Mortgage terms glossary Mortgage terms A-C

Adverse credit mortgage

A mortgage for people with a poor credit history. Also see Sub-prime.

APR

Annual percentage rate. The overall cost of a mortgage, including the interest and fees. It assumes you will have the mortgage for the whole term, so may not be a useful way to compare deals.

Arrangement fee

A set-up fee for your mortgage.

Most mortgage lenders will allow you to add this fee to the loan, but you should avoid this as you will end up paying interest on it for the life of the loan. Read more on mortgage fees in our guide to how to get the best mortgage deal.

Arrears

If you go into arrears it means you have 'defaulted' at least once on your mortgage repayments, i.e. you have missed a month's payment.

Contact your lender as soon as possible if you think you may go into arrears. Read more in our guide to avoiding repossession.

Base rate

A rate of interest set by the Bank of England, which tracker rates and lenders’ standard variable rates usually follow.

Booking fee

A type of mortgage set-up fee.

Buildings insurance

Insurance which covers you for damage to the structure of your home. A lender will require you to have buildings insurance in place when you take out a mortgage.

Buy-to-let

A buy-to-let property is bought with the sole intention of letting it to tenants. Most mortgage lenders offer special 'buy-to-let' mortgage deals for this purpose.

As this type of lending poses a greater risk to the lender, it is usually more expensive than a residential mortgage.

Capital

The amount of money you borrow to buy a property.

Capped rate

The mortgage interest rate charged by your lender will never exceed the upper 'capped' limit, regardless of increases to the Bank of England base rate.

Cashback mortgage

Your lender gives you a certain amount of cash on completion, which could be useful to spend on decorating, for example. You should factor this money into the total cost of your mortgage over the initial period to decide whether it’s a good deal.

CCJ

County Court Judgement. These are made against you for non-payment of debt, and could make it harder for you to get a mortgage.

Collar

If your mortgage deal has a collar, your interest rate will not fall any lower than the specified amount. So if rates drop to 3.75% and your deal is collared at 4%, you'll miss out on the savings this lower rate will bring.

Conveyancing

The legal process of buying and selling property. This can be done by a solicitor or specialist licensed conveyancer.

Current account mortgage (Cam)

Your mortgage, credit card and loan debts, and your current account and savings balances are combined into one account. Your credit balances offset your debts so you only pay interest on the difference.

These are usually more expensive than conventional mortgages, so whether they are worth it for you depends on your circumstances.

Mortgage Advice

We believe you should seek independent mortgage advice before taking out a mortgage. The Which? Group offers an independent mortgage advice service, Which? Mortgage Advisers, that looks at every mortgage from every available lender. You can also find an independent mortgage adviser using Unbiased.co.uk.

To find out what your repayments would be at different interest rates, or to see how much you could borrow and work out how much you can afford to spend on a mortgage, take a look at the mortgage calculators offered by Which? Mortgage Advisers.