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Mortgage types & jargon explained

The financial world is full of terms, definitions and acronyms that you may find unfamiliar and difficult to understand.

Please click on a term below to reveal a simple explanation.

For an exact definition of many of these terms please refer to the Mortgage Terms and Conditions that will be supplied to you with your Mortgage.

Mortgage Jargon


A loan made against the security of a property.

Additional borrowing

A further loan, for a variety of purposes, added to your existing Mortgage. If additional borrowing is available, this will normally be made on the same product as your existing Mortgage.


The amount of your Mortgage.

APRC (Annual Percentage Rate of Charge)

A standard interest rate calculation designed to reflect the total cost of credit over the whole term of the Mortgage so that it can be compared to other loans.

Arrangement fee

The charge that may be made to cover the administrative costs of assessing and setting up a Mortgage (not all of our Mortgage products have an Arrangement Fee).


Term used if a Mortgage repayment is missed.

Asking price

The price the seller is asking for the property.

Bank of England Base Rate

The rate of interest set by the Bank of England, which is reviewed each month by the Monetary Policy Committee.

Base Rate Tracker

A Mortgage that tracks the independently set Bank of England Base Rate for an agreed period, by a pre-arranged amount – this means your monthly payment will automatically change in line with any adjustments made to the Base Rate.

Capped Rate Mortgage

A variable rate Mortgage that will not rise above a pre-agreed rate for a set period but will rise and fall beneath that pre-agreed rate with general interest rate movements.


The date we release your Mortgage funds for you.

Completion fee

Payable when the process of arranging the Mortgage has been completed.


The written legal agreement between the seller and the buyer with regard to the transfer of the property.


The legal work involved between the seller and the buyer.

Daily interest

If interest is calculated daily then any payments made that reduce the Mortgage balance immediately reduce the amount of interest paid.


Legal documents showing the previous owner’s legal entitlement to the property. Today this is known as a Title Information Document which is produced by the Land Registry.


The amount of money the buyer has agreed to pay as a lump sum when the contracts are exchanged.

Discount Mortgage

Offers you a discount off Hinckley & Rugby’s Standard Variable Rate for a set period – if the Standard Variable Rate changes so will the rate you pay with the guarantee that the discount remains the same.

Early Repayment

Paying off all or part of your Mortgage before the end of the agreed term.

Early repayment charge

The costs charged on some Mortgage products if you pay all or part of your Mortgage off early.


The difference between the value of the property and the amount of any loans secured against it.

Exchange of contracts

The point at which both the buyer and the seller are legally bound to the transaction.

Fee Free Mortgage

Gives you all the benefits of  Hinckley & Rugby mortgage but with no fees to pay during the life of the mortgage, including when you apply, complete or redeem.

Fixed Rate Mortgage

Offers you peace of mind that your monthly payments will not vary for a set period of time, whether or not the Bank of England Base Rate changes.

Flexible Mortgage

Puts you in control by allowing you to adapt your mortgage to suit your changing needs – for instance, you might want to take a payment holiday or make an overpayment.  Some of our flexible mortgages also have an optional offset facility.


Full ownership of the property and the land it stands on.

Further advance

Please see Additional Borrowing.

Higher lending charge

A charge made when you take out a high Loan to Value Mortgage (usually over 80%) paid by the Society.

Homebuyers report

A more detailed inspection than a Property Assessment for Mortgage purposes, but not a full Structural Survey.


Someone other than a financial institution who offers advice and information on Mortgages and arranges Mortgages through different lenders.

Interest Only Mortgages

You pay just the interest on the loan each month to the Society and nothing off the capital.  You must arrange an adequate Repayment Vehicle to pay off the loan at the end of its term.

European Standardised Information Sheet (ESIS)

A document providing all the important information you need to help you decide if a Mortgage is suitable for you and enables you to make a comparison with other lenders


Property ownership where the property is leased by the owner to a Leaseholder or tenant for a fixed number of years.


The organisation your Mortgage is with.


The total amount you have borrowed.

Loan to value (LTV)

The size of the Mortgage as a percentage of the property’s value.  For example: Loan amount of £180,000 divided by Purchase Price of £300,000 = 60% LTV.

Monetary Policy Committee

The committee that determines the Bank of England Base Rate every month.

Monthly payment

The amount you pay each month over the term of the Mortgage. This may vary if your Mortgage is a variable rate Mortgage.

Mortgage exit administration fee on redemption

Fee payable when repayment of the Mortgage loan in full is made.

Mortgage Offer

A document showing the terms and conditions applying to the Mortgage after approval of your application.

Mortgage term

How many years you choose to have your Mortgage over, eg 25 years.

Offset Mortgage

Could allow you to save money and reduce the term of your mortgage by using your savings – the amount of your savings is offset against your mortgage and, over the life of your mortgage, you are only charged interest on the difference.

Overall cost for comparison

Please see Annual Percentage Rate of Charge (APRC).


An additional payment to a Mortgage account, over and above the required monthly Mortgage payment.

Payment holiday

A facility on a Flexible Mortgage allowing you to miss your normal monthly Mortgage payments for a period of time agreed with the lender.


The facility to take your current Mortgage terms and conditions with you if you move from one property to another.

Property Assessment Fee

Fee for a property inspection to establish its value for securing a Mortgage.


The point at which the repayment of a Mortgage loan in full is made, leaving no outstanding borrowing.

Repayment Mortgage

You repay part of the capital and the interest on the Mortgage each month. Under this option, if all repayments are made, your Mortgage will be repaid in full at the end of the agreed term.

Repayment Vehicle

Savings plans or other forms of investment that you must have to pay off your Mortgage at the end of the term if you have an interest-only Mortgage.


Term used to describe when you move a Mortgage from one lender to another without moving house.

Stamp duty

A Government tax based on the property purchase price, which has to be paid by the buyer wherever it is applicable. This currently applies to properties priced at £125,000 and above.

Standard Variable Rate (SVR)

The Variable Rate of interest at which a lender’s standard mortgage is set.

Structural Survey

A detailed inspection of a property to check that it is structurally sound.

Subject to contract

Occurs when an offer has been made for a property but is subject to a formal contract being entered into.

Tracker Mortgage

Benefits you by tracking the independently set Bank of England Base Rate for an agreed period of time, by a pre-arranged amount – this means your monthly payment will automatically change in line with any adjustments made to the base rate.


A facility on a Flexible Mortgage allowing you to make a smaller payment agreed with the lender.

Variable Rate Mortgage

Offers an interest rate that can fluctuate – if the mortgage interest rate falls your monthly mortgage payment also reduces but, if the mortgage interest rises, so will your monthly payment.  Our variable rate mortgages are based on our Standard Variable Rate, which is usually (but not always) based on the movement of the Bank of England’s Base Rate.


The person who is selling the property.