Jargon Buster
Payment cap
A legal limit on the amount a monthly payment can increase
on an variable rate loan.
Payment default
This results when you are unable or simply unwilling to
meet your loan repayments. If you default on your payments,
the lender may ultimately be entitled to sell your home
in order to recover the loan. Different lenders will have
different policies on how long they give you before they
start the legal proceedings to recover the loan. Many
will have a separate schedule of charges which you will
incur before they start proceedings.
Payment holiday
A short break from regular mortgage repayments, sometimes
offered with flexible mortgages. This can sometimes be
a useful feature for self-employed people or others with
irregular income.
Payment of balance
This usually takes place between a week and a month after
exchanging contracts. It is possible to have a simultaneous
exchange and completion if you are in a real hurry to
get moving. When you complete the sale, your solicitor
forwards the remaining balance of the purchase price to
the seller's solicitor. You then have the right to take
occupancy of the property and are free to move in.
Payment protection insurance
A type of insurance that pays your loan for you if you
become unable to work for an extended period of time,
as a result of redundancy, accident, sickness or disability.
Most non-mortgage PPI products are taken out for a length
of time that corresponds to the life of the loan it is
protecting.
Payment shock
Payment shocks are when the discount period ends
and the monthly repayments jump by a large amount to match
the Standard Variable Rate. You must be sure that you
can budget for this in your monthly expenses.
Percentage advance
The size of a loan expressed as a percentage in relation
to the value of the property.
Policy exclusions
These are events, instances or possessions which are not
covered by an insurance policy.
Portability
A product feature that governs whether you can take the
loan with you if you move during the term.
Premium
In the context of insurance, a premium is the regular
sum you pay to keep your cover in force.
Prepayment penalty
Lenders can impose a penalty on a borrower who pays a
loan off before its expected end date.
Prime rate
The best interest rate available to a lender's most qualified
customers.
Principal
The amount of money that the borrower owes on a loan -
the amount on which interest is calculated.
Private Medical Insurance
This insurance which gives you access to private medical
care in the event of injury or illness. This will not
normally cover injuries or illnesses present prior to
accepting a policy. The main downside to most of these
plans is that you usually have to pay for hospital accommodation,
surgeon's fees, and drugs or medication upfront and then
receive a refund once your claim has been processed.
Protection products
A protection product shields you from exposure to the
financial hardship caused by events such as unemployment,
illness or injury. Some protection products are designed
to provide additional medical or financial benefits to
those that are available through the state system.
