Jargon Buster
Payment cap
A legal limit on the amount a monthly payment can increase
on an adjustable rate mortgage.
Payment default
This results when you are unable or simply unwilling to
meet your mortgage repayments. If you default on your payments,
the lender is ultimately 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.
Pension mortgage
A type of interest-only mortgage where your mortgage payments
are combined with payments into your personal pension fund.
This is designed to mature on your retirement, so the mortgage
loan term must end between the ages of 50 and 75 unless
the borrower is in an industry where the Inland Revenue
permits earlier retirement. The pension also needs to provide
you with an income during retirement, so only twenty five
percent of the pension fund can be taken as a lump sum to
pay of your mortgage.
Pension plan
An investment plan which can provide a lump sum on and an
income after retirement. A pension plan is sometimes used
as a way of providing a lump sum to repay the capital of
an interest only mortgage.
Percentage advance
The size of mortgage expressed as a percentage in relation
to the value of the property.
Personal pension
A structured personal savings and investment plan to provide
for your financial needs after you retire. You can use some
or all of the proceeds from a personal pension to pay off
an interest-only mortgage. You will need to arrange life
assurance separately to a personal pension.
Personal search
This is a manual search by a conveyancer or some other specialist,
who manually undertakes the same activities as in a local
search. These can be completed in a matter of days rather
than weeks or months, though they do end up being up to
fifty pounds more expensive.
Policy excess
The amount you will have to pay when you make a claim. For
example, this may be the first £100 of a £1000 claim for
damage caused by a fire.
Policy exclusions
These are events, instances or possessions which are not
covered by your household or other insurance policy. This
can be confusing as the main policy may seem to imply that
such events, instances or possessions are covered only to
excluded in the small print of the policy. Moral: Read the
small print.
Policy schedule
A policy that details how much cover you have (the sum insured),
the discount you qualify for (if any), and the premiums
you have to pay. With some policies you may get a new schedule
when you renew the policy or whenever you want to change
your policy.
Portability
A product feature that governs whether you can take the
mortgage with you if you move during the introductory offer
period and beyond. This saves you having to pay off the
loan and take out a new one.
Portable mortgage
The mortgage can be transferred from one property to another
without incurring penalties.
Possession
When a buyer signs the papers and receives the keys to the
house, they officially take possession.
Possessory title
The description given by the Land Registry to the title
or ownership of a property where the registry is not entirely
satisfied as to the vendor's ownership of the property due
to a discrepancy. It is satisfied only that the person is
lawfully in possession of the property, as opposed to title
absolute and good leasehold title.
Pre-approval
Where a potential home buyer attempts to secure a guaranteed
mortgage approval before making an offer on a house.
Pre-approval letter
A letter from a lender that informs a seller about
the amount of money that a potential buyer can obtain.
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.
Prequalification
A process by which a potential home buyer qualifies for
a home mortgage before making an offer on a house. A lending
institution agrees to make a loan in the specified amount
to the person it has prequalified.
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 mortgage
- 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.
Private sale
The sale of a property without the use of an estate agent.
Private treaty
The sale of property by private treaty is the most common
method employed by estate agents and involves preparing
descriptive details of the property and quoting a definitive
asking price. Details can then be viewed by potential buyers
and viewings arranged.
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.
