Glossary

Bank of England Base Rate
This is the interest rate set by the Bank of England and it is reviewed by them on a monthly basis. This rate is seen as the "benchmark" to all other rates and any changes in it are often soon reflected in revised mortgage rates.

Chain
The term used to describe the number of transactions while related in a purchase. A first time buyer may be at the beginning of the chain, whilst the person at the end may be emigrating, no longer requiring a property, or buying a brand new property.

Deposit
The amount of money provided by the borrower towards the purchase. This may be a different amount than the deposit paid at exchange of contracts, which is usually between 5% - 10% of the purchase price.

Equity
This is the difference between a mortgage and the value of a property.

ERC
Early Repayment Charge. A charge payable upon repayment (in full or maybe in part) during the ERC period.

Higher Lending Charge (HLC)
This is an insurance policy that protects the lender against a possible shortfall from sale proceeds, should they repossess the property. This policy is arranged on loans normally in excess of 75% of the value/purchase price of the property. However, in recent years the lender has met the cost of this policy for loans up to 90%, and indeed recently even up to 100% in certain circumstances. In cases where they do not, invariably the premium is added to the loan and repaid over the mortgage term.