Adverse Credit

This term is used to apply to a borrower or application that has past problems with credit, for instance late payment, bankruptcy or County Court Judgements.

Agreement in principle

The agreement in principle gives an indication to you of the likely outcome of a loan application. It is not a formal offer, but includes a credit check with a credit reference agency and an assessment of your ability to repay the loan amount requested.
Once you have been given an agreement in principle we will make further checks to validate the information you have provided and check that the house you have chosen is suitable for us to lend against. At that stage we would then offer you a formal offer of loan.

Annual Percentage Rate (APR) or Overall Cost for Comparison

The APR shows the true, total cost of borrowing and allows you to compare offers from different lenders. The APR takes into consideration all payments, such as interest payments, repayments of capital, all costs and any fees based on projections for the payments applicable during the term of a mortgage.

Appreciation

The increase in the value of a property as a result of changes in market conditions.

Arrangement Fee

Some of our mortgage products have an Arrangement Fee; this is a fee payable on the product you’ve chosen to the Society, for arranging the mortgage. The fee can be added to the amount you want to borrow if you wish, although if it is added you will pay interest on this additional amount throughout the life of your mortgage. Details of these fees are shown within each product details section.

Arrears

The amount, usually in either months or pounds, that your mortgage payments have fallen behind schedule.

Asset

Any form of property owned by a person, including currency, stocks, and enforceable claims against others.

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B

Building Society

A mutual organisation whose purpose or principal purpose is to provide mortgages and savings accounts.

Buildings Insurance

An insurance policy which pays the cost of repair or rebuilding in the event your property is damaged or destroyed. Most mortgage lenders will require you to take out buildings insurance as a condition of their loan.

Buy To Let

A mortgage used to buy property which is to be used solely for the purposes of renting out to a third party.

Bank of England Base Rate

The Bank of England Base Rate is the rate of interest set by the Bank of England and is officially called the Bank of England repo rate.

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C

Capital Repayment

A lump sum payment to reduce the loan which has the effect of reducing either the term of your mortgage or your monthly repayments.

Cap and Collar Mortgage

A capped mortgage has a maximum rate of interest that can be charged for a specified period, while a collar mortgage has a minimum rate of interest that can be charged for a specified period.

Capped Rate Mortgage

A capped rate mortgage sets a maximum rate of interest that the lender can charge, but only for a specified period.

Cashback Mortgage

These are generally variable rate mortgages where the benefit of lower payments given in discounted rate mortgages are converted into a single lump sum, which you receive when you take out the mortgage. Other mortgages such as fixed or discounted can also offer a cashback.

County Court Judgment (CCJ)

A ruling for bad debt issued by a County Court or higher court. The judgment will be recorded and the record will show up during any credit checks and may count against you in your mortgage application.

Completion

The completion date is the date on which your solicitor forwards the money from your lender to the solicitor of the vendor. It is the date that you become the legal owner of your new property.

Contents Insurance

Insurance that covers the contents of your home, including electrical goods, carpets, furniture and curtains.

Conveyancing

This is the legal process of transferring ownership of a property. It includes negotiating and agreeing the contract for buying and selling your home.

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D

Decreasing Term Assurance

Mortgage life assurance is designed specifically to protect a repayment (capital and interest) mortgage. The cash lump sum payable is designed to help pay off the outstanding balance on your mortgage. If you have an interest only mortgage you can use level term life assurance to cover your mortgage amount.
You choose the amount of cover you need and the length of the plan. The premiums you pay remain the same throughout the plan term, however the cash lump sum payable decreases to reflect your decreasing mortgage loan. The plan has no cash-in value at any time.

Discounted Rate Mortgage

This interest rate is discounted from the Society's published Standard Variable Rate, or 100% Standard Variable Rate if applicable, for an agreed period from the start of the mortgage.

E

Early Repayment Charge

A charge levied on the customer in the event the amount of the loan is repaid in full or in part before a date specified in the contract.

Equity

The amount of money either put into buying a property or the deposit placed on a property. Also known as capital.

Exchange of Contracts

This is the stage in England and Wales at which buyer and seller have legally committed themselves to the purchase deal.

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F

Fixed Rate Mortgage

A fixed rate means that no matter what happens to interest rates, your mortgage interest rate stays the same until an agreed date. However you should note that your monthly commitment could change as a result of other factors; for example changes in insurance premiums.
When the fixed rate ends, your mortgage will change to a different interest rate. This will usually be either our Standard Variable Rate, or a rate which is linked to the Bank of England Base Rate. The follow on interest rate may be higher or lower than the interest rate you've been paying. If the interest rate is higher, your payments will increase.

Flexible Mortgage

A mortgage that allows the borrower to make over or under payments, or take a payment holiday.

Freehold

A term which means that you own the property and the land it is situated on.

Further Advance

A situation whereby the lender makes available another loan and under which both loans are included within first charge on the property. A further advance can be used to consolidate debt or pay for improvements to the property.
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE

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G

Gazumping

This is when another potential buyer puts in a higher offer for the property after your offer on the same property has been accepted.

Guarantor

A person, other than the borrower, who guarantees the mortgage repayments in the event the borrower defaults. Typically the guarantor will be a parent or relative.

H

Higher Lending Charge (HLC)

A Higher Lending Charge is a premium charge which you may have to pay if you are borrowing more than 90% of the purchase price or property valuation, whichever is the lower. This charge may either be added to the loan or deducted from the advance on completion.

Homeowners’ Loan

A further loan secured on your existing property for any purpose.

Household Insurance

An insurance policy that protects against loss or damage to the property caused by fire, some natural causes and acts of vandalism.

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I

Income Multiplier

The formula used by lenders to calculate how much a prospective borrower can borrow. Normally this amount will be three or 3.5 times the person's income, or for joint applicants it is typically 2.85 times joint income.

Initial Disclosure Document

A document giving information about the scope and nature of the services offered by Scarborough Building Society in relation to its required objectives.

Interest Only Mortgage

A type of mortgage in which the borrower only repays the interest on the loan for the duration of its term, and repays the full loan amount at the end of the mortgage period.

Investment Vehicle

An investment vehicle is needed if taking out an interest only mortgage. This could be an endowment policy, personal pension or ISA.

J

Joint Income

The total gross income of the two borrowers in a joint mortgage.

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K

KFI (Key Facts Illustration)

The KFI summarises all the important features of the mortgage and must be clear, fair and not misleading. It must be presented in a standard way, so you can check the cost and terms of the mortgage and compare it with other similar mortgages.

L

Landlord's Reference

A reference given by a previous landlord, which confirms an applicant's history of payment of rent and previous conduct as a tenant.

Level Term Assurance

This type of life assurance policy provides a guaranteed lump sump in the event of death that can be used to repay a mortgage over a fixed term. It is usually used to protect an interest only mortgage.

Loan to Value (LTV)

This refers to the amount you are borrowing as a percentage of either the property value or the purchase price, whichever is the lower.

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M

MIRAS (Mortgage Interest Relief At Source)

This was a government scheme discontinued in April 2001 that allowed you to claim tax relief on the interest you paid on your mortgage.

Mortgage

A loan made against the security of a property.

Mortgagee

The lender in a mortgage.

Mortgagor

The borrower in a mortgage.

N

Negative Equity

Where a mortgage is greater than the value of the property.

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O

Offer of Advance

Once your mortgage application has been assessed, we will send you an offer of advance which will show how much we are prepared to lend and on what terms. A copy of this document will also be sent to your solicitor.

Overpayment

Situation where repayments are increased so that the mortgage is repaid before the end of the agreed term. Some mortgages (flexible mortgages) allow for overpayment, but others may impose early redemption charges for overpayment.

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P

Payment Holiday

A payment holiday is an agreed period of time when you can take a break from making payments. You can take a payment holiday up to the extent of any previously accured overpayment (when not used to reduce the mortgage term). Payment holidays require one month's notice and our approval.

Payment Method

The method by which an interest-only mortgage is to be repaid at the end of its term. Typically this will be either an endowment, an ISA, or some other investment product.

Portable

In relation to a mortgage, this refers to a mortgage that can be transferred between properties when the policyholder moves home.

R

Re-mortgaging

Moving mortgage from one lender to another without moving house.

Re-inspection Fees

A fee levied if the Scarborough need to re-inspect the property after the original valuation, usually to check if you've made agreed repairs.

Repayment Mortgage

Mortgage repayments on these loans represent both interest and a portion of the capital owed each month. This means that your outstanding mortgage balance will reduce year on year over the term of the loan.

Retention

The ability of a lender to hold back (retain) part of a mortgage until certain conditions are met.

Right-to-Buy mortgages

Mortgages for public sector tenants who qualify to buy their home under the Government's Right-to-Buy scheme. Most of our mortgages are available under this scheme.

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S

Self Certification

A mortgage whereby the borrower provides confirmation themselves of their income, rather than from an employer or company accounts. Typically the lender will charge higher rates of interest, or require a larger deposit.

Self build scheme

A package for customers who are looking to build their new home themselves.

Stamp Duty Land Tax

You currently have to pay Stamp Duty Land Tax if you are moving home and your new home costs more than £125,000. The amount is calculated on the whole purchase price and rises as the price of your home increases.

Standard Construction

A building that has been constructed using conventional techniques and materials, for instance bricks and stone with a tiled or slate roof.