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Secured Loan Questions N-Q

N :: O :: P :: Q

N

Negative equity

When the amount that is outstanding on a mortgage is greater than the amount the property is worth.

No Insurance

Insurance is offered to provide peace of mind against life's unexpected problems which invariably occur. Selecting "No insurance" means that you are choosing not to protect your proposed loan repayment in the event of you being unable to work due to an accident, sickness or redundancy.

Net

After the deduction of tax.

Net monthly repayment

Monthly repayment made to the lender.

Notice of default

A lender's initial action when a mortgage payment is late and attempts to reconcile the issue out of court have failed.

O

Offer of Advance

Sometimes informally known as a mortgage offer. This document details the terms and conditions upon which the lender is prepared to make a mortgage loan. The applicant must sign and return a copy of the offer indicating their acceptance of the proposed terms.

Office Copies

Copies of documents held at Land Registry showing ownership and mortgages outstanding on a property.

Outstanding balance

The amount to be repaid at any point in time.

Overpaid funds

The amount you have paid in excess of your regular monthly payments.

Overpayment

The difference between your regular monthly repayment and a higher amount that you choose to pay.

Over-repayments

This term is used to describe the making of payments over and above those outlined by the loan repayment plan.

P

Payment cap

A legal limit on the amount a monthly payment can increase on an variable rate loan.

Payment default

This results when you are unable or simply unwilling to meet your loan repayments. If you default on your payments, the lender may ultimately be entitled to sell your home in order to recover the loan. Different lenders will have different policies on how long they give you before they start the legal proceedings to recover the loan. Many will have a separate schedule of charges which you will incur before they start proceedings.

Payment holiday

A short break from regular mortgage repayments, sometimes offered with flexible mortgages. This can sometimes be a useful feature for self-employed people or others with irregular income.

Payment of balance

This usually takes place between a week and a month after exchanging contracts. It is possible to have a simultaneous exchange and completion if you are in a real hurry to get moving. When you complete the sale, your solicitor forwards the remaining balance of the purchase price to the seller's solicitor. You then have the right to take occupancy of the property and are free to move in.

Payment Protection Plan

This is a type of insurance that can be taken out with a loan that will protect your loan payments in the event of illness, disability or redundancy. You do not, however, need to take out this type of insurance with your loan provider. Income protection insurance or payment protection insurance can be procured from most insurance providers and performs the same job.

Payment protection insurance

That covers the payments of your loan in the event of unforeseen circumstances that affect your regular income such as ill health or job loss.

Payment shock

Payment shocks are when the discount period ends and the monthly repayments jump by a large amount to match the Standard Variable Rate. You must be sure that you can budget for this in your monthly expenses.

Percentage advance

The size of a loan expressed as a percentage in relation to the value of the property.

PHI

Permanent Health Insurance.

PIN

Personal Identification Number.

Policy exclusions

These are events, instances or possessions which are not covered by an insurance policy.

Portability

A product feature that governs whether you can take the loan with you if you move during the term.

Premium

In the context of insurance, a premium is the regular sum you pay to keep your cover in force.

Prepayment penalty

Lenders can impose a penalty on a borrower who pays a loan off before its expected end date.

Prime rate

The best interest rate available to a lender's most qualified customers.

Principal

The amount of money that the borrower owes on a loan - the amount on which interest is calculated.

Private Medical Insurance

This insurance which gives you access to private medical care in the event of injury or illness. This will not normally cover injuries or illnesses present prior to accepting a policy. The main downside to most of these plans is that you usually have to pay for hospital accommodation, surgeon's fees, and drugs or medication upfront and then receive a refund once your claim has been processed.

Processing

The administration and paperwork related to a loan from the time a completed application form is received through to completion of the loan process.

Protection products

A protection product shields you from exposure to the financial hardship caused by events such as unemployment, illness or injury. Some protection products are designed to provide additional medical or financial benefits to those that are available through the state system.

 

 

Q

Quotations

Borrowers are advised to shop around for quotations from different lenders before making a commitment. A quotation is also an illustration of the costs involved in the loan and repayments.

Quotation

A written illustration of the costs involved in taking out a loan and in its repayment.