First Time Buyer Help and guides

Accessibility

Accessibility is the degree to which a product, device, service, or environment is available to as many people as possible.

We are committed to ensuring that all our products and services are easily and equally accessible to all our members, enabling disabled people to conduct their business with us without difficulty.

Additional Borrowing

Sometimes called a further advance. This is the term used when an existing mortgage customer wishes to increase their mortgage borrowing, which can be done 6 months after the main mortgage loan has completed. Additional borrowing is often used to fund home improvements but can be taken for any purpose (except capital raising).

Add fee to loan

You can add the product fee to the loan and spread the cost over the remaining term of the mortgage.

Advice

A recommendation to enter into or vary the terms of an existing mortgage based on your individual needs and circumstances.

Agreement in principle

An initial document from your lender that gives you an idea of the amount they are likely to lend you. This certificate is not a guarantee, but is often needed when dealing with estate agents, so they have an idea of the size of your mortgage and if you can afford the property. Also known as a ‘lending decision’ or ‘decision in principle’.

Annual Equivalent Rate (AER)

AER stands for Annual Equivalent Rate and shows what the interest rate would be if interest was paid and compounded once a year.

Arrangement

This is a temporary agreement for those who have previously had payment difficulties, allowing you to pay more than the normal monthly payment. This allows you to pay arrears, or the shortfall that arose during a period when you were making concessionary payments, without incurring any charge for overpayments which might otherwise arise under the terms of an early repayment charge.

Bank of England

Responsible for issuing bank notes and maintaining a stable financial economy; the Government bank and also a lender for commercial banks.

Banker's draft (also known as a counter draft)

A cheque drawn on the bank or building society itself against either a cash deposit or money taken directly from your own bank account. A banker's draft is a secure way of receiving money from someone you don't know and where cash is inconvenient. Banker's drafts are commonly used for large purchases such as homes and cars.

Base rate

The interest rate set by the Bank of England Monetary Policy Committee which is used as a benchmark by lenders to set their own rates, which would generally be higher. This is reviewed each month throughout the year and can fluctuate (go up and down)

Base Mortgage Rate

A variable rate, guaranteed to be no more than 2 percent above the Bank of England base rate. You have the flexibility to make overpayments without incurring an early repayment charge.

The Base Mortgage Rate is not available for new mortgage deals and only applies to customers coming to the end of their deal where the product was reserved on or before the 29 April 2009.

If you choose to switch to a new Rafidain Bank mortgage product, the new product will currently revert onto our Standard Mortgage Rate (SMR) not the Base Mortgage Rate (BMR). The SMR has no upper limit or cap and you wouldn’t be able to revert to the BMR at a later date.

Bridging loan

A special type of loan which is taken out to overcome a short term cash flow problem, usually needed when you buy a property before you sell.

Borrow Back

A feature of a mortgage where any overpayments made may be withdrawn and borrowed back.  Any overpayments will have already reduced the balance outstanding, so when it is borrowed back the balance will increase. Interest will be charged on the higher balance and monthly payments will also increase. All requests to borrow back overpayments are subject to an eligibility assessment and current lending criteria. (Consent from all applicants is required.)

Not all of our products have the borrow back feature, for example Consumer Credit Act 1974 regulated accounts do not benefit from this feature.

All mortgages reserved on or before 3rd March 2010 include the option to borrow back, subject to eligibility. Any mortgages reserved after this date do not include this facility.

Buildings insurance

This is insurance cover for a building which pays out an insured amount, in the event of a claim, for an insurable event under the policy terms, such as fire, flood and wind. In most cases, buildings insurance is needed as part of a mortgage terms.

Buy-to-let mortgage

Specific mortgages that are aimed at those that buy property to rent out.

Capital

The amount of money you have actually borrowed, or still owe on your property (not including interest or other charges)

Capital Gains Tax

A Capital Gains Tax is a tax on the gain or profit you make when you sell, give away or otherwise dispose of something. It applies to assets that you own, such as shares or property. There's a tax-free allowance and some additional reliefs that may reduce your Capital Gains Tax bill. Sometimes you may have no tax to pay.

Capital and Interest mortgage

Where you pay off part of the ‘capital’ (amount borrowed) as well as interest each month (as opposed to ‘interest only’). This usually means that everything (capital and interest) will have been fully paid off by the end of the agreed term. Also known as a repayment mortgage

Collateral

Something of value that is given as a guarantee to the lender that you are able to pay back the loan; in the case of mortgages it is the house itself

Completion (mortgage)

The final stage of the sale when the ownership changes hands from the seller to the buyer.

Consent to Let

Permission from your mortgage provider will be required if you wish to let/rent out your property if your current mortgage is arranged on a residential basis.

Construction Type

The material used to build the wall of the insured property i.e. brick or other material.

Contract Variations

Varying the terms of an existing mortgage, for example reducing/extending the term or converting the repayment type.

Conveyancing

The process of transferring ownership from one person to another.

Credit rating

Credit rating is a rating system used by financial institutions, to judge an individual or company's creditworthiness. Depending on how many points the applicant gets when his/her personal details are run through the rating system, the financial institution will either accept or reject the risk. Financial institutions rely on computerised credit rating systems, and co-operate with each other in providing details of bad credit risks.

Credit reference agency

Credit reference agencies are organisations that gather information about people and businesses across the UK. This information comes from lenders such as banks, credit card companies and fraud prevention agencies, as well as records in the public domain.

Credit report

Credit report is a report issued by a credit agency usually for a small fee which highlights someone's past purchase behaviour and credit rating.

Credit scoring

Credit scoring is a way of assessing someone’s financial status. This is used to decide which credit facilities can be offered to customers.

Credit search

A credit search is when we carry out a search with a credit reference agency to help us understand more about your credit history. Each time a search is done it is noted on your credit record to let other organisations know that we have asked for information about you.

Daily Interest

Where your interest is calculated daily, which means you only pay interest on what you owe.

Debt Consolidation

Taking out one loan to pay off a number of other debts. You may be able to spread the loan over a longer period, which may reduce your monthly payment, but by increasing the term you may pay more interest overall.
It may be possible to increase your mortgage or personal loan to pay off debts, but it’s important to seek advice before doing this.
You need to think very carefully before securing other debts against your home as your home may be repossessed if you do not keep up repayments on your mortgage.

Direct Debit

A Direct Debit is an agreement between you and a company you want to pay on a regular basis. The agreement you make authorises the company to collect varying amounts from your account on a regular basis. Because you’re covered by the Direct Debit Guarantee, the company should always tell you what these amounts are - and when they’ll be collected.

Early Repayment Charges

If you repay a loan or a mortgage early or make an overpayment of more than your overpayment allowance, an early repayment charge may be payable.

Equity

The monetary difference between the current market value of a property and the mortgage loan held against that property.

Execution Only (Mortgages)

A mortgage transaction completed by a firm upon the specific instructions of the customer where the firm does not provide advice relating to the suitability of the mortgage transaction.

Exit fees (also known as redemption charges)

Charged by some lenders when you exit a credit agreement early.

First Time Buyer

A person buying their first property.

Fixed rate mortgage

A fixed rate mortgage provides the security of fixed mortgage repayments until the end of the deal period, no matter what happens to interest rates.

Flexible features 

Rafidain Bank offers the following flexible mortgage features as standard:

• Overpayments - This is when you pay more than your required minimum monthly payment and build up an overpayment reserve. This enables you to pay off your mortgage earlier, save interest, or make underpayments in the future (conditions apply).
• 'Switch and Fix' - Our tracker products offer the option to switch to a fixed rate within our 'Switch and Fix' range at any point in the deal period, without paying Early Repayment Charges on the tracker mortgage.
• Payment holidays - For mortgages reserved on or before 3rd March 2010 you can apply for a payment holiday of between three and twelve months if you have had a mortgage for more than one year and your mortgage is less than 80% of the value of your home at the end of your payment holiday (conditions apply). Any mortgages reserved after this date will no longer include this facility.
• Borrow back - For mortgages reserved on or before 3rd March 2010 you can apply to borrow back a lump sum from your overpayment reserve. Any mortgages reserved after this date will no longer include this facility.

Forces Help to Buy

This scheme allows eligible members of the Armed Forces to apply for an advance of pay up to 50% of their salary (to a limit of £25,000) which can be used towards their deposit. This is then paid back over a period of up to 10 years through their monthly salary. The pilot scheme is running for three years and is intended to encourage home ownership amongst eligible Armed Forces personnel.

Freehold

Where the sale includes the property and the land on which the property is built, and you have complete ownership of both for an unlimited time.

Guarantor

A person who guarantees you will pay the mortgage repayments. If you don’t pay they are liable to have to pay them themselves. Often parents or relatives are guarantors for first time home buyers to help them to afford a property.

Higher Lending Charge

Some lenders impose a Higher Lending Charge if you only have a small deposit. At Rafidain Bank, we don't.

Home Insurance

This is a type of property insurance that covers a private residence. It is an insurance policy that combines various personal insurance protections, which can include losses occurring to one's home, its contents, loss of use (additional living expenses), or loss of other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home or at the hands of the homeowner within the policy territory.

Premiums and payments are not linked to your mortgage and are payable to a separate policy.

Home Mover

A person selling one property and purchasing another property.

Interest Rates

Borrowing: This is the rate at which the lender calculates the interest they charge the borrower, expressed as a percentage.

Saving: This is the rate at which is paid to an investor for money that they have invested in a savings account.

Interest only mortgage

With interest only mortgages, your monthly payments only cover the interest on the amount you owe (so you're not reducing the outstanding sum each month).

You will need to put additional money aside to repay your mortgage at the end of the term, for example into an investment such as an endowment policy or ISA.

Land Registry

A Government department that records registered land in the UK (or ownership), along with details of that land such as mortgages or sales.

Legal Interests

Someone who has a financial interest in your property such as a mortgage provider.

Lending Into Retirement

When the mortgage term exceeds beyond the customers retirement age.

Liabilities

These are the debts you owe to creditors, which may include your mortgage, car loan, credit card debt, etc.

Loan to Value (LTV)

The loan to value represents the amount you are looking to borrow (or the remaining amount of your existing mortgage) as a percentage of the value of the property. For example, if a property is valued at £100,000 and you have a £80,000 loan, the LTV is 80% (80,000/100,000 x 100 = 80%).

Mortgage Payment Protection Insurance (MPPI)

This insurance can cover your mortgage payments if you can’t work because you’ve become unemployed, or can’t work because of an accident or illness.

New Build Property

The definition of a 'new build' means a property that has not been occupied within two years of being newly constructed, converted or refurbished.

No Extended tie-ins

You won't be tied-in to any extended Early Repayment Charges.

Notice of default

Legal notice given by the mortgage lender detailing a payment default (missed payments) by the borrower. This notice will also contain details of the steps the borrower must take to pay this off and by what date, otherwise the property may be taken over by the lender (see Claim for possession).

Offset mortgage

A type of mortgage that allows you to save on the interest you will pay on your mortgage debt by ‘offsetting’ any savings you (or perhaps family/friends) have linked to your mortgage. For example if you have a mortgage of £120,000 and put savings of £20,000 with your lender, in this type of mortgage you would only pay interest on £100,000.

Overpayments

This is when you pay more than your required minimum monthly payment and build up an overpayment reserve. This enables you to pay off your mortgage or personal loan earlier, or make underpayments in the future (conditions apply).

P.a.

'Per Annum', which means 'each year'.

Part and part mortgage

Where you choose to split your loan so that you repay part of it on an interest-only basis and part of it on a repayment (capital and interest) basis each month.

Payment holidays

For mortgages reserved on or before 3rd March 2010 you can apply for a payment holiday of between three and twelve months if:

• You’ve had your mortgage for more than one year, and
• Your mortgage is less than 80% of the value of your home at the end of your payment holiday (conditions apply).

If you want to find out more information or apply for a payment holiday please call us on 08457 30 20 10

Permanent Resident

To be considered a Permanent Resident of the UK, you must have Indefinite leave to remain in the UK and you should consider the UK as your home.

Porting

Most of the mortgage products available through Rafidain Bank are "portable" which means that they may be transferred from one property to another when you sell one property and buy another (terms and conditions apply).

Product Fee

A fee charged on some mortgages to secure a particular mortgage deal. For mortgages reserved on or before 3rd March 2010, this was known as a reservation fee.

Property Valuation

When you apply for a mortgage we may ask you to pay a valuation fee to cover the cost of valuing your property. The valuation fee is payable prior to valuation and is non-refundable if the valuation is carried out. The valuation is very basic and is carried out for our benefit. We strongly recommend that you have a more thorough survey undertaken, such as a homebuyers report.

This will tell you about the quality and condition of the house you want to buy. There is an additional fee for this service, which can be arranged through Rafidain Bank.

Quotation searches (indicative searches)

Information provided by a lender in response to a customer who wishes to know the likely cost of borrowing a specific amount on one or more risk-priced products.  An indicative quotation does not bind the customer to borrow or the lender to provide credit but it can be used to enable a customer to compare different products and costs.  Any credit search undertaken to provide the indicative quotation is not registered as a full application search at Credit Reference Agencies.

Redemption Charge

If you enter into a new mortgage with Rafidain Bank and subsequently repay your mortgage more than ten years before the natural term, you will pay a charge (currently £90) unless you are taking a new Rafidain Bank mortgage at the same time.

Remortgage

When you move your mortgage to another lender (adding to or replacing your existing mortgage) without moving home. Usually people remortgage to save money by taking a better deal with another lender, and sometimes also to get cash for e.g. an extension, car or other purchase.

Repayment (capital & interest) mortgage

Each month you pay off part of the ‘capital’ (amount borrowed) as well as interest. This usually means that everything, capital and interest, will have been fully paid off by the end of the agreed term of the mortgage

Reservation Fee

A fee charged on some mortgages to secure a particular mortgage deal. For mortgages reserved on or before 3rd March 2010, this was known as a reservation fee.

Repossessed

This is where a property is ‘taken back’ by the lender if the borrower fails to make the mortgage repayments. The property is then sold so the lender can get their money back. Always let them know as soon as possible if you are struggling with repayments.

Standard Mortgage Rate

A variable rate, which is not subject to any upper limit or a cap and has the flexibility to make overpayments without incurring an early repayment charge.

The Standard Mortgage Rate is not available for new mortgage deals and only applies to customers coming to the end of their deal where the product was reserved on or after the 30 April 2009. The Standard Mortgage Rate is not available for new mortgage deals and only applies to customers coming to the end of their deal where the product was reserved on or after the 30 April 2009.

Standing Order

This is a regular payment arrangement you have set up with your current account provider to make a payment or transfer to someone.

Survey (mortgage)

An inspection of the property by a qualified surveyor carried out before buying a property. (Structural Survey also known as ‘building survey’.)

Switching

When a customer switches from one product to another with the same provider, i.e. current account types, or mortgage products.

Switch and Fix

Our tracker products offer the option to switch to a fixed rate within our 'Switch and Fix' range at any point in the deal period, without paying Early Repayment Charges on the tracker mortgage.

Telegraphic Transfer fee

Also known as a CHAPS transfer, this term is used to refer to sending funds from one bank to another electronically. There is usually a fee involved.

Telephone Banking

As the name suggests, this is banking over the phone. You can get details of your balance, pay bills, or report lost or stolen cards.

Title Deeds

The documents held at the Land Registry that prove legal ownership of a property and all other dealings with that land; England and Wales, Scotland and Northern Ireland all have their own Land Registries.

Tracker Floor

Tracker mortgages often have a lower limit called a tracker floor or a collar. This means that if the Bank rate falls past this point, any cut will not be passed on to customers.

Tracker Rate Mortgage

With a tracker mortgage, the interest rate you are charged tracks the Bank of England's (BoE) base rate up and down by an agreed percentage.

Thus your payments will go up and down in line with the rate changes, except where the BoE base rate goes below the tracker floor.

Underpayments

By making overpayments to your mortgage account, you can improve your flexibility when it comes to underpaying in the future. Any overpayments you make during each calendar year, within your product’s annual overpayment allowance, will contribute to and build up an overpayment reserve. For example, if you have an overpayment allowance of £10,000 over the course of a year and make a £1,000 overpayment in one month, you can use the £1,000 to pay reduced monthly payments at any time up to the value of the credit balance you have built up, provided all of your accounts are up to date. So if you find you want some flexibility with your monthly payments for a few months, your overpayment reserve can cover your monthly payments, or allow you to ‘underpay’ to reduce your monthly mortgage payment.

Valuation fee

The charge for obtaining a valuation report of a property, also known as a valuation cost. Usually the fee increases with the value of the property.

Variable Rate mortgage

This is where the interest rate offered by the provider varies and can move up and down with market fluctuations

Vendor

Another word for the person selling the property.