The world of mortgages and finance is full of jargon and sometimes it can be difficult to know your APR from your LTV... This glossary breaks down all the common (and not so common) terms associated with the credit industry so that it's a bit less like a foreign language...

Agreement in Principle (AIP)

An Agreement in Principle is a document which your mortgage lender will provide. You can use it as a form of proof to show your seller how much you'll be able to borrow from that lender - although it is not considered a guarantee.

Annual Percentage Rate (APR)

APR stands for Annual Percentage Rate and is calculated by taking the total interest cost plus fees. APR is often used as a way to compare mortgages and all lenders must tell you the APR of a loan before you sign the credit agreement.

Arrangement Fee

The Arrangement Fee is the amount that a lender charges to set up your mortgage.

Arrears

If your loan or mortgage are in arrears, this means that at least one contractual payment has been missed. When your account falls into arrears, this will usually be reflected on your credit report. Continued arrears can lead to you losing your home.

Base Rate

The base rate is set by the Bank of England and is the amount of interest that other banks and lenders pay when they borrow money. The base rate will also influence the amount of interest that companies will charge for mortgages, loans and other types of credit.

Booking Fee

A booking fee is charged by companies to set up your mortgage. It can also be called an Arrangement Fee.

Broker

A mortgage broker is someone who can help you to arrange a mortgage. They act as an adviser and intermediary between individuals and lenders. There are certain mortgage and insurance products which are only available through a broker.

Buy to Let

A buy to let property is bought specifically for the purpose of letting out to tenants. There are special buy to let mortgages which are available for this type of purchase. 

Capital

The capital is the mortgage amount that you borrow in order to buy a property.

Capital Repayment Mortgage

A Capital Repayment Mortgage is the most commonly available and involves paying a combination of the capital and interest each month until the entire mortgage is paid.

Cashback Mortgage

A Cashback Mortgage offers borrowers a cash lump sum as part of their mortgage.

County Court Judgment (CCJ)

A County Court Judgment is a type of court order that may be made against you if you fail to make payments on a credit agreement such as a loan or credit card. A CCJ will be recorded on your credit report and can seriously impact your ability to get a mortgage - and the rates that you're offered.

Credit Score

All lenders have a scoring system that they will use to help them decide whether to accept your application. They will check the information on your credit report, along with other details that you provide in your application and they'll assign you a credit score based on their specific lending criteria.