Category
Borrowing and Credit
Words used for overdrafts, loans, mortgages, rates and credit information.
Borrowing language affects how people compare costs, understand risk and read credit agreements. Similar-looking terms can mean different things: APR is not the same as EAR, a credit score is not the same as a credit report, and a secured loan is different from an unsecured loan.
The terms in this category cover overdrafts, interest rates, loans, mortgages, loan to value, credit scores and credit reports. The explanations are written for UK readers and avoid recommending products, because the right borrowing decision depends on personal circumstances, costs, risks and current official information.
41 terms
Borrowing and Credit terms
- Annual Percentage Rate APR Borrowing and credit APR is a standard annual measure of the cost of borrowing that includes interest and certain compulsory charges to help compare credit products.
- Arranged overdraft Borrowing and credit An arranged overdraft is an overdraft limit agreed with the bank in advance, allowing borrowing through a current account up to that limit.
- Buy-to-let mortgage BTL Borrowing and credit A buy-to-let mortgage is a mortgage for a property intended to be rented out, usually assessed differently from a residential mortgage.
- Capped-rate mortgage Borrowing and credit A capped-rate mortgage is a variable-rate mortgage with an agreed maximum rate for a period, limiting how far the rate can rise.
- Cashback mortgage Borrowing and credit A cashback mortgage gives the borrower a cash payment from the lender, usually after completion, as part of the mortgage deal.
- Credit report Borrowing and credit A credit report is a record held by a credit reference agency showing information about credit accounts, payment history and related public data.
- Credit score Borrowing and credit A credit score is a number produced by a credit reference agency or lender to summarise aspects of a person's credit information.
- Discount mortgage Borrowing and credit A discount mortgage charges a variable rate set below another lender rate, usually the lender's standard variable rate, for a limited period.
- Equivalent Annual Rate EAR Borrowing and credit EAR is an annualised rate used to show the cost of overdraft borrowing when interest is compounded over a year.
- First-time buyer mortgage Borrowing and credit A first-time buyer mortgage is a mortgage used by someone buying their first home, often with products or schemes aimed at new buyers.
- Fixed-rate mortgage Borrowing and credit A fixed-rate mortgage has an interest rate that stays the same for an agreed period, so payments are more predictable during that deal.
- Flexible mortgage Borrowing and credit A flexible mortgage includes features that may allow overpayments, underpayments, payment breaks or borrowing back, depending on the lender's terms.
- Green mortgage Borrowing and credit A green mortgage is a mortgage product or incentive linked to the energy efficiency of a property or improvements made to it.
- Guarantor mortgage Borrowing and credit A guarantor mortgage uses support from another person, often a family member, who agrees to help if the borrower cannot keep up payments.
- Hard credit check Borrowing and credit A hard credit check is a credit search linked to a formal application for borrowing that can be visible to other lenders on a credit report.
- High loan-to-value mortgage LTV Borrowing and credit A high loan-to-value mortgage is a mortgage where the loan is large compared with the property's value, often because the deposit is small.
- Home equity Borrowing and credit Home equity is the part of a property's value that the owner effectively owns after subtracting mortgage or secured borrowing owed on it.
- Interest rate Borrowing and credit An interest rate is the percentage used to calculate interest paid on savings or charged on borrowing over a stated period.
- Interest-only mortgage Borrowing and credit An interest-only mortgage is a mortgage where monthly payments cover interest only, leaving the borrowed capital to be repaid separately.
- Lifetime mortgage Borrowing and credit A lifetime mortgage is an equity release product secured on a home, usually repaid when the borrower dies or moves permanently into long-term care.
- Loan to value LTV Borrowing and credit Loan to value is the percentage of a property's value that is being borrowed, often used by mortgage lenders to assess risk and pricing.
- Mortgage Borrowing and credit A mortgage is a long-term loan secured on property, commonly used to buy a home and repaid through regular payments.
- Negative equity Borrowing and credit Negative equity happens when the mortgage or secured debt on a property is higher than the property's current value.
- Offset mortgage Borrowing and credit An offset mortgage links savings to a mortgage so the savings balance reduces the amount of mortgage debt on which interest is charged.
- Overdraft Borrowing and credit An overdraft is borrowing through a current account when payments take the account below zero or below the customer's own money.
- Personal loan Borrowing and credit A personal loan is borrowing where a lender provides a fixed amount that is usually repaid in regular instalments over an agreed period.
- Quotation search Borrowing and credit A quotation search is a credit search used to show likely borrowing options or eligibility without making a full credit application.
- Remortgage Borrowing and credit A remortgage is the process of moving an existing mortgage to a new deal, either with the same lender or a different lender.
- Repayment mortgage Borrowing and credit A repayment mortgage is a mortgage where each monthly payment is designed to repay both interest and part of the loan capital over the agreed term.
- Retirement interest-only mortgage RIO Borrowing and credit A retirement interest-only mortgage is a later-life mortgage where the borrower pays interest monthly and the capital is usually repaid when the property is sold.
- Second charge mortgage Borrowing and credit A second charge mortgage is an additional secured loan on a property that already has a first mortgage.
- Secured loan Borrowing and credit A secured loan is borrowing backed by an asset, often property, which the lender may be able to claim if repayments are not made.
- Self-build mortgage Borrowing and credit A self-build mortgage is designed to finance a home that is being built or custom-built, often releasing money in stages.
- Shared equity mortgage Borrowing and credit A shared equity mortgage involves buying the whole property with a mortgage plus an additional equity loan or contribution from another party.
- Shared ownership mortgage Borrowing and credit A shared ownership mortgage helps buy a share of a property while rent is paid on the remaining share, usually under a shared ownership scheme.
- Standard variable rate mortgage SVR Borrowing and credit A standard variable rate mortgage uses the lender's own variable rate, often after an introductory mortgage deal has ended.
- Tracker mortgage Borrowing and credit A tracker mortgage is a variable-rate mortgage where the interest rate tracks a reference rate, often Bank Rate, plus or minus a set margin.
- Unarranged overdraft Borrowing and credit An unarranged overdraft happens when an account goes overdrawn without an agreed overdraft or beyond the agreed overdraft limit.
- Unsecured loan Borrowing and credit An unsecured loan is borrowing not secured against a specific asset, though the borrower is still legally responsible for repayment.
- Variable-rate mortgage Borrowing and credit A variable-rate mortgage has an interest rate that can change, meaning monthly payments can rise or fall during the mortgage.
- Zero-interest credit card Borrowing and credit A zero-interest credit card is a credit card that charges no interest on certain balances for a promotional period, subject to its terms.