General educational information only. Not financial advice.

Glossary of Terms

Mortgage and insurance terms can be confusing. We’ve defined the most common ones in plain English.

The ratio of your mortgage amount to the property’s value, shown as a percentage.

The initial cash payment you make towards the property price, usually 5% to 10% or more.

The difference between what your home is worth and the amount you still owe on your mortgage.

A statement from a lender indicating how much they might be willing to lend you based on basic checks.

An interest rate that stays the same for a set number of years, keeping your monthly payments stable.

A variable interest rate that moves up or down in line with an external rate, usually the Bank of England Base Rate.

Switching your current mortgage to a different deal, either with your current lender or a new one.

A lender’s assessment of whether you can comfortably manage monthly payments based on your income and spending.

A review of your financial history to help a lender understand how you have managed credit in the past.

A policy that pays out a lump sum to your chosen beneficiaries if you pass away during the term.

Insurance that provides a regular monthly income if you are unable to work due to illness or injury.

Insurance designed to cover your mortgage payments or pay off the balance if you die or become seriously ill.

A policy that pays a tax-free lump sum if you are diagnosed with a specific serious illness listed in the policy.

The regular amount you pay (usually monthly) to keep an insurance policy active.

A specific condition or situation that is not covered by an insurance policy.

The process an insurer uses to assess your risk and decide on your premiums and policy terms.

The time you must be unable to work before an income protection policy starts paying out.