A look at some commonly used mortgage terms

Buying a home is a complex process, which is why many potential buyers turn to a CeMAP qualified mortgage advisor for support and advice. However, the process can become even more confusing when lenders and other professionals use jargon and abbreviations throughout. Here are some of the more common terms:

Higher Lending Charge (HLC) is a fee charged by mortgage lenders when the loan to value ratio is higher than the standard amount; for instance, if you borrow 95% the lender may want to set a Higher Lending Charge in case you can’t maintain your monthly repayments.

The Loan To Value (LTV) is the maximum loan you can borrow against the property’s value. For instance, if you buy a property for £100,000 and the LTV is 75%, the maximum mortgage you will be given is £75,000, so you would need to save a deposit of £25,000.

The Annual Percentage Rate of Charge (APRC) is the total cost of your mortgage if you were to retain the property for the whole term, including charges, interest and any fees. You can use this to compare the cost of the whole mortgage when looking at various lenders and the deals on offer.

The Agreement in Principal (AIP) is a document given to you by a lender, confirming the loan size they would be willing to lend you. This gives you a guide to the value of homes you may be able to afford.

If you are in the process of buying a home and are confused by the terminology, either ask for an explanation or seek the guidance of a mortgage advisor.



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