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APR – Annual Percentage Rate
(APR) is the best way to compare two loans as it
takes into account the interest over the whole term,
as well as any charges or fees. For example, on a
mortgage, you might be tied into a lender for 5
years, and the interest rate is 5% fixed for the
first 3 years, going up to 7% in the final 2 years.
If you compared this initial rate to a loan that was
5.75% for the full 5 years you might think that the
first loan was better value. In fact the APR would
show that the second loan is cheaper over the long
term. |
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Arrears - The term used to
describe late payments, or payments outstanding |
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Bailiff’s Rights of Entry –
Under current legislation, bailiffs can only gain
‘Peaceful Entry’ to your premises to ‘Levy’ goods
(Levy means to mark as removable), so if you do not
let a bailiff in, then they cannot take your
property (think about your car though – they can
impound that). Beware: Bailiffs can come through
open window, over a garden wall, through an unlocked
but closed door or through an open door. However if
you refuse them entry, they cannot enter. If they
have entered your property through peaceable means
ONCE though, they can force entry any time in the
future under the “Walking Possession Agreement”. |
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Bailiffs – There are two types
of bailiffs. County Court appointed bailiffs who
collect consumer debts such as loans etc., and
Private bailiffs who collect debts such as council
tax & magistrate enforced fines. Bailiffs from
Magistrates Courts can only collect debts between 8am
and 6pm Monday to Saturday unless there are
exceptional circumstances. |
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Bankruptcy – This is when you
hand over all of your assets to an appointed
Official Receiver (who then appoints a trustee) who
will sell all of your assets (often including your
home) and split the money amongst your creditors
(people you owe money to). See our page on
bankruptcy. |
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Compound Interest - This
describes the type of interest that is usually
charged on Credit Cards, where the interest is
calculated monthly based on what is left on the
balance, thereby charging interest on top of
interest that has been added before. (It works in
your favour if you have a savings account). |
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Credit rating – This is often
thought of a as magical figure that below which you
will always be refused credit and above which you
will always be accepted. In fact, your rating is
just a formula that records how many missed
payments, defaults CCJ’s and other adverse records you
have had, compared with the number of good marks you
have for paying on time. You can improve your credit
rating – see our credit rating report under the
Factsheet section |
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Credit Referral Agency – There
are three main companies that record all of your
credit history (history of your credit payments and
missed payments). Experian, Equifax & Call Credit.
You can find their details on the ‘Links’ Page. |
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Creditors - These are people
you owe money to |
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Default notice (Internal)
– Creditors often issue an internal default notice
to incentivise you to make a payment. Usually, it is
only a Statutory default notice that is registered
on your credit file. |
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Default notice (Statutory) –
This is a notice served on a debtor (someone who
owes money) who has failed to pay a number of agreed
monthly instalments. It is usually registered on
the credit file and will hinder your ability to get
credit in the future. On the flipside, it usually
freezes all interest on the principle (amount
owing). |
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I.V.A. – Individual Voluntary
Agreement (IVA) is a way of consolidating your
debts, and repaying them all over a shorter period
of time. However, it is a very serious step and will
affect your credit rating for up to 6 years after it
has been settled, so think about it carefully. Look
at our page on IVA's. |
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Interest - Front loaded – Often
on loans with fixed rate, (like the one you might
get from your bank), the total interest is
calculated & added to the amount borrowed up front.
If you repay the loan early, the lender usually
refunds the interest no longer chargeable. |
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Interest rate - This
can be used to describe the Bank of England Interest
Rate, the interest rate of a loan or the interest
rate of a particular institution. It is the figure
that the principle (the amount borrowed) is
multiplied by (and subsequently added to) to work
out the total amount payable. Think of it as the
profit added to your loan by the lender. It can be
front loaded (calculated & added up-front - this is
usual for unsecured loans where the interest rate is
fixed) or calculated daily, weekly, monthly or
annually (often applicable to mortgages). Generally,
the higher the interest rate, the larger the
‘profit’ on the loan. See
APR |
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Interest rate (fixed) -
See also
Interest & Interest Rate.
The rate of interest (profit the lender adds to the
amount they lend you) never changes throughout the
length of the loan. The interest is usually
calculated annually or up front. |
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Interest rate (variable) –
See also
Interest & Interest Rate.
The rate of interest (profit the lender adds to the
amount they lend you) goes up or down (usually)
according to the Bank of England Base Rate, or the
lenders Standard Variable Rate (SVR). The interest
is usually calculated weekly or monthly. |
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Lender – an institution who
lends money. Mortgage companies & banks are often
grouped under this term. |
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Option to Buy – If you are
currently renting, your landlord may grant you an
option to buy your home. Often this is at a fixed
price, and valid for a fixed term. |
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Principle – The amount borrowed
excluding any interest. For example, if you borrowed
£10,000 over 5 years, you may repay £12,000, of
which £2,000 is interest and £10,000 is the
principle. |
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Redemption figure – This is the
figure quoted by a lender to fully repay the loan
outstanding including all fees, charges and interest. |
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Re-mortgage – (also
called “Re-Fi”) When you
take out a new mortgage, which may be a higher
amount than the original loan (if you have one), to
provide you with cash. Be aware, if you consolidate
unsecured debt (such as credit cards) with money
raised from a re-mortgage, you are converting
unsecured debt to secured debt, which, if you stop
paying, could result in you losing your home.
However, the upside is usually that the payments are
much lower and therefore usually more affordable. |
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Repossession - When your lender
will take back possession of your house, evicting
anyone living there. |
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Repossession Date – This is the
date set by the judge for the Repossession Order to
be enforced |
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Repossession Order – This is an
order granted by a County Court Judge allowing
someone who has an interest in a property to
instruct bailiffs to enter the property & evict.
NOTE: This is usually only granted if the Judge sees
that the creditor (the person who owes the money) is
UNWILLING to pay, not UNABLE to. Please see our
Repossession page for more details on how to prove
the difference & stop repossession. |
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Secured loan – This type of loan
is secured against something that can be repossessed
if you fail to keep up payments. Usually it is your
home, but it can also be an investment property or
your car. |
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Sell & Rentback – This is where
a third party will buy your property and then rent
back to you. You may, or may not have a an option to
buy back. See our Sale & Rentback Page |
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Survey/Valuation - Often
performed by a RICS (Royal Institute of
Chartered Surveyors) valuer, this is a survey
performed on a property that will return a market
valuation plus a snapshot of the state of repair of
the home outlining any potential problems predicted
in the future (for example damp or rotting timbers)
plus a rebuild cost for insurance purposes.
Reputable companies only use RICS valuers, and do
not rely on any Estate Agents or own valuations that
can be manipulated easily. |
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Valuation/Survey – Often
performed by a RICS (Royal Institute of
Chartered Surveyors) valuer, this is a survey
performed on a property that will return a market
valuation plus a snapshot of the state of repair of
the home outlining any potential problems predicted
in the future (for example damp or rotting timbers)
plus a rebuild cost for insurance purposes.
Reputable companies only use RICS valuers, and do
not rely on any Estate Agents or own valuations that
can be manipulated easily. |
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Walking Possession Agreement –
If you have allowed bailiffs entry, or they have
gained peaceful entry they will ‘levy’ (make a list
of) your articles that they can remove to sell to
repay the debt. If you make an agreement to repay
the bailiff, but default on this payment at any time
before the agreed amount has been repaid, then they
can force entry (break locks) and seize your
possessions (except beds, bedding, tools of the
trade, items that belong wholly to someone else,
items on hire purchase or rented or fixtures &
fittings. This is a guide though, and it depends on
what debt the bailiff is enforcing. Ask for more
details.) |
