Definitions
Every term we use across the site, defined in full and in one place. Search it, filter it by subject, and see which pages each term is used on.
D22 terms
Debenture
Commercial
A document by which a company gives a lender security over its assets, usually a fixed charge over specific assets and a floating charge over changing assets such as stock.
Debenture: Full definition · used on 6 pages
HMRC guidance describes a debenture as giving the debenture holder, usually a bank or other lender, a charge over the debtor's assets as security for money lent. In development and commercial lending to a company, such as an SPV, a lender may take a debenture alongside its legal charge over the property and any guarantees it requires.
A charge created by a company must be registered at Companies House within 21 days of its creation, or it may be difficult to enforce if the company becomes insolvent. In company law the word has a wider meaning, covering bonds and other company securities.
Debt consolidation
Lending and affordability
Replacing several existing debts with one new loan. Secured on a home, it is usually a remortgage, a further advance or a second charge whose money repays credit cards, loans and similar debts.
Debt consolidation: Full definition · used on 24 pages
Debt consolidation replaces several debts, such as credit cards, personal loans, overdrafts and car finance, with one new loan. When the new loan is secured on a home, through a remortgage, a further advance or a second charge mortgage, the monthly payment usually falls, but the debt becomes secured on the property, and spreading it over a long term can raise the total interest paid.
On a home the borrower lives in, the borrowing is a regulated mortgage. An adviser recommending one whose main purpose is consolidation must take account of the cost of repaying a debt over a longer period, whether it is appropriate to secure unsecured debt and, for a borrower known to be in payment difficulties, whether an arrangement with creditors would be more appropriate (FCA Handbook: MCOB 4.7A.15R). Where the loan is affordable only once the debts are repaid, the lender may have to make sure they are, for example by paying the creditors directly (FCA Handbook: MCOB 11.6.16R).
Debt management plan (DMP)
Lending and affordability
An informal agreement, usually arranged through a debt adviser, to repay unsecured debts in affordable monthly amounts. It is not a formal insolvency, and lenders treat it as adverse credit.
Debt management plan (DMP): Full definition · used on 10 pages
A debt management plan covers unsecured debts only, such as credit cards, loans and overdrafts. Unless the agreement says otherwise, creditors can still ask for the full debt later, and some providers charge set-up or handling fees (GOV.UK: debt management plans). Under the industry reporting principles, accounts in a plan are marked on the credit file as being in a debt management plan, and arrears can continue to be counted against the original terms, so defaults can appear alongside one.
Mortgage lenders treat an active or recent plan as adverse credit, and those that accept an active plan count the monthly payment as a commitment. In Scotland the statutory equivalent is a debt payment programme under the Debt Arrangement Scheme (mygov.scot: Debt Arrangement Scheme). A formal, binding arrangement with creditors is an individual voluntary arrangement.
Debt relief order (DRO)
Regulation
A way for a person in England and Wales who owes less than £50,000 and has little spare income or assets to have their debts written off after 12 months without going bankrupt. It counts as adverse credit.
Debt relief order (DRO): Full definition · used on 6 pages
A debt relief order is made by the Insolvency Service on an application through an approved debt adviser. To qualify, the person must owe less than £50,000, have less than £75 a month of spare income, less than £2,000 of assets and no vehicle worth £4,000 or more, and must not own their home. There has been no fee since 6 April 2024. The order lasts 12 months, during which the creditors named in it cannot chase the debts, and the debts are then written off. While it runs the person must not borrow more than £500 without saying they have a DRO and cannot act as a company director.
A DRO stays on the credit file for six years and is listed on the Individual Insolvency Register until three months after it ends (GOV.UK: debt relief orders). Northern Ireland has its own scheme with similar limits. Lenders treat a DRO as adverse credit, and some group it with bankruptcy in their criteria.
Debt service coverage ratio (DSCR)
Lending and affordability
Income available to service debt divided by the required debt payments over the same period.
Debt service coverage ratio (DSCR): Full definition · used on 50 pages
Income available to service debt divided by the required debt payments over the same period.
Unlike an interest-only coverage measure, debt service may include scheduled capital repayments. The lender defines the income, costs and debt commitments included in its calculation.
Deducted interest
Bridging finance
Interest withheld from a loan advance to cover an agreed period, reducing the cash released to the borrower.
Deducted interest: Full definition · used on 23 pages
Interest withheld from a loan advance to cover an agreed period, reducing the cash released to the borrower.
Also called retained interest, it is different from interest added to the balance as it accrues. The agreement determines the interest calculation, treatment of early repayment and charges if the loan lasts longer than expected.
Default (credit file)
Lending and affordability
A record a lender files with the credit reference agencies when it considers that a credit agreement has broken down, usually after several months of missed payments. It stays on the credit file for six years from the default date, whether or not the debt is repaid.
Default (credit file): Full definition · used on 88 pages
Under the industry principles drawn up with the Information Commissioner's Office, a lender may file a default once an account is 3 months in arrears, and normally does so by the time it is 6 months in arrears, after giving at least 28 days' notice. Mortgages and other secured loans are an exception and may be defaulted later. A default can also follow a repossession that leaves a balance unpaid, or a debt included in a county court judgment, an IVA or a bankruptcy (Principles for the reporting of arrears, arrangements and defaults).
Paying the debt changes the record to settled, or partially settled where the creditor accepts less than the full balance, but the default still stays for six years from the original default date. Lenders treat a default as adverse credit and look at its age, size, status and type of account. A default on a mortgage or secured loan counts for much more than one on a phone or utility account.
Default interest
Fees and charges
A higher rate of interest that a loan agreement allows the lender to charge after a default, such as a missed payment or a failure to repay by the end date.
Default interest: Full definition · used on 6 pages
The loan agreement states when default interest starts, the rate and how it is calculated. On a bridging loan a common trigger is the term ending without repayment, so default interest adds to the redemption figure that a sale, a refinance or a re-bridge has to cover. Agreeing an extension or completing a refinance before the end date avoids it.
For a regulated mortgage, the FCA's rules on charges in MCOB 12 apply, including the rule that the contract must not impose excessive charges (FCA Handbook: MCOB 12.5). For unregulated lending the agreement governs, and a solicitor can say whether a default rate in it can be challenged.
Deferred period
Insurance
The time you must be off work through illness or injury before an income protection policy starts paying, chosen when the policy is set up.
Deferred period: Full definition · used on 8 pages
The deferred period is the time an income protection policyholder must be off work through illness or injury before the policy starts paying benefit. It is chosen when the policy is set up, from the options the insurer offers, such as 4, 8, 13, 26 or 52 weeks. A longer deferred period lowers the premium, because the insurer pays later.
Employees can match it to the date their employer's sick pay ends, so the benefit starts when pay stops; Statutory Sick Pay may then be the only pay left for the rest of its 28 weeks. The self-employed have no employer sick pay or Statutory Sick Pay, so their income stops on the first day of absence and the deferred period is the gap their savings must cover. It is not the same as the three waiting days that applied to Statutory Sick Pay before 6 April 2026. See also income protection insurance.
Designated defective housing
Valuation
Homes of a building type the government has designated as defective because of its design or construction, under the housing defects legislation that now forms Part XVI of the Housing Act 1985 in England and Wales.
Designated defective housing: Full definition · used on 4 pages
Part XVI lets the Secretary of State designate a class of buildings as defective by reason of their design or construction. The national designations made under the Housing Defects Act 1984 are mostly concrete house types, among them Airey, Cornish Unit, Orlit, Reema Hollow Panel, Unity and Butterley, Wates and Woolaway. BISF and Colt homes are not on the national list.
Lender policies differ: some accept a designated home only after a licensed repair, and some decline designated homes whether repaired or not. Scotland repealed its equivalent regime in 2018. See PRC and non-standard construction mortgages.
Desktop valuation
Valuation
A valuation prepared remotely by a valuer using property information and comparable evidence without a site inspection.
Desktop valuation: Full definition · used on 12 pages
A valuation prepared remotely by a valuer using property information and comparable evidence without a site inspection.
It differs from a purely automated estimate because a valuer reviews the evidence. Acceptance depends on the lender and property, and it is not a building survey.
Development exit finance
Development finance
Short-term finance used to refinance a development loan as a project reaches completion or the sales stage.
Development exit finance: Full definition · used on 23 pages
Short-term finance used to refinance a development loan as a project reaches completion or the sales stage.
It can provide time to sell or arrange longer-term borrowing. Eligibility depends on the project’s condition and proposed exit; it does not guarantee a lower rate or a successful sale.
Development finance
Development finance
Property finance used to fund a construction or conversion project, with borrowing structured around the project budget and progress.
Development finance: Full definition · used on 119 pages
Property finance used to fund a construction or conversion project, with borrowing structured around the project budget and progress.
Funds may be released in stages subject to monitoring and conditions. The lender considers costs, contingency, the expected completed value and how the facility will be repaid.
Direct Payment Scheme (Inheritance Tax)
Regulation
An HMRC arrangement under which banks, building societies and investment providers pay Inheritance Tax to HMRC directly from the deceased's accounts, before the grant of probate is issued.
Direct Payment Scheme (Inheritance Tax): Full definition · used on 1 page
Inheritance Tax usually has to be paid before the grant, while much of the deceased's money cannot be released until the grant is issued. The Direct Payment Scheme lets that money pay the tax. The personal representatives ask each bank, building society or investment provider, including National Savings and Investments, brokers and wealth managers, to recognise them as personal representatives, get an Inheritance Tax payment reference number from HMRC, send form IHT423 to each provider and send the IHT400 to HMRC. The provider then pays some or all of the tax.
In England and Wales HMRC then sends the code needed for the probate application; in Scotland and Northern Ireland it stamps and returns form C1 or IHT421. The scheme uses the deceased's own money rather than borrowing, but each provider handles it in its own way and some are not part of it. GOV.UK: pay from the deceased's accounts.
Director's loan account (DLA)
Lending and affordability
The record of money a director takes from their company that is not salary, dividends or expense repayments, and of money the director puts in or lends to it.
Director's loan account (DLA): Full definition · used on 3 pages
Any balance at the end of the financial year goes on the company's balance sheet. The account is overdrawn when the director owes the company and in credit when the company owes the director (GOV.UK: directors loans). A loan of more than £10,000 at any time in the year is treated as a benefit in kind, and an overdrawn balance not repaid within 9 months of the end of the accounting period leads to a corporation tax charge at the dividend upper rate for the tax year in which the loan was made (Corporation Tax Act 2010, section 455), which is 35.75% for loans made from 6 April 2026.
Mortgage lenders read the account from the company's accounts. Some treat an overdrawn balance as income the director has already taken and others as a debt, and a credit balance can support an application based on retained profit.
Discounted market sale
Residential
A home sold at a discount of at least 20% below local market value to buyers who meet eligibility rules, with provisions keeping the discount for every later eligible buyer. It is one of the types of affordable housing in national planning policy for England, secured through planning, for example by a section 106 agreement.
Discounted market sale: Full definition · used on 2 pages
National planning policy for England defines discounted market sales housing as housing sold at a discount of at least 20% below local market value, with eligibility set with regard to local incomes and local house prices, and provisions in place so that it remains at a discount for future eligible households (GOV.UK: National Planning Policy Framework glossary). The percentage is fixed for each development and applied to the market value at each sale, so the owner never holds the discount as equity.
The buyer owns the whole home and pays no rent, unlike shared ownership. Lenders that accept these homes lend on the discounted price and read the section 106 agreement, especially its mortgagee in possession clause. First Homes are a specific kind of discounted market sale housing with a minimum discount of 30%.
Distributable reserves
Commercial
A company's accumulated realised profits less its accumulated realised losses: the profits it may lawfully pay out to shareholders as dividends.
Distributable reserves: Full definition · used on 1 page
A company may only make a distribution, such as a dividend, out of profits available for the purpose. Those are its accumulated, realised profits, so far as not already distributed or capitalised, less its accumulated, realised losses, so far as not written off in a reduction or reorganisation of capital (Companies Act 2006, section 830). Whether a dividend is covered is judged on the company's last annual accounts, or on interim or initial accounts where the law allows (Companies Act 2006, section 836).
Distributable reserves build up as a company keeps retained profit year after year, and losses from earlier years reduce them. A company can therefore make a profit in its latest year and still have little or nothing it can pay out. Mortgage lenders that count a director's share of net profit may look at the reserves on the balance sheet, alongside the company's cash, before counting profit that was never paid out as dividends.
Dividend income
Lending and affordability
Payments a company makes to its shareholders out of its profits, which a lender can count as a director's income on the salary and dividends reading.
Dividend income: Full definition · used on 35 pages
A company may only pay a dividend out of profits available for distribution: its accumulated, realised profits less its accumulated, realised losses (Companies Act 2006, section 830). The directors declare it and the company records each payment on a dividend voucher. Dividends are not a business cost for corporation tax, so they come out of profit after tax.
For the 2026 to 2027 tax year the first £500 of a shareholder's dividends is covered by the dividend allowance, and dividends above it are taxed at 10.75%, 35.75% or 39.35% depending on the shareholder's income band, at the same rates across the UK (GOV.UK: tax on dividends). A lender reading salary and dividends counts the dividends paid in the tax year before personal tax, from the HMRC tax calculation. A lender reading share of net profit works from the company's profit instead, so it also counts retained profit that was never paid out.
Divorce settlement bridging
Bridging finance
Short-term property finance used to meet a financial settlement before an agreed sale or remortgage can complete.
Divorce settlement bridging: Full definition · used on 1 page
Short-term property finance used to meet a financial settlement before an agreed sale or remortgage can complete.
A settlement deadline can arrive before a sale or remortgage is ready. If a sole-name mortgage is the exit, the remaining borrower must be able to support the full bridge redemption figure.
Down valuation
Valuation
When the lender's valuer values a property below the agreed purchase price, so the loan-to-value rises or the loan offered falls.
Down valuation: Full definition · used on 26 pages
A lender lends against its own valuer's figure, not the price agreed with the seller. On an ordinary purchase lenders work from the lower of the price and the valuation, so a valuation below the price leaves a gap the buyer must fill with a larger deposit, a renegotiated price or a smaller loan.
A down valuation is different from a decline: the property is still acceptable security, but at the lower figure. See mortgage valuation.
Drawdown
Development finance
The release of some or all of the money available under a loan facility.
Drawdown: Full definition · used on 34 pages
The release of some or all of the money available under a loan facility.
A development facility may have several drawdowns tied to progress and monitoring. An ordinary mortgage may have one release at completion. Conditions, interest and any charges on undrawn funds depend on the agreement.
DSS tenant
Buy-to-let
An informal name for a tenant whose rent is paid wholly or partly by Housing Benefit or the housing element of Universal Credit. It comes from the Department of Social Security, which was replaced in 2001.
DSS tenant: Full definition · used on 13 pages
Universal Credit can include an amount towards housing costs, such as rent to a private landlord, and Housing Benefit is being replaced by Universal Credit. Lenders' buy-to-let and HMO criteria differ on whether they accept tenants who receive these benefits. See DSS HMO mortgages and social housing mortgages. GOV.UK: housing and Universal Credit.
E13 terms
Early repayment charge (ERC)
Fees and charges
A contractual charge that can apply when a borrower repays all or part of a mortgage before a specified date.
Early repayment charge (ERC): Full definition · used on 56 pages
A contractual charge that can apply when a borrower repays all or part of a mortgage before a specified date.
The offer states when it applies, how it is calculated and any overpayment allowance. The charge may be distinct from an administration or exit fee, so check the redemption figure for the intended repayment date.
A measure of a business's earnings before interest, tax, depreciation and amortisation are deducted, widely used in commercial lending to measure a trading business's performance.
Earnings before interest, tax, depreciation and amortisation (EBITDA): Full definition · used on 37 pages
Removing the non-cash charges for depreciation and amortisation moves the figure closer to the cash a business generates. HMRC notes it is frequently used in commercial loan agreements to measure a borrower's performance year on year. For a trading property such as a hotel, care home or pub, it can be the income figure behind the debt service coverage ratio and the going concern valuation. HMRC Corporate Finance Manual.
Electoral roll (electoral register)
Lending and affordability
The list of people registered to vote at each address. Credit reference agencies receive the full register from local councils, and lenders use it to confirm an applicant's name and address.
Electoral roll (electoral register): Full definition · used on 4 pages
Councils send the full electoral register to the credit reference agencies, which may use it to check applications for credit. Opting out of the open register, the version anyone can buy, does not remove a person from the full register (GOV.UK: the open register). The ICO says that someone entitled to vote but not registered may find it difficult to get credit.
Experian says a new registration should appear on its report within 30 days, except that one made during the annual canvass, which it says usually runs from August to November, shows from 1 December (Experian: the electoral roll and your credit score). In Northern Ireland registration is with the Electoral Office for Northern Ireland and there is no annual canvass. A person who is not eligible to register can add a statement to their credit file explaining why, and lenders can then confirm the address in other ways.
Energy Performance Certificate (EPC)
Regulation
A certificate that rates a property's energy efficiency from A (best) to G (worst). One is needed when a property is built, sold or rented, and it is valid for ten years.
Energy Performance Certificate (EPC): Full definition · used on 17 pages
In England and Wales a domestic private rented property must meet a minimum EPC rating set by regulations before it can be let, unless a valid exemption is registered; GOV.UK's landlord guidance gives the standard in force. The government has said it aims to raise the standard, which would need new regulations.
Equity
Lending and affordability
The value of a property less the outstanding debt secured against it.
Equity: Full definition · used on 176 pages
The value of a property less the outstanding debt secured against it.
Equity changes as the property value or secured borrowing changes. It is not the same as cash available to withdraw: lending limits, costs and repayment requirements affect what can be released. Negative equity means secured debt exceeds the property value.
Equity release
Residential
The name for lifetime mortgages and home reversion plans, which let homeowners in later life take money from their home without monthly repayments being required.
Equity release: Full definition · used on 9 pages
Equity release covers two products. A lifetime mortgage is a loan secured on the home that is usually not repaid in full until the last borrower dies or moves permanently into long-term care. A home reversion plan sells part or all of the home to a provider, which receives its share when the home is sold. Both are regulated by the Financial Conduct Authority, which sets advice and disclosure rules for them in MCOB 8 and MCOB 9, and advising on either needs an appropriate equity release qualification.
The Equity Release Council, the trade body for the sector, sets product standards for plans that meet them, including a no negative equity guarantee and the requirement for independent legal advice. A retirement interest-only mortgage is a later-life mortgage too, but it is assessed under the standard mortgage rules rather than as equity release.
EWS1 form
Valuation
A standard form on which a suitably qualified expert confirms that the external walls of a residential building have been assessed, so valuers and lenders can judge whether cladding or other wall materials affect its value. It is not a life safety certificate.
EWS1 form: Full definition · used on 8 pages
A signed form covers the whole building for five years. RICS guidance says not every building needs one: whether a valuer asks for it depends on criteria such as the building's height and the type and extent of cladding, and some lenders accept other evidence, such as a fire risk appraisal of the external wall (FRAEW). RICS expects the need for EWS1 forms to fall away as those appraisals are completed.
See mortgages for leasehold flats and the Building Safety Act 2022. RICS: EWS FAQs.
Ex-local authority mortgage
Residential
A mortgage on a property built by a council or housing association and since sold into private ownership. Lender appetite turns on construction type, the balance of private ownership in the block, and access.
Ex-local authority mortgage: Full definition · used on 16 pages
The key difference from a standard mortgage application is not the borrower’s circumstances but the property itself. Lenders want reassurance that the building is of standard construction, that the freeholder (often still the local council) manages the block appropriately, and that enough of the block is now privately owned rather than retained as council or housing association stock.
Lenders weigh these points differently, so a flat one lender declines can be acceptable to another; the lender's criteria are checked against the specific building and block.
Exchange of contracts
Residential
The point in a property purchase in England and Wales when the buyer and seller swap signed contracts, so the sale becomes legally binding and the completion date is fixed. In Scotland the equivalent is the conclusion of missives.
Exchange of contracts: Full definition · used on 51 pages
Before exchange, an offer to buy a home in England and Wales is not legally binding, and either side can withdraw. At exchange each side's conveyancer sends the other the signed contract, and from then on neither side can usually pull out without paying compensation (GOV.UK: buying a home, transferring ownership). The contract fixes the completion date, when the rest of the price is paid and ownership passes. Under the Law Society's Standard Conditions of Sale the buyer pays a deposit of 10% of the price at exchange unless the contract says otherwise, and the property is at the buyer's risk from the date of the contract.
A lender's mortgage offer is not part of the purchase contract, so a buyer whose offer is withdrawn after exchange is still bound to complete. In Scotland the binding point is the conclusion of missives; in Northern Ireland, as in England and Wales, it is the exchange of contracts.
Executive income protection
Insurance
Income protection that a company takes out and pays for to cover a director or employee, with the benefit paid to the company and passed on through payroll.
Executive income protection: Full definition · used on 2 pages
Executive income protection is an income protection policy that a company takes out and pays for to cover a director or employee. The company owns the policy and pays the premium, and whether the premium is deductible for the company depends on HMRC's test of whether the insurance is taken out for the purposes of the trade. If the insured person cannot work because of illness or injury, the insurer pays the benefit to the company after the deferred period, and the company pays it to the person through PAYE, where it is taxed as earnings (HMRC manual: EIM06410).
It differs from a personal income protection policy, whose benefit is free of income tax, and from key person insurance, which pays the company for the loss of profits that a key person's absence or death causes.
Exit fee
Fees and charges
A fee a lender charges when a loan is repaid or the borrower moves to another lender. It is separate from any early repayment charge.
Exit fee: Full definition · used on 26 pages
On a residential mortgage it is usually an administration fee for closing the account; the regulator calls it a mortgage exit administration fee and expects it to reflect the administrative cost. On bridging and development loans an exit fee can instead be a percentage of the loan or of the gross development value, set out in the facility agreement. Compare it with the early repayment charge and other fees when weighing the total cost.
Exit strategy
Bridging finance
The planned source of funds used to repay a loan, particularly a short-term facility.
Exit strategy: Full definition · used on 122 pages
An exit strategy is the planned way a loan, most often a short-term loan such as a bridging loan, will be repaid. The usual exits are a sale of the property or a remortgage onto a longer-term mortgage, and money from another identifiable source, such as the sale of another asset, can also repay it. A lender assesses the evidence for the exit, its timing and whether it will cover everything owed at the end of the term.
A refinance exit has to meet the future lender's criteria, including its valuation, its rent or income test and any six-month rule on ownership, so check it with that lender before the bridge completes. For a regulated bridging loan, the FCA requires the lender to have evidence of a clearly understood and credible repayment strategy, and its guidance says a lender should not accept a refinance exit unless it is reasonably satisfied that a mainstream lender will be willing to lend (FCA Handbook, MCOB 11.6.41R and 11.6.54G).
Expat mortgage
Specialist lending
A specialist UK mortgage for British nationals living and working overseas, underwritten to accommodate overseas income, foreign currency earnings and non-UK residency.
Expat mortgage: Full definition · used on 123 pages
An expat mortgage is a specialist UK mortgage designed for British nationals who are living and working overseas but wish to buy, refinance, or retain property in the United Kingdom. These products exist because most standard UK residential and buy-to-let lenders restrict lending to borrowers who are resident and paid in the UK.
Expat mortgages are underwritten to accommodate overseas income, foreign currency earnings, international tax arrangements, and non-UK residency. As a result, they are typically provided by specialist lenders or private banks and involve enhanced due diligence, particularly around income verification and AML compliance. Deposits are often higher and pricing can be slightly above equivalent UK resident products to reflect the additional risk.
An expat mortgage can be used across a broad range of property and asset types. This includes standard residential property, buy-to-let, houses in multiple occupation (HMO), serviced accommodation (SA), holiday lets, semi-commercial property, and fully commercial assets. Lender appetite will vary depending on the asset class, location, tenancy structure, and the borrower’s country of residence.
Expat mortgages can be arranged in a personal name or via a UK limited company, depending on the borrower’s objectives and lender policy. Some lenders will also consider more complex ownership structures, including portfolio landlords and mixed-use investments, where the underlying income and risk profile is acceptable.
An expat mortgage is a flexible, specialist lending solution that enables UK nationals living overseas to invest in, own, or refinance UK property across residential, investment, and commercial sectors where standard mortgage products are not suitable.
F15 terms
Family assisted mortgage
Residential
A mortgage where a family member's savings or property help the buyer borrow, without the helper taking a share of the property.
Family assisted mortgage: Full definition · used on 25 pages
Family assistance takes several forms: savings held by the lender as security for a period, a charge over the helper's own property, a guarantee, a gifted deposit, or income used for affordability under a joint borrower sole proprietor arrangement.
In each case the helper stays off the title, so the purchase does not attract the additional dwelling surcharge on their account.
Where savings are held as security they are released once the loan falls below an agreed loan-to-value. Interest paid on them, where any is paid, is taxable in the helper's hands.
Family buy to let
Buy-to-let
One of the two kinds of regulated buy to let, alongside consumer buy to let: a mortgage on a home that a close relative of the borrower, such as a parent or child, will live in. Because a related person lives there it is a regulated mortgage, assessed on the borrower's income rather than the rent.
Family buy to let: Full definition · used on 12 pages
Family buy to let covers buying or remortgaging a property that the borrower's spouse, civil partner or partner, parent, brother, sister, child, grandparent or grandchild will live in. Each of them is a related person, so the buy to let exclusions in the Regulated Activities Order do not apply and the loan is a regulated mortgage contract (legislation.gov.uk: Regulated Activities Order, article 61A). It is one of the two kinds of regulated buy to let; the other is consumer buy to let, for a borrower who lets to a tenant but not as a business.
The lender assesses affordability on the borrower's income and committed expenditure under MCOB, including the borrower's own mortgage, rather than with a rental stress test. Lenders differ on whether the relative must pay rent and on whether they count it, and not every buy to let lender offers family buy to let. The mortgage counts against the borrower's own affordability, and a buyer who already owns a home usually pays the higher rates of Stamp Duty Land Tax in England and Northern Ireland, the higher rates of Land Transaction Tax in Wales or the Additional Dwelling Supplement in Scotland.
Family income benefit
Insurance
A term life insurance policy that, if the person insured dies during the term, pays a regular income from the claim until the policy's end date instead of a lump sum.
Family income benefit: Full definition · used on 9 pages
Family income benefit is a form of term life insurance. The policyholder chooses an income, usually monthly, and a term, often running until the youngest child is expected to be independent. If the person insured dies during the term, the insurer pays that income from the claim until the end of the term, so a claim early in the term pays for many years and a claim late in the term for few. Because the number of payments left falls each year, the most the insurer could pay falls too. The income can be level or rise each year with inflation, and some policies add critical illness cover.
HMRC treats the payments as a series of capital sums paid on death rather than as income (HMRC Insurance Policyholder Taxation Manual: IPTM8080). A policy written in trust pays the trustees for the beneficiaries, while one that pays the estate can count towards it for Inheritance Tax. It is a pure protection policy with no cash-in value, and advising on and arranging it is insurance distribution regulated by the FCA under ICOBS.
Finance cost restriction (Section 24)
Buy-to-let
The rule that stops individual landlords of residential property deducting mortgage interest and other finance costs from rental income, giving a basic rate tax reduction instead.
Finance cost restriction (Section 24): Full definition · used on 9 pages
Since 6 April 2020, an individual who lets residential property cannot deduct mortgage interest and other finance costs, such as fees for taking out or repaying a mortgage, in working out the rental profit. Instead the landlord gets a reduction in their Income Tax bill equal to 20% of the lowest of the finance costs, the property profit and their income above the personal allowance, and unused costs carry forward (GOV.UK: restricting finance cost relief for individual landlords). It is often called Section 24, after the section of the Finance (No. 2) Act 2015 that introduced it.
A higher-rate taxpayer therefore gets relief at less than their own rate, which is why buy to let lenders commonly ask higher-rate taxpayers for more rent cover under the interest coverage ratio test. Companies are not affected and deduct interest in working out their profit for Corporation Tax (HMRC Property Income Manual: PIM2054). From 2027 to 2028 the reduction is due to be given at the 22% property basic rate.
Financial association
Lending and affordability
A link between two people's credit files, created when they share a joint account or apply for credit together. A lender looking at one file can see financial information in the other person's name.
Financial association: Full definition · used on 8 pages
A joint account, a joint loan or mortgage, or a joint application for credit links the two people's files at the credit reference agencies. A lender searching one file can then see financial information in the associate's name, so one person's adverse credit can affect the other's application. The ICO says you should not be linked to anyone just because you live at the same address (ICO: credit).
The link stays for as long as the agencies believe the two people are financially connected. Once the joint account has closed and finances are separate, either person can write to each agency asking for a disassociation, sometimes called a notice of disassociation, so the files are no longer linked. Each agency holds its own record, so the request goes to each one.
Financial Conduct Authority (FCA)
Regulation
The independent UK regulator of the conduct of financial services firms. Firms, including mortgage lenders and brokers, must be authorised by it to carry on regulated activities.
Financial Conduct Authority (FCA): Full definition · used on 783 pages
The FCA's role and objectives are set mainly by the Financial Services and Markets Act 2000. It authorises firms, supervises them after authorisation and writes the rules they follow; its rules for regulated mortgage business are in MCOB. It took over from the Financial Services Authority in 2013.
Not all property finance is FCA-regulated. A loan is a regulated mortgage only where the statutory test is met, broadly lending secured on a home the borrower or a close relative lives in. Lending to a company or investor for buy-to-let, commercial or development purposes is generally outside it, and consumer buy-to-let has its own framework. FCA: about the FCA.
Financial Ombudsman Service (FOS)
Regulation
The free, independent service set up under the Financial Services and Markets Act 2000 to settle complaints between financial businesses and their customers.
Financial Ombudsman Service (FOS): Full definition · used on 9 pages
The Financial Ombudsman Service was set up by Parliament in 2001 as a statutory dispute resolution scheme under the Financial Services and Markets Act 2000. It is free for consumers and offers an informal alternative to the courts for complaints about financial businesses, including mortgage lenders and brokers (Financial Ombudsman Service: who we are).
A complaint goes to the business first. For most complaints the business has up to eight weeks to respond, and the customer then has six months from the date of the final response to bring the complaint to the ombudsman. If the ombudsman decides a complaint and the customer accepts the decision, it is binding on the business and the customer and final (Financial Services and Markets Act 2000, section 228). The ombudsman settles individual disputes; the rules that firms follow are set by the Financial Conduct Authority.
First Homes
Residential
An England-only scheme under which new homes are sold to eligible first-time buyers at a discount of at least 30% to market value, with the same percentage discount passed on to every later buyer.
First Homes: Full definition · used on 14 pages
A restriction on the title keeps the discount, as a percentage of market value at the time, with the home at each sale, so the owner cannot keep the discount as equity. Whether First Homes are offered depends on local delivery. Scotland's First Homes Fund is a separate shared equity scheme. GOV.UK: First Homes.
First Homes Fund (Scotland)
Residential
A Scottish Government shared equity scheme, open since 24 June 2026, that gives first-time buyers up to £10,000 towards a home worth up to £300,000 in return for an equity stake in the home.
First Homes Fund (Scotland): Full definition · used on 4 pages
The stake is the contribution as a percentage of the home's value or price, whichever is lower, so £10,000 towards a £200,000 home is a 5% stake. No interest or monthly payment is charged on it. The buyer can buy back the stake in steps of 5% or more, and on a sale the government receives its percentage of the sale price or the current value, whichever is higher.
The buyer needs a repayment mortgage covering at least 25% of the price, applies after the offer is accepted, and must live in the home as their only residence. The fund cannot be combined with LIFT or another scheme that helps a buyer purchase a home (mygov.scot: First Homes Fund). The scheme is separate from England's First Homes and from the earlier First Home Fund, which ran from December 2019 to March 2022 (gov.scot: First Homes Fund, how to apply).
Fixed rate mortgage
Residential
A mortgage whose interest rate is held for an agreed period, commonly two or five years, after which it reverts to the lender's standard variable rate.
Fixed rate mortgage: Full definition · used on 87 pages
A fixed rate holds the interest rate, and so the payment, for a set period regardless of what Bank Rate does. Fixed rates are priced off the swap market rather than off Bank Rate directly.
Leaving before the end of the fixed period usually triggers an early repayment charge, commonly stepping down each year of the term.
For a regulated mortgage, MCOB 11.6.18R requires the lender to consider likely future interest rates over at least five years when assessing affordability, unless the rate is fixed for five years or more. That can mean a larger loan on a five-year fix than the same borrower would be offered on a shorter fix.
Fixed term contract mortgage
Specialist lending
A mortgage for someone employed on a contract with an end date, assessed as employment rather than self-employment where enough of the term remains or a renewal history exists.
Fixed term contract mortgage: Full definition · used on 13 pages
A fixed term contract is employment, and most lenders treat it as such provided either a minimum period remains on the current contract or the borrower can show a history of renewals with the same employer.
This is distinct from day-rate contracting, which is assessed on the annualised rate rather than on a salary.
Probation, a first contract with no renewal history, and gaps between contracts are the points on which lender policy differs most.
Flat above commercial premises
Residential
A self-contained home in a building where another part, usually the ground floor, is used by a shop, office, takeaway, pub or other business. Lenders treat the business below as part of the property's risk.
Flat above commercial premises: Full definition · used on 9 pages
A flat above commercial premises is a home in a building where another part, usually the ground floor, is used for a business such as a shop, office, cafe, takeaway or pub. The flat can be bought and mortgaged on its own, on a residential mortgage or a buy to let mortgage, or with the commercial unit as one building on a semi-commercial mortgage.
Lenders set their own criteria for these flats. They look at what the business is and its trading hours, cooking and extraction, how the flat is reached and whether it has its own entrance, the fire separation between the two uses, the lease, and the valuer's view of saleability. In England a change of use within Class E, such as a shop becoming a cafe, needs no planning permission, while a hot food takeaway or a pub is sui generis and a change to it generally needs permission (legislation.gov.uk: Use Classes Order, Schedule 2).
Foreign national mortgage
Specialist lending
A UK mortgage application by a borrower who is not a UK national.
Foreign national mortgage: Full definition · used on 36 pages
A UK mortgage application by a borrower who is not a UK national.
Eligibility depends on the lender’s criteria for residency, immigration status, income and the property. Nationality alone does not determine approval, and overseas residents may need different products from UK residents.
Full repairing and insuring (FRI) lease
Commercial
A lease under which the tenant is responsible for all repairs and for insuring the property, so those costs fall on the tenant rather than the landlord.
Full repairing and insuring (FRI) lease: Full definition · used on 6 pages
The term comes up in commercial, social housing and care leases. Where a lender finances let property, the lease terms, including who repairs and insures, form part of the income assessment. Valuation Office Agency glossary (GOV.UK).
Further advance
Residential
Extra borrowing from the lender that already holds the mortgage, secured on the same property and usually added as a separate part of the mortgage with its own rate and term.
Further advance: Full definition · used on 33 pages
A further advance increases the borrowing under an existing mortgage without changing lender. The lender assesses it much as it would a new loan: it checks affordability on the total borrowing, may revalue the property and decides whether it accepts the purpose, such as home improvements. On a home, a further advance varies a regulated mortgage contract by adding borrowing, so the FCA's affordability rules apply to it, unlike a product switch with no extra borrowing (FCA Handbook: MCOB 11.6).
Lenders usually set the extra borrowing up as a separate part, or sub-account, with its own product, rate and term, so the existing deal carries on and no early repayment charge arises on it. The alternatives are a remortgage of the whole balance to a new lender and a second charge mortgage from a different lender; a product transfer changes the deal without borrowing more.
G10 terms
Gift with reservation of benefit
Regulation
A gift the giver goes on benefiting from, such as a home given or sold cheaply to a child that the parent still lives in. While the benefit continues, Inheritance Tax treats the gifted property as still part of the giver's estate.
Gift with reservation of benefit: Full definition · used on 3 pages
Under section 102 of the Finance Act 1986, property given away is subject to a reservation while the person receiving it has not taken possession and enjoyment of it, or the giver is not excluded, or virtually excluded, from benefiting from it. If the reservation still exists when the giver dies, the property is treated as part of their estate. If it ends earlier, for example because the giver moves out, the giver is treated as making a potentially exempt transfer at that time, and the seven years run from then (Finance Act 1986, section 102). The usual example is a parent who gives a home to a child and carries on living there.
A sale below value is partly a gift. HMRC treats the undervalue as the property given, so if the seller in a concessionary purchase keeps living in the home, that share of its value can stay in their estate for Inheritance Tax (HMRC: IHTM14316). Occupation paid for at full value, such as a full market rent, is not treated as a reservation.
Gifted deposit
Residential
Money given towards a buyer's deposit by someone else, such as a parent, as a gift rather than a loan. Lenders ask for a declaration from the giver, and the conveyancer reports the gift to the lender where the lender's instructions require it.
Gifted deposit: Full definition · used on 30 pages
A gifted deposit is money given towards a buyer's deposit by a parent, another relative or, with some lenders, a friend, on terms that it is not repaid, carries no interest and gives the giver no share in the property. Lenders ask the giver to sign a gift letter or the lender's own form saying so. Money that has to be repaid is a loan, which a lender may refuse as the deposit or count as a commitment. The conveyancer, who usually acts for the lender as well, tells the lender about the gift where the lender's instructions require it.
The conveyancer also checks the giver's identity and where the money came from under the anti-money laundering rules. A giver who will live in the home usually signs an occupier's waiver putting any claim behind the lender's charge. For the giver, the gift is normally a potentially exempt transfer for Inheritance Tax, exempt if they live for seven years. See family assisted mortgages.
Going concern valuation
Valuation
A valuation of a trading property, such as a hotel, pub, care home or guest house, as an operating business with its fittings, licences and trading potential, rather than as an empty building.
Going concern valuation: Full definition · used on 54 pages
RICS valuation standards call these trade related properties: buildings designed or adapted for a specific business, whose value reflects the trading potential of that business. They are valued as a fully equipped operational entity, which assumes a sale or letting together with the trade inventory and the licences needed to keep trading, so the accounts and the market's view of the trading potential drive the figure. The figure is commonly reached by the profits method, from the operating profit a reasonably efficient operator could earn there.
A lender may also ask the valuer for a figure on the special assumption that trade has ceased. See vacant possession and hotel mortgages.
Grant of probate
Specialist lending
The court document that gives an executor authority to collect and deal with the estate of someone who has died. Where there is no will, or no executor can act, the grant is letters of administration; Scotland's equivalent is confirmation.
Grant of probate: Full definition · used on 14 pages
In England and Wales the Probate Registry issues a grant of representation: a grant of probate where an executor named in a will applies, or letters of administration where there is no will or no executor can act. With it the personal representatives can collect the assets, sell property and investments, pay debts and distribute the estate. Where Inheritance Tax is due they send form IHT400 to HMRC and usually pay part of the tax before applying, and HMRC sends a code the application needs. The fee is £526 for an estate over £5,000, as at October 2026 (GOV.UK: probate fees).
In England and Wales, HM Land Registry will not register a disposition by an executor until probate is granted, so a loan secured on estate property normally waits for the grant. In Scotland the sheriff court grants confirmation on an inventory of the estate in form C1, and in Northern Ireland the Probate Office of the High Court issues grants.
Gross development value (GDV)
Development finance
The projected market value of a development once it is finished. Development finance limits are usually expressed as a percentage of it.
Gross development value (GDV): Full definition · used on 35 pages
Gross development value is the valuer’s view of what a scheme will be worth on completion, in line with the approved plans and specification. It is the denominator for the loan to gross development value ratio that caps a development facility.
It is assessed on comparable evidence for the finished units, not on the developer’s appraisal. Where the two differ, the lender’s figure governs the facility, which can move the equity requirement significantly late in an application.
A development is also tested against loan to cost, and the binding constraint is whichever of the two produces the smaller facility.
Gross loan
Bridging finance
The loan amount before deductions such as retained interest or fees, using the basis stated in the lender’s offer.
Gross loan: Full definition · used on 98 pages
The loan amount before deductions such as retained interest or fees, using the basis stated in the lender’s offer.
It may include financed costs as well as money released to the borrower. Terminology varies, so distinguish the total facility, drawn balance, net advance and amount used for the LTV calculation.
Ground rent
Planning and tenure
A regular payment, usually yearly, that a leaseholder makes to the landlord under the lease, with no service in return. On most new long residential leases in England and Wales it is limited to a peppercorn, which has no financial value.
Ground rent: Full definition · used on 15 pages
Ground rent is not defined in law in England and Wales; it is the name for the rent a long residential lease reserves to the landlord. The Leasehold Reform (Ground Rent) Act 2022 limits the ground rent on most new long residential leases to a peppercorn. Leases granted before the Act took effect, and existing leases bought from another leaseholder, keep the ground rent the lease sets.
Lenders set their own limits on the level of ground rent, how it rises (fixed steps, increases linked to the RPI or doubling at intervals) and how often it is reviewed, so an onerous ground rent can make a flat harder to mortgage even on a long lease. See mortgages for leasehold flats.
Guaranteed acceptance life insurance
Insurance
Life cover, usually sold as an over-50s plan, that accepts applicants in its age range without health questions or a medical check and pays a fixed sum on death.
Guaranteed acceptance life insurance: Full definition · used on 1 page
Guaranteed acceptance plans are usually for people aged 50 to 85. The premium is fixed and cannot be increased, and the plan pays a fixed lump sum on death that does not keep up with rising prices. Plans set a waiting period before full cover starts, and apart from the 30-day period to cancel after buying the plan (FCA Handbook: ICOBS 7.1), money comes back only through a claim. Someone who starts a plan in their 50s and lives to 80 or above can pay in much more than the plan pays out, and MoneyHelper suggests comparing ordinary life insurance first, since lots of health conditions are accepted on ordinary policies (MoneyHelper: life insurance for over 50s).
The plans can suit people who cannot get individually underwritten cover, for example after a decline following insurance underwriting. The sum is chosen at the start and is not linked to a mortgage balance.
Guernsey mortgage
Specialist lending
A loan secured against property in the Bailiwick of Guernsey under the applicable local property and lending rules.
Guernsey mortgage: Full definition · used on 11 pages
A loan secured against property in the Bailiwick of Guernsey under the applicable local property and lending rules.
The security process and lender requirements differ from mainland UK lending. The Guernsey lending framework includes regulated home-finance agreements and exemptions; the status of the particular agreement must be checked.
Sources: GFSC: lending, credit and finance.
Guest house mortgage
Commercial
Property finance for premises used to operate a guest house or bed-and-breakfast business.
Guest house mortgage: Full definition · used on 22 pages
Property finance for premises used to operate a guest house or bed-and-breakfast business.
The lender considers guest accommodation, any owner’s living accommodation and the business income. The balance between home and business use affects the appropriate finance structure.
H14 terms
Help to Buy equity loan
Residential
A government loan secured as a second charge, taken as a percentage of the property value rather than a fixed sum, so the amount repayable moves with the property's value.
Help to Buy equity loan: Full definition · used on 12 pages
A Help to Buy equity loan funds part of a new-build purchase alongside a repayment mortgage. It is secured by a second charge and is repaid as the same percentage of the property's value at the time of repayment, not as the cash originally advanced.
England's scheme and the Help to Buy (Scotland) schemes are closed to new applications, so for existing English loans the questions are interest from year six, repaying all or part of the loan, and remortgaging with it in place. Help to Buy Wales is a separate scheme with its own eligibility rules and application deadline, set by the Welsh Government.
Whether the administrator's permission is needed depends on the change. In England, moving to a new lender with the loan kept, or borrowing more, needs permission, but a rate switch with the current lender and no extra borrowing needs no application, and repaying in full needs no permission. In Wales, moving to a new mortgage lender with the loan kept also needs the scheme's consent; for a rate switch with the current lender and no extra borrowing, confirm with Help to Buy (Wales) Ltd whether consent is needed. Repayment uses a RICS valuation by an independent valuer who meets the scheme's criteria, arranged and paid for by the homeowner.
High net worth mortgage
Specialist lending
A mortgage arranged for a borrower with substantial income or assets, often involving an individual assessment of their financial position.
High net worth mortgage: Full definition · used on 35 pages
A mortgage arranged for a borrower with substantial income or assets, often involving an individual assessment of their financial position.
The marketing term does not itself establish eligibility for the FCA’s high-net-worth mortgage provisions. Any use of those provisions depends on the regulatory definition and conditions, and does not remove the need for a credible repayment assessment.
Sources: FCA: mortgage perimeter guidance.
HM Revenue and Customs (HMRC)
Regulation
The UK's tax, payments and customs authority. It collects taxes including Income Tax, National Insurance, VAT and Stamp Duty Land Tax, and runs schemes such as PAYE and the Construction Industry Scheme.
HM Revenue and Customs (HMRC): Full definition · used on 50 pages
HMRC records are common income evidence in a mortgage application: tax calculations and tax year overviews for the self-employed, and pay and tax records under PAYE for employees. It collects Stamp Duty Land Tax in England and Northern Ireland; Scotland and Wales have their own property taxes, collected by Revenue Scotland and the Welsh Revenue Authority. GOV.UK: HM Revenue and Customs.
HMO bridging finance
Bridging finance
Short-term funding to buy, convert or improve an HMO before refinancing or selling it.
HMO bridging finance: Full definition · used on 1 page
Short-term funding to buy, convert or improve an HMO before refinancing or selling it.
The exit lender’s licensing, planning, rental-cover and valuation requirements should be checked before the bridge completes. Investment value is not accepted by every lender.
HMO licence
Buy-to-let
A licence from the local council that a landlord needs to let certain houses in multiple occupation. Larger HMOs need one by law, and councils can extend licensing to other HMOs in their area.
HMO licence: Full definition · used on 41 pages
In England mandatory licensing under Part 2 of the Housing Act 2004 covers HMOs occupied by five or more people forming two or more households. In Wales the mandatory test also requires the building to have three or more storeys. In both nations a council can designate an area for additional licensing, which brings other HMOs into the scheme.
In Scotland every HMO needs a licence from the council under Part 5 of the Housing (Scotland) Act 2006: a property is an HMO when it is the only or main residence of three or more people from three or more families. Licensing of other rented homes in a designated area is selective licensing. GOV.UK: HMO licences.
HMO mortgage
Buy-to-let
A mortgage for a property let as a house in multiple occupation, subject to the lender’s HMO criteria.
HMO mortgage: Full definition · used on 99 pages
A mortgage for a property let as a house in multiple occupation, subject to the lender’s HMO criteria.
A lender considers the number of occupants, tenancy arrangements, rental income, property layout and any licensing or planning requirements. Its product criteria do not replace the legal test for an HMO.
Sources: GOV.UK: houses in multiple occupation.
Holiday let mortgage
Buy-to-let
Specialist finance for property let short-term to holidaymakers rather than to long-term tenants, structured around seasonal and nightly income and priced in a different risk category to standard buy-to-let.
Holiday let mortgage: Full definition · used on 302 pages
A holiday let mortgage is a specialist form of property finance designed for properties that are let on a short-term basis to holidaymakers, rather than to long-term residential tenants. These mortgages are specifically structured around the seasonal and nightly income generated by holiday accommodation and sit in a different risk category to standard buy-to-let lending.
Holiday let mortgages can be used for properties located in major towns and cities, as well as, more commonly, in areas with strong and proven tourism demand. While coastal, rural, and lifestyle destinations remain the core of this market, many lenders will also consider city-based holiday lets where there is clear non-corporate short-stay demand from leisure travellers.
It is important to distinguish holiday let mortgages from Airbnb mortgages. Most lenders in this space do not lend purely on short-term corporate or transient accommodation models. Instead, they typically require evidence of sustained leisure demand, such as holidaymakers booking weekend or weekly stays, rather than contractor or business use.
Home equity line of credit (HELOC)
Residential
A credit limit secured on a home that can be drawn, repaid and drawn again during a set draw period, with interest charged only on the balance drawn.
Home equity line of credit (HELOC): Full definition · used on 4 pages
A credit limit secured on a home that can be drawn, repaid and drawn again during a set draw period, with interest charged only on the balance drawn.
In the UK a HELOC is arranged as a second charge behind the existing mortgage, which stays in place, and on a borrower's own home it is regulated by the Financial Conduct Authority. When the draw period ends, no new funds can be drawn and the balance is repaid over the rest of the term. The lender tests affordability as if the whole limit were drawn.
Home Report (Scotland)
Valuation
A pack of documents a seller in Scotland must have before marketing most homes: a single survey with a valuation, an energy report and a property questionnaire. A seller must give a copy to a prospective buyer who asks, with limited grounds for refusal.
Home Report (Scotland): Full definition · used on 9 pages
The Home Report was introduced in Scotland on 1 December 2008 under Part 3 of the Housing (Scotland) Act 2006. The single survey is carried out by a surveyor registered with or authorised by the Royal Institution of Chartered Surveyors and gives condition ratings and an opinion of value. The energy report contains the property's Energy Performance Certificate, and the seller completes the property questionnaire. The survey and energy report must date from no earlier than 12 weeks before the home goes on the market. A seller must give a copy within nine days to a buyer who asks, and can refuse only if they doubt the buyer is serious or can afford the home, or would prefer not to sell to them, never for an unlawful discriminatory reason.
The surveyor can also prepare a mortgage valuation report for lenders. Some lenders accept the Home Report valuation in that form and others instruct their own mortgage valuation, so lender policy varies. New homes sold to the first occupier, newly converted homes and some other properties are exempt, although the seller must still provide an Energy Performance Certificate. mygov.scot: Home Report.
Home reversion plan
Residential
A plan in which you sell part or all of your home to a provider for a lump sum or regular payments, keep the right to live there for life, and the provider takes its share when the home is sold.
Home reversion plan: Full definition · used on 1 page
A home reversion plan is a form of equity release. The provider buys a share of the home, taking the seller's age and health into account, and pays a percentage of the full market value of that share. The seller keeps the right to live in the home, and the provider receives its share of the proceeds when the home is eventually sold.
The seller no longer owns the share sold, so they do not benefit from any rise in its value and cannot leave it to anyone. Entering into a plan is a regulated activity where the seller, or a related person, is entitled to occupy at least 40% of the property as a dwelling (legislation.gov.uk: Regulated Activities Order, article 63B). Minimum ages are set by each provider.
Hotel bridging loan
Bridging finance
A short-term loan secured on a hotel, guest house or other hospitality property, used to buy, refurbish, refinance or convert it until a hotel mortgage or a sale repays it in one sum.
Hotel bridging loan: Full definition · used on 10 pages
A hotel bridging loan is a bridging loan whose security is a hotel, whether trading or closed, or a guest house. Because the property's value depends on its trade, the lender's valuer reports a trading value under the profits method and a figure on the assumption that trade has ceased, and the lender decides which one the loan is based on. The interest is retained or rolled up, or sometimes paid monthly, and the loan is repaid from the exit: a hotel mortgage once the hotel's accounts support one, a sale of the hotel, or the sale or refinance of converted units.
Most hotel bridging loans are unregulated business lending. A loan to an individual or trustees is normally a regulated mortgage contract where at least 40% of the property is used as a dwelling by the borrower (or, for trustees, a beneficiary of the trust) or a related person, as can happen in a small guest house (Regulated Activities Order, article 61 and article 61A).
Hotel mortgage
Commercial
A commercial mortgage secured against hotel premises, used to purchase or refinance the property.
Hotel mortgage: Full definition · used on 24 pages
A commercial mortgage secured against hotel premises, used to purchase or refinance the property.
For an owner-operated hotel, the lender considers the trading business as well as the property. Where a separate operator rents the building, the lease and rental income form part of the assessment.
A closed hotel, or one that needs work before its trading can support a mortgage, can be bought with a hotel bridging loan that a hotel mortgage later repays.
House in multiple occupation (HMO)
Buy-to-let
A house in multiple occupation generally houses at least three people from more than one household who share facilities such as a kitchen or bathroom.
House in multiple occupation (HMO): Full definition · used on 145 pages
A house in multiple occupation generally houses at least three people from more than one household who share facilities such as a kitchen or bathroom.
The precise legal definition and licensing rules depend on the UK nation and local authority. Licensing requirements are separate from planning permission and a lender’s own HMO product criteria.
Sources: GOV.UK: houses in multiple occupation.
Housing association
Residential
A not-for-profit organisation that owns and lets social and affordable homes. In England housing associations are registered providers of social housing regulated by the Regulator of Social Housing; Scotland and Wales call them registered social landlords.
Housing association: Full definition · used on 51 pages
Many shared ownership homes are sold by housing associations, and in England an eligible tenant may be able to buy their home under the Right to Acquire. Some social housing cases involve leasing a property to a housing association. In Scotland they are regulated by the Scottish Housing Regulator, and in Wales they are registered with and regulated by the Welsh Ministers. GOV.UK: housing association homes.
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