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Specialist contractor mortgage brokers in the UK.

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Mortgage Jargon Buster

To make it easy to understand, we have prepared a list of Contractor Mortage Jargons / Abbreviations and their definitions.



APR stands for Annual Percentage Rate. It is the total cost of a mortgage which also includes the interest and fees.

Annual Percentage Rate of Charge (also known as APRC)

Annual Percentage Rate of Charge (APRC) is used while comparing loan offers

Additional Borrowing

When a customer releases the equity available in the property to increase the borrowing, is known as additional borrowing

Agreement in Principle

Agreement in Principle (AIP) or Decision in Principle (DIP) or Mortgage Promise / Offer are all relative terms. It is a certificate or a statement from the lender which says that they (Lender) would lend an 'x'amount 'in principle' to the the prospective borrower based on the information provided by the borrower.

Arrangement Fee

This is a type of fee charged by the lender during the mortgage process, also known as a setup fee. This fee can be clubbed to the loan, but if you do that, you'll be paying interest on it throughout the mortgage term.


Arrears in layman terms means that you missed out on a repayment (and is now being owed) which should have been paid earlier.

Bank of England Base Rate

Bank of England Base Rate or BOEBR is also known as the official bank rate. This is the interest rate set by the Bank of England, which if changes (up / down), could affect your mortgage repayments. It is announced by the Bank of England's Monetory Policy Committee every month. It is currently set at 0.50%.


Broker is a specialist, expert and an adviser who helps with the mortgage application, negotiates with underwriters and guides the borrower throughout the mortgage process and helps the borrower secure a mortgage.

Booking Fee

It's a kind of a setup fee charged on some mortgages, this type of fee is mostly non-refundable.

Buy to Let

Buy to Let is tagged with properties purchased with an intent to rent. Buy to Let mortgages are very popular in the UK. To find out more about Buy to Let mortgages, please click here.


Amount of money borrowed to purchase a property

Capital and Interest Repayment

It means that the monthly repayment covers some part of capital as well as interest element

Completion Fee

This is a fee that covers the cost of electronic mortgage funds transfer to the borrower.


Your contribution towards the mortgage. For example, you purchase a property of £500,000 and you have saved £100,000 to contribute towards the property is known as deposit, the rest is your mortgage. From this example, it means that the deposit made towards the mortgage is 20%.


In simple terms, it means Equity = Property Value - Mortgage held against the property. Equity is something a borrower owns, which includes the deposit and repayments.

Early Repayment Charges (ERC)

An Early Repayment Charge (ERC) is charged by the lender, if you repay whole or part of a mortgage early. This normally applies if the borrower leaves the mortgage early. It may also apply if you move to a different product or switch your mortgage lender.

First Time Buyer

This applies to a person who is purchasing property for the first time. There is a specific mortgage product for contractors, who are First Time Buyers. Click here to know more.

Fixed Rate Mortgage

This is a type of mortgage where the interest rate is fixed throughout the mortgage period, regardless of the interest rate fluctuations.

Flexible Mortgage

As the name suggests, terms of this type of mortgage is very flexible. It is usually expensive than other mortgage types but, it gives you the flexibility to overpay, underpay, pay early or even take a payment holiday. There are usually no penalties or prepayment charges applied on this type of mortgage.


Guarantor is a person who takes full responsibility of your repayments, and is liable for the repayment of the mortgage if you fail to repay.

Home Mover

This is for someone who sells one property and purchases another. For Contractors moving home, there's a specific type of mortgage available.

Interest Only Mortgage

In this type of mortgage, monthly payments does not cover the capital; it only covers interest. You only pay interest throughout the term, and repay the whole capital at the end of the mortgage term through savings, pensions, sale of property / stocks etc.

Interest Rate

This is the percentage rate which the lender charges the borrower for the mortgage. There are two types of interest rates, fixed and variable.

Joint Mortgage

This is a type of mortgage taken by two or more people. It is usually taken by family members, friends or a business partners in order to share costs and/or property.

Key Facts Illustration (KFI)

Key Facts Illustration also known as KFI is a document prepared by the lenders which outlines information such interest rates, fees for a mortgage to help the customer understand and compare products.

Loan to Value (LTV)

Loan to Value also known as LTV, is percentage of the property value that the borrower is looking to borrow, for example: a £100,000 property with £80,000 mortgage means 80% Loan to Value or LTV.

Mortgage Term

The total amount of time over which a borrower takes a mortgage. Mortgage term is usually 25 to 30 years.

Monthly Repayment

The amount which you will pay to the mortgage lender towards your mortgage, on a monthly basis. It may or may not include the capital, depends on the type of your mortgage, for example: interest only mortgage repayments does not include the capital.

Negative Equity

It means that your property value has gone down to a level below the amount remaining on your mortgage.

New Build Property

New build property means that the property has been built in the last 24 months and the property has not been even occupied once. Mortgage lenders like HSBC lend up to a maximum of 85% Loan to Value (LTV) on new build properties.


Overpayment occurs when the borrower decides to pay more than his/her fixed repayment amount stipulated in the mortgage terms.

Outstanding Balance

Total amount owed to the lender by the borrower

Porting or Portability

Transferring your mortgage from one property to another is called porting / portability.

Property Valuation Survey

This is a survey undertaken by the lender to check property's real worth / value.


Switching your mortgage from one lender to another is known as remortgaging. Click on remortgages for contractors to find out more about this type of mortgage.

Stamp Duty

Fee/Tax charged by the Government when someone buys a property. It is only charged on property value above the set threshold of £125,000, and the fee charged is more on buy to let type of mortgage. Visit Buy to Let Mortgage to know more.

Standard Variable Rate (SVR)

A default mortgage interest rate is applied after the initial mortgage deal period ends. This interest rate is known as Standard Variable Rate or SVR.

Tie-in Period

Tie-in period also popularly known as Locked-in period is a minimum period for which you cannot leave the mortgage. In the event you do, there'll be a penalty for leaving the mortgage early.

Tracker Rate Mortgages

In this type of mortgage, interest rate fluctuates with the change in Bank of England's (BOEBR) base rate. Interest rate is set at a fixed percentage above the Bank of England's (BOEBR) base rate.

If you want to learn more about contractor mortgage then, please get in touch with us.

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