The CAT (Cost, Access and Terms) Standard is a new system whereby if a mortgage product conforms to rules set out by The Government it can use a CAT mark, rather like a British Standard of Kite mark. See the CAT Standard Mortgages section in 'Mortgages Explained'.
CAP
A maximum interest rate is set for a given period. Please close the Glossary and enter our 'Guide to Mortgages' for a more detailed explanation. .
Capital
Also known as 'equity', this is the amount of money either put into buying the property, or the amount over and about the amount needed to pay off any outstanding mortgage if the property is sold.
Capital improvement
Any improvement which permanently increases the value of the property.
Capital and interest mortgage
Capital and Interest mortgage guarantees that your mortgage will be repaid at the end of the mortgage term, assuming you have made all of the payments when they fall due. Your monthly payments consist of Capital (the amount you owe) and Interest (the charge for the money). Please close the Glossary and enter Mortgages Explained for a more detailed explanation.
Cash back
An amount of money paid by a lender to a borrower as an incentive on taking out a mortgage but not then added to the amount borrowed. See Cash back mortgages.
Centralised lender
An amount of money paid by a lender to a borrower as an incentive on taking out a mortgage but not then added to the amount borrowed. See Cash back mortgages.
Certificate
See Mortgage Certificate
Charge
Usually known as a Legal (Mortgage) Charge. When a mortgage is taken out, the bank or building society register an interest in the property by taking a legal charge over it. You will manually have to pay a fee to your solicitor to cover this, typically about £100.
Clear title
A legal description where property is owned without any questions as to its ownership.
Collar
A minimum interest rate set for a given period. Such mortgages are rare and are usually associated with a 'Capped Rate Mortgage'. See 'Capped Rate Mortgages' in our 'Guide to Mortgages' section.
Collateral
An asset that is used to guarantee the repayment of a loan in case the borrower fails to pay if off.
Commission
An amount payable to a mortgage broker by a lender for introducing a borrower to the lender. This is often referred to in the industry as a 'Procuration Fee'.
Common areas
Areas of land or buildings where access is shared by more than one owner and where the cost of maintaining the area is also shared. This may include gardens, hallways or parking areas.
Completion
The final stage in the purchase of a property, when the legal documentation is finalised and funds are sent by the lender to the purchaser's solicitor, who transfers them on to the vendor's solicitor.
Compound interest
An interest payment on both capital and interest that has previously accrued. For example, £1,000 borrowed for 25 years at 10% interest rate attracts interest of £100 after 1 year. If this is not paid off £1,100 is left owing at the end of the year. In year 2 the interest is calculated on both the original £1,000 and the first year's interest of £100 so the interest for year two is £110 meaning the amount owed at the end of year 2 is £1,210 and so on.
Compounding
Compounding Is where interest is added to the capital and any preciously accrued interest.
Compulsory insurance
(also known as Conditional Insurance). Some lenders insist that the insurance policies such as for the structure of the building or event its contents be taken out with them. In any event, lenders often insist that the building be insured before they will advance the monies for the mortgage amount. See also Buildings Insurance.
Concrete construction
Some properties, particularly those build by public bodies in the 1960s and 1970s are made largely of concrete. Some lenders will not provide a mortgage for such properties.
Conditional insurance
(also known as Compulsory Insurance) Some lenders insist that the insurance policies such as for the structure of the building, or event for its contents, be taken out with them. In any event, lenders often insist that the building be insured before they will advance the monies for the mortgage amount. See also Buildings Insurance.
Contents insurance
Insuring the contents of your home such as electrical goods, carpets, furniture and curtains is usually advisable. Some compulsory building insurance policies also provide contents insurance.
Contingent
A term which means that an action relies on another action happening first. For example, a mortgage being contingent on a satisfactory survey means that the mortgage will not go ahead until a survey is carried out and is found to be satisfactory.
Contract
Either a written or an oral agreement to do or not to do something.
Contract work
Some workers are now employed on fixed term contracts rather than full time employment. This means that the individual is not employed directly by the company and while they loose the security and other benefits of full time employment, they are often better paid and have greater working flexibility. Lenders have traditionally preferred to see full time employment but many have adapted to take account of contract workers. If you are a contract worker you will need to demonstrate a consistency of employment.
Converted flat
A flat or apartment that was formerly part of a larger property.
Conveyancing
The act of buying or selling a property, usually handled by a solicitor or a licensed conveyancer.
Conveyancing fee
The cost of buying a property, usually charged by a solicitor or a conveyancer for the time taken to process the legal paperwork and normally charged on completion.
County Court Judgement (CCJ)
A notice for bad debt issued by a County Court that will show up during a credit check. If you have one or more CCJ's you may find it difficult to get a mortgage although there are some lenders who specialise in borrowers with CCJ's or other credit problems.
Covenant
A clause in a mortgage contract or in a contract for the sale of a property that places an obligation or a restriction on one of the parties. The contract will specify what happens if this obligation/restriction is broken.
Credit check
A process whereby the lender will examine your credit history by using one of the major credit agencies. Lenders will also have their own criteria against which to judge whether they are prepared to lend to you.
Credit reference agency
A company that collects and stores financial and public records about the payment records of individuals. These records are examined by lenders upon receipt of your application.
Credit scoring
A system whereby lenders will assess your ability to meet the mortgage payments based on the contents of your application form.
Criteria
The standard terms that each lender uses to define the type of mortgage business they will conduct. A typical example would be limiting loan to value to 75%.