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Glossary of Lending Terms Absolute title
One of the four classes of title which can be registered at the Land Registry. It is the strongest title that the registered owner can have. Additional security
Any security for a mortgage in addition to the basic security, which is the house. The main type of additional security is a single premium insurance policy (colloquially, a MIG - mortgage indemnity guarantee). Strictly if accepted by a lender this is ‘other’ rather than ‘additional’ security. All monies deed
A mortgage deed used by some lending institutions whereby the deed secures all borrowings by the customer not solely just the amount borrowed by way of mortgage. Allodial land
Land in Scotland which is held outside the feudal chain - that is, with no superior. Allodial land comprises, inter alia, Crown Property, some church land and udual land (a type of Viking tenure) in Orkney and Shetland. All risks
An extra layer of contents insurance offered by most insurance companies. All risks cover usually provides for, inter alia, accidental damage and loss of personal belongings whilst off the premises. It covers all risks except those specifically excluded. Annual review schemes
These apply to variable rate mortgages. The borrower’s repayment is set once a year, though interest is charged to the account at the going rate. This can result in larger than average changes in repayment each year during periods when market rates of interest are volatile. Annual rest
The most common method of accounting for interest due on a mortgage. Under this method, the lender charges a full year’s interest to the account annually. If a part capital repayment is made the account is adjusted accordingly. Annuity linked mortgage
A repayment method aimed to help elderly borrowers raise capital on their personal dwellings. The annuity raised, using the house as security, provides, typically, income for the annuitants, a part of which pays the interest on the loan raised to purchase the annuity. Annuity method
A once common term for the traditional capital and interest mortgage. APR
Annual Percentage Rate. This is the rate of charge on a loan calculated to a set formula. It includes not just the rate of interest, but also associated costs. It was introduced to provide a meaningful comparison of rates charged by different lenders. More sophisticated repayment systems have recently made APRs much less meaningful than in the past. Articles of association
The internal constitution of a limited company, setting down conditions relating to officers, meetings, etc. Assignment
In the context of mortgages, this means the assignment to the lender of life policies taken out to repay the capital at the end of the mortgage term, or on prior death of the borrower. A deed of assignment is required. This gives the lender the legal right to cash in the policy in the event of default by the borrower. It also requires the life company to inform the lender of lapsed payments or the policy being ‘paid up’. Many lenders no longer require the assignment of life policies, though some take a deposit of the policy document instead. Assured tenancy
A method of creating a tenancy which provides the tenant with some security of tenure for the agreed period. Lenders may not be prepared to lend on these as there is no permanent security of tenure. Bankruptcy
Occurs when an individual is deemed insolvent by a County Court under the provisions of the Insolvency Act 1986. A bankruptcy petition can be initiated by the Insolvency Act 1986. A bankruptcy petition can be initiated by the individual himself or his creditors. Once granted, it remains in force for three (sometimes two) years. Most lenders have a clause in their mortgage conditions which provides a right to possession on bankruptcy, though this is seldom pursued unless the account goes into arrears. A mortgage lender can require mortgage repayments to be made direct by the bankrupt person rather that via an Official Receiver or Trustee in Bankruptcy. Betterment Clause
In the context of property insurance, a betterment clause reserves the right of the insurance company to reduce the amount paid in respect of a claim so that the claimant is no better or worse off. This is an application of the principle of indemnity. Building Societies Commission
A body established under Section 1 of the Building Societies Act 1986 to regulate the activities of building societies. Its powers to regulate and issue guidance to societies passed to the Financial Services Authority with the coming-into effect of the Financial Services and Markets Act 2000. Building Society
A mutual savings and loan institution established under the Building Societies Act 1986. The principal purpose is to create loans secured on residential land, funded by savings of members and depositors. Buildmark
The defect protection scheme offered by the National House Building Council (NHBC). Capital Adequacy
The requirements laid down by regulators to comply with a specified capital requirement (i.e. reserve position), determined by looking at the risk profile of the institution’s assets. Captive Insurer
An insurance company set up for the purpose of providing insurance services for its parent organisation. In 1994 the Treasury permitted building societies to set up captives to write their own MIG business. Groups of societies can set up a captive between them for this purpose. Though societies can wholly own a life assurance company, they cannot own more than 15% of a general insurer, except in connection with MIG business. Capital Reduction
A capital reduction occurs when a borrower makes a lump sum payment to reduce the capital amount owed on a mortgage. It is commonly called a part redemption. Some institutions specify minimum accounts they will consider as capital reductions. Centralised Lenders
There are organisations which lend from a single office or through a network of introducers. Their mortgages are mainly funded from wholesale sources. Chattels
A term used to describe moveable possessions, such as furniture, consumer durables and fittings (but not fixtures). The word is a corruption of ‘cattle’, from the times when livestock formed the bulk of a household’s possessions. Cherry picking
The practice of some financial institutions through which business is targeted at specific market segments to the exclusion of others. Less desirable business is either refused out of hand or offered at uncompetitively high prices or rates of interest. Classification of business assets
The Building Societies Act 1997 requires that not less than 75% of a society’s business assets are loans fully secured on residential property. Clogging the equity of redemption
The act of preventing a borrower from redeeming a loan early. Though it is possible for a lender to impose charges for early redemption, it is a common law right of any mortgagor to be able to redeem a loan at any time. Closing
A term sometimes used instead of completion – the point at which the mortgage contract is signed and executed. Closing date
In Scottish conveyancing, the date by which offers to purchase a property have to be received by the vendor’s solicitor. Common property
In Scots law, property held by two or more persons, with each person’s share of it specifically defined. The Scottish equivalent of tenancy in common. On death of one person, the assets pass to the estate, not the other parties. Completion
The point at which the mortgage is signed and executed and all its conditions come into effect. In the sale and purchase of property, it is when the balance of the purchase price is paid by the purchaser to the seller and, in exchange the seller hands over the deeds. Consent to mortgage form
Lenders require this to be completed by any occupier of the property in question ages 17 or over who is not party to the mortgage. The form waives any rights of residence that the third party might have, enabling the lender to obtain vacant possession in the event of default. Consent forms were introduced following the Boland and Brown cases. Consolidation
The right of a person (the lender) in whom two or more mortgages are vested to refuse to allow one mortgage to be redeemed unless the other or others are also redeemed. This can be used, for example, to prevent the redemption of the loan on a property of worth, while leaving a property of little value still mortgaged, thus leaving the lender exposed. Consumer Credit Act 1974
Amongst other things, regulates certain secured and unsecured lending. Loans in excess of £25,000 are unregulated. Loans for house purchase are exempt. Regulated loans require set procedures for both pre-loan administration and default arrangements. The Act also sets out requirements for ‘cooling-off periods’ -– these provide the opportunity for borrowers to change their minds. Contributory mortgage
A mortgage where there is more than one lender (mortgagee). Often used in inner-city partnership projects. Conveyance
A mode, or method of the transfer of property. Cooling- off periods
A period where the lender cannot contact the borrower, allowing the latter to reconsider prior to finalising a loan. Cooling-off periods were introduced by the Consumer Credit Act 1974. Corporeal property
Tangible property-physical things which can be seen and touched, such as land, physical belongings and so on. Council of Mortgage Lenders
A trade body representing banks, building societies and other mortgage lenders. It provides a forum for exchange of views on common issues confronting lenders, as well as acting as a powerful lobby group on their behalf. The CML operates from the London premises of the Building Societies Association. Court of Protection
A court which appoints a person to represent the interests of those who are mentally incapacitated (England and Wales only). Covenants
Are promises contained in deeds. They are enforceable. There are basically two types: positive and negative. The positive covenant requires the person bound by it to do something, for example, to build or maintain something. A negative covenant prevents the person from doing something, for example, NOT building or NOT erecting a fence. Credit bureau
An organisation which maintains a database on the credit history of data subjects in order to advise lenders and other interested parties of matters relevant to the status of the prospective customer. Credit scoring
A technique based on probabilities, used to asses the degree of risk exposure arising from a potential lending situation. Curator bonis
In Scots law, this is a person who is appointed by a court to represent the interests of a person of unsound mind. Deed of postponement
An agreement whereby a second mortgage postpones the priority of its mortgage in favour of a further charge taken by the first mortgagee. Default notice
This must be issued by the lender if it wishes to enforce a loan regulated under the Consumer Credit Act 1974 where the borrower is in default. It has to set out the nature of the breach of the terms of the contract and how (and by when) this can be remedied by the borrower. Easement
Rights of the owner of land over the land of another, such as a right of way or a right of light or a right or support. Endowment mortgage
The most popular method of repayment in recent years, until it declined in the early 1990’s. The borrower pays interest to the lender and hopes that an endowment policy will repay the capital at the end of the agreed term. The most common method used in the past has been the low cost, with-profits endowment, though the borrower can buy a fully guaranteed version. Enforcement Order
An order issued by a local authority to carry out alterations to a property, such as reinstatement of a building to is former condition when work has been carried out without planning permission. Enfranchisement
This occurs when a leaseholder buys the freehold of the property the leaseholder is leasing. Equity of redemption
The equity of redemption is an interest in the land the mortgagor has. The mortgagor has the right to redeem at anytime from creation of the mortgage and ,indeed, can dispose of that interest, for example, by selling it. Excess
An excess is an amount of an insurance claim which has to be met from the policy holder’s own resources. Exclusion
An exclusion is a condition attached to an insurance policy which excludes the right to claim for specified perils. Feudal estate
The principle form of land tenure in Scotland. Forfeiture
In the context of leasehold property, this occurs when a leaseholder fails to comply with one or more of certain of the conditions of the lease and forfeits all rights of ownership of that lease. But the leaseholder, in some instances, can mitigate the harshness of this. Freehold
One form of ownership of an interest in land, ‘in fee simple’. Freehold rights are the highest and most secure type. Foreclosure
A legal remedy on default, all but obsolete in the UK. A foreclosure order caused the borrower in default to forfeit the equity of redemption (i.e. on sale, the lender would keep any profit). A foreclosure order would have to be granted by the Chancery Division of the High Court of Justice. Full endowment mortgage
An interest only mortgage through which capital is repaid by the proceeds of a with-profits endowment life assurance policy. The basic sum assured is equal to the mortgage, guaranteeing that the loan will be paid off in the event of survival or death. A tax-free bonus is usually also payable, subject to investment performance. Full structural survey
A comprehensive report by a qualified surveyor on the condition of a property to be purchased. The survey is expensive but provides absolute peace of mind, as all matters affecting the value and condition of the property are reported on. The price varies, depending on the value of the property. Fungibles
Assets which can be measured and replaced by equal quantities of the same, such as cash and precious metals. Good leasehold
One of four classes of title which can be registered at the Land Registry. A person with this title is in the same position as a person holding an absolute title (the best), except for one thing. It is that there is no guarantee that the lease has been validly granted. Ground rent
A sum, usually paid annually, by a leaseholder to the freeholder in respect of a leasehold property. Guardian
In Scots law, a guardian is a person who can enter into a contract on behalf of a young person. Guarantor
A person who promises to be answerable for the dept of another. Heritable security
The main way of securing rights over property in Scotland is a security over heritable property, usually by way of a standard security (mortgage deed). Home Buyer’s Report
A report by a surveyor or similarly qualified person on the condition of a property which is being considered for purchase. This service is less thorough than a full structural survey but provides reasonably detailed information at a slightly higher outlay than a basic valuation. Home free scheme
An advisory service provided to buyers and sellers of houses by Scottish solicitors in respect of all matters relating to home ownership. Housing associations (or societies)
Non-profit making organisations, often run by volunteers, whose purpose is to provide housing for purchase, rental or both. Housing associations are regulated by the Housing Corporation in England and Wales and Scottish Homes in Scotland. Housing Corporation
The body set up by the Housing Act 1964 to regulate the activities of housing associations and housing societies. Income multiple
The factor by which lenders will multiply the gross annual salary of mortgage applicants in order to determine the maximum borrowing capability. Income support – Mortgage Interest (ISMI)
Support paid by the government after a qualifying period to mortgage borrowers who are unemployed. ISMI is means tested and not available to all. Incorporeal property
Rights which are intangible, such as debts, shares in a company and leases. Index-linked mortgage
A method of repayment which enables the lender to index-link the size of the loan and therefore repayments to some measure of inflation, enabling the mortgagor to obtain a higher loan than would otherwise be possible.
These mortgages only really work when the property market is rising, so they fell out of favour in the 1990’s. Index-linking
Most household policies are index-linked to inflation, with the amount insured and the premium adjusted accordingly each year. This practice assists in avoiding or mitigating the problem of under-insurance. Insolvency
Insolvency occurs when a person or organisation cannot discharge its financial obligations within a reasonable time of them falling due, or where total liabilities exceed total assets. Joint property
In Scots law, property over which two or more persons have absolute rights-that is, they all own al of it. An example is a joint bank account. On death, the property passes to the surviving party or parties. Joint tenancy
Joint tenancy is where two or more persons own land in common (it is impossible to point to one part of the property and say that belongs to one person rather than the other or others). An important feature is that on the death of one joint owner, the land passes to the survivors. This is called the ‘right of survivorship’. Jura in re aliena
A term used in Scots law to describe the rights of someone over the property of another. Land charges
Various different classes of charge can be registered at the Land Charges Registry if the title to the property is unregistered. The most common are Class C (IV) charges (puisne mortgages) and and Class F charges, indicating the interest of a spouse under matrimonial homes legislation. Land Charges Registry
A registry where rights over unregistered land may be noted. When unregistered land changes hands, the conveyancer searches this register to determine whether rights exist over the land. Land Registry
The body responsible for recording details of real estate (land) in England and Wales. It keeps three registers: property, proprietorship, charges. Land Register of Scotland
The body responsible for land registration in Scotland, established by the Land Registration (Scotland) Act 1979. Lands Tribunal for Scotland
A body to which disputes concerning ownership or rights over land can be referred. The person bringing the dispute also has a right of appeal to the Court of Session. Leasehold
A form of land tenure whereby a person has rights over a piece of land for a specific period. Most residential leases have long terms, and those with leases over 21 years can legally buy out the freehold or extend the lease under the provisions of the Leasehold Reform, Housing and Urban Development Act 1993. Legal Charge
The main type of mortgage deed used in England and Wales. Legal date of redemption
The Law of Property Act 1925 (mainly applicable only to England and Wales) specifies that many powers of mortgagees become available once the legal date of redemption has passed. This is therefore set by lenders as a date shortly after the mortgage is completed so that there powers can be invoked. Low cost endowment policy
The most commonly accepted investment product sold alongside a mortgage throughout the 1980’s. Memorandum
The constitution document of a limited company or building society which defines its powers and relationship with the outside world. In lending, it determines whether a company has the power to borrow and to what extent. The memorandum can only be changed by Special Resolution of the members. Modifying agreement
An agreement made to vary the conditions of a loan regulated by the Customer Credit Act 1974. Mortgage approval certificate
A certificate issued by some lenders to indicate conditional approval of a mortgage subject to a suitable property being found. The certificate is issued if status can be corroborated. Mortgage deed
The legally binding contract between lender and borrower. The main type of mortgage deed used in England and Wales is a legal charge. In Scotland it is a standard security. Mortgage protection
An inexpensive type of diminishing term life assurance designed to provide a lump sum in the event of death. The sum is usually just sufficient to discharge the mortgage. Moveable property
Anything other than land (immovable), that is personal property, such as, for example, furniture, books, CD’s. MIG
Mortgage indemnity guarantee. A single premium policy, paid for by the borrower prior to completion of the mortgage. It insures the lender for losses in excess of (usually) 75% of the loan-to-value sum. The borrower still remains liable for any amount claimed, so the insurer can recover the sum paid out under its power of subrogation. MIRAS
Mortgage Interest Relief at Source. Introduced in 1983. Qualifying borrowers paid interest net of tax relief to the lender. The Inland Revenue paid the relief due on the loan to the lender. MIRAS was withdrawn in April 2000. Mortgage indemnity guarantee
See MIG. Mortgager
The lender. Mortgagee
The borrower. National House Building Council
The NHBC is a builders’ federation which provides a defect protection scheme, ‘Buildmark’, on new houses. Membership of NHBC is conditional on the builder maintaining standards of construction. Negative equity
Where the loan amount outstanding exceeds the market value of the property held as security. Negligence
A tort (or civil wrong) which arises when a person owes a duty of care to another which is subsequently breached with resultant loss or damage. If proven, the usual recompense is an award for damages. New for old
This is a feature of some insurance policies which permits the policy holder to claim for lost of damaged goods at their replacement rather than historic cost. Non est factum
‘This is not my deed’ – a basic of a claim which can be made to deny a contract by one seeking to avoid its conditions. Non-fungibles
Assets which have an individual value and cannot be replaced exactly, such as work of art. Offer of advance
The formal statement by a lender to a mortgage applicant of the amount that it is prepared to lend and the terms and conditions attached to this. All offers are issued conditionally and are therefore not binding on the lender. Office of Fair Trading
A government body responsible for fair trading, the OFT regulates activities governed by the Consumer Credit Act 1974, including advertisements and APR quotations. The OFT also regulates policy with regard to choice of buildings insurer. Official Receiver
The Official Receiver is a public servant appointed to administer insolvency. The Official Receiver will usually appoint a Trustee in Bankruptcy when a bankruptcy order has been granted. Other security
Most forms of security taken over and above the basic security (i.e. the property) are strictly called ‘other security’. The most common type is a MIG – a mortgage indemnity guarantee. Most lenders use the term ‘additional security’, though the Building Societies Act 1986 differentiates between ‘additional’ and ‘other’ security. Outright sale
In the specific context of Scottish land law, this is where a new vassal takes the place of an existing one, with the latter coming out of the feudal chain. Panel valuer
An independent valuer with whom a lending institution is prepared to arrange inspections of the property to determine the adequacy of security for loans. Part redemption
Occurs when the borrower makes a lump sum capital repayment in part settlement of a loan. Some lenders specify a minimum amount which can be part redeemed. Pension mortgage
An interest-only mortgage through which capital is paid off from the proceeds of the commutable lump sum derived from a personal pension. The arrangement also provides for a pension after the mortgage is redeemed. PEP mortgage
Personal equity plans are tax-free savings schemes, so a mortgage linked to such a scheme has the effect of providing a tax-efficient savings vehicle to repay the capital on maturity. PEP’s have now been discontinued (having in effect been replaced by ISAs) and so no new PEP mortgages are being created, though older ones still exist. Positive covenant
A condition applying to land which specifies certain actions to be taken by the owner. An example is maintenance of boundaries. Possession
The right of the mortgagee to take possession of the property to protect his position as mortgagee and to enable him to get repayment. Possessory title
An occupier of land can register this type of title at the Land Registry. If unchallenged after 12 years, the occupier has an absolute right to the land (‘squatter's rights’). The land registry will not convert possessory to absolute title, however, until 15 years after registration of the former. Power of sale
A legal remedy of a mortgagee through which a mortgaged property is sold to repay the mortgage debt. Protected loan
A term used in MIRAS administration. Prior to 1988, any member of persons occupying a property (except married couples) could each claim MIRAS entitlement.
Though entitlement was changed to relief on the basis of the property rather than the individual in 1988, loans completed before that date continue to attract relief on the original basis. If parties to protected loans subsequently marry or re-mortgage, this perk is lost. The onus is on the lender to monitor such cases for continuing entitlement to MIRAS on the old basis. Provisions
Amounts set aside in the accounts of a lender in anticipation of bad debts and losses attributable to present assets. Puisne (pronounced ‘puny’) mortgage
A legal mortgage not supported by the deposit of title deeds. Qualified title
One of the four classes of title which can be registered at the Land Registry. Similar to absolute or good leasehold, but ‘qualified’ indicates some defect in the title. Receiver
One who acts on behalf of a lender in respect of a property possession. The duty of the receiver is to gather any income due to the property (for example, from tenants). A receiver acts as agent for the borrower. The funds must be applied to the mortgage account. Redemption
The act of paying off a loan. Redemption interest
This is charged on the redemption of a loan by many institutes, often as a percentage of the amount being paid to redeem. Some lenders charge part redemption interest also. Nearly all lenders waive redemption interest if the borrower takes out a new loan with the same institution. Red lining
The practice adopted by some lenders and insurance companies to refuse business in certain defined geographical locations which are considered too high risk. Register of Sasines
The register of heritable security in Scotland, created by the Registration Act 1617. Regulated loans
A term commonly applied to loans which are subject to the provisions of the Consumer Credit Act 1974. Release of part security
This occurs when the lender is prepared to reduce its security for an advance by releasing some of the land (for example, to permit widening of the road). Remortgage
A mortgage which is a replacement loan for another mortgage. Restrictive covenant
A condition applying to land which specifies that the owner cannot do. These covenants usually arise from agreements between an earlier vendor and purchaser. An example is a prohibition from carrying out a business on the land, or perhaps from keeping livestock. Retention
A condition of mortgage whereby a lender holds back a portion of the advance pending work to be carried out by the mortgagor. Rules
Many mutual organisations (including building societies) have a set of rules, which represent their internal constitution. They set down conditions for meetings, election of officers and so on. Building society rules invariably have some provisions relating to mortgages. Scottish Homes
The regulatory and supervisory body for housing associations in Scotland. Searches
Searches are usually undertaken by the solicitor acting for the purchaser. For registered land he will search the Land Registry. For unregistered land he will search the Land Charges Registry. There are several other searches which can be undertaken, such as local land charges, parcels index search, and so on. The purpose is to establish whether there are any encumbrances, or other disabilities or concerns which may adversely affect the value of the property and which might cause the purchaser not to buy. Secured second advances
A term sometimes used to describe further advances to mortgage clients where the top-up element is separated out as a regulated loan governed by the Consumer Credit Act 1974. Settlement
An alternative term for completion of the mortgage – the point at which the mortgage contract becomes effective. Settlement fees
Fees charged for early redemption of fixed rate mortgages as a deterrent to switching out of the product. Shared ownership
Shared ownership schemes enable a mortgagor to buy a proportion of the property, with the remainder being owned by a housing association. Rent is paid on the remainder. The borrower is usually entitled to buy subsequent shares in the property, a process known as ‘staircasing’. Specialised mortgage houses
Another term for centralised lenders. There are organisations which lenders from a single office or through a network of introducers. Their mortgages are mainly funded from wholesale sources. Squatter’s rights
See possessory title. Stabilised payment mortgage
The borrower is allowed to select an interest rate within a given range. If at the end of an agreement period the loan has been over-paid, a capital adjustment will be made to reduce the debt. Conversely, if the loan has been under-paid, the capital sum then owed is increased. Staircasing
This relates to shared ownership mortgages. Staircasing is the process of buying subsequent shares in the property. Stamp duty
A tax paid by the purchaser of the property on the conveyance of the property. It is a tax which is imposed on the documents relating to certain types of transfer. Standard security
The main type of mortgage deed used in Scotland. Status
A generic term used by lenders which refers to any matter affecting the credit worthiness of the mortgage applicant. Subrogation
Subrogation means the substitution of one person (or thing) for another person (or thing). So, the person subrogated is said to ‘stand in the shoes’ of the other. Consequently the one subrogated has the rights of the person in whose shoes he is standing. An example of this is where an insurer pays out under a policy and in doing so, has the right of subrogation against the insured. So the insurer takes the rights of the insured (perhaps a lender and can sue the borrower, if that is whom the insurer paid out in respect of). Sue on personal covenant
The right of the mortgagee to sue a borrower for the outstanding debt. Surety
A guarantor who supports his guarantee by depositing some form of security. TCC
Total Charge for Credit: this is a way of expressing the total true cost to the borrower of his loan, and includes all interest payable, arrangement, redemption and administrative fees, valuation and solicitors’ fees, MIG premiums. Other insurance premiums if there is no choice of insurer and any other charges that relate directly to the mortgage loan. Tenancy in common
This is where property is owned by more than one person, with each person’s share being specifically defined. They have undivided possession but several freeholds. The share of a deceased person does NOT pass by survivorship to the others, but the person to whom it is left in his will. On the death of one person, his or her share passes to the estate, not to the other tenants in common. Transfer of equity
The process of adding or removing a party from a mortgage transaction. The most common reason for this is where spouses or partners agree to separate and wish to change their status as joint mortgagors. Transfer of mortgage
The process of transferring the rights of the lender (mortgagee) to another institution. This is governed by a code of practice and requires the consent of the borrower. A clause is usually inserted in the mortgage deed for this purpose. TSM
‘Transfer subject to mortgage’ – a term used by some lenders instead of transfer of equity. Ultra vires
‘Outside the powers’. Ultra vires becomes relevant when lending to a corporate body, which may not be permitted to borrow under its Memorandum. The Companies Act 1989 enables companies to adopt ‘general trading powers’, to some extent rendering ultra vires redundant. Undertaking
An undertaking is a condition of mortgage where the borrower is obliged to carry out certain works within a specified period of time following completion of the mortgage. Unit-linked endowment policy
Interest only is paid to the lender with the capital element of the mortgage being repaid from the proceeds of a unit linked policy, usually included life cover. Unit linked policies are designed to provide high investment performance, but they are speculative in that they provide little or no guarantee. Vacation
The release of the borrower from covenants in the mortgage. This occurs when the borrower redeems the loan. Valuation
An appraisal of the value of the property, often to assess its worth as security for a loan (but also perhaps simply for the comfort of a prospective buyer). A valuation would, for mortgage purposes, be carried out by a qualified professional valuer. Valuer
The person appointed to value a property on behalf of a lender. Valuers are usually professionally qualified as architects, chartered surveyors or incorporated valuers or auctioneers. Vicarious liability
If an employee of an institution is found to be negligent, the institution can also be liable, and if so, is said to be vicariously liable for that employee’s action. This principal applies to some but not all actions of employees. Voluntary housing sector
A genetic term for housing associations, housing societies and other organisations which have the purpose of providing housing for rent or purchase or both. Zero coupon (interest) mortgages
The return is expressed in terms of a higher amount of capital payable at the end of the mortgage term than that which is borrowed. In other words, instead of interest the lender receives a larger capital sum.
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