M – P
A loan where the ‘mortgaged’ property acts as a security for the lender until the loan is repaid in full — often after 25 years.
The organisation that lends you the money to buy a property. Usually a building society or bank.
Mortgage Indemnity Guarantee (MIG)
An insurance policy that covers lenders in the event of a property being repossessed and the mortgagor (see below) not being able to repay any payments outstanding. Ironically, while these insurance policies protect the lender, it is the borrower who has pay for them. MIGs are generally asked when the LTV (loan to value) is over 75%. Fortunately, MIGs are becoming less common.
Mortgage Payment Protection Insurance (MPPI)
Also known as Accident, sickness and unemployment insurance (ASU), MPPI pays a percentage of a person’s mortgage payments if they are unable to work because of illness, accident or enforced redundancy.
The person who borrows money from a lender (such as a bank or building society) under a mortgage agreement.
The unfortunate situation whereby the money a borrower owes on a mortgage is greater than the value of the property. It really becomes a problem if a person wants to sell their home.
New for old
A form of property insurance that replaces damaged or lost items in your home with new items.
With a non-status mortgage, the lender may not require income details from the borrower. This kind of mortgage is often taken out by people who cannot prove their income, have unusual employment circumstances or a poor credit history.
The sum of money that a buyer offers to a seller for a property.
These are usually for people with complex mortgage needs, such as high net worth foreign nationals and international sports stars looking to purchase a UK home. Finance is arranged through any number of trusts and companies in the various offshore jurisdictions — from the Cayman Islands to the Isle of Man.
Open Market Value (OMV)
The price of a property when both buyer and seller are willing.
Generally applies to flexible mortgages, which allow overpayments to be made by the borrower without incurring a penalty. Over the term of a mortgage, this can result in significant interest savings.
These are taken out by investors looking to build a portfolio of properties abroad, or by people who simply want to buy a holiday home, possibly secured against the equity in their UK property. Can be either sterling or foreign currency loans.
Generally applies to flexible mortgages, and is a period during which borrowers make no mortgage payments (usually for six months). In some cases, there is a prerequisite that they have already made ‘overpayments’ on their mortgage.
Permanent Health Insurance (PHI)
Provides a regular tax-free income for policyholders if they are unable to work due to accident or sickness. It is available to both the employed and the self-employed.
A mortgage that can be transferred between properties when a borrower moves house is said to be ‘portable’.
The amount of the loan on which lenders calculate interest.
The person who is buying a property.