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Glossary

To find a glossary definition, please click the first letter of the word in the list below.

A

Accessories

The extra bits that help individualise your vehicle. These can be added when your car is initially ordered, or at any time in its life. Check your insurance quote carefully to see what level of accessory cover it includes or if any of the accessories you've added fall under the modifications, which might mean you require extra cover.

Additional Living Expense

Should extensive work need carrying out as the result of a claim, additional living expenses may be incurred by you and your family.

Administration fee

An admin fee is a charge for setting up a loan from a lender.

Adverse credit

If you fall behind with any loan or other credit payments, even utility bills and especially council tax (if you get a court judgment), you could find you attract adverse credit entries on your credit report. You can view your credit report online now using CreditExpert. It's a good idea to do this even if you are confident you're up to date with all your bills and payments, as you'll be able to see if there is any out of date information and even spot potential fraud if you've been the victim of identity fraud.

Annual Fee

Most credit card companies no longer charge an annual fee, but it's still worth looking out for just in case.

Annual Percentage Rate (APR)

Introduced with the Consumer Credit Act of 1974, this enables a clear comparison of interest payments on borrowing to be made. It takes into account any compulsory charges that might be otherwise hidden and must be displayed very clearly so that comparisons are simpler.

Annual mortgage statement

Every year you have your mortgage you should get a statement showing what you still owe and how much you have paid over the year.

Approval in principle

If you apply for a mortgage through the services of an intermediary they will usually seek an approval in principle from a mortgage lender to get an idea of the amount they may be prepared to lend you. It is not a guarantee, but an 'offer in principle', subject to certain criteria, such as employment and/or bank references, being satisfactory. It can help keep estate agents on-side!

Approved repairer

Insurance companies sometimes like to work with garages on their approved roster. This is not necessarily a bad thing, as it usually means the insurance company is confident of the quality of work and resources available at that repairer.

Arbitration Clause

In the event you make a claim, but can't agree with your insurance company, an arbitrator can appoint an independent assessor to give their view in an effort to help the claim get resolved.

Authorised firm

An authorised firm has permission from the Financial Services Authority (FSA) to carry out regulated activities, such as providing financial advice and information.

B

Balance transfer

You may often transfer any outstanding balance from other credit or store cards and lower your bills by paying 0% interest for up to 18 months.

Base rate

This is an interest rate set by the Bank of England.

Bridging loan

A loan designed to "tide you over" usually between the sale of one property and purchase of another. It can be a more expensive loan so is really only suitable for short term borrowing.

Buildings cover

These can cover a range of items such as patios, swimming pools, walls, fences, hedges, gates, drives, footpaths, drains, septic tanks, pipes, cables and more that all come under 'buildings'.

Business equipment

Computers, keyboards, printers, fax machines, photocopiers, telecoms equipment.

Buy-to-let mortgage

If you already have a mortgage on a property you live in, but have decided to invest in a house or flat you want to rent out, you'd typically require a buy-to-let mortgage to ensure you comply with mortgage lender conditions.

C

Calorific Value (CV)

The heat given by the specified quantity of gas is known as the calorific value.

Capital and Interest

Often known as a repayment mortgage, a capital and interest mortgage pays off both the interest and the outstanding amount of any loan at the same time.

Capped mortgage

A capped mortgage may initially appear to be more expensive, but it could offer protection against rising interest rates by providing a ceiling above which it's guaranteed the mortgage interest rate won't rise (for a specific period) regardless of what happens to the Bank of England base interest rate.

Cash advance

If you draw down cash using your credit card, this is known as a cash advance and often attracts interest charges from the moment you take the advance.

Cashback mortgage

This type of mortgage offers you either a fixed sum or a percentage of the overall amount you have borrowed back in cash when you draw down the mortgage.

Certificate of Motor Insurance

You need to look after this document as it proves you are covered and serves as a handy reminder of when your cover requires renewing.

Claim

When you need to put your insurance policy into action because of financial loss you have incurred due to something that your policy covers, you make a claim.

Conditions

Your insurance policy will have certain conditions attached. Make sure you're aware of these to keep your policy valid. It might require you to have certain locks for example.

Consolidated Billing

Some suppliers enable you to have both gas and electricity accounts on one bill and make one payment each month.

Consumption

The usage of gas or electricity in your home.

Contents

All the things in your home that aren't a fixed part of the fabric of the building, including cash, up to certain limits (check the individual insurance policy details).

Contract

The agreement between you and the supplier.

Court Judgments (CCJ)

You may receive a court judgment if you default on a loan, mortgage, or other financial obligation and you are taken to court. Court judgments appear on your credit report and will be taken into account by lenders, many will not look at you if you have a county court judgement – even if you pay it off later. A CCJ stays on your credit report for six years. Any company that successfully takes you to court for non payment make get a CCJ awarded against you, for example the DVLA has obtained large numbers recently as they crack down on non payment of car tax.

Credit history

Lenders usually check your credit history before making a decision about whether to take any application forward or not, and if so, at what interest rate. You can check what credit history Experian® holds about you by using the online service it provides: CreditExpert.

Credit Reference Agency

A credit reference agency, such as Experian®, records factual details about your financial behaviour and helps lenders assess how much of a risk lending to you might be. You can check what information is held on your own credit report by using CreditExpert - another Experian® service to help lower your bills.

Credit score

Most lenders now use a system called credit scoring which gives a numerical value to a whole range of items of information. That information might come from your credit report or from information you provide as part of your application. Lenders use different scores depending on their policy and will usually use a combination of scores and policy rules to decide whether to offer you credit and, in many cases, what to charge for it. You can get an idea of how the information on your credit report might impact on your score by accessing your score through CreditExpert.

D

Deposit

The deposit is the amount of capital you have available to contribute to a property purchase. For instance, if you have been offered a 90 per cent mortgage on a £100,000 property, you would require a 10 per cent deposit of £10,000 over and above any fees and taxes you will have to pay.

Depreciation

Not everything we buy retains its value. Things that go down in value are said to depreciate.

Direct Debit

You can pay by direct debit each month and the amount required to cover your bill will be taken direct from your bank account automatically.

Discounted mortgage

A mortgage offering a discount provides lower payments for a fixed period of, for instance, 12 months. However, after this period a discount mortgage will revert to its standard rate. A discount mortgage can help buyers get off to a good start in their new home by giving them a year or more of slightly lower payments.

E

Early repayment charge

If you originally took out a mortgage that offered an attractive cash back deal or was a fixed, capped or discount mortgage, you may find that early repayment (or redemption) of it involves a penalty charge. This is because the lender will need to recoup the costs of the discount or cash back incentive it provided you with when you took out the mortgage product. If you moved to a new property you can usually roll any existing mortgage over to that property but it does mean that you will need to take out any extra mortgage that you need with your existing mortgage provider.

Excess

Increasing the excess is a good way to get lower car insurance bills. However, in the event of a claim the amount of the excess is not covered and you will have to pay this part yourself.

Exclusions

Your insurance policy won't cover everything. Make sure you're aware of what it excludes.

F

Fixed rate

Another alternative to a capped interest rate mortgage or a cash back mortgage is a fixed interest rate mortgage. This offers the security of a fixed interest rate for a pre-determined period and protects you (the borrower) from sometimes unpredictable rises in mortgage interest rates.

Force Majeure

Something that happens beyond the control of supplier or customer.

FSA

The Financial Services Authority is the financial services regulator for the United Kingdom.

H

High risk items

High value or items that you take out of your home like jewellery as well as individual items of high value such as Valuable audio equipment, posh flat screen TVs, expensive laptops and so on can be considered to be high risk items and may require separate cover or to be individually mentioned on your policy.

Home entertainment equipment

Computer equipment, TVs, DVD player, games consoles, audio equipment, aerials, and satellite dishes.

I

Income multiples

Mortgage lenders usually state income multiples as a rough guide as to how much they might lend you. So for example they say they will lend 3 times your income if you apply alone or 2.5 times joint income if you apply with a partner. These days most lenders will also check affordability too so you should only ever see this as a rough guide. When they refer to income they usually will not include bonuses or overtime unless you can prove that it is guaranteed.

Interest

Lenders charge interest on the money they agree to lend you.

Interest rate

The interest rate is a way of describing the amount of interest you'll pay.

Interest-only mortgage

An interest only mortgage has you paying the interest charges of the loan each month. You will not reduce the loan amount itself, so at the end of a £100,000 25 year interest only mortgage, you would owe the lender £100,000. It will be your responsibility to have another repayment vehicle to do this.

Introductory rate

Credit card providers often offer introductory rates of interest to new customers. This can be 0% for balance transfers from other credit cards and can be for as long as 18 months. Compare 0% balance transfer credit cards now!

Isolation

If you never pay your gas or electricity bill and don't communicate with the supplier you may be cut off, which is sometimes referred to as isolation.

K

Key facts documents

All authorised lenders and brokers are required to explain their services and details about the mortgage or other financial products they are representing.

Kilowatt Hours (kWh)

A kilowatt hour is a unit of energy measurement.

L

Liability Insurance

It's important to have insurance not just to protect you from financial loss regarding your own property, it's important you're covered should anyone who is not in your immediate family make a claim against you for damage that you or your possessions have caused. For example if a tree from your garden falls down and damages another property.

Loan-to-value (LTV)

The loan to value is the percentage of a property value that a lender will provide. This is typically in the region of 90 per cent, but can be as much as 100 per cent or could be, in the event you require a buy-to-let mortgage, 75 per cent of the total property value. This means that a lender offering a maximum LTV of 90 per cent would lend you £90,000 to help you purchase a £100,000 property. However, if you are buying a very expensive property most lenders will offer a much lower LTV. This is because the price of high value properties can fluctuate a lot more.

M

Market value

In the event it needs to replace your car, your insurance company will refer to the value of your vehicle at the time of any claim by referring to industry guide prices and coming up with a market value.

Minimum payment

This is usually a small percentage of the outstanding balance of your credit card and you must pay this each month to keep within the terms of your card.

Money

Cash, cheques, postal orders, Premium Bonds, traveller’s cheques, any tickets for travel you might have, gift tokens and even phone cards come under cash these days.

Mortgage

A mortgage is a loan that's secured against your home. A secured loan may also be secured against your home in addition to the mortgage that will usually be called a second (or even third) mortgage.

Mortgage broker

A mortgage broker is a go-between between lenders and borrowers (that's you, the customer!). A mortgage broker who is independent should have knowledge of more products and services than just one particular lender would offer. They make their money by selling you other products such as insurance and they also get a fee from any lender that they get mortgages for.

Motor Proposal Confirmation

This details what cover you do and do not have. For instance, it might include details of any additional drivers who are covered and also detail exclusions, such as track day events.

N

Non status

A non status mortgage is designed for applicants who either have trouble providing proof of three years of income (for example they might not have been working that long) or who are self employed or possibly who have had payment problems before.

O

Office of Gas and Electricity Markets (Ofgem)

The Government regulator for Gas and Electricity Markets

P

Partner

You may want your partner insured to drive your vehicle. You don't have to be married, this could be your husband, wife, boyfriend or girlfriend.

Pedal cycle

Just to ensure people don't get confused between motorbikes and mountain bikes: if you have to pedal it, it's a pedal cycle!

Period of cover

The dates between which you're insured is known as the period of cover.

Policy

All the documents you receive from your insurance company are referred to as the policy. This is the document you will have to produce if asked e.g. to tax your car.

Premium

This is the cost of the insurance policy.

R

Remortgaging

If you have been on a special deal such as a fixed rate you will want to check what is available when that rate finishes or "runs off" as it is sometimes called. If you decide to move to another lender, without moving house you will be remortgaging. Sometimes you can also increase the size of your borrowing at the same, for example if you want to do some home improvements.

Renewable Energy

Green electricity is produced from non-fossil fuels, such as wind or solar power.

Repayment mortgage

A repayment mortgage pays off both the interest and the outstanding loan itself at the same time. So, at the start of the mortgage most of your monthly payments will be interest but over time a larger and larger proportion of your payments will be paying the actual mortgage, capital as it is called. By the time the mortgage is finished you should have repaid it all and own your home outright – lucky you!

Replacement Cost Coverage

When insuring possessions some policies will cover the full replacement cost rather than the actual value at the time they are lost. (see depreciation above)

S

Schedule

This document makes it clear exactly who and what is insured.

Secured loan

A secured loan is supported by a legal charge over an asset, usually a property, so that if you do not pay the lender can seize that asset to pay off what you owe, plus any charges that have accrued.

Secured mortgage

A secured mortgage is supported by a legal charge over an asset, usually a property, so that if you do not pay the lender can seize that asset to pay off what you owe, plus any charges that have accrued.

Settlement

In the event of a claim you and your insurance company have to agree on a settlement figure.

Stamp duty

To give it its full title: Stamp Duty Land Tax is a tax payable on property that costs over £125,000. The amount you pay is between one and four per cent depending on what price band the agreed purchase price falls into. Below £125,000 and you don't pay any stamp duty.

Standard variable rate mortgage

A standard variable rate mortgage (SVR) is a mortgage all lenders have, which they base their other mortgage products on.

Standing Charge

You may have to pay a standing charge even if you don't use any gas or electricity.

Supplier

The company that's licensed to supply electricity or gas.

T

Terms

Any specific conditions are detailed in your insurance policy terms document.

Tracker mortgage

A tracker mortgage tracks the Bank of England base interest rate, staying within a fraction of a percent of it, moving up and down as the base rate itself does.

Track day

Track days don't always involve high performance cars. Some classic car insurance policies might even include a few track day attendances. However, track day attendance generally requires further cover, so you'll need to notify your insurance company of any track days you plan to attend.

U

Underwriter

An underwriter is a company that agrees to provide the actual cover for the specific policy you're interested in.

Unit Price

The price you pay for energy that includes all costs.

V

Valuables

Jewellery, works of art, clocks, watches, photographic equipment, stamp collections and more all come under 'valuables' as far as your insurance company is concerned and may have to be mentioned separately.

Value Added Tax (VAT)

A tax charged for the supply of goods and services. All businesses must pay 20%. Domestic properties, businesses who use less than 33 units per day and charities pay VAT at 5%.