Get to grips with mortgage terminology with our jargon buster
Additional borrowing: The term used when a customer increases their borrowing to release some of the equity available in their property.
Annual Percentage Rate of Charge (APRC): The APRC (Annual Percentage Rate of Charge) represents the overall cost for comparison and can be used to compare mortgages.
Arrangement fee: The fee charged for the administration involved in arranging the mortgage.
Bank of England base rate: Bank of England base rate: The Bank of England base rate is set by the Bank of England. HSBC Tracker mortgage interest rates are linked with a margin above this base rate.
Booking Fee: A fee charged on some mortgages to secure a particular mortgage deal.
Capital and Interest Repayment: Your monthly payment covers the interest and also reduces the total balance outstanding.
Completion fee: A fee to cover the cost of electronically transferring the mortgage funds to the borrower.
Deposit amount: The value of funds that you are using to purchase the property.
Early Repayment Charges: An Early Repayment Charge (ERC) is a charge you may have to pay if you repay the whole or part of your mortgage, by paying it back early (which includes if you move to a different HSBC product or move to a different lender) during a certain period.
Estimated property value: The purchase price or the conservative market value of the property being used as security.
Equity: The monetary difference between a property's actual value and the mortgage held against the property.
Exit fee: This is a closure administration fee payable to the lender when you fully repay your mortgage. We do not charge an exit fee.
Fee Saver: Fee Saver means no booking fee, no completion fee. We will cover the cost of one standard valuation where this is required by HSBC as part of your mortgage application. Other fees and charges may be payable to other parties including, but not limited to legal fees and charges levied by your existing lender.
Fixed rate mortgage: A fixed rate mortgage provides the security of fixed mortgage repayments until an agreed date, no matter what happens to interest rates.
Fixed until: The date at which a fixed rate mortgage will expire.
HSBC Buy to let standard variable rate: When your initial HSBC buy to let mortgage rate ends, the interest on your mortgage will be calculated using a variable rate. This will vary over the term of the loan and is set internally. The variable rate does not track the Bank of England base rate.
HSBC standard variable rate: When your initial HSBC residential mortgage rate ends, the interest on your mortgage will be calculated using a variable rate. This will vary over the term of the loan and is set internally. The variable rate does not track the Bank of England base rate.
Interest calculated daily: The interest chargeable on the outstanding mortgage balance is calculated every day rather than at the end of each week, month or year.
Interest only: The monthly payment covers just the interest and the original capital amount borrowed remains outstanding throughout the term of the mortgage.
Interest rate: This is the percentage rate at which the lender calculates the interest they charge the borrower for the mortgage.
Interest rate type: Interest payable may be variable or fixed (a certain rate fixed for a given term set by the lender).
Mortgage illustration: Lenders are required to set out the details of all associated rates and fees for a mortgage product in the same format to enable customers to easily compare products.
Loan to Value (LTV): The loan to value represents the percentage of the value of the property which the borrower is seeking to borrow. E.g. a £100K property with an £80K mortgage = an 80% LTV.
The maximum LTV we will lend will depend on your individual situation, the property, the loan you choose and the amount you borrow.
Lump sum payment: When a customer makes a one-off payment to reduce the outstanding balance on their mortgage.
Monthly repayment: These are calculated monthly repayments at the current stated interest rate.
Mortgage term: The length of time over which a mortgage is taken.
New build property
A New Build Property is defined as:
- a building that has been built in the last 24 months which includes property bought directly from a builder or developer
- a property that has yet to be occupied for the first time
- a property that is yet to be occupied in its current form, for example following a renovation or conversion.
The property being purchased must have an HSBC recognised satisfactory Structural Defects Warranty.
We may lend up to a maximum of 85% Loan to Value (LTV) on New Build Properties. Customers with an LTV greater than 75% are required to have a minimum deposit of £25,000.
Outstanding balance: The outstanding amount owed to a lender under an existing mortgage.
Overpayment: An overpayment occurs when a borrower chooses to make a larger monthly repayment on their mortgage than is stipulated under the mortgage terms.
When you transfer your current HSBC rate from one property to another. You can do this when:
- you sell your property and buy another at the same time
- the sale and purchase don’t happen on the same day. You have up to 6 months to apply to use the existing rate on a new property
This is subject to terms and conditions.
Remortgage: When a person transfers their mortgage from another lender.
Service fee: The fee charged by a lender who, with the customer's written consent, requests details from their existing mortgage lender.
Standard Valuation Report: This report is solely for the purpose of arriving at a current market value to enable the lender to determine the amount of the advance. It should not be relied on by the customer to assess the suitability or saleability of the property.
Switching: When a customer moves to a new mortgage with the same lender, e.g. their fixed rate period ends and they move to a tracker rate mortgage.
Tracker rate mortgage: The mortgage interest rate is set at a fixed percentage above the Bank of England base rate. The interest rate payable will rise and fall in line with changes to the base rate.
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.