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R

Redemption

The ‘paying off’ of a mortgage when remortgaging, moving house or simply at the end of the mortgage term.

Redemption Penalties

Lenders levy redemption penalties when borrowers pay off their mortgage before the end of the agreed redemption period. They are very common with fixed rate and discounted mortgages.

Remittance Fee

This is charged by lenders for sending mortgage funds to an individual’s solicitor prior to the purchase of a property.

Remortgage

When you remortgage a property, you pay it off with the money you receive from a new mortgage, using the very same property as a security. People often remortgage to secure a more competitive interest rate.

Repayment Mortgage

Repayment mortgages, often referred to as capital repayment mortgages, require borrowers to repay on a monthly basis not just the interest on the loan but also a slice of the capital borrowed. This kind of mortgage is usually favoured by more conservative homeowners who want to guarantee that, at the end of the mortgage term, the property will belong to them.

Repossession

The unfortunate situation whereby a borrower can no longer keep up with his/her mortgage repayments and the property is legally repossessed by the lender. In order for the lender to then retrieve any outstanding debt, the property is usually sold at a public auction.

Retention

The holding back by a lender of a mortgage until certain repairs have been satisfactorily completed.

S

Self Invested Personal Pension (SIPP)

A personal pension where the person investing for his/her retirement makes the investment decisions rather than a pension fund manager. Favoured by higher net worth, more investment-savvy individuals.

Sealing Fee

A charge levied by lenders when a mortgage is repaid.

Searches

The checks carried out during the conveyancing process before the offer of a loan. They are made with local authorities and other organisations and reveal any planning proposals that could adversely affect the value of a property in the future.

Self-Certified Mortgage

These are generally for the self-employed and people with more complex forms of income. As a rule, lenders will charge a higher interest rate, or require a larger deposit to meet the increased level of risk.

Short Lease Loan

Favoured by more speculative borrowers, these can be a cost-effective way to buy properties in some of London’s most desirable locations and generate spectacular capital growth and rental yields as a result. Changes in the law mean that individuals or companies – if they have owned a property for at least two years – can now apply for a lease extension, which will theoretically increase a property’s value.

Stamp Duty

Stamp duty is a tax levied on property purchases and applies on a sliding scale according to the price of a property. Properties below £120,000 are free from stamp duty, whereas those valued above £120,000 and below £250,000 pay stamp duty of 1%. Properties over £250,000 but not more than £500,000 are taxed at 3% and those worth more than £500,000 are charged at 4%.

Standard Variable Rate (SVR)

The standard variable rate is a type of interest rate on a mortgage that often moves in line with the Bank of England base rate. However, unlike a tracker mortgage, changes are ultimately at the lender’s discretion.

Structural Survey

Sometimes referred to as a Building Survey, this is an in-depth structural analysis of the inside and outside of a property that should reveal any hidden, or not obvious faults. Carried out by a chartered surveyor who proceeds to write an extensive report outlining any defects. Structural surveys tend to be carried out on older properties, those that have been poorly maintained or where there are subsidence concerns.

T

Term

The time period – usually in years ¬–over which a mortgage is repaid.

Term Assurance

The most common form of insurance, this pays out a lump sum if the policyholder dies at during the term of a policy. The money is usually used to pay off a mortgage or to provide financial security for the policyholder’s dependants.

Tie-in Period

If you move mortgage during a tie-in period, you will usually be charged an early redemption fee

Title Deeds

Important documents that prove ownership of the freehold and leasehold of a property.

Transfer Deed

Once you have signed the transfer deed, ownership of the property in hand is transferred to you.

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Yuriko Kagotani & Frederic De La Borderie – February 2013

Efficient, quick and straight to the point

Adviser: Rob Gill C1012213