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.
S38 terms
SA302 and tax year overview
Lending and affordability
HMRC's tax calculation for a Self Assessment year (the SA302) and its summary of that year's account (the tax year overview), which lenders use as evidence of self-employed income.
SA302 and tax year overview: Full definition · used on 15 pages
The SA302 is HMRC's calculation of the tax due for a Self Assessment year. It shows the total income on which tax is due, by source, the allowances and reliefs given and how the tax was worked out. It does not show payments on account already made or other amounts outstanding. A taxpayer who files online can print it from their HMRC online account for each of the last four years, from 72 hours after the return is sent, and a return filed through commercial software, including a Making Tax Digital return, produces its calculation in that software (GOV.UK: get your SA302 tax calculation).
The tax year overview is HMRC's summary of the same year's account, setting out the tax for the year and the payments allocated to it, and it can be printed for any year. Lenders assessing a sole trader or a partner on net profit, or a company director on salary and dividends, usually ask for both documents for each year they read. HMRC suggests checking that the lender accepts copies printed by the applicant.
Salaried member (LLP)
Lending and affordability
A member of a limited liability partnership who is taxed as an employee because all three statutory conditions apply: mainly fixed pay, no significant influence and a capital contribution below 25% of that pay.
Salaried member (LLP): Full definition · used on 1 page
Under sections 863A to 863G of the Income Tax (Trading and Other Income) Act 2005, a member of a UK limited liability partnership is treated as employed by it for income tax where three conditions are all met. Condition A: at least 80% of the amount payable for the member's services is expected to be disguised salary, meaning fixed, or variable without reference to the LLP's overall profits or losses. Condition B: the member's rights and duties do not give them significant influence over the LLP's affairs. Condition C: the member's capital contribution is less than 25% of that disguised salary (legislation.gov.uk: ITTOIA 2005, section 863A). If any condition is not met, the member is taxed on their profit share like a partner.
A salaried member is paid through PAYE and the LLP pays employer's National Insurance on what it pays them. "Salaried partner" is also used in general partnerships, where HMRC says it usually describes an employee, although whether someone is a partner or an employee depends on the facts. Lenders usually assess salaried members and salaried partners who are employees on payslips and P60s.
Second charge bridging loan
Bridging finance
A short-term loan secured against a property behind an existing first-charge mortgage.
Second charge bridging loan: Full definition · used on 9 pages
A short-term loan secured against a property behind an existing first-charge mortgage.
The lender considers total secured borrowing and the proposed repayment strategy. Existing lender consent may be required. Regulatory status depends on the agreement and applicable rules; the second charge does not remove the obligation to pay the first mortgage.
Second charge business loan
Regulation
A second charge for more than £25,000, ranking behind another mortgage on the land and taken wholly or predominantly for a business the borrower carries on or intends to carry on. It is excluded from the regulated mortgage contract definition.
Second charge business loan: Full definition · used on 2 pages
A second charge business loan is a loan secured on land that would otherwise be a regulated mortgage contract, where the lender provides credit of more than £25,000, the mortgage ranks behind one or more other mortgages on the land, and the borrower enters into the agreement wholly or predominantly for the purposes of a business they carry on or intend to carry on. Article 61A of the Regulated Activities Order excludes it from the regulated mortgage contract definition (legislation.gov.uk: Regulated Activities Order, article 61A), and credit of that size for business purposes is also exempt from the consumer credit rules under article 60C.
The lender can rely on a business purpose declaration in the agreement, which states that the loan is for business purposes, that the borrower will not have the protection and remedies of a regulated mortgage contract, and that they should take independent legal advice if in any doubt. The presumption does not apply where the lender knows or has reasonable cause to suspect the loan is not for business. A second charge of £25,000 or less stays regulated. In Scotland the security is a second-ranking standard security.
Second-charge mortgage
Residential
An additional loan secured against a property behind an existing first-charge mortgage.
Second-charge mortgage: Full definition · used on 35 pages
An additional loan secured against a property behind an existing first-charge mortgage.
The first mortgage remains in place. Both loans must be repaid, and the second lender assesses available equity and repayment capacity. Compare all fees and commitments with the cost of remortgaging.
Sources: MoneyHelper: second-charge mortgages.
Second home mortgage
Residential
A residential mortgage on a property the borrower will use themselves alongside their main home, assessed on their income with both mortgages counted.
Second home mortgage: Full definition · used on 1 page
A second home mortgage is a residential mortgage on a property the borrower will live in for part of the time alongside their main home, such as a flat near work or a weekend home. Because the borrower uses it as a dwelling, it is normally a regulated mortgage, and the lender assesses affordability on the borrower's income, with the mortgage on the main home and the second home's running costs counted as commitments.
It differs from a buy-to-let mortgage, which is assessed mainly on the rent a tenant pays, and from a holiday let mortgage, which is assessed on projected letting income and limits the owner's own use. A buyer who keeps their main home usually pays the higher rates of Stamp Duty Land Tax in England and Northern Ireland on a second home, the Additional Dwelling Supplement in Scotland and the higher rates of Land Transaction Tax in Wales (GOV.UK: buying an additional residential property).
Section 106 agreement
Planning and tenure
A legally binding planning obligation under section 106 of the Town and Country Planning Act 1990 that makes a development acceptable in planning terms, for example by requiring affordable homes or a contribution to local infrastructure.
Section 106 agreement: Full definition · used on 10 pages
A planning obligation is agreed between someone with an interest in the land and the local planning authority, or given as a unilateral undertaking. It runs with the land, so it binds later owners, and it must be necessary to make the development acceptable, directly related to it, and fairly and reasonably related to it in scale and kind.
In England and Wales a planning obligation is a local land charge, so a buyer's conveyancer finds it in the local search, and it can be modified or discharged by agreement with the authority or, once the relevant period has passed, on an application under section 106A. Where it restricts the sale or occupation of a home, mortgage lenders look for a mortgagee in possession clause.
In Scotland the equivalent is a planning obligation under section 75 of the Town and Country Planning (Scotland) Act 1997, and in Northern Ireland a planning agreement under section 76 of the Planning Act (Northern Ireland) 2011. GOV.UK: planning obligations.
Section 257 HMO
Buy-to-let
A building converted into self-contained flats that is treated as an HMO because the conversion does not meet building standards and fewer than two-thirds of the flats are owner-occupied.
Section 257 HMO: Full definition · used on 2 pages
A building converted into self-contained flats that is treated as an HMO because the conversion does not meet building standards and fewer than two-thirds of the flats are owner-occupied.
The test is in section 257 of the Housing Act 2004, which applies in England and Wales. For conversions completed before 1 June 1992 the benchmark is the standard of the Building Regulations 1991. Section 257 blocks fall outside mandatory licensing in England but can be licensed under a council's additional or selective scheme, and most lenders assess them on HMO criteria.
Selective licensing
Buy-to-let
A council scheme under Part 3 of the Housing Act 2004 that requires landlords in a designated area of England or Wales to hold a licence for each privately rented home, not only for HMOs.
Selective licensing: Full definition · used on 14 pages
A council may designate all or part of its district where the statutory conditions are met. Within the area each house let under a tenancy that is not exempt needs a licence; social housing tenancies are exempt. It runs alongside HMO licensing. GOV.UK: selective licensing guide.
Self-build bridging
Bridging finance
Short-term secured finance for a plot purchase or a funding gap during construction of a home.
Self-build bridging: Full definition · used on 3 pages
Short-term secured finance for a plot purchase or a funding gap during construction of a home.
The repayment plan may be a staged self-build mortgage, a mortgage on the completed home or a property sale. Intended occupation matters when deciding whether the bridge is regulated.
Self-build mortgage
Residential
A mortgage that funds the construction of a home, usually by releasing money at agreed stages of the project.
Self-build mortgage: Full definition · used on 34 pages
A mortgage that funds the construction of a home, usually by releasing money at agreed stages of the project.
A facility may include the plot purchase. Stage payments can be made before or after work, depending on the product, so the funding schedule must match the build budget and cash available.
Self-employed mortgage
Residential
A mortgage application assessed using evidence of self-employed income, such as business accounts and tax documents.
Self-employed mortgage: Full definition · used on 33 pages
Self-employed applicants need to show the income available to support their mortgage payments. Lenders may ask for business accounts, tax calculations and bank statements. The evidence required depends on the lender and the applicant’s circumstances.
Read about self-employed mortgages. MoneyHelper explains the documents commonly used in a mortgage application.
Self-invested personal pension (SIPP)
Commercial
A personal pension in which the member chooses the investments, run by an FCA-authorised operator, which can hold commercial property and borrow up to 50% of the member's fund towards it.
Self-invested personal pension (SIPP): Full definition · used on 7 pages
A SIPP is a personal pension scheme, registered with HMRC, in which the member directs how the money is invested. The firm that establishes and operates it must be authorised by the Financial Conduct Authority, whatever assets it holds, and a property bought by a SIPP is held in the name of its trustee, usually a company connected with the provider.
Where the provider allows it, a SIPP can buy commercial property and let it, including to the member's own business at a market rent. Its borrowing is limited to 50% of the member's arrangement, measured immediately before the loan, and a loan to the trustee is a commercial mortgage. A SIPP has no sponsoring employer, so it cannot lend to the member or to a business connected with them, and residential property is taxable property for it. FCA Handbook, PERG 12.
Semi-commercial mortgage
Commercial
A mortgage secured against property containing both residential and commercial accommodation, such as a shop with a flat above.
Semi-commercial mortgage: Full definition · used on 30 pages
A mortgage secured against property containing both residential and commercial accommodation, such as a shop with a flat above.
The lender considers the uses, leases and income from each part, as well as the property’s title and valuation. The balance of residential and commercial use affects which products are suitable.
Senior debt
Development finance
Borrowing that ranks ahead of specified junior debt for repayment under the applicable security and creditor arrangements.
Senior debt: Full definition · used on 15 pages
Borrowing that ranks ahead of specified junior debt for repayment under the applicable security and creditor arrangements.
In property finance it is commonly secured by a first charge. Priority does not guarantee that sale proceeds will cover the balance, and enforcement costs or other legal claims can affect recoveries.
Service charge
Planning and tenure
A variable amount a leaseholder pays the landlord, on top of or as part of the rent, towards the costs of services, repairs, maintenance, improvements, insurance and management of the building.
Service charge: Full definition · used on 25 pages
In England and Wales the definition is in section 18 of the Landlord and Tenant Act 1985: the charge must vary, in whole or part, with the landlord's relevant costs. The lease sets out what can be charged and how it is organised.
Service charges count towards the cost of owning a flat. Lenders include them in the affordability assessment on shared ownership, and some lenders ask the valuer to confirm the charges are not so onerous that they affect the flat's marketability.
Serviced accommodation mortgage
Specialist lending
Finance for property offered for short stays with services such as cleaning, rather than occupied under a conventional residential letting.
Serviced accommodation mortgage: Full definition · used on 45 pages
Finance for property offered for short stays with services such as cleaning, rather than occupied under a conventional residential letting.
The actual use determines whether a holiday-let, specialist buy-to-let or commercial facility is appropriate. Planning permission, operating arrangements and lender consent must support that use.
Serviced interest
Bridging finance
Interest paid during the loan term rather than retained from the advance or added to the balance.
Serviced interest: Full definition · used on 27 pages
Interest paid during the loan term rather than retained from the advance or added to the balance.
For a bridging loan, interest may be paid monthly while the capital remains due at exit. The borrower needs sufficient cash flow; total cost depends on the rate, fees, amount and duration.
Sharia-compliant property finance
Specialist lending
Property finance structured to comply with Islamic principles, using an arrangement such as joint ownership, leasing or a sale with an agreed profit instead of a conventional interest-bearing loan.
Sharia-compliant property finance: Full definition · used on 3 pages
Property finance structured to comply with Islamic principles, using an arrangement such as joint ownership, leasing or a sale with an agreed profit instead of a conventional interest-bearing loan.
The payment and ownership arrangements depend on the contract. Finance for a rental investment must permit that use; compare the total costs, purchase obligations and exit terms.
Sources: MoneyHelper: Islamic mortgages.
SIC code
Buy-to-let
A Standard Industrial Classification code that a company gives Companies House to describe the nature of its business.
SIC code: Full definition · used on 6 pages
Companies House uses a condensed list of the Office for National Statistics codes, and only codes on that list can be used when filing. A company set up to own buy-to-let property, a special purpose vehicle, registers codes for letting or managing property, and lenders to such companies may check them. Companies House: SIC codes.
Single person mortgage
Residential
A residential mortgage taken out by one borrower and assessed on that person's own income, commitments and credit history.
Single person mortgage: Full definition · used on 4 pages
A single person mortgage is an ordinary residential mortgage with one named borrower. There is no separate product: the lender applies its usual affordability assessment, interest rate stress test and credit checks, using one income and one set of commitments. Because one income usually supports a smaller loan than two, the deposit, the lender's income multiple and schemes such as shared ownership decide how far the loan reaches.
A married person or civil partner can take one in their sole name, and the partner who will live in the home is usually asked to sign an occupier's consent. A joint mortgage can become a single person mortgage through a transfer of equity or a remortgage, with the remaining borrower's income assessed alone. A joint borrower sole proprietor mortgage is a different arrangement, with one owner and more than one borrower.
Six-month rule (remortgaging)
Lending and affordability
A lender policy of not remortgaging a property, or not lending on a new valuation, until the borrower has owned it for at least six months. It is lender and conveyancing practice, not law, and lenders apply it differently.
Six-month rule (remortgaging): Full definition · used on 6 pages
The six-month rule is the name given to a minimum ownership period before a remortgage. A lender that applies it will not refinance a property the borrower has owned for less than six months, or will lend only on the price paid, sometimes with the documented cost of any works added, until the six months have passed. Some lenders want 12 months, some lend from day one, and common exceptions include inherited property and a remortgage that repays a bridging loan.
No statute or FCA rule sets the period. It comes from lenders' criteria and from their instructions to conveyancers: in England and Wales the UK Finance Mortgage Lenders' Handbook asks the conveyancer to report a seller who has owned the property for less than six months (UK Finance Mortgage Lenders' Handbook), and each lender adds its own requirements. The aim is to stop quick resales at inflated values. On a refurbish and refinance project the rule decides how long the bridge has to run before the new valuation can be used, so it is part of the exit strategy.
Small self-administered scheme (SSAS)
Commercial
A pension scheme set up by a company for a small number of members, usually its directors, who act as its trustees and can use it to buy commercial property, borrow towards it and lend to the company within HMRC's rules.
Small self-administered scheme (SSAS): Full definition · used on 6 pages
A SSAS is an occupational pension scheme registered with HMRC under the Finance Act 2004. HMRC describes it as available for up to 12 members, and it is often used by directors and family businesses, with the members as trustees deciding how it invests. The name is often misspelt SASS.
A SSAS can buy commercial property, including the premises of the sponsoring company, and let it at a market rent. It can borrow up to 50% of its net assets, measured immediately before the borrowing, and a loan to its trustees for that purpose is a commercial mortgage. It can also make an authorised employer loan to the sponsoring company. Residential property is taxable property for a SSAS, and every deal with a member or the company has to be at market value. From 6 April 2027 most unused pension funds, including property held in a SSAS, count towards the member's estate for Inheritance Tax. HMRC Inheritance Tax Manual, IHTM17022.
Social housing mortgage
Specialist lending
Property finance for housing let or leased for social or supported housing use.
Social housing mortgage: Full definition · used on 36 pages
Property finance for housing let or leased for social or supported housing use.
This is a description of the property’s use, not a guarantee of government-backed rent. The lender examines the provider, lease, occupancy arrangements, property standards and the party responsible for payments.
Spanish mortgage
Specialist lending
A loan secured against property in Spain, arranged under Spanish law and lender criteria, with its own deposit, tax and completion requirements for a non-resident buyer.
Spanish mortgage: Full definition · used on 7 pages
A Spanish mortgage is a loan secured against a property in Spain, used to buy, refinance, or release equity from Spanish real estate. Spanish mortgages are granted by Spanish banks and international lenders operating in Spain, regulated under Spanish law rather than by the United Kingdom Financial Conduct Authority (FCA). Non-residents, including buyers from the United Kingdom, the United States, Germany, France, Italy, and Sweden, can obtain a Spanish mortgage, although lenders typically offer non-residents lower maximum loan-to-value limits than Spanish residents.
Specialist lending
Specialist lending
Lending assessed case by case on the property, the borrower or the income, rather than by the standard scorecard a mainstream lender applies.
Specialist lending: Full definition · used on 85 pages
Lending assessed case by case on the property, the borrower or the income, rather than by the standard scorecard a mainstream lender applies.
A case is usually specialist because of something mainstream criteria cannot accommodate: a non-standard construction, a trading business as security, income from several sources or from overseas, an ownership structure, or a credit history that automated scoring declines.
Underwriting is generally manual and pricing is higher, because the lender is pricing for work as well as for risk that a scorecard cannot measure.
Spray foam insulation
Valuation
Polyurethane foam sprayed onto the underside of a roof, or onto walls or floors, as insulation. It can hide the roof timbers from inspection and trap moisture, so valuers often ask for a specialist report and lenders commonly decline it or refer the case.
Spray foam insulation: Full definition · used on 9 pages
Sprayed under a roof it creates a warm roof. If it covers the timber roof structure, the timbers cannot be fully seen or inspected; badly installed foam can cause condensation and damp, and a roof leak behind it can go unnoticed and lead to rotting timber. RICS says spray foam can affect a surveyor's opinion of value and that the surveyor may ask for an independent specialist report.
Lender policies range from declining any property where spray foam has been used, even after removal, to accepting it with installation evidence such as a suitability report, a condensation risk assessment, product certification and a transferable insurance-backed warranty. Owners are advised to keep the installation documents. See spray foam insulation mortgages.
SPV mortgage
Buy-to-let
A mortgage made to a special purpose vehicle, usually a company established to own and let property.
SPV mortgage: Full definition · used on 58 pages
A mortgage made to a special purpose vehicle, usually a company established to own and let property.
The lender assesses the company, its owners, the property and the proposed letting. A personal guarantee can make directors personally liable under its terms. Company ownership does not itself establish a tax saving or a particular mortgage rate.
Staircasing
Residential
Buying further shares in a shared ownership home. Each purchase reduces the share the landlord owns, and so the rent paid on it.
Staircasing: Full definition · used on 6 pages
Larger shares are priced on a valuation by a RICS-registered surveyor at the time of purchase. On homes bought on or after 1 April 2021 the lease may allow small 1% shares each year for a period, priced from the original price adjusted by the House Price Index. The minimum step depends on the lease. GOV.UK: buying more shares (staircasing). See shared ownership mortgages.
Stamp Duty Land Tax (SDLT)
Fees and charges
The tax paid on buying property or land over a certain price in England and Northern Ireland. Different rates apply to first-time buyers, to buyers of an additional residential property and to non-UK residents.
Stamp Duty Land Tax (SDLT): Full definition · used on 49 pages
Stamp Duty Land Tax is charged in bands on the price of residential property bought in England or Northern Ireland, and is paid to HMRC. As at October 2026 the standard residential bands are nil up to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5 million and 12% above. A buyer who will also own another residential property worth £40,000 or more usually pays the higher rates for additional dwellings, which since 31 October 2024 have been 5 percentage points above each standard band, on a purchase of £40,000 or more. Married couples and civil partners are treated as buying together, and if any buyer must pay the higher rates the whole purchase does.
The higher rates for additional dwellings apply where the property will not be the buyer's only residential property and the buyer has not sold or given away their previous main home, and can apply even if the buyer will live in it. First-time buyers can claim relief. Because a supporting borrower on a joint borrower sole proprietor mortgage is not on the title, their own home does not bring the purchase into the higher rates.
Scotland has Land and Buildings Transaction Tax and Wales has Land Transaction Tax instead. Rates and thresholds are on GOV.UK: Stamp Duty Land Tax.
Standard security
Lending and affordability
The deed that secures a loan over land or buildings in Scotland, the Scots law equivalent of a mortgage or legal charge. It is registered in the Land Register of Scotland.
Standard security: Full definition · used on 8 pages
Under the Conveyancing and Feudal Reform (Scotland) Act 1970, a security for a debt over land in Scotland can only be created as a standard security, and it is granted and registered in the Land Register of Scotland, kept by Registers of Scotland (legislation.gov.uk: 1970 Act, section 9). A home buyer grants one to the mortgage lender at settlement, on the date of entry.
A home can carry more than one standard security. Under shared equity schemes such as LIFT the Scottish Government's share is protected by its own standard security, alongside the lender's.
Standard variable rate (SVR)
Residential
The rate a lender applies once an initial fixed or tracker period ends. The lender sets it and can change it at will, and it is usually the most expensive rate on the product range.
Standard variable rate (SVR): Full definition · used on 24 pages
The standard variable rate is the lender's own default rate. Unlike a tracker it is not tied to Bank Rate, and the lender can move it with notice whether or not Bank Rate has changed.
A mortgage reverts to it automatically at the end of an initial period, which is why a borrower who does nothing at the end of a fix usually sees the payment rise.
There are no early repayment charges on an SVR, so a borrower sitting on one can move at any time.
Statutory Sick Pay (SSP)
Insurance
The legal minimum an employer must pay an eligible employee who is too ill to work, for up to 28 weeks.
Statutory Sick Pay (SSP): Full definition · used on 2 pages
Statutory Sick Pay (SSP) is the legal minimum an employer must pay an employee who is too ill to work. For the 2026 to 2027 tax year it is £123.25 a week, or 80% of the employee's average weekly earnings if that is lower, and it is paid for up to 28 weeks (GOV.UK: rates and thresholds for employers 2026 to 2027).
Changes made by the Employment Rights Act 2025 took effect on 6 April 2026: the three unpaid waiting days were removed, so SSP is paid from the first day of sickness on a day the employee would normally work, and the Lower Earnings Limit was removed, so employees on low pay qualify (legislation.gov.uk: Employment Rights Act 2025, section 11). The same changes apply in Northern Ireland. Contractual sick pay from the employer counts towards SSP for the same days. SSP is paid only to people classed as employees, so the self-employed cannot get it, and when it ends a person still unable to work may be able to claim Universal Credit or Employment and Support Allowance. See income protection insurance and deferred period.
Student loan repayment plan
Lending and affordability
The plan that sets how a UK student loan is repaid: a percentage of income above a yearly threshold, collected through payroll or Self Assessment, with any balance written off after a set period.
Student loan repayment plan: Full definition · used on 10 pages
Which plan applies depends on which UK student finance body the borrower applied to, the type of course and when it started, wherever they studied (GOV.UK: which repayment plan you are on). For 2026/27 the yearly thresholds are £26,900 for Plan 1, £29,385 for Plan 2, £33,795 for Plan 4 and £25,000 for Plan 5, each repaid at 9% of income above the threshold, and £21,000 for a Postgraduate Loan, repaid at 6% (GOV.UK: what you pay). An employee repays through PAYE, with the deduction worked out each pay period. Someone with more than one of Plans 1, 2, 4 and 5 makes one deduction, at 9% above the lowest threshold, and a Postgraduate Loan is repaid on top.
Loans from the Student Loans Company do not appear on credit files. Mortgage lenders see the deduction on the payslip and take it into account in affordability, although they differ on how. The balance owed does not change what is repaid each month, which depends only on income above the threshold.
Sui generis
Planning and tenure
A use of land or buildings that falls in no planning use class, described as 'of its own kind'. A change of use to or from a sui generis use generally needs a planning application.
Sui generis: Full definition · used on 19 pages
Article 3(6) of the Use Classes Order 1987 lists uses that belong to no class, among them hostels. Other uses are sui generis because no class fits them: in England a house in multiple occupation with more than six residents is outside Class C3 and Class C4, which both stop at six residents.
Because a change of use to or from a sui generis use generally needs a planning application, creating a large HMO normally needs planning permission, and an HMO lender checks that the planning position supports the use. GOV.UK: when planning permission is required.
Support for Mortgage Interest (SMI)
Residential
A government loan towards the interest on a homeowner's mortgage for people getting Universal Credit, Pension Credit or income-related Employment and Support Allowance, repaid with interest when the home is sold or ownership is transferred.
Support for Mortgage Interest (SMI): Full definition · used on 2 pages
SMI stopped being a benefit and became an interest-bearing loan on 6 April 2018. The Department for Work and Pensions pays an amount towards the mortgage interest, normally straight to the lender, worked out at a standard rate on up to £200,000 of the loan, or £100,000 for Pension Credit claimants and people who started claiming another qualifying benefit before January 2009 while below State Pension age.
On Universal Credit, payments can start after 3 months in a row on the benefit, and since 3 April 2023 a claimant can get SMI while earning. The loan is secured on the home and repaid, with interest added each year, when the home is sold or ownership is transferred; any part the sale does not cover is written off. SMI does not pay capital repayments, arrears or insurance. Northern Ireland runs its own scheme on the same lines. The rates in force are on gov.uk: Support for Mortgage Interest.
T7 terms
Taxable property (pension schemes)
Regulation
Residential property and most tangible moveable assets, which an investment-regulated pension scheme such as a SSAS or SIPP can hold only by paying heavy tax charges.
Taxable property (pension schemes): Full definition · used on 2 pages
Schedule 29A to the Finance Act 2004 makes residential property, such as houses, flats, holiday lets and their gardens, and tangible moveable property, such as cars and furniture, taxable property for an investment-regulated pension scheme. If such a scheme acquires it, the member pays an unauthorised payments charge of 40% on the cost, a 15% surcharge can apply, and the scheme administrator pays a scheme sanction charge, generally 15%; income from it (actual, or a deemed 10% of its value if higher) and gains are charged at 40%.
Care homes, hospitals, children's homes, prisons, student halls of residence and a whole hotel are not residential property for these rules. A dwelling is also outside the charges if it is lived in by an unconnected employee as a condition of the job, or by an unconnected person in connection with business premises the scheme holds. HMRC Pensions Tax Manual, PTM125200.
Time to Pay arrangement (HMRC payment plan)
Lending and affordability
A payment plan agreed with HMRC to pay a tax bill in instalments when it cannot be paid in full.
Time to Pay arrangement (HMRC payment plan): Full definition · used on 2 pages
A Time to Pay arrangement is a payment plan agreed with HM Revenue and Customs (HMRC) to pay a tax bill in instalments when it cannot be paid in full. HMRC checks that the plan is affordable, and if a plan cannot be agreed it asks for the amount owed in full. Interest is charged on what is outstanding, so paying more quickly costs less in total (GOV.UK: if you cannot pay your tax bill on time).
For a mortgage, a payment plan is a commitment the lender reads alongside other debts, and whether a lender accepts one, and on what terms, varies by lender. A plan spreads the bill without adding it to the mortgage, while remortgaging to pay the bill instead secures it on the home over the mortgage term.
Title split
Planning and tenure
Creating separate property titles or leases so parts of a property can be owned, sold or financed separately.
Title split: Full definition · used on 329 pages
A block of flats can remain on one freehold while separate long leases are created for individual flats. A title split does not replace planning permission or building regulations approval, and any existing lender must agree to changes affecting its security.
Top slicing
Buy-to-let
Using surplus personal income to cover the shortfall where rent alone does not meet the lender’s stress test. Not every lender offers it, and those that do set their own limits.
Top slicing: Full definition · used on 19 pages
Top slicing lets a borrower use surplus personal income to bridge the gap where the rent does not quite meet the interest coverage requirement. The lender assesses the borrower’s income and outgoings in the way a residential lender would, and applies the surplus to the shortfall.
It is common on lower yielding property, particularly in the south of England, where capital values outrun rents. It is not universal. Lenders that allow it set their own minimum income, their own maximum reliance on personal income, and their own view of which income counts.
Tracker mortgage
Residential
A mortgage whose rate is a fixed margin above Bank Rate and moves with it. The margin is contractual; the rate underneath it is not.
Tracker mortgage: Full definition · used on 23 pages
A tracker mortgage charges Bank Rate plus a set margin, so the payment moves whenever the Bank of England changes Bank Rate. The margin is fixed for the product term.
A tracker differs from a standard variable rate, which the lender sets at its own discretion and can move independently of Bank Rate.
Some trackers carry a collar, a floor below which the rate will not fall. A tracker is the right product where the borrower can absorb a rise and wants the benefit of a fall.
Trading history
Lending and affordability
The length of time a self-employed borrower or their business has been trading, which lenders measure in years of tax calculations, accounts or contracts.
Trading history: Full definition · used on 60 pages
Trading history is the length of the record a self-employed borrower can show: how many years of tax calculations, accounts or contracts exist for the income a lender is asked to use. Each lender sets its own minimum. Some want two years of figures, some accept one, and some consider less where the work continues an employed role in the same field.
The tax year shapes what the record shows. A sole trader or partner is taxed on the profits of the tax year, and a business's first tax year runs from its start date to 5 April (Income Tax (Trading and Other Income) Act 2005, section 7). A borrower one year into trading may therefore hold twelve months of accounts but no tax return for a full year. A limited company's first accounts run from incorporation to its accounting reference date and can cover up to 18 months. Trading history decides whether a lender will use the income at all; the affordability assessment then decides how much it will lend.
Transfer of equity
Residential
A change in who owns a property, such as adding or removing an owner, without the property being sold.
Transfer of equity: Full definition · used on 8 pages
A transfer of equity often follows separation or divorce, or a partner being added to the title. Where the property is mortgaged the lender has to consent, and it usually reassesses affordability on the borrowers who will remain; a departing borrower stays liable until the lender releases them. The alternative is a remortgage to a new lender in the new owners' names.
In England and Wales the change is registered at HM Land Registry on a transfer deed. Stamp Duty Land Tax can be due on the consideration, which includes any cash paid and the share of the mortgage debt the new owner takes on. Transfers between spouses or civil partners under an agreement or court order on divorce or dissolution are exempt (gov.uk: SDLT on transferring ownership). Wales has its own tax, Land Transaction Tax, and Scotland its own register and Land and Buildings Transaction Tax.
U3 terms
Umbrella company
Specialist lending
A business, often used by recruitment agencies, that employs a temporary worker or contractor and pays their wages through PAYE. It does not find the work; the agency does.
Umbrella company: Full definition · used on 9 pages
Because the umbrella company is the employer, a contractor paid this way receives payslips with tax and National Insurance already deducted, and HMRC says the IR35 rules are unlikely to apply. Lenders differ on umbrella income: some read the payslips, some annualise the contract rate after deducting umbrella costs, and some do not accept it. See contractor mortgages. GOV.UK: working through an umbrella company.
Underwriting
Lending and affordability
The lender's assessment of whether to lend and on what terms, covering the borrower, the property, the income and the way the loan will be repaid.
Underwriting: Full definition · used on 382 pages
Underwriting is the decision process behind a mortgage offer. An underwriter weighs the borrower, the security property, the income evidence and the repayment route against the lender's policy, and prices the risk that remains.
What dominates depends on the product. Residential underwriting is led by affordability and credit history. Buy-to-let is led by the rent and the stress test. Commercial is led by income sustainability and the valuation basis. Bridging is led by the security and the exit strategy.
Criteria published by a lender describe the boundaries, not the decision. Two lenders with identical published criteria can reach different answers on the same case, which is why placing a case with the right lender matters more than the headline rate on a complex application.
Use class
Planning and tenure
The category planning law places a building's use in, such as C3 for a home or C4 for a small shared house in England. Moving a property from one class to another can need planning permission.
Use class: Full definition · used on 43 pages
In England the Town and Country Planning (Use Classes) Order 1987 sets the classes. Those met most in property finance are C1 (hotels, boarding and guest houses where no significant care is provided), C2 (residential institutions such as care homes, hospitals and residential schools), C3 (dwellinghouses used by one household, including up to six people living together as a single household) and C4 (a house in multiple occupation with no more than six residents). Class E covers most commercial, business and service uses in England.
In England, national permitted development rights allow a change from C3 to C4 and back without a planning application, but an Article 4 direction can remove that right in a defined area. A house in multiple occupation with more than six residents fits neither C3 nor C4 and is sui generis.
Wales uses the same Order with its own changes: Welsh C3 is limited to homes used as a sole or main residence, and Wales has added C5 for homes not used as a sole or main residence and C6 for short-term lets. Scotland has its own Use Classes (Scotland) Order 1997, in which hotels and hostels are Class 7 and houses are Class 9. GOV.UK: when planning permission is required.
V4 terms
Vacant possession (VP)
Valuation
A property free of tenants, occupiers or leases. A vacant possession value is the valuation on that basis, ignoring any rent or business the property produces, and RICS standards make it the usual basis for valuing a single buy-to-let home.
Vacant possession (VP): Full definition · used on 117 pages
When a let property is valued as if empty, valuers call it a special assumption. For a single buy-to-let unit, the RICS standard on buy-to-let and HMO valuation bases the capital value on vacant possession unless the lender agrees otherwise in writing, and it describes the same figure as a bricks and mortar value.
It differs from an investment valuation, which capitalises the rent, and from a going concern valuation of a trading business. Where a valuer reports more than one figure, the lender decides which one the loan is based on.
Value Added Tax (VAT)
Fees and charges
A tax added to most goods and services sold by VAT-registered businesses. Most sales and lettings of commercial property are exempt, but become standard-rated where the owner has opted to tax the land or building.
Value Added Tax (VAT): Full definition · used on 19 pages
Under HMRC's guidance the grant, assignment or surrender of an interest in land is normally exempt from VAT, with exceptions: the sale of a new or part-completed commercial building is treated separately, and a builder's sale of a new home is generally zero-rated. An owner can opt to tax land or buildings, after which its supplies of them are normally standard-rated and it can normally recover VAT on related costs.
Where VAT is charged on a purchase price, the buyer has to fund it on completion even if it can reclaim it later, which is the gap a VAT bridging loan covers. HMRC: VAT on land and property (Notice 742).
Variable income
Lending and affordability
Pay on top of basic salary that the employment contract does not guarantee, such as overtime, bonus and commission. Each lender decides how much of it to count and over what period.
Variable income: Full definition · used on 23 pages
Variable income is the part of an employee's pay that can change from one pay period or year to the next: overtime, bonus, commission and similar payments. For a residential mortgage the lender must obtain evidence of the income declared, and the FCA's guidance says the evidence needed depends on how far each element of income is contractually guaranteed, giving payslips over a period of time as one way to evidence overtime (FCA Handbook: MCOB 11.6.8R and 11.6.9G).
Lenders treat variable income in different ways. Some count it in full where it is regular and evidenced, some count a share of it, some average it over one or two years and some leave it out, so the same payslips can support different loans at different lenders. An application that relies on the full amount when the lender counts only part of it can fail at underwriting. The figure the lender counts then goes into its affordability assessment with the rest of the income.
VAT bridging loan
Bridging finance
Short-term finance used to fund VAT due on a transaction while an eligible VAT recovery or another repayment source is arranged.
VAT bridging loan: Full definition · used on 11 pages
Short-term finance used to fund VAT due on a transaction while an eligible VAT recovery or another repayment source is arranged.
A VAT reclaim is not automatic or guaranteed within a fixed period. The transaction’s VAT treatment, eligibility, evidence and expected repayment timing need to support the loan.
W1 term
Warehouse mortgage
Commercial
A commercial mortgage used to purchase or refinance warehouse or industrial premises.
Warehouse mortgage: Full definition · used on 14 pages
A commercial mortgage used to purchase or refinance warehouse or industrial premises.
The lender assesses property use, condition and saleability, together with the occupying business or tenant and lease. Owner-occupied and investment premises can require different products.
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