mortgages Newton Abbot
Home About Us Services Corporate Services Online Services Resources Our Clients Contact Us  
Pensions Investments Mortgages Life Assurance General Insurance Long Term Care Healthcare Wills & Estate Planning
Mortgage types FAQs Glossary Mortgage Calculators Endowment Mortgage Valuation      
mortgages Newton Abbot

Annual Management Fee

For certain investments, a charge made every year for running your fund. It is usually a percentage of the amount you've built up.   <back>

APR (Annual Percentage Rate)

There are many ways that lenders can calculate interest, and this makes it difficult for comparisons to be made between the different mortgage offers. To try to get around this, regulations require the lender's advertisement or offer to show a percentage rate, which takes into account the charges you have to pay as well as interest.   <back>

Capital & Interest or Repayment Mortgage

Each payment consists of capital and interest, so that at the end of the mortgage term the capital, together with the interest is completely repaid. Some lenders require a term assurance be taken out to cover the mortgage in the event of death before the end of the mortgage term.  <back>

CAT Standards

were introduced by the Government to help the public understand which mortgages fulfil standards for low charges, access and fair terms.   <back>

Endowment Backed Mortgage

An interest-only mortgage repaid using an endowment policy as the investment vehicle. An endowment policy combines life assurance and savings. This type of policy is intended, but not guaranteed, to repay the loan at maturity, but will also repay the loan if you should unfortunately die during the term of the policy. Because the endowment policy may leave a shortfall, many companies offer review facilities to ensure that the policy stays on track.  <back>

Flexible mortgage

The lender may allow you to make extra loan repayments, to underpay, or to suspend payments for a certain amount of time or to borrow additional monies. If the flexible mortgage is a capital and repayment one, some lenders require a term assurance be taken out to cover the mortgage in the event of death before the end of the mortgage term.  <back>

State Benefits

If you are unable to pay your mortgage due to unemployment or illness there are two potential state benefits:

  Homeowners Mortgage Support

A government backed scheme offered by participating lenders, which allows borrowers who have faced a sudden drop in income to negotiate an affordable monthly repayment, and delay interest charges.
  Support for Mortgage Interest

You may get help with mortgage interest payments as part of your benefits if you are a homeowner and are eligible for:
  • Income Support
     
  • Income-based Jobseeker’s Allowance
     
  • Income-related Employment and Support Allowance
     
  • Pension Credit
      If you are eligible you can apply for help with the interest repayments on up to £200,000 of your mortgage. The benefit commences 13 weeks from the date of the claim.  <back>

    Insurance

    Homebuyers should consider the following types of insurance:

  • Buildings and Contents
      Your lender will require the property to be covered by buildings insurance and in some cases mortgages are conditional on the buildings and contents insurance being taken with the lender.
  • Payment Protection Insurance
      This can be arranged for a monthly premium. It will cover your mortgage repayments if you have an accident or are sick or unemployed, usually up to a period of twelve months. Check the policy carefully to make sure that you are covered and when you will receive the money, as some will not start your payments until a certain period has elapsed.
  • Mortgage Indemnity Insurance
      This may be required by a lender where a mortgage exceeds a certain percentage of the valuation of the property, usually 75%. You may be required to pay a single fee for Mortgage Indemnity Guarantee (MIG) insurance, which is to protect the lender if you cannot pay your mortgage and your property is subsequently taken into possession. The fee varies from lender to lender, but can be substantial. The fee is normally paid upon completion, although in some cases it can be added to your mortgage. This insurance will protect the lender and will not protect you if your property is subsequently taken into possession and sold for less than the amount you owe. You will remain liable to pay all sums owing including arrears, interest and your lender's legal fees. If a claim is paid to your lender under such insurance, the insurers generally have the right to recover this amount from you. These policies are unusual at the present time, but may return. Please contact us if you require any clarification or further information.
     <back>

    Interest Only mortgage

    This is a mortgage where interest only is payable and the capital is intended to be repaid at the end of the term by an appropriate repayment vehicle such as ISAs, PEPs, pensions or endowment policies. Thus, the amount of the loan remains relatively constant during the mortgage term.  <back>

    Interest Rates

  • Variable Rate
      This is the standard interest rate of the lender. The rate will change whenever the lender alters its lending rate, going up or down (as do your payments) in line with market forces. There can be quite a difference between lenders and it is worthwhile shopping around.
  • Discounted Rate
      This is a specified discount off the variable rate for a nominated period. Therefore, during the discounted period, the rate payable will change whenever the lender changes its variable rate. At the end of the discount period the rate usually reverts to the variable rate.
  • Fixed Rate
      The interest rate is fixed for a specified period at a specified rate. At the end of the fixed term, the rate will either change to the lender's variable rate or, subject to the terms offered by the individual lender, a new rate.
  • Capped Rate
      The interest rate provided by the lender is guaranteed not to rise above a specified level for an agreed period of the loan, but may fall below it. At the end of this period the interest rate will revert to the lender's variable rate.
  • Capped & Collared Rate
      The interest rate will not exceed a maximum rate (cap) or fall below a minimum rate (collar) for a fixed period. At the end of the period the rate reverts to the lender's variable rate.

    ISA mortgage

    ISAs are savings accounts that let you save in cash, equities (bonds, gilts, shares and unit trusts), life insurance policies or any combination of the three, without having to pay tax on the income you get from them or on any gain you make when you sell them. They can be used in conjunction with interest only mortgages to pay off the loan at the end of the term. There are specified limits on how much can be paid into the different types of ISAs. If the ISA does not have a life insurance element, some lenders may require a separate term assurance be taken out for the term of the loan.  <back>

    Life Assurance

    A general term for life cover, which may or may not include an investment element, whether mortgage related or not. <back>

    Maturity

    The word used to describe the date, other than when a claim is made, on which a contract taken out for a specific length of time becomes payable by the product provider.   <back>

    Mortgage Term

    The length of time agreed by the lender for you to repay your mortgage.   <back>

    Negative Equity

    The value of the asset (e.g. your house) used to secure a loan is less than the amount of the loan   <back>

    PEP mortgage

    Personal Equity Plans (PEPs) were replaced by ISAs in April 1999. You can no longer invest new money in a PEP, but can continue to hold an existing one for as long as you like, or transfer an existing PEP to a new provider. They can be used in conjunction with interest only mortgages to pay off the loan at the end of the term. <back>

    Pension-Linked mortgage

    is an interest only mortgage that uses the lump sum from a personal pension to pay off the loan amount at the end of the loan term. As a personal pension benefits from tax relief, a pension-linked mortgage is tax efficient, although levels and bases of, and reliefs from, taxation are subject to change and the value of the tax relief will depend on the circumstances of the individual investor. If the pension arrangement does not have sufficient life insurance linked to it, some lenders may require a term assurance be taken out to cover the loan for the term of the mortgage. <back>

    Stamp duty

    The tax a buyer pays if the property they are buying costs over £125,000 (unless they are a first time buyer).

    Purchase Price/ lease premium or transfer value SDLT rate SDLT rate for first time buyers
    Up to £125,000 Zero Zero
    £125,000 to £250,000 1% Zero
    £250,001 to £500,000 3% 3%
    Over £500,000 4% 4%

    Levels and bases of, and reliefs from, taxation are subject to change.  <back>

    Stock Market

    Where stocks and shares are bought and sold.  <back>

    Unit Linked

    Your contributions buy units in the selected fund. The value of the units depends on the underlying assets in the fund. Consequently the value of your fund can go down or up. There is a wide range of funds to choose from: some are relatively low risk and others can be very speculative.   <back>

    With Profit

    At the end of each year the company declares the reversionary bonuses (also known as 'regular' or 'annual'). These bonuses are added to the value of the fund and once added, cannot be taken away - although the product provider will usually reserve the right to apply a 'Market Value Adjuster'. Reversionary bonuses are guaranteed to be paid in full on the contractual maturity date. A Market Value Adjuster (also known as 'Market Level Adjuster' or 'Market Value Reduction') is a type of penalty applied on early encashment. It is usually applied when the stock market is falling or fluctuating rapidly. The idea is to ensure the surrender value received is not unrealistic when compared with the underlying assets of the fund. A further bonus may be paid on the contractual maturity date or on a death claim. This is called the 'terminal' or 'final' bonus. A factsheet (pdf file, 105kb) on with profit policies can be found on the FCA Consumer Help website.  <back>


    If you have not found the information you are looking for, further information on residential mortgages and insurance can be found at www.hedgelandsmortgages.co.uk.
    Your home may be repossessed if you do not keep up repayments on your mortgage.
    For mortgage advice we can charge a fee of typically £500 or we can receive commission from the lender.




    Hedgelands Financial Services, Hedgelands, Abbotskerswell, Newton Abbot, TQ12 5PW
    Registered in England No. 4694508.  Registered Office 32 Monk Street, Abergavenny, Monmouthshire, NP7 5NW
    Hedgelands Financial Services Ltd is authorised and regulated by the Financial Conduct Authority, FCA Registration Number 624282. Sitemap
    Hedgelands Financial Services
    Hedgelands
    Abbotskerswell
    Newton Abbot
    Devon   TQ12 5PW

    map

    Telephone:

    01626 360654

    General Insurance:

    01626 438184

    Independent Financial Adviser
    mortgages Newton Abbot
    mortgages Newton Abbot mortgages Newton Abbot