borrowing more than the value of your house as you are immediately placing yourself in a negative equity position and if the property market makes a downturn you could be left with owing more than your property is worth. Professional advice should be sought by a Mortgage Broker.

A Self-Certification mortgage can offer great benefits but also some downsides. If you are self-employed you may all too well know the difficulties faced sometimes in proving income. Some lenders may want to see at least 2 years audited accounts before you can be considered for a mortgage and if available will work on the net profit. For the self-employed, income can fluctuate hugely or if relatively new, audited accounts may not exist.

Similarly, employees who have two jobs or rely heavily on bonuses as a part of their income can find it difficult evidencing income, as some lenders will only take half of any extra income into account when calculating affordability. For individuals that need other income taken into account there is a different type of mortgage available known as a self-certification mortgage. This kind of mortgage allows the applicants to declare their income without the need for providing evidence. The mortgage once taken out is exactly the same as any other, however the way the mortgage is underwritten is different. There is obviously an increased risk to the lender & because of this, lenders may charge a higher rate of interest or higher repayment charges.

It is always important to discuss your personal situation openly & honestly with a professional adviser, so they are best equipped to provide you with the best advice to suit your personal circumstances & assess whether a self-certification mortgage is really for you.

A Remortgage is simply the term used for switching an existing mortgage. You will not be moving home but wish to change your mortgage to a better product with another lender perhaps increasing the loan size for home improvements or debt consolidation .

This simply means that you wish to borrow further money on an existing mortgage, usually with the same lender.

Buy to Let mortgages have become a popular means of investment in recent years. Many people buy properties to let out rather than take out pensions or invest on the stock market; however like any other investment there is an element of risk involved. Most lenders will ask that you put down a 15%-25% deposit so this could limit the price of the property you are looking to buy. You would usually be expected to be able to predict the likely rental income that can be achieved from the buy to let property.

A Let to Buy mortgage is essentially where you would let out your existing property in order to purchase another to live in. The original idea of let-to-buy mortgages was that they would offer a stop-gap to homeowners who were forced to relocate or could not sell their homes. Many borrowers now seem to use them as a backdoor into the rental market. Lenders may allow you to borrow up to 95% of the purchase price of the new property.

The overseas property finance market is very competitive, and so interest rates tend to be very similar from one lender to another. It is important to fully assess what conditions may be attached to any interest rates offered, as some may be cheaper early on but become quickly more expensive when the introductory period finishes. You usually have to be over 21, a UK resident and already own a UK property. Some lenders may offer you a choice of currency in which you pay the mortgage.

Lifetime mortgages are a popular means for homeowners over 60 to unlock some of the value in their homes. It is a way of borrowing a set amount of money against the value of your home, in the form of a long-term loan and without the need to move. You continue to own your own home, for the duration of the plan and as long as you are living in it, you will be responsible for keeping your home in good repair. There are no monthly repayments and the loan is paid back using the proceeds from the eventual sale of your property. This is usually on death or on moving into permanent long-term care.

As there are no monthly repayments, interest is built up throughout the lifetime of the loan and added on to the final sum to be paid off at the end. The money released can be used for whatever you wish (so long as any outstanding mortgage has been paid off). You should be aware that taking out a lifetime mortgage could reduce eligibility to means-tested benefits and could affect your tax position.

In addition, as the interest is added to the loan, there may be no value left in your home at the end of the plan. Taking out a lifetime mortgage may also reduce the options that you have for moving or selling your home. This is a highly specialist area & you should talk to a qualified Mortgage Adviser or Financial Adviser for full details.

This is a scheme that allows council tenants to buy their homes at a discounted price, assuming they meet the usual lender criteria. A Council right to buy is an excellent way of getting on the property ladder without the hassle of saving for a deposit, as lenders will often lend up to 100% of the discounted price. To qualify for the right to buy option, you usually will need to have been a public sector tenant for a minimum of 2 years but your council will be able to give more detailed information.

A commercial mortgage or business mortgage in laymans terms is simply a specialist secured loan, used to buy a business property or going concern. A business mortgage may be used to start a new business, buy an existing business or for residential and commercial investment purposes. This business loan can be used to raise capital for the growth of a business or even property development. It is probably the easiest & best way of arranging business finance to purchase buildings or land for your business. Just like a residential mortgage, the lender has a legal claim over the business property until the loan has been repaid and the property itself will be placed at risk if the monthly payments are not met.

Buying a business property or commercial premises, as opposed to renting, can be a good investment, providing the business with stability and the added benefit that the business property itself can become an asset. There are many avenues to obtaining a commercial mortgage or business loan, such as banks, building societies and specialist commercial lenders. All are able to offer a loan for a business property, but as with residential mortgages some lenders will be more strict than others. Buying a business property and obtaining business finance is a milestone for most people but it is also a major commitment, you need to seek independent mortgage advice from a specialist in commercial mortgages, who has experience of how business mortgages work. Your local commercial mortgage broker will be able to advise on the most suitable lender for your circumstances and point out the pro's and con's of the commercial mortgages available to you. Qualified impartial advice is vital when looking to buy a business property.

Some of the advantages to buying your business property are:

• The monthly mortgage payments are likely to be similar to that of rental charges for a business property
• There is no exposure to hefty rent increases
• There is the option of sub-letting any unused space, although permission may be needed from the relevant lender
• The interest payments on a business mortgage are tax deductable
• Any future increase in the property value will increase your capital assets

There are also some disadvantages to buying your business property which may include:

• There will be a deposit required by the mortgage lender to put towards the purchase of the business property.
• It could be more difficult for the business to relocate if you own the property, as it could take a while to sell the premises
• Depending on the type of mortgage and interest rate selected, if you opt for a variable rate mortgage, you may be subjected to interest rate changes.
• You would become liable for the usual costs associated with owning a property, such as maintenance charges, insurance, security & general upkeep.

Commercial mortgages typically run for 10 years or more and can be used to purchase  business properties ranging from a pub, restaurant, takeaway, shop, office, warehouse, factory, hotel, B&B, equestrian centre, farm, garage, holiday home let, care home, nursing home and many more. An Independent mortgage adviser will be able to advise what type of mortgage you need.

Business finance loans can be made to individuals, limited companies or pension schemes and the amount available to borrow can range from as little as £15,000 all the way up to well over £1 million, depending of course on individual or company circumstance. Most lenders will ask that a proportion of your own money be put towards the business property (known as the loan to value ratio or LTV) and this can be as little as 15% of the property value. Majority of lenders need to ensure that your credit worthiness meets with their underwriting guidelines, however it is still possible to obtain business finance where there is a history of adverse credit, such as county court judgements (CCJ's).

As with all mortgages, banks, building societies and specialist commercial mortgage lenders may ask for evidence that the payments on the business mortgage can be met and may ask for a business plan together with long term financial projections. This is simply to ensure that mortgage payments will be met in the future. However, there are several self-certification commercial mortgages available, whereby the lender will not need to verify the applicant's income as long as they meet relevant criteria.

Commercial mortgages often carry higher interest rates than standard residential mortgages, due to the higher risk incurred by the lenders. This is particularly the case if the deposit you are putting down is less than 20%. As with residential mortgages, interest rates offered on commercial mortgages are variable rates & fixed rates.

• Variable Rate means that the interest rate will rise and fall in line with the Bank of England base rate, so your monthly mortgage repayments will change, depending on market economy. The plus side to this is that when interest rates go down, so will your payments, however on the down side, when interest rates increase, so will your monthly payments. This can make monthly budgeting a little difficult.
• Fixed Rate means that the interest rate is guaranteed to remain the same for a set period of time, usually 1-5 years. The benefit to a fixed rate mortgage is that you know exactly what the monthly payments will be for a fixed period of time, making it easier to budget. The down side of a fixed rate mortgage is that if interest rates fall & the lenders variable rate reduces you will not benefit from theses lower interest rates.

As with a residential mortgage, there are two methods of repaying a commercial mortgage, Repayment & Interest Only:

• Repayment Mortgage, also called a capital repayment mortgage, your monthly payments will include both the interest charged for the loan, together with the capital element, thus you will own the property in full at the end of the mortgage.
• Interest Only Mortgage, the monthly payments on an interest only mortgage simply cover the interest charged for the loan, the capital (initial amount borrowed) will still need to be repaid at a later date.

Other fees may apply in obtaining a commercial mortgage which should be considered:

• Arrangement / Application fee's are fees that a lender may charge to process your business mortgage application, these can range from being free of charge or upto 1.5% of the loan size and may be negotiable.
• Valuation Fee. A valuation fee is charged by the lender for carrying out a survey/valuation of the business property and charges may vary from lender to lender. Depending upon the premises & circumstances, a further structural survey may also be required which may incur additional charges.
• Legal/Conveyancing costs. As with a residential mortgage, these costs are inevitable when purchasing a property. They will vary from company to company and will include local searches, site surveys and the preparation of all the legal documents.
• Early Repayment Charges/Redemption Charges may apply if you repay your commercial mortgage early or pay off a lump sum of the mortgage within a specified period. These charges usually apply during the early years of a mortgage however it is something that should be clearly understood before committing to a new mortgage.

High street banks and building societies may not be the best place to start looking for a commercial mortgage, although they can offer advisory services, it would be much better to speak with a specialist commercial mortgage adviser, able to offer impartial advice on the best commercial mortgage for you, through a range of lenders.

An independent mortgage adviser, specialising in business finance will be able to help in finding a suitable mortgage, that meets your needs and circumstances. An independent adviser will not only guide you through the whole mortgage application process but can often assist you with related insurances that should be considered for both your business property and business in general.

Once you have obtained your business mortgage, your local mortgage broker is always available for any future assistance, through their constant monitoring of the commercial mortgage market, they will ensure that you are placed with the most suitable lender, every time. Find a commercial mortgage adviser now!

This is the term used for increasing the size of your mortgage in order to release cash. Perhaps to use on home improvements or for debt consolidation. This is a cost-effective short-term solution as no doubt the interest rate payable on a mortgage would be lower than that of a personal loan.  But it does mean a larger mortgage, so should be discussed with a qualified mortgage adviser to pin point the pitfalls.

This term is used for rolling all your existing debts into one.  This is a useful means of getting out of a financial hole especially if you have a large amount of equity in your home.  However, you are increasing your mortgage so will cost you more in the long run. Again this is an area that should be fully discussed with an experienced & qualified mortgage adviser.

Most lenders these days will allow you to move your mortgage to another property. This means, that assuming you meet their usual lending criteria you can benefit in transferring your mortgage & interest rate to the new property. This may be an ideal way of avoiding paying early repayment fees.

These are charges made by the lender in the event of you moving away from that lender, repaying your mortgage or changing your interest rate or mortgage in any way. These fee's usually apply if you are taking advantage of a fixed rate, discounted rate, capped rate or tracker rate mortgage but having said that each lender will vary, so it is important to be aware of these fee's when entering into a new mortgage or considering leaving one. Sometimes you will have only redemption charges applicable during the scheme period & sometimes there may be extended redemption penalties. It is important to consider these charges prior to making any commitment to a mortgage. A Mortgage Adviser would advise you accordingly.

Shared ownership is a scheme where you part buy and part rent your home. The initial share (% of which the housing association will set) is purchased with a mortgage from a lender in the normal way & rent is payable in respect of the remaining share, (subject to reasonable increases). You may purchase further shares at a later date (known as 'staircasing') or alternatively, you can remain a shared owner indefinitely. There is usually a high demand for these sought after properties, and Home Zone maintains a list of prospective purchasers.

You can usually sell your share, whereby your Shared Ownership lease is assigned to the purchaser, or alternatively, if you have bought the remaining shares in the property & own the property outright then you can usually sell the property on the open market.

Homebuy is a government funded programme designed to promote low cost affordable home ownership. The scheme helps people who wish to buy a property but cannot afford to do so. Homebuy is primarily targeted at public sector key workers and council or Housing Association tenants.

There are three main schemes available for those who wish to purchase a property:

1. Open Market Homebuy
   Offers an equity loan so that you can purchase approximately 75% of the equity of the property of your choice subject to certain criteria. The remaining 25% is funded through an equity loan which has no interest or loan repayments. Open Market Homebuy is mainly for key workers.
2. New Build Homebuy
   Offers new homes on a part buy/part rent basis where you purchase a % share in the property and pay a discounted rent to the housing association on the remaining share and Social Homebuy : Offers some housing association tenants the opportunity to buy a share in their home
3. If you are a Key Worker and employed in one of the following groups you may be eligible for assistance under the Homebuy scheme:
   
   NHS – All clinical staff employed by the NHS except doctors and dentists.
   
   Education – Qualified teachers in schools and sixth form colleges, lecturers in Further Education Colleges, children’s social workers, and qualified nursery nurses in LEA nursery schools only.
   
   Police – Police officers and community support officers including those working for the British Transport Police and Civil Nuclear Constabulary in certain areas. Some front line civilian police roles are included but this varies by force.
   
   Prison Service – Prison officers and related grades, operational support grades, nursing staff, industrials and instructional officers working at specified locations.
   
   Probation Service – Probation officers, senior probation officers, probation service officers. Trainee probation Officers for discounted rent properties only.
   
   Local Authority – Local authority employed clinical staff, adult social workers, occupational therapists, educational psychologists, speech and language therapists, rehabilitation officers for the visually impaired. Nursery nurses. Local authority planners employed by the local planning authority.
   
   Fire Fighters – Uniformed fire and rescue staff below principal level.

This is a government imposed tax that applies to the purchase of all property over £125,000. If you are buying between £125,000 and £250,000 you will be charged 1% of the purchase price. For properties between £250,000 and £500,000 you will be charged 3% of the purchase price. Stamp Duty for properties over £500,000 amounts to 4% of the purchase price. It is important to consider these charges when buying a new property as it can hike the initial costs up quite considerably.

This is an evaluation carried out by a qualified surveyor to assess that the property is suitable security for a mortgage & worth the amount suggested. There is a fee chargeable for this service & ranges in price according to the property price. Some lenders incentivize borrowers to use them by offering a free valuation or a refund of this cost.

This is usually referred to as the insurance that would need to go alongside a mortgage to include; Home Insurance (i.e. Buildings & contents insurance) and accident, sickness and/or redundancy protection, also referred to as Mortgage Payment Protection Insurance (MPPI).

This is a general way to refer to insurance that covers any aspect of a home and belongings. These policies are usually split into separate sections, namely 'buildings' and 'contents' and not all policies will cover both. Buildings Insurance covers the structure of a building, including the foundations plus permanent 'fixtures and fittings' such as baths, fitted kitchens, etc. The test that the insurance companies will usually use is “can it reasonably be removed and taken to another home”? If it can, then it is part of the 'contents' and it will not generally be covered by a buildings policy. Buildings insurance policies usually include outbuildings, such as garages and garden sheds. Anyone with a mortgage will be required to have in place adequate insurance to cover the re-building cost of the property (this is the estimated cost of how much the property would cost to rebuild).

Contents Insurance is designed to protect possessions, such as electrical appliances, furniture, clothes, etc. In other words, just about everything you would take with you if you moved. While it is generally easy to determine whether an item is part of the buildings or part of the contents, sometimes this is not immediately apparent and policyholders should read the small print if in doubt. Accidental Damage cover may be added for an additional charge to cover accidental breakage or damage to the contents of the home.

This is an insurance policy designed to pay your monthly mortgage payments for a limited period if you are unable to work due to accident or sickness or you are made redundant. Please also see 'Accident, Sickness & Redunancy Protection'

On the 1st December 2004, the Financial Services Authority created new rules concerning regulated advisers, known as "de-polarization". This provided three categories of adviser; namely; a tied adviser, multi tied adviser & independent adviser. A Tied Adviser or a direct salesman will only offer advice on the products of one provider. A multi-tied adviser will offer consumers the choice of products from a limited range of companies they have selected. An Independent Adviser is obliged to make recommendations to clients in the light of all the various financial products available. They can accordingly be impartial in their recommendations on the basis of offering "best advice". Independent Advisers must offer their clients the ability to pay an agreed fee as opposed to receiving commission from the sale of an investment product

All advisers, by law, must provide customers with a 'keyfacts' document. This will provide information on their status, (be it tied, multi-tied or independent) the services they offer and a menu of their charges. This will enable you to properly understand the value and cost of the adviser. This is a legal document enforced by the Financial Services Authority to protect borrowers & investors & provide clear information on a Mortgage Adviser or Financial Adviser.

When buying and selling a house, the term conveyancing is considered the legal process of transferring the title of a property from one legal party to another. Conveyancers are in essence “Property Lawyers”. A conveyancer is usually required to take care of the legal aspects of both the purchase & sale of your property.

Professional advisers may charge a fee for their advice and/or they may take commission from the company whose products you eventually buy. In investment cases, some commission might be deducted from the money you pay into an investment. Professional advisers may also be paid further commission in each year that you keep an investment going.

From mid-2005, investment advisers wishing to call themselves 'independent' must give you the option to pay by fees if you want to. The same applies to mortgage advisers as of 31st October 2004 .

If the adviser receives commission, this is usually a payment to an intermediary for services rendered & is based on a percentage of the value of the "deal". This is paid to the intermediary by the product provider.

If an adviser charges fee’s you would make a payment to the intermediary for services rendered. This is fixed and agreed before the service is performed.

It is the legal responsibility of an adviser to notify you in advance & in writing of any fees they may charge you; this will be made clear to you in the Keyfacts document he/she gives you on your first meeting.

The Financial Services Act 1986 came into effect to offer protection for investors. This required the registration and monitoring of investment businesses under the ultimate control of the Treasury. This Act was superseded by the Financial Services and Markets Act 2000, which formed the Financial Services Authority (FSA), an independent non-governmental body with the authority to regulate investment business.

With effect from the beginning of 2005, the FSA also took over responsibility for the regulation of General Insurance and Mortgages. The FSA has four statutory objectives which are to maintain confidence in the financial system, promote public understanding of the financial system, secure the appropriate degree of protection for consumers and reduce the extent to which it is possible for a business carried on by a regulated person to be used for a purpose connected with financial crime. More information, including the ability to search for regulated firms or individuals, is available on their website, www.fsa.gov.uk.

This is the term used for lenders to calculate how much you are able to borrow on a mortgage and is based on a multiple factor of the income of the borrower(s). This is to ensure that in the opinion of the lender the borrower has a reasonable chance to meet the monthly payments. A typical lenders' income multiples would be for a maximum loan of 3 times the main income plus 1 times the second income or 2.5 times joint incomes if higher. However owing to the recent hikes in property prices many lenders have now increased this & some work on a pure affordability basis, taking into account your incomings & outgoings. If the amount you need to borrow against the property is low (say under 75% LTV), the multiples may be increased.

This is the ratio of the mortgage amount against the value of the property you are purchasing or own. Quite simply, it is the mortgage amount divided by the property value. If the LTV exceeds 90%, some mortgage lenders will charge a higher lending charge. Lenders will often charge a higher interest rate for a higher LTV purely because of the increased risk to them.

The more deposit you put down on a property, the lower the LTV. If a borrower has a bigger deposit this reduces the risk to the lender because if a borrower were to default on the payments & the property repossessed, it is more likley that the lender would be able to recoup the money they lent. With a lower LTV & bigger deposit you are likely to be able to take advantage of lower interest rates.

This is a charge made by the lender usually if you are borrowing more than 90% of the value of your home, (known as the loan to value ratio).

It is effectively an insurance policy to protect the lender should your property be repossessed. It can usually be spread over the term of the mortgage or paid upfront. It is important to not automatically rule out a mortgage deal if this charge applies, consult a mortgage adviser, who will be able to talk you through the pros & cons!

An endowment policy is a savings plan which provides life assurance for the policyholder. The policy exists for a set term, the minimum usually being 10 years. A cash lump sum is paid out at the end of the policy term (known as maturity) or in the event of the earlier death of the policyholder. This type of policy has traditionally been used to repay an interest only mortgage. It is designed that on maturity of the endowment the amount payable should be enough to repay the capital element of the outstanding mortgage. There are, however, no guarantees that there will be sufficient funds in the endowment to ensure the mortgage will be repaid and this is a specialist area that should be discussed with a professional adviser.

Becoming an increasing concern for many borrowers & has recently been given wide publicity in the press & on television.

Many mortgage borrowers in the UK have been warned that they will experience an endowment shortfall, due to the underperformance of the investment that they set up to pay off the outstanding amount on their interest-only mortgage.

If a shortfall on your mortgage endowment has been predicted you will have received a letter from the insurance company advising you to take positive action. This may be achieved by either switching your mortgage to a repayment basis or increasing your contributions into the endowment. It may also be possible to cash in an endowment policy and use it to pay off the mortgage or sell it on the second hand market. This is an area of great complication as you could end up losing money if you don’t choose the right option & it is imperative that you discuss these possibilities with a specialist.

ISA’s are ideal ways to build up a fund to, for instance, pay off a mortgage. They were introduced on 6th April 1999 to replace PEPs and TESSAs. They are not an investment in their own right but are tax-free savings accounts. Adults living in the UK can invest a maximum of £7,000 per year in each tax year or up to £3,000 in a mini cash ISA. Investment may be made in three components; equities, cash and life assurance. Stock and share investments that can be held in an ISA include unit trusts, open-ended investment companies (OEICs), investment trusts, ordinary shares, preference shares and fixed interest corporate bonds. Income from some ISA investments (corporate bonds) is tax-free and you don't have to report it on your tax return. Capital gains are also exempt from CGT. ISA plans are sold by stockbrokers, IFAs, fund managers, banks and other authorised financial institutions. You can buy a plan and take advice on what to put in it, or you can have a 'self-select' ISA and make your own decisions. But, investment is not without risk, careful choice should be taken of the funds invested. For instance, many investors lost out when technology shares tumbled. As the fund grows, professional advice should be sought to ensure the capital is protected as much as possible

The current maximum limit is £7,000 that can be invested by an individual in an ISA during one tax year. See Individual Savings Account (ISA) for more details.

The current limit is £3,000 that can be invested by an individual in a Mini Cash ISA during one tax year. The investment must be held in cash and, as it is not possible for an individual to take out more than one ISA a year, thus meaning that an investor will not be able to also have a Maxi ISA, even to top up to the £7,000 limit.

NB. You can, however, take out an additional Mini Stocks and Shares ISA to the value of £3,000 and an insurance ISA of £1,000, making a total of £7,000.

Quite simply, this is a life insurance policy to pay a lump sum on the death of the insured. Mortgage Life Insurance is usually termed as “Term Assurance”, whereby the policy will provide life cover for a specified term and used in conjunction with a mortgage to pay off the outstanding loan in the event of the death of the borrower. There are essentially two types of life insurance that are usually used alongside a mortgage, Decreasing Term Assurance & Level Term Assurance. Many lenders will insist that you take out appropriate life cover alongside your mortgage.

This is most commonly used to run alongside a repayment mortgage, where the level of life cover will decrease each year aimed to coincide with the decreasing mortgage amount. Decreasing term assurance will run for a specified term and has no surrender or cash in value.

This is commonly used to run alongside an Interest Only mortgage, or used for other financial matters. As the words describe the amount of life cover will remain level throughout the term. With an interest only mortgage the loan size stays the same until the end of the term as will the life cover. Level term assurance will run for a specified term and has no surrender or cash in value.

(The word Assurance is used by many English Insurance companies but simply means the same as insurance where life insurance is concerned).