Jargon Buster
Mandatory products
These are supplementary products that some lenders insist
you purchase along with the core product that you are
buying. This is often loan protection or accident, sickness
and unemployment insurance.
Margin
The lender's "retail markup" on the loan. For example,
if the index rate for an variable rate mortgage is 5 percent
but the lender has a 2.5 percentage-point margin, the
rate the borrower will pay is 7.5 percent.
Modification
A change in any of the terms of the loan agreement.
Monthly fee
A fee charged once a month.
Monthly repayment
This is the amount you pay to your lender each month towards
the cost of your loan.
Mortgage
The name given to a loan used to buy a property.
Mortgage acceleration clause
A clause which allows a lender to demand that the entire
balance of a secured loan be repaid in a lump sum under
certain circumstances. The acceleration clause is usually
triggered if the home is sold, title to the property is
changed, the loan is refinanced or the borrower defaults
on a scheduled payment.
Mortgage application
Forms used to assess whether you meet the lender's underwriting
criteria. These criteria are set to ensure that barring
any unforeseeable change in circumstances, you will be
able to support the mortgage and meet the repayments.
Questions relate to such things as your personal details,
existing loans secured against the property, credit history
etc.
Mortgage code
The mortgage code is a set of standards defined by the
Council of Mortgage Lenders, that lenders voluntarily
subscribe to. It sets out codes of conduct on how a lender
or intermediary should act when arranging your mortgage,
as well as how you should be dealt with once your mortgage
is in place. It also tells you how to complain in the
event of a lender not keeping to the code and who to complain
to.
Mortgage code arbitration scheme
An arbitration service between members of the public and
lenders.
Mortgage debt
The amount outstanding on your mortgage.
Mortgage payment protection insurance (MPPI)
An MPPI policy pays your mortgage or other loan repayments
for you if you become unable to work for an extended period
of time, as a result of redundancy, accident, sickness
or disability. It should provide enough income to cover
all your monthly mortgage expenses. If you have a repayment
mortgage, this should be your capital and interest repayment
and if you have an interest-only mortgage, the MPPI should
cover your interest payment as well as your normal monthly
contribution to the investment vehicle that will repay
your loan.
Mortgagee
A bank or other financial institution that lends money
to the borrower. The borrower is considered the mortgagor.
Mortgagor
The mortgagor is another term for the borrower.
MPC
Monetary Policy Committee of the Bank of England. Meets
monthly to discuss and alter interest rates etc.
