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What is a Consolidation Loan?
APR
This stands for Annualised Percentage Rate. It is the best way to compare loan quotations. When you take out a loan, the number of repayments you must make, and the exact date they must be paid by, will be clearly stated in your loan agreement. As these details are defined precisely, the annual rate of interest over the period of the loan can be calculated exactly and must be shown on advertisements by law. All arrangement fees and any other costs must be included in the calculation.
Loan-to-value
The proportion of the mortgage borrowed to the value of the property.
Second charge on the mortgage
A different name for a second mortgage or a secured loan.
Secured loan
Borrowers receive these loans by pledging an asset such as property as collateral for the loan.
Equity
This is the value of your home, minus the amounts you owe on secured loans and mortgages.
Arrangement Fee
Some lenders may charge an arrangement fee. This is sometimes known as the booking fee. It is the charge that covers administration and reserves funds for fixed,
tracker and/or discounted rate mortgages. Lenders usually allow this to be added to the mortgage loan.
Early Repayment Charge
This charge may be payable on certain discounted or fixed interest rate loans.
It only applies if you redeem or part redeem the loan within the specified early repayment charger period.
Mortgage Deed
A mortgage deed is the legal document confirming that you have a mortgage on your home or property.
Negative equity
The amount you owe the lender exceeds the value of your home.
DMP
Lifetime mortgage
A type of equity release scheme - a loan secured on your home, which is repaid by selling your home when you die or go into long-term care.
Secured Loan
Such loans (Consolidation Loan) are secured against an asset such as a property or a
vehicle and the borrower could lose the asset if they do not keep up with the repayments.
Unsecured Loan
These loans are more risky for the lender than secured loans as they are not secured on an asset, therefore the interest rate can be higher than that of a secured loan.
Interest rate
The percentage rate at which interest is charged on a loan, or paid out on savings.
The rate will vary according to the base rate and the type of loan or savings plan.
APR
This stands for Annualised Percentage Rate. It is the best way to compare loan quotations. When you take out a loan, the number of repayments you must make, and the exact date they must be paid by, will be clearly stated in your loan agreement. As these details are defined precisely, the annual rate of interest over the period of the loan can be calculated exactly and must be shown on advertisements by law. All arrangement fees and any other costs must be included in the calculation.
Arrears
Being unable to make the full payments will cause you to fall behind on your credit repayments.
LTV
The loan to value ratio is the size of your loan as a percentage of the property's price that your loan is based on.
Payment Protection Insurance
This is a type of insurance that could cover your payments on the secured loan should you be unable to work due to unemployment, accident, injury, sickness and sometimes even death.
PTD
Equity release
Equity releases borrow against the value of a property to give you a regular income or a lump sum.
Home income plan
Such loans pay a cash lump sum with which you buy an annuity to give you a monthly income. These incomes are usually fixed and part of the income is used to pay the interest on the loan.
Home reversion
A type of equity release scheme - you sell all or part of your home to a scheme provider. This gives you a regular income, a cash lump sum or both, and you continue to live in your home for as long as you wish.
IVA
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