Jargon Buster
Call option
A clause in a loan agreement that allows a lender to ask
for the balance at any time.
Cancellation clause
A clause that details the conditions under which each
party may terminate the agreement.
Cap
A limit on the amount the interest rate or monthly payment
can increase in an variable rate loan.
Capital
In the context of loans, capital describes the original
sum borrowed as distinct from interest required on that
loan.
CAT standard
These are a set of standards proposed by the government
aimed at ensuring a certain level of standard amongst
financial products such as mortgages and ISAs. Whilst
they are a sign that a lender or provider is a reputable
business and offers products that are of a certain quality,
a CAT mark does nott ensure that a product is the most
suitable one for you.
Caveat
A formal notice, that asks a court to suspend action until
the party which filed the challenge can be heard.
Caveat emptor
A legal principle derived from Latin than means "let the
buyer beware."
CCJ - County Court Judgement
Whenever someone fails to pay for something and is
subsequently taken to court, the magistrate may issue
a County Court Judgement against that individual to pay
the outstanding debt. This may well affect your ability
to raise finances in the future.
Certificate of deposit (CD)
A document which shows that the bearer has a specified
amount of money on deposit with a bank, stock-brokerage
firm or other financial institution.
CHAPS
Clearing House Automated Payment System. An electronic
way of transferring money between accounts.
Charge
Security the lender relies on when granting a mortgage.
Charge certificate
A certificate from the Land Registry that shows the boundaries
of a property and gives details of covenants affecting
it.
CML
Council of Mortgage Lenders. Building societies, banks
and other lenders are members of this trade organisation.
Code of practice
An agreement that certain professions can sign up to in
which they agree to act or serve in a certain way and
which therefore protects the consumer in areas (such as
estate agency) which are not regulated by an institution.
Collateral security
Additional security a borrower supplies to obtain a loan.
Collateral
The property or other asset which the lender can sell
to repay the loan if the borrower does not keep up the
mortgage payments. In most cases, the home is collateral
on a mortgage. If the borrower fails to repay the loan,
the property will be repossessed.
Collection
The series of steps a lender takes to bring a delinquent
mortgage up to date.
Collusion
The action of two or more people to break the law.
Commission
A percentage of the sale price which the selling party
receives. This can be an estate agent in relation to a
property, a broker selling you a mortgage or other products
and even a dorr to door salesman selling you a nice new
set of double glazing.
Commission amount
An amount deducted to reflect the costs of providing a
service.
Compound interest
The interest paid on the principal balance in a mortgage
and on the accrued and unpaid interest of the loan.
Compulsory products
Some lenders, at least for certain loans, insist that
you take out payment protection insurance as a condition
of the loan.
Consumer credit act
Act of legislation to define the rules relating to lending
money and aimed at protecting the consumer when credit
is agreed with a third party.
Contract
A legal document between two parties confirming any sort
of agreement such as terms of sale, employment or service.
Contractual liability
The terms of a contract to which you must abide. There
may be financial or even criminal penalties which you
incur if if you do not meet your contractual liabilities.
Contractual lien
A voluntary obligation such as a mortgage or trust deed.
Contribution
An amount of money paid into an account. This can be a
'one off' payment or on a regular basis.
Co-signer
A person who assumes joint liability for a loan. The co-signer
of a loan agreement is not necessarily, however, a co-owner.
Council of Mortgage Lenders
An institution that sets out code a code of good practice
which mortgage lenders volunteer to stick to - they are
not regulated by the government.
Counter cheque
A cheque withdrawal made over the counter, issued by the
cashier.
County court fee
This is charged when a lender provides information to
solicitors relating to county court rules when your loan
payments are in arrears.
County Court Judgement
Whenever someone fails to pay for something and is subsequently
taken to court, the magistrate may issue a County Court
Judgement against that individual to pay the outstanding
debt. This may well affect your ability to raise finances
in the future.
Cover
In the context of insurance, cover describes the specific
risk a given policy protects you against. Life cover protects
your family against the financial consequences of your
death, buildings cover against damage to the property
that you live in.
Credit
A measurement of a person's ability to pay bills on time.
Several companies track individuals' credit histories
by detailing late or missed payments on loans, credit
cards and other debts.
Credit agencies
Companies such as Equifax or Experian that are often used
by lenders to assess your financial background and determine
the level of risk involved with lending you money.
Credit averse
When a borrower has a poor credit history, has previously
been declared bankrupt or has outstanding County Court
Judgements, they are often described as credit averse.
People with averse credit ratings often have to pay higher
interest rates on a mortgage.
Credit checks
These are checks made when you try to borrow money or
purchase goods on hire purchase, and are used to determine
the risk of lending you money. They will examine your
credit history and check for payment defaults and what
you owe to other financial organisation. A credit agency
is often used.
Credit history
If you have a history of bad debts, county court judgements
or bankruptcy to your name, you may not be eligible for
a mainstream mortgage. To help ensure you are a good credit
risk, a lender may require references from your existing
lender, bank or landlord. In addition to this, many lenders
will make use of the services of one of the two large
credit agencies, Experian and Equifax. These offer a credit
inquiry or a full credit application, which show details
of any existing credit arrangements or county court judgements
against you.
Credit period
The time frame for which the lender agrees to provide
you with credit.
Credit rating
The degree of credit worthiness assigned to a person based
on credit history and financial status.
Credit reference agency
When assessing your application, a mortgage lender will
study your records. These records are held centrally by
credit reference agencies, and contain information for
many different aspects of your life.
Creditor
An individual or institution to whom a debt is owed.
Critical illness insurance
Covers an individual for life or for a set period against
a number of serious illnesses, diseases and medical conditions.
It pays out a single tax-free lump sum on the diagnosis
of one of the illnesses specified in the policy details.
The most common of these included in a policy of this
sort are: Heart attack, Stroke, Cancer, Kidney or liver
failure paralysis and multiple sclerosis. AIDS is not
usually included.
