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.
A17 terms
Accountant's certificate
Lending and affordability
A form or letter from a self-employed borrower's accountant confirming the income figures a mortgage lender reads, such as a director's salary, dividends, shareholding and the company's net profit.
Accountant's certificate: Full definition · used on 8 pages
For a regulated mortgage, a lender must obtain evidence of the income the borrower declares, from a source independent of the borrower, and must not accept self-certification of income (FCA Handbook: MCOB 11.6.8R). For self-employed borrowers the evidence is usually HMRC tax calculations and accounts, and some lenders also ask the borrower's accountant to confirm the figures on a certificate or in a reference letter.
For a company director the certificate usually confirms the salary, the dividends, the shareholding and the company's net profit for recent years, and some lenders reading share of net profit also ask the accountant to confirm that retained profit is available to draw without harming the business. Lenders set their own rules on which accounting qualifications they accept, and some send their own form for the accountant to complete. A sole trader's or partner's accountant may be asked to confirm net profit and the current year's trading.
Additional Dwelling Supplement (ADS)
Fees and charges
An extra charge on top of Land and Buildings Transaction Tax in Scotland, payable when a buyer purchases an additional home and on most purchases of residential property by companies.
Additional Dwelling Supplement (ADS): Full definition · used on 14 pages
The Additional Dwelling Supplement is part of Land and Buildings Transaction Tax and is administered by Revenue Scotland. For transactions on or after 5 December 2024 it is 8% of the purchase price, charged on top of LBTT, on a residential purchase of £40,000 or more where an individual buyer already owns a residential property anywhere in the world and is not replacing an only or main residence. It also applies to most purchases of residential property by non-natural persons such as companies, even where the company owns no other residential property.
For purchases from 1 April 2024, a buyer who sold a previous main residence in the 36 months before the purchase is treated as replacing it and does not pay the supplement, and a buyer who buys first can claim it back if the previous main residence is sold within 36 months after the purchase. Revenue Scotland cannot consider exceptional circumstances. Revenue Scotland: Additional Dwelling Supplement.
Adverse credit
Lending and affordability
A record of missed payments, defaults, county court judgments, an individual voluntary arrangement or a bankruptcy. It narrows lender choice rather than ending it.
Adverse credit: Full definition · used on 98 pages
Adverse credit covers anything on a credit file that shows an obligation was not met: arrears, defaults, county court judgments, a debt management plan, an individual voluntary arrangement, or a bankruptcy.
Lenders assess four things about it rather than its presence alone. How old it is, how large it is, whether it is satisfied, and what caused it. A satisfied default from four years ago on a small telecoms account is treated very differently from an unsatisfied judgment from last year on a mortgage.
Mainstream lenders publish tight limits. Specialist lenders price for the risk and take a broader view, and short-term lenders may not weigh credit heavily at all where the security and the exit are strong.
Affordability
Lending and affordability
A measure of whether the borrower can pay the mortgage on time and keep paying it, after debts, bills and living costs, including if circumstances change.
Affordability: Full definition · used on 388 pages
Affordability is a measure of how well you’ll be able to pay for a given mortgage. It entails being able to comfortably pay your mortgage on time, taking into account other factors like your debts, bills, and living expenses. Effectively, affordability on a mortgage means being able to pay for the loan while maintaining your lifestyle, and being able to continue to do so even if situations change.
Falling behind on mortgage payments can affect your credit score, so buying with affordability is incredibly important. Affordability exists to ensure you can continue to pay for a property, protecting both lenders and homeowners from purchases that can’t be afforded.
Affordability stress rate
Lending and affordability
The higher interest rate a lender uses to check that a residential mortgage would still be affordable if rates rose. Each lender sets its own within the FCA's rules.
Affordability stress rate: Full definition · used on 22 pages
An affordability stress rate is the interest rate at which a lender tests the monthly payment on a residential mortgage, to check that the borrower could still pay if rates rose. Under the FCA's rule MCOB 11.6.18R a lender must consider likely interest rates over at least the first five years of the mortgage, having regard to market expectations, and must assume a rise of at least 1% over that period. The five-year test does not apply where the rate is fixed for five years or more, so a longer fix can be assessed at or close to its pay rate (FCA Handbook: MCOB 11.6).
The rule does not say which rate the test must start from. In March 2025 the FCA reminded lenders that adding a margin to a reversion rate can produce an unnecessarily high test. The Bank of England's separate affordability test, at 3 percentage points above the reversion rate, was withdrawn on 1 August 2022. Buy to let lending is tested differently, against the rent, under the rental stress test.
Agreement in principle (AIP)
Lending and affordability
A lender’s initial indication of what it may lend, based on preliminary information and checks.
Agreement in principle (AIP): Full definition · used on 47 pages
A lender’s initial indication of what it may lend, based on preliminary information and checks.
It is not a final mortgage offer or a promise to release funds. A full application, supporting evidence and an acceptable property assessment are still required.
Airbnb mortgage
Buy-to-let
Finance for a property let on a short-stay platform. Depending on how the property is used it is a residential, a specialist buy-to-let, a holiday let or a commercial mortgage, and the structure has to be right at application.
Airbnb mortgage: Full definition · used on 5 pages
Airbnb mortgages fall into three broad categories:
- A residential mortgage, if you’re letting a room, annex, or outbuilding on Airbnb while living in the property yourself, and your lender permits it.
- A buy-to-let mortgage (standard or specialist), if the property is let out on Airbnb as an investment and you don’t live there.
- A commercial mortgage, if the property is run more like a business, such as a guest house or a portfolio of short-term let units with trading history.
Airbnb mortgages must be structured correctly from the outset. Short-term letting is assessed differently from standard buy-to-let: lenders look at property type, planning use class, projected or historic income, your experience as a host, and whether the case fits residential, holiday let, specialist buy-to-let, or commercial criteria. Getting the wrong structure in place at application stage is one of the most common reasons Airbnb mortgage applications are declined or delayed.
Anti-money laundering (AML) checks
Regulation
The identity and source-of-funds checks that lenders and other businesses covered by the Money Laundering Regulations must carry out before taking on a customer, with stricter checks where the risk is higher.
Anti-money laundering (AML) checks: Full definition · used on 37 pages
The Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 require covered businesses to identify customers and verify their identity, to monitor transactions, including where necessary the source of funds, and to apply enhanced due diligence in higher-risk cases. On a property purchase this usually means proof of identity and address and evidence of where the deposit came from.
The FCA says mortgage brokers are not bound by the regulations themselves but must still have systems and controls to prevent financial crime. FCA: money laundering and terrorist financing.
Area of Outstanding Natural Beauty (AONB)
Planning and tenure
A landscape in England or Wales designated by law to conserve and enhance its natural beauty. In England these areas are known as National Landscapes, and planning policy limits development in them.
Area of Outstanding Natural Beauty (AONB): Full definition · used on 3 pages
Areas are designated under section 82 of the Countryside and Rights of Way Act 2000, by Natural England in England and Natural Resources Wales in Wales. National planning policy in England places substantial weight on conserving and enhancing their natural beauty, and says major development in them should be refused other than in exceptional circumstances and where it is in the public interest. GOV.UK: AONBs, designation and management.
Arrangement to pay (AP marker)
Lending and affordability
A temporary reduced payment agreed between a borrower and a lender, which the credit file records to show the account is on special terms.
Arrangement to pay (AP marker): Full definition · used on 5 pages
Under the credit industry's Principles for the Reporting of Arrears, Arrangements and Defaults, a temporary reduction in payments agreed by borrower and lender is recorded at the credit reference agencies as an arrangement, and the record must show that the account is subject to special terms. A payment holiday or a temporary change to interest only that is not part of the product's own terms can be recorded the same way. Arrears may still be calculated against the original terms, but a default would not normally be registered unless the arrangement is broken.
The agencies show arrangements in different ways, and how long one stays on the file depends on its terms. Mortgage lenders differ on how they read it: some treat a current or recent arrangement as adverse credit, and the time since it ended can affect which lenders and products fit. A plan negotiated by a third-party debt adviser is marked separately as a debt management plan.
Article 4 direction
Planning and tenure
A direction that removes specified permitted development rights for a defined area or property.
Article 4 direction: Full definition · used on 34 pages
A direction that removes specified permitted development rights for a defined area or property.
It can mean that work or a change of use needs a planning application even where national permitted development rights would otherwise apply. The direction’s wording, scope and effective date matter; it is not limited to HMOs. GOV.UK planning guidance.
Assured periodic tenancy
Regulation
An assured tenancy that continues from period to period rather than having a fixed end date.
Assured periodic tenancy: Full definition · used on 13 pages
An assured tenancy that continues from period to period rather than having a fixed end date.
In England, most private assured shorthold tenancies became assured periodic tenancies on 1 May 2026. The current rules govern notice and possession; other UK nations have different tenancy systems.
Sources: GOV.UK: tenancy changes.
Assured shorthold tenancy (AST)
Planning and tenure
A form of residential tenancy used under the Housing Act 1988, historically common in private renting in England.
Assured shorthold tenancy (AST): Full definition · used on 45 pages
A form of residential tenancy used under the Housing Act 1988, historically common in private renting in England.
Most private ASTs in England became assured periodic tenancies on 1 May 2026. Wales replaced most tenancy and licence arrangements with occupation contracts in December 2022. Check the applicable jurisdiction and any transitional provisions rather than treating an AST as the current default.
Sources: GOV.UK: tenancy changes, Welsh Government: occupation contracts.
Auction finance
Bridging finance
Finance arranged to complete an auction purchase within the deadline set by the auction contract.
Auction finance: Full definition · used on 44 pages
Finance arranged to complete an auction purchase within the deadline set by the auction contract.
The funding may be a bridging loan or a mortgage, depending on the property and timetable. An initial lending indication does not guarantee that valuation, legal work and release of funds will be completed in time.
Authorised employer loan (SSAS loanback)
Regulation
A loan from an occupational pension scheme, usually a SSAS, to its sponsoring employer that meets the Finance Act 2004 conditions on amount, security, interest and repayment.
Authorised employer loan (SSAS loanback): Full definition · used on 1 page
Section 179 of the Finance Act 2004 allows an occupational pension scheme to lend to a sponsoring employer on four conditions. The loan is no more than 50% of the scheme's net assets immediately before it is made. It is secured by a first charge on an asset, owned by the employer or someone else, worth at least the loan plus interest. It carries interest of at least 1 percentage point above the average base lending rate of six banks named in regulations, rounded up to the nearest 0.25%. It is repaid within five years in at least equal yearly instalments of capital and interest. If money is still owed on the repayment date, the date can be put back once, for up to five years.
A loan that fails a condition is an unauthorised payment, taxed on the employer, with a scheme sanction charge on the scheme administrator. A SIPP has no sponsoring employer and cannot make one. The loanback limit is a separate test from the scheme's own 50% borrowing limit. HMRC Pensions Tax Manual, PTM123200.
Automated valuation model (AVM)
Valuation
An automated valuation model estimates a property’s value using data and statistical methods rather than a physical inspection.
Automated valuation model (AVM): Full definition · used on 22 pages
An automated valuation model estimates a property’s value using data and statistical methods rather than a physical inspection.
A lender decides whether the estimate and confidence level are acceptable for the property and loan. It does not inspect the condition of the building or guarantee completion speed.
Average daily rate (ADR)
Commercial
A hotel trading measure: room revenue divided by the number of rooms sold, the average price achieved for each occupied room.
Average daily rate (ADR): Full definition · used on 6 pages
The official occupancy surveys treat occupancy, ADR and revenue per available room (RevPAR) as the three main measures of hotel trading. They feed the going concern valuation of a hotel or guest house. Visit Wales: accommodation occupancy survey definitions.
B22 terms
Bad credit bridging loan
Bridging finance
A short-term property loan assessed for a borrower with adverse credit, with repayment planned through a sale or refinance.
Bad credit bridging loan: Full definition · used on 4 pages
A short-term property loan assessed for a borrower with adverse credit, with repayment planned through a sale or refinance.
The lender considers the age and seriousness of credit problems alongside the property and the exit. If a mortgage will repay the bridge, its lender must also accept the borrower’s credit history.
Bank Rate
Lending and affordability
The Bank of England's core interest rate, set by its Monetary Policy Committee. Changes in it usually feed through to the rates lenders charge, and tracker mortgages move with it directly.
Bank Rate: Full definition · used on 21 pages
Bank Rate is the rate the Bank of England pays to banks, building societies and other financial institutions that hold money with it. The Monetary Policy Committee meets eight times a year to set it at the level needed to keep inflation low and stable.
A tracker mortgage charges Bank Rate plus a margin, a standard variable rate is set by the lender and need not follow it, and fixed rates are priced off market rates rather than Bank Rate directly. Bank of England: Bank Rate.
Bankruptcy
Lending and affordability
A legal process for a person who cannot pay their debts, in which a trustee deals with their assets and they are usually released from most of their debts after a year.
Bankruptcy: Full definition · used on 26 pages
In England and Wales a person can apply online to become bankrupt, and an adjudicator at the Insolvency Service decides the application, or a creditor can petition the court. An official receiver or a trustee then deals with the person's assets. Discharge from the bankruptcy restrictions and debts usually follows after 12 months, although debts not included in the bankruptcy still have to be paid. While bankrupt, a person cannot borrow more than £500 without telling the lender. Where the bankrupt person's equity in the family home is more than £1,000, the trustee can sell the home or apply for a charging order, which fixes the amount the trustee will get when the home is sold later. The bankruptcy can stay on the credit file for six years from its date, and the Individual Insolvency Register is updated within three months of discharge (GOV.UK: when bankruptcy ends).
In Scotland bankruptcy is also called sequestration; the Accountant in Bankruptcy decides a person's own application, and discharge usually follows after a year, or after six months under the Minimal Asset Process (mygov.scot: bankruptcy). In Northern Ireland a bankruptcy order is made by the High Court in Belfast. Lenders treat a current or past bankruptcy as adverse credit and look at the discharge date. An individual voluntary arrangement is a formal alternative that leaves the person more control of their assets, and a debt relief order is a route for people with smaller debts and few assets. A bankruptcy restrictions order can keep the restrictions in place after discharge.
Bankruptcy restrictions order (BRO)
Regulation
An order that extends the restrictions of bankruptcy for between 2 and 15 years where the bankrupt was dishonest or to blame for their debts. An undertaking agreed without a court hearing has the same effect.
Bankruptcy restrictions order (BRO): Full definition · used on 1 page
The official receiver asks for one where a bankrupt's conduct was dishonest or blameworthy, for example giving away assets or selling them for less than they were worth, or borrowing money they knew they could not repay. The bankrupt can agree to a bankruptcy restrictions undertaking instead, which has the same effect without going to court (GOV.UK: bankruptcy restrictions orders and undertakings).
While an order or undertaking is in force, the person must not borrow more than £500 without saying they are subject to restrictions, and cannot act as a company director without the court's permission. It is listed on the Individual Insolvency Register until it expires, so the restrictions can outlast the discharge from bankruptcy. Lenders treat a current order or undertaking as serious adverse credit.
Barn conversion bridging
Bridging finance
Short-term finance to acquire or begin converting a barn before staged funding, a mortgage or sale repays the loan.
Barn conversion bridging: Full definition · used on 4 pages
Short-term finance to acquire or begin converting a barn before staged funding, a mortgage or sale repays the loan.
Lenders check consent, structural suitability, access and the conversion budget. Finance to buy the barn and funding to complete the works must fit the same repayment plan.
Barn conversion mortgage
Specialist lending
Finance for buying, refinancing or converting a barn into residential accommodation.
Barn conversion mortgage: Full definition · used on 14 pages
Finance for buying, refinancing or converting a barn into residential accommodation.
A completed, habitable conversion may suit a residential or buy-to-let mortgage. Funding the conversion itself can require staged self-build or development finance, depending on the intended use.
Basis period reform
Regulation
The change that taxes sole traders and partners on the profits of the tax year from 2024 to 2025, with the extra transition profit from 2023 to 2024 spread over five years.
Basis period reform: Full definition · used on 4 pages
Before the reform, a self-employed person was usually taxed on the profits of the accounting year that ended in the tax year. From the 2024 to 2025 tax year, profits are taxed for the tax year itself, 6 April to 5 April, and a business with a year end other than 31 March or 1 to 4 April apportions its profits from two sets of accounts (HMRC helpsheet HS222).
2023 to 2024 was the transition year. A business with a year end outside 31 March to 5 April was taxed on its usual 12 months plus a transition period to 5 April 2024, less overlap relief. The resulting transition profit is spread over five tax years by default: at least 20% in 2023 to 2024 and the rest equally over the four years to 2027 to 2028, unless the trader chose to have more taxed sooner (GOV.UK: work out your transition profit). A tax calculation in those years can therefore show more taxable profit than the business earned in the year, which matters to a lender reading SA302s.
Below market value (BMV) mortgage
Valuation
A residential or buy to let mortgage on a property bought for less than the lender's valuation. For an ordinary purchase lenders generally lend on the lower of the price and the valuation; for a genuine concessionary purchase, such as a family or landlord sale, many use the valuation while capping the loan at the price.
Below market value (BMV) mortgage: Full definition · used on 15 pages
A below market value (BMV) mortgage is not a separate product. It is an ordinary mortgage where the agreed price is below the market value reported by the lender's valuer.
For an ordinary purchase, lenders that state a basis lend on the lower of the price and the valuation, so the discount does not by itself raise the loan. For a genuine concessionary purchase, where a relative, landlord or other connected seller knowingly passes part of the value to the buyer as a gift of equity, many lenders base the loan-to-value on the valuation and count the discount towards the deposit, usually with the loan capped at the discounted price. Others lend only on the price paid.
Which sellers qualify, the maximum loan-to-value, any cash deposit, the checks on the seller and how soon the property can be remortgaged all vary by lender and change over time.
BISF house
Valuation
A steel-framed house of the type designed by the British Iron and Steel Federation, with walls faced externally in steel sheeting, built in large numbers just after the Second World War. Lenders treat BISF homes as non-standard construction.
BISF house: Full definition · used on 4 pages
Government guidance describes a BISF house as non-traditionally built, with steel-frame walls faced externally with vertical steel sheeting; about 35,000 were built between 1945 and 1950. The steel frame can corrode, and some types are known to be susceptible near the coast.
BISF is not one of the nationally designated defective types, but lender treatment differs: some decline BISF whether or not it has been reclad, while others consider it at a reduced loan-to-value on the valuer's report. See non-standard construction mortgages.
Block discount
Valuation
The difference between a whole block’s investment value and the combined values of its units sold separately.
Block discount: Full definition · used on 1 page
The discount reflects the market for the whole block and the costs, time and risks of separate sales. A lender may use block value rather than aggregate unit value, which can reduce the loan available.
Breathing Space (Debt Respite Scheme)
Regulation
A scheme in England and Wales that gives a person getting debt advice legal protection from most creditor action, and from most interest and charges, for up to 60 days, or for longer during mental health crisis treatment.
Breathing Space (Debt Respite Scheme): Full definition · used on 1 page
Breathing Space is set up under the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, and the Insolvency Service runs it. A debt adviser applies on the person's behalf. A standard breathing space lasts up to 60 days; a mental health crisis breathing space lasts for the crisis treatment plus 30 days. During it most enforcement action and contact from creditors is paused, and most interest, fees and charges on the debts are frozen. Ongoing liabilities, such as a mortgage on the person's home, should be kept up where possible (GOV.UK: Breathing Space guidance for creditors).
The Insolvency Service keeps a private register of people in a breathing space, which is not published. Starting one should have no automatic effect on the credit file, but lenders that report payment information can keep doing so, so payments not made during it can still show as missed payments. Scotland has a separate six-month moratorium, which is recorded on the public Register of Insolvencies.
Bridge-to-let
Bridging finance
An arrangement that uses short-term bridging finance before moving to a buy-to-let mortgage.
Bridge-to-let: Full definition · used on 20 pages
An arrangement that uses short-term bridging finance before moving to a buy-to-let mortgage.
The bridge may fund a purchase or works before the property is ready for longer-term letting finance. A proposed refinance is not guaranteed; check whether it is a separate application or a conditional part of the same arrangement.
Bridging agreement in principle
Bridging finance
Indicative bridging terms based on initial information, subject to valuation, legal checks and underwriting.
Bridging agreement in principle: Full definition · used on 3 pages
Indicative bridging terms based on initial information, subject to valuation, legal checks and underwriting.
It is not a binding offer. The property valuation, title checks, evidence of the exit and full underwriting can change the amount or terms.
Bridging loan
Bridging finance
A short-term loan secured against property or land to cover a funding gap until an agreed repayment event, such as a sale or refinance.
Bridging loan: Full definition · used on 234 pages
A short-term loan secured against property or land to cover a funding gap until an agreed repayment event, such as a sale or refinance.
The lender assesses the security, borrower and proposed exit. Interest may be paid during the term, retained from the advance or added to the balance. The agreement sets the repayment date and costs; a planned sale or refinance is not guaranteed.
Read about can a bridging loan affect your mortgage application?.
Build to rent
Development finance
Residential development built to be held and let as a single operating block, rather than built to sell unit by unit.
Build to rent: Full definition · used on 8 pages
A build to rent scheme is valued as an investment: the rent roll, less operating costs and voids, capitalised at a yield. That investment value, not the sum of individual unit sales, is the gross development value the facility is sized against.
Because the exit is a refinance onto investment lending or an institutional sale rather than a sales programme, lenders underwrite the letting-up period and the operator alongside the build.
Schemes are commonly held in a single ownership with amenity space and on-site management, which is what distinguishes them from a block of flats sold individually.
Building regulations approval
Planning and tenure
Confirmation from building control that building work, such as an extension or a loft conversion, meets the building regulations. It is a separate consent from planning permission.
Building regulations approval: Full definition · used on 22 pages
In England and Wales the Building Regulations 2010 cover building work such as extending a building or making a structural alteration. A building control body checks the work and gives a completion certificate once it is satisfied the work complies. Where work was done without approval, the owner can apply for a regularisation certificate for work carried out on or after 11 November 1985 (legislation.gov.uk: Building Regulations 2010, regulation 18).
In Scotland a building warrant is needed before work such as an extension or a loft conversion starts, and a completion certificate is submitted to the council's verifier when it ends (mygov.scot: building warrants). Northern Ireland has its own building regulations, applied by councils. Lenders' and buyers' solicitors ask for these certificates, and work that is permitted development for planning purposes can still need building regulations approval.
Building Safety Act 2022
Regulation
The Act that created the Building Safety Regulator and a stricter regime for designing, building and occupying higher-risk residential buildings in England, and that protects leaseholders in many taller buildings from costs relating to relevant building safety defects.
Building Safety Act 2022: Full definition · used on 9 pages
During design and construction a higher-risk building is one in England at least 18 metres high or with at least seven storeys that has at least two residential units, or is a care home or hospital. Building control approval for it comes from the Building Safety Regulator and must be obtained before work starts, and a residential higher-risk building must be registered with the regulator before people live in it.
The leaseholder protections apply to a relevant building: a self-contained building in England with at least two dwellings that is at least 11 metres high or has at least five storeys. GOV.UK: building control approval for higher-risk buildings.
Buildings and contents insurance
Insurance
Home insurance in two parts: buildings insurance for the structure of a home and its permanent fixtures, and contents insurance for the belongings in it. They can be bought together or separately.
Buildings and contents insurance: Full definition · used on 21 pages
Buildings insurance pays to repair or rebuild the structure of a home, such as the walls, roof, floors and fitted kitchen and bathroom, after insured events such as fire, storm, flood, escape of water or subsidence. Its sum insured should be the home's rebuild cost, not its market value. Contents insurance pays to repair or replace belongings, and can be extended to belongings away from home. Buildings insurance is normally a condition of a mortgage (GOV.UK: how to buy a home), while contents insurance is the owner's choice. The owner of a leasehold flat usually pays for the block's buildings insurance through the service charge and insures only the contents.
Home insurance is regulated by the Financial Conduct Authority under its Insurance: Conduct of Business sourcebook (ICOBS), and since 1 January 2022 a renewal price cannot be higher than the price for an equivalent new customer. A consumer must take reasonable care not to make a misrepresentation when the insurer asks questions (legislation.gov.uk: Consumer Insurance (Disclosure and Representations) Act 2012, section 2).
Business bridging loan
Bridging finance
A bridging loan raised by a business rather than for a property purchase alone, used to acquire assets or a company, release equity from commercial property, consolidate debt, cover a VAT or tax bill, or exit development finance.
Business bridging loan: Full definition · used on 24 pages
A common use of a bridge loan for business acquisition is to purchase assets or acquire a company before arranging long-term financing. Business owners also use bridging loans to release equity from commercial properties, consolidate debt, cover unexpected VAT or tax bills, and fund renovation or development work. In property-backed sectors, business bridging loans are widely used to exit development finance or refinance commercial mortgages pending asset sale or long-term refinance.
Business purpose declaration
Regulation
A statement a borrower signs in a credit agreement that the borrowing is wholly or predominantly for a business. On buy to let it takes the loan outside the consumer buy to let regime unless the lender knows or suspects it is untrue.
Business purpose declaration: Full definition · used on 2 pages
For buy to let, the declaration is set out in article 4 of the Mortgage Credit Directive Order 2015. It must state that the agreement is entered into wholly or predominantly for the purposes of a business carried on, or intended to be carried on, by the borrower; that the borrower understands they will not have the protections and remedies of the consumer buy to let regime; and that they should seek independent legal advice if in doubt. The agreement is then presumed to be for business purposes, unless the lender, or someone acting for it, knows or has reasonable cause to suspect that it is not (legislation.gov.uk: Mortgage Credit Directive Order 2015, article 4).
Article 61A of the Regulated Activities Order uses the same declaration and presumption for its business exclusions from a regulated mortgage contract, including the investment property loan and the second charge business loan; there the declaration says the borrower will not have the protection and remedies available for a regulated mortgage contract (legislation.gov.uk: Regulated Activities Order, article 61A). On buy to let, some borrowers are treated as business borrowers whatever they declare: one who bought the property to let and has not lived in it, or one who already owns other let property. A declaration also does not change the position where a related person lives in the property, because the investment property loan exclusion cannot then apply.
Business purpose loan
Regulation
Credit taken wholly or predominantly for a business the borrower carries on or intends to carry on. Secured on the borrower's home, it is still a regulated mortgage contract unless it is a second charge business loan.
Business purpose loan: Full definition · used on 2 pages
A business purpose loan is credit a borrower takes wholly or predominantly for the purposes of a business they carry on, or intend to carry on. The purpose matters for some exclusions and exemptions, but it does not decide on its own whether a loan secured on a home is regulated. Under article 61 of the Regulated Activities Order, a regulated mortgage contract is credit to an individual or trustees secured on land at least 40% of which is used, or intended to be used, as or in connection with a dwelling, and the FCA's perimeter guidance says the definition contains no reference to the purpose of the loan.
A first charge remortgage or further advance on the borrower's own home is therefore a regulated mortgage contract even where the money goes into a business. Article 61A excludes a second charge business loan (more than £25,000, ranking behind another mortgage and taken for the borrower's business) and an investment property loan, where less than 40% of the land is used as a dwelling by the borrower or a related person (legislation.gov.uk: Regulated Activities Order, article 61A). A loan to a company is outside the definition because the borrower is not an individual.
Buy-to-let mortgage
Buy-to-let
A mortgage for a residential property bought or held to rent to tenants rather than occupy as the borrower’s own home.
Buy-to-let mortgage: Full definition · used on 384 pages
A mortgage for a residential property bought or held to rent to tenants rather than occupy as the borrower’s own home.
Lenders consider rental income, the property and the borrower’s circumstances. Repayment method, deposit requirements and regulatory classification depend on the product and the purpose of the borrowing.
Sources: MoneyHelper: buy-to-let mortgages.
C34 terms
Capital allowances
Fees and charges
Tax relief that lets a business deduct some or all of the cost of equipment, machinery and business vehicles from its profits before tax.
Capital allowances: Full definition · used on 5 pages
Capital allowances let a business deduct some or all of the value of plant and machinery, such as equipment, machinery and business vehicles including vans, from its profits before tax. The annual investment allowance deducts up to £1 million of qualifying plant and machinery in the year it is bought (GOV.UK: capital allowances).
A sole trader or partnership using the cash basis claims capital allowances only on business cars; other equipment and vehicles bought and kept for the business are claimed as allowable expenses. Limited companies and limited liability partnerships cannot use the cash basis and claim capital allowances under traditional accounting. Either way, a large purchase lowers the net profit for the year it is claimed in, and so the income a mortgage lender reads for that year, even though the business keeps the asset.
Capital raising (releasing equity)
Lending and affordability
Borrowing more against a property you already own, through a remortgage, a further advance or a second charge, to turn part of its equity into cash.
Capital raising (releasing equity): Full definition · used on 44 pages
Capital raising means taking out more borrowing secured on a property than is needed to repay the existing mortgage, so that part of the owner's equity is paid out as cash. On a home it is done by a remortgage to a new lender for a larger amount, a further advance from the existing lender or a second charge loan from another lender, each repaid monthly. Lenders ask what the money is for and set their own loan to value limits for capital raising.
On a home the borrower or a close relative lives in, the loan is normally a regulated mortgage, and any additional borrowing is assessed for affordability: the exception that lets a lender skip a fresh assessment on a new deal applies only where there is no extra borrowing beyond the balance, other than fees (FCA Handbook: MCOB 11.6.3R). Later-life borrowing without monthly repayments is a different product, equity release.
Care home mortgage
Commercial
A commercial mortgage secured against premises used as a care home.
Care home mortgage: Full definition · used on 12 pages
A commercial mortgage secured against premises used as a care home.
Assessment depends on whether the borrower operates the care business or lets the premises to an operator. Trading performance or lease income, property suitability and the operator’s required registrations are relevant.
The independent body that registers and inspects care services in each UK nation: the Care Quality Commission in England, Care Inspectorate Wales, the Care Inspectorate in Scotland and the RQIA in Northern Ireland.
Care regulator (CQC, CIW, Care Inspectorate, RQIA): Full definition · used on 14 pages
The Care Quality Commission regulates health and adult social care in England. Care Inspectorate Wales regulates social care and childcare in Wales. The Care Inspectorate, legally Social Care and Social Work Improvement Scotland, registers and regulates care services in Scotland. The Regulation and Quality Improvement Authority monitors and inspects health and social care services in Northern Ireland.
For a care home mortgage or a property let to a care operator, the operator's registration and its inspection reports form part of the lender's assessment. CQC, CIW, Care Inspectorate (mygov.scot), RQIA.
Cavity wall insulation (CWI)
Valuation
Insulation fitted into the space between the inner and outer walls of a home with cavity walls, which can typically be fitted in homes built after the 1920s.
Cavity wall insulation (CWI): Full definition · used on 3 pages
The Cavity Insulation Guarantee Agency (CIGA), set up in 1995, has provided independent 25-year guarantees for cavity wall insulation fitted by registered installers in the UK and Channel Islands. See mortgage refused because of cavity wall insulation.
Celebrity mortgage
Specialist lending
A mortgage arranged for a public figure whose income, assets or career require individual underwriting.
Celebrity mortgage: Full definition · used on 19 pages
A mortgage arranged for a public figure whose income, assets or career require individual underwriting.
The term describes the applicant’s circumstances rather than a separate mortgage product. Contracts, royalties, company income and assets may need specialist assessment, particularly where earnings vary or the career is short.
Certificate of lawful use
Planning and tenure
A certificate from the local planning authority confirming that an existing use of a property, such as an HMO, is lawful for planning purposes, so no enforcement action can be taken against it, or that a proposed use or building work would be lawful.
Certificate of lawful use: Full definition · used on 16 pages
Its formal name in England is a certificate of lawfulness of existing use or development, issued under section 191 of the Town and Country Planning Act 1990; GOV.UK calls it a lawful development certificate. A use is lawful if no enforcement action may then be taken against it and it does not breach an enforcement notice in force. Scotland's equivalent is issued under section 150 of the Town and Country Planning (Scotland) Act 1997.
A second kind, the certificate of lawfulness of proposed use or development under section 192 of the 1990 Act, confirms that a proposed use or building work would be lawful for planning purposes. A homeowner can apply for one where it is unclear whether an extension or loft conversion is permitted development. It covers planning only, not building regulations approval or listed building consent.
An HMO lender may ask for one where a property is used as an HMO without a specific planning permission, for example where the use began before an Article 4 direction came into force. GOV.UK: lawful development certificates.
Charge priority
Lending and affordability
The ranking of secured claims against a property, which affects the order in which lenders receive proceeds when the security is enforced.
Charge priority: Full definition · used on 66 pages
The ranking of secured claims against a property, which affects the order in which lenders receive proceeds when the security is enforced.
A second charge normally ranks behind a first charge. Legal priority, enforcement costs and any agreement between creditors affect the distribution; a first charge is not a promise of full repayment.
CIS mortgage
Specialist lending
A residential mortgage for a subcontractor paid under the Construction Industry Scheme, assessed under the lender's own rules for CIS income, evidence and time in the trade.
CIS mortgage: Full definition · used on 14 pages
Under the Construction Industry Scheme a contractor deducts tax at source from the labour part of a subcontractor's payments (not VAT or materials): 20% for a registered subcontractor, 30% for one who is not registered, and nothing where the subcontractor has HMRC gross payment status. A subcontractor can be a sole trader, a partnership or a limited company.
Lenders assess CIS income in different ways. Some average and annualise recent CIS payslips or statements, some deduct materials or expenses, and some assess CIS workers as self-employed on tax calculations or accounts, under their self-employed income rules.
How long the applicant has worked under CIS and how many months of evidence the lender reads are separate tests, and both vary by lender. A subcontractor with gross payment status may hold no deduction statements, so the evidence and the income figure depend on the lender.
Class Q
Planning and tenure
An English permitted development right allowing eligible agricultural buildings to become homes, subject to conditions and prior approval.
Class Q: Full definition · used on 5 pages
Class Q is not automatic permission for every barn. Eligibility, the proposed works and prior approval requirements must be checked with the local planning authority before relying on the conversion as a lending exit.
Close company
Commercial
A company under the control of five or fewer participators, or of participators who are directors. The status matters for some tax rules, including relief on loans to invest in the company.
Close company: Full definition · used on 1 page
A close company is a company under the control of five or fewer participators, or of participators who are directors (legislation.gov.uk: Corporation Tax Act 2010, section 439). A company that is not UK resident is not a close company. A company owned and run by one or a few directors usually meets the test.
The status matters for qualifying loan interest relief: an individual who borrows to buy shares in, or lend to, a close company that is not a close investment-holding company can claim relief on the interest if they meet the material interest or working conditions. Close companies also have their own tax rules on loans to participators, covered under director's loan account.
Co-Ownership (Northern Ireland)
Residential
Northern Ireland's shared ownership scheme. The buyer purchases a share of 50% to 90% of a home, usually with a mortgage, and pays rent to Co-Ownership on the rest.
Co-Ownership (Northern Ireland): Full definition · used on 5 pages
Co-Ownership is the shared ownership scheme run in Northern Ireland since 1978 by the Northern Ireland Co-Ownership Housing Association, which is regulated and part funded by the Department for Communities. It is the only provider of shared ownership there, and the English shared ownership model does not operate in Northern Ireland.
The buyer chooses a home on the open market, new build or existing, within a property value limit the Department sets, and buys a share of 50% to 90% of it, usually with a mortgage on that share from a lender that works with Co-Ownership. Co-Ownership owns the rest, the buyer holds the home on a 99-year lease, and Co-Ownership charges rent on its share, set as a percentage of the share's value and reviewed each year. The buyer can buy further shares, known as staircasing, at the home's value at the time, up to full ownership, and can sell at any stage at market value (Co-Ownership: shared ownership in Northern Ireland).
Co-Own for Over-55s is a version without a mortgage, in which the buyer pays for at least half the home from savings or a sale. Co-Ownership purchases are outside the Mortgage Guarantee Scheme, whose rules exclude shared ownership. The Great Britain schemes are described under shared ownership.
Commercial bridging loan
Bridging finance
Short-term finance secured against commercial or semi-commercial property, used where a commercial mortgage is too slow or unavailable until a lease, a planning consent or a trading position is resolved.
Commercial bridging loan: Full definition · used on 16 pages
A commercial bridging loan is a form of short-term finance secured against commercial or semi-commercial property. It is designed to provide fast, flexible funding where traditional commercial mortgages may be too slow, restrictive, or unavailable due to the property’s current status. Commercial bridging loans are commonly used where a property is not yet suitable for long-term mortgage finance, but is expected to be once certain issues are resolved. Typical examples include funding a lease extension or lease renewal, bridging a period while planning permission or change of use is obtained, or even providing time to build up trading accounts or stabilise rental income to secure a stronger commercial mortgage exit.
They are also used to purchase commercial property with short lease terms, vacant units, or assets requiring light refurbishment, where mainstream lenders would initially decline. Once the lease position is improved, planning is granted, or income is proven, the borrower can refinance onto a lower-rate commercial mortgage or sell the property. The loan-to-value available depends on the asset, the strength of the exit strategy and the borrower's profile. Both serviced interest (monthly payments, subject to affordability) and deducted or rolled-up interest (no monthly payments) are available, giving flexibility depending on cash flow and income evidence.
Bridging lenders differ in the commercial property experience they ask for, and pricing reflects the asset and the exit, so it can sit above residential bridging. The cost is weighed against the time it buys to reach a longer-term commercial mortgage once the property is improved or stabilised.
Commercial buy-to-let
Commercial
Mortgage finance for commercial property purchased or held as an investment and let to a business tenant.
Commercial buy-to-let: Full definition · used on 33 pages
Mortgage finance for commercial property purchased or held as an investment and let to a business tenant.
The property’s rental income and lease terms support the lending assessment. This differs from an owner-occupied commercial mortgage, where the borrower’s own business occupies the premises.
Commercial mortgage
Commercial
An asset-backed loan secured against commercial, semi-commercial or large-scale investment property, assessed on income sustainability, asset risk and valuation methodology rather than personal affordability alone.
Commercial mortgage: Full definition · used on 231 pages
A commercial mortgage is a bespoke, asset-backed loan secured against commercial, semi-commercial, or large-scale investment property, where lending is assessed primarily on income sustainability, asset risk, and valuation methodology, rather than personal affordability alone. These facilities are used by property investors, business owners, and owner-occupiers to fund acquisitions, refinances, or capital raising, and are suitable across all sectors and property types, including residential property portfolios, mixed-use and semi-commercial assets, as well as commercial lending structures applied to residential property.
Commercial mortgages are commonly used for non-standard residential arrangements, such as social housing, supported and care-based accommodation, serviced accommodation, and other operational or income-led residential models where standard residential finance is not appropriate. Lending is underwritten using sector-specific criteria, with affordability assessed on rental income for investment property or trading cash flow for owner-occupied premises, alongside income-led (MV1), vacant possession, or time-restricted valuations depending on the asset and strategy.
Loan structures, pricing, and terms vary according to property type, lease profile, tenant or operator strength, borrower experience, and market conditions. The maximum loan-to-value depends on asset quality, income security and any additional risk mitigants.
Committed expenditure
Lending and affordability
The credit and other contractual payments a borrower will keep making after the mortgage starts, which a lender takes into account when it assesses affordability.
Committed expenditure: Full definition · used on 42 pages
Committed expenditure is the FCA's term for a mortgage applicant's credit and other contractual commitments that continue after the mortgage begins. The FCA gives secured and unsecured loans, credit cards, hire purchase agreements, child maintenance and alimony as examples. A lender must take full account of it when assessing affordability, alongside income net of tax and the household's basic living costs, and must take reasonable steps to find the actual commitments, for example with a credit reference agency search or statements (FCA Handbook: MCOB 11.6).
Each lender decides how to count each commitment, for example whether to take a percentage of a credit card balance as a monthly cost, and a commitment due to end shortly after completion may be left out on a common sense view. Because the payment comes off the income the mortgage is tested against, clearing a commitment can raise the maximum loan by much more than the balance repaid. The FCA treats childcare as a basic quality-of-living cost rather than committed expenditure.
Community Infrastructure Levy (CIL)
Planning and tenure
A charge a local authority in England or Wales can set on new development in its area to help fund infrastructure. It applies only where the authority has adopted a charging schedule.
Community Infrastructure Levy (CIL): Full definition · used on 6 pages
The legal basis is Part 11 of the Planning Act 2008. A council that charges the levy publishes a charging schedule after consultation, and the levy sits alongside any section 106 planning obligations on the same scheme. Scotland has no Community Infrastructure Levy. GOV.UK: Community Infrastructure Levy.
Company director mortgage
Residential
A residential or buy to let mortgage in a company director's own name, where the lender assesses the income the director draws from, or earns through, a company they own.
Company director mortgage: Full definition · used on 13 pages
The director is the borrower and applies for the same mortgage products as any other borrower. A director whose shareholding reaches the lender's threshold is assessed as self-employed, and the lender reads the income in one of two ways: the salary and dividends the director drew, from HMRC tax calculations, or the salary plus the director's share of the company's net profit, from the accounts, which also counts retained profit. A director below the threshold is usually assessed as an employee.
Lenders set their own shareholding thresholds, years of accounts and averaging rules, so the same director can be offered very different amounts by different lenders. A mortgage on the director's own home is a regulated mortgage, and the lender must take account of the director's income net of income tax and National Insurance (FCA Handbook: MCOB 11.6). Buying property through the company is a different product, an SPV mortgage.
Comparable evidence
Valuation
Prices and other market information from similar properties that a valuer uses to support a valuation. It underpins almost every property valuation.
Comparable evidence: Full definition · used on 60 pages
RICS describes a comparable as information used during a valuation as evidence to support the value of another, similar item, on the principle that a buyer looks at the prices achieved for similar items. The best evidence is recent, verifiable, from arm's-length transactions and closely similar to the property being valued; where it falls short, the valuer analyses and adjusts it using judgement. RICS: comparable evidence in real estate valuation.
Concessionary purchase
Residential
A sale of a home below its market value to someone the seller has a connection with, such as a relative, a sitting tenant or an employee. The discount, called gifted equity, can count towards the buyer's deposit with lenders that accept it.
Concessionary purchase: Full definition · used on 14 pages
In a concessionary purchase the seller knowingly accepts less than the home is worth, and the difference between the open market value and the price is treated as a gift of equity to the buyer. Some lenders that accept it work out the loan-to-value on their own valuation and cap the loan at the discounted price, so the gifted equity can replace some or all of the cash deposit. Others lend only on the price paid. Family sales are the type accepted most widely, and fewer lenders accept a landlord selling to a sitting tenant or an employer selling to an employee.
The discount must be an unconditional gift, with no repayment or share kept by the seller, confirmed in writing. Because the parties are connected, the sale also has tax effects. The buyer's Stamp Duty Land Tax is charged on the price paid, while a sale to a connected person is treated as made at market value for capital gains tax, and the discount can be a gift for Inheritance Tax (gov.uk: Inheritance Tax on gifts). A Right to Buy discount works in a similar way under each lender's own Right to Buy rules.
Connected person (tax)
Regulation
Someone the tax rules treat as linked to you, such as your spouse or civil partner, a parent, child, grandchild or sibling, or one of their spouses. For capital gains tax, a sale to a connected person is treated as made at market value, whatever price is paid.
Connected person (tax): Full definition · used on 3 pages
For capital gains tax, section 286 of the Taxation of Chargeable Gains Act 1992 connects an individual with their spouse or civil partner, their relatives, the spouses or civil partners of those relatives, and the relatives of their own spouse or civil partner, along with some trustee, partner and company links. A relative here means a brother, sister, ancestor or lineal descendant, so aunts, uncles, nieces and nephews are not connected (HMRC: CG14580 connected persons). A disposal to a connected person is treated as not made at arm's length, so the gain is worked out on the market value instead of the price, and HMRC applies the same rule to a sale for less than full value made to help the buyer.
Other taxes use their own versions. For Inheritance Tax the definition also includes uncles, aunts, nephews and nieces, and in Stamp Duty Land Tax the market value rule applies to a transfer to a company connected with the seller, not to a sale between individuals. On a concessionary purchase by a relative, the buyer pays stamp duty on the price while the seller's gain is measured at market value.
Consent order
Regulation
A court order making an agreed financial settlement legally binding in divorce or civil partnership dissolution proceedings.
Consent order: Full definition · used on 1 page
In England and Wales, a financial consent order can record an agreed property transfer or lump-sum payment. The mortgage lender’s consent and affordability checks remain separate from the court’s approval of the settlement.
Consent to let
Residential
A residential mortgage lender's agreement to the borrower letting the mortgaged home under the existing mortgage, instead of moving it onto a buy to let mortgage.
Consent to let: Full definition · used on 4 pages
A residential mortgage is lent on the basis that the borrower lives in the property, so a borrower who wants to let it, for example after moving for work or failing to sell, must tell the lender and have its agreement first. MoneyHelper warns that letting without telling the lender could invalidate the mortgage, and that a lender that agrees may charge a higher interest rate, an annual fee or both (MoneyHelper: buy-to-let mortgages explained). The borrower's insurer also needs to be told.
Lenders decide case by case, and some decline. The alternative is to remortgage onto a buy to let mortgage; for a former home where the borrower owns no other let property, that can be a consumer buy to let mortgage, and where the borrower is buying another home at the same time it can be arranged as a let to buy.
Consumer buy-to-let mortgage
Regulation
A buy-to-let loan within the consumer buy-to-let regime because the borrowing is not wholly or predominantly for a business purpose.
Consumer buy-to-let mortgage: Full definition · used on 23 pages
A buy-to-let loan within the consumer buy-to-let regime because the borrowing is not wholly or predominantly for a business purpose.
Letting a former home can be relevant, but the classification depends on the circumstances. Consumer buy-to-let has a separate statutory framework and should not be described as identical to a regulated residential mortgage.
Sources: FCA: consumer buy-to-let framework.
The duty a consumer has, under the Consumer Insurance (Disclosure and Representations) Act 2012, to take reasonable care not to misrepresent anything to an insurer when taking out or changing a policy.
Consumer insurance disclosure (CIDRA 2012): Full definition · used on 7 pages
The Consumer Insurance (Disclosure and Representations) Act 2012 replaced the older duty to volunteer information with a duty to take reasonable care not to make a misrepresentation, which in practice means answering the insurer's questions fully and accurately (legislation.gov.uk: CIDRA 2012, section 2). The standard is that of a reasonable consumer, and how clear and specific the insurer's questions were is taken into account. The Act applies in England, Wales, Scotland and Northern Ireland.
If a misrepresentation was deliberate or reckless, the insurer may avoid the policy and refuse all claims. If it was careless, the remedy depends on what the insurer would have done with the right answer: avoid the policy and return the premiums, treat the policy as written on different terms such as an exclusion, or reduce a claim in proportion to the higher premium it would have charged (legislation.gov.uk: CIDRA 2012, Schedule 1). Disputes can go to the Financial Ombudsman Service.
Consumer Prices Index (CPI)
Lending and affordability
A measure of consumer price inflation published monthly by the Office for National Statistics, tracking the change in prices of goods and services bought by households. It is the measure used for the government's inflation target.
Consumer Prices Index (CPI): Full definition · used on 6 pages
Some property and loan terms rise in line with CPI. English Help to Buy equity loans taken from 2021 to 2023 increase their interest rate each April by CPI plus 2%, and Scottish rent control areas link permitted rent increases to CPI.
Contractor mortgage
Specialist lending
A mortgage where the lender assesses a contractor's income from the contract, usually by annualising the day rate, or from umbrella or fixed-term payslips, rather than only from company accounts.
Contractor mortgage: Full definition · used on 28 pages
A contractor's income can be read in different ways: the day rate annualised over a set number of working weeks, the payslips from an umbrella company or a fixed-term employer, or the salary, dividends and profits in a limited company's accounts. The same work can give very different affordability results depending on which reading the lender uses.
Lenders with a contractor policy set their own rules on the number of weeks they annualise over, the contracting history they need, the time left on the current contract, the gaps they allow between contracts and how they treat umbrella pay. Some deduct umbrella or employer costs before annualising, and some do not accept umbrella income.
IR35, the off-payroll working rules, is a tax status that decides who deducts income tax and National Insurance. Lenders look at how the contractor is actually paid, rather than applying one rule to everyone inside or outside IR35.
Country house mortgage
Specialist lending
A mortgage on a rural home where land, outbuildings, services or occupancy restrictions affect lender choice.
Country house mortgage: Full definition · used on 20 pages
A mortgage on a rural home where land, outbuildings, services or occupancy restrictions affect lender choice.
Acreage, business use, private services and planning restrictions can affect valuation and lender choice. Land is not automatically non-residential for SDLT simply because the holding is large.
County court judgment (CCJ)
Lending and affordability
A court order in England and Wales that a person or business pays a debt, made when a creditor's claim succeeds or goes unanswered. Most are recorded on the public Register of Judgments, Orders and Fines for six years.
County court judgment (CCJ): Full definition · used on 51 pages
A county court judgment is the court's formal decision that money is owed. Most money judgments, including judgments entered in default because the claim went unanswered, are sent by the court to Registry Trust for the Register of Judgments, Orders and Fines, and from there to the credit reference agencies. The entry stays for six years from the date of judgment. Paid in full within one calendar month, it can be cancelled and removed. Paid later, it can be marked satisfied, and it then stays for the rest of the six years showing that it was paid. A judgment the court sets aside is removed (GOV.UK: CCJs and your credit rating).
Scotland's equivalent is a decree of the sheriff court, which the court can recall. Northern Ireland has its own judgments, enforced through the Enforcement of Judgments Office. Lenders treat a judgment as adverse credit, and older and satisfied judgments generally weigh less than recent unpaid ones (Registry Trust: guide to CCJs).
Credit reference agency
Lending and affordability
A company that holds records of how people have managed credit and other accounts, and supplies them to lenders deciding whether and on what terms to lend.
Credit reference agency: Full definition · used on 53 pages
Lenders, phone companies and utility providers share monthly account data with the agencies. The agencies also hold electoral roll details and public records such as county court judgments and insolvencies. The three large agencies are Experian, Equifax and TransUnion, and MoneyHelper also lists Crediva as an agency that provides a statutory credit report. Not every lender reports to every agency, and the FCA's credit information market study found material differences between the files the three large agencies held (FCA, December 2023), so a lender can see a different history from the report you checked.
You can get your statutory credit report free from each agency. An inaccurate entry can be challenged with the lender or the agency, and under section 159 of the Consumer Credit Act 1974 you can add a notice of correction of up to 200 words. The Financial Conduct Authority regulates the agencies, and the data protection regulator, the Information Commission (ICO), oversees how they handle personal data.
Credit score
Lending and affordability
A number that summarises the information on a credit file as an estimate of how likely a person is to repay borrowing. Each credit reference agency shows consumers its own score on its own scale, and lenders apply their own scoring to the file.
Credit score: Full definition · used on 48 pages
The scores consumers see come from the credit reference agencies, each worked out from the data that agency holds and on its own scale. As at October 2026, Experian's runs from 0 to 1,250 and Equifax's from 0 to 1,000, and TransUnion is moving from a scale of 0 to 710 to one of 0 to 999, with score providers switching from September 2026 (TransUnion: support and FAQs). Bands such as fair, good or low are each agency's own.
Lenders do not decide on the number a consumer sees. They assess the information on the credit file, often from more than one agency, and apply their own scorecards and lending criteria, which they do not have to publish, so there is no minimum credit score for a mortgage. The ICO explains that each lender sets its own pass mark, so an application refused by one lender can be accepted by another (ICO: Credit explained). A score can be low because of adverse credit, or because of a thin file, high credit use, a missing electoral roll entry, recent credit searches or a financial association.
Credit search (soft and hard searches)
Lending and affordability
The record made on a credit file when an organisation looks at it. A hard search, made when you apply for credit, can be seen by other lenders; a soft search, such as your own check or a quotation, is visible only to you.
Credit search (soft and hard searches): Full definition · used on 14 pages
Every time an organisation looks at a credit file, the credit reference agency records a search, sometimes called a footprint, showing who searched, when and the type of search. A hard search follows an application for credit and other lenders can see it. Experian and Equifax keep hard searches visible to lenders for a year (Experian: data retention periods), and TransUnion shows searches for two years. The ICO says lots of searches in a short space of time can imply that a person is having problems getting credit (ICO: credit).
A soft search, such as checking your own report, an identity check, an eligibility checker or a quotation search while you shop around, is visible only to you and does not affect the score lenders see. Some lenders give an agreement in principle on a soft search and others record a hard search, so it is worth asking which before agreeing to one.
Critical illness cover
Insurance
Insurance that pays a lump sum if the person covered is diagnosed with one of the serious illnesses listed in the policy, such as cancer, heart attack or stroke, and the diagnosis meets the policy's definition.
Critical illness cover: Full definition · used on 7 pages
Every policy sold as critical illness cover by a firm that follows the Association of British Insurers' Guide to Minimum Standards for Critical Illness Cover must include three core conditions, cancer, heart attack and stroke, each defined at least as widely as the Guide's model wording. Insurers can add further conditions and go beyond the minimum, so the list and the definitions differ between policies. The current Guide is dated 16 September 2022 and was clarified in April 2023 (ABI: Guide to Minimum Standards).
Cover depends on insurance underwriting: an insurer may accept an applicant on standard terms, at a higher premium, with an exclusion for an existing condition, or not at all. Severity-based policies pay part of the sum assured for less serious diagnoses and the full sum for the most severe. When applying, the applicant must take reasonable care to answer the insurer's questions accurately (consumer insurance disclosure). Critical illness cover can be bought on its own or with life insurance, and it differs from income protection, which pays a monthly income while illness or injury stops the person covered from working, whatever the cause.
Cross-collateralisation
Lending and affordability
An arrangement where several properties each secure the whole of a loan or facility, so the lender can look to any of them for the full debt.
Cross-collateralisation: Full definition · used on 5 pages
On a portfolio or revolving facility the lender takes a charge over each property, and the security documents make every property answerable for the whole limit. The lender gets security across the portfolio, and the borrower gets one facility in place of a separate loan on each property.
Selling or refinancing one property then involves the lender, because the charge over it is released only on the terms in the agreement, usually on repayment of an agreed release amount. A fall in the value of one property can affect the limit for all of them. Bridging lenders use a similar idea when they take a charge over a second property as additional security. See charge priority and portfolio mortgage.
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 23 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 6 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 21 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 84 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 5 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 3 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 11 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 115 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 33 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 2 pages
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 27 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 35 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 2 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 168 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 8 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 50 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 118 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 118 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 8 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 769 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 83 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 35 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 31 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 29 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 53 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 20 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 16 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.
H13 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 33 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 3 pages
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 40 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 97 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 93 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 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 23 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.
I15 terms
Income payments agreement (IPA)
Regulation
A written agreement under which a bankrupt pays part of their income to the trustee for a set period of up to three years, which can continue after discharge.
Income payments agreement (IPA): Full definition · used on 1 page
An income payments agreement is made between the bankrupt and the trustee or the official receiver where the bankrupt's income is more than they need for reasonable domestic needs. It sets the amount and the period, which may run past discharge but cannot end more than three years after the agreement is made (Insolvency Act 1986, section 310A). Where no agreement is reached, the court can make an income payments order to the same effect.
The payments must continue until the agreement ends, even after the bankruptcy itself has ended. A mortgage lender counts them as a commitment when it assesses affordability, so they reduce the amount it will lend on income while they run.
Income protection insurance
Insurance
Insurance that pays a monthly income, a proportion of your earnings, if illness or injury stops you working, starting after a waiting time called the deferred period.
Income protection insurance: Full definition · used on 11 pages
Income protection insurance, also called permanent health insurance, replaces part of your income if illness or injury stops you working. It pays a monthly benefit after a deferred period chosen at the start, and keeps paying until you return to work, the benefit period ends or the policy ends. The benefit is a proportion of earnings, up to a maximum each insurer sets. Policies differ in the occupation test they use, such as own occupation, and in whether the benefit period is full term or limited for each claim.
It is a pure protection contract with no cash-in value, and advising on or arranging it is insurance distribution regulated by the Financial Conduct Authority under its Insurance: Conduct of Business sourcebook (ICOBS). Benefit from a personal policy you pay for yourself is free of income tax (legislation.gov.uk: ITTOIA 2005, section 735); benefit from a policy an employer pays for is taxed as earnings. It differs from critical illness cover, which pays a lump sum on diagnosis of a listed condition whether or not you can work.
Incorporation relief
Regulation
A capital gains tax relief that postpones the gain when a business is transferred to a company as a going concern in exchange for shares.
Incorporation relief: Full definition · used on 7 pages
Under section 162 of the Taxation of Chargeable Gains Act 1992, when a person who is not a company transfers a business to a company as a going concern, with all its assets or all of them other than cash, wholly or partly in exchange for shares, the gain is deducted from the cost of the shares and taxed when the shares are disposed of. For transfers on or after 6 April 2026 the relief has to be claimed (HMRC Capital Gains Manual: CG65700).
Landlords moving a portfolio into a company need to know whether their letting is a business. HMRC treats that as a question of fact, looking at the overall level of activity, and accepts a business where an individual spends 20 hours or more a week on business-type activities (HMRC Capital Gains Manual: CG65715). The relief covers capital gains tax only: Stamp Duty Land Tax on the transfer is worked out separately. A tax adviser should confirm whether it applies.
Indefinite leave to remain (ILR)
Specialist lending
Settlement in the UK: an immigration status that gives the right to live, work and study in the UK without a time limit, and can lead to British citizenship.
Indefinite leave to remain (ILR): Full definition · used on 6 pages
Lenders that assess foreign national applicants look at immigration status, including whether the applicant holds ILR or a time-limited visa. GOV.UK: indefinite leave to remain.
Individual Insolvency Register
Regulation
The public register of bankruptcies, debt relief orders and individual voluntary arrangements in England and Wales, kept by the Insolvency Service.
Individual Insolvency Register: Full definition · used on 3 pages
The register lists bankruptcies, debt relief orders and individual voluntary arrangements that are current or ended in the last three months, together with current bankruptcy restrictions orders and undertakings. A bankruptcy entry is removed three months after discharge, and a restrictions order or undertaking when it expires (Insolvency Service: the Individual Insolvency Register). Anyone can search it free.
The register is separate from the credit file: a bankruptcy can stay on the credit file for six years from the order after it has left the register. Scotland keeps its own Register of Insolvencies, run by the Accountant in Bankruptcy, and Northern Ireland keeps separate registers for its bankruptcies, debt relief orders and IVAs.
Individual voluntary arrangement (IVA)
Lending and affordability
A formal agreement with creditors to repay all or part of a person's debts through regular payments to an insolvency practitioner, who shares the money between the creditors. It counts as adverse credit.
Individual voluntary arrangement (IVA): Full definition · used on 29 pages
The insolvency practitioner works out what the debtor can afford and how long the arrangement lasts. In England and Wales it starts once creditors holding three-quarters or more by value of the debts of those who respond vote for it, and the unsecured debts included in it are released when it completes. IVAs are available in England, Wales and Northern Ireland; in Scotland the comparable route is a trust deed, which can become a protected trust deed. Secured debts such as a mortgage sit outside the arrangement and continue to be paid.
Consumer IVAs can be proposed under the Insolvency Service's IVA Protocol, a standard framework that practitioners and creditors agree to follow. Under the 2025 version, which must be used for protocol IVAs proposed from 1 July 2025, the family home is excluded: the IVA runs for 60 months, or 72 months where the debtor's share of 85% of the home's value less secured borrowing is £10,000 or more (IVA Protocol 2025). In England and Wales an IVA is listed on the Individual Insolvency Register until three months after it ends, and Northern Ireland keeps its own IVA register; an IVA stays on the credit file for six years from its start. Lenders treat a current or past IVA as adverse credit, and their rules on how recent it is differ. GOV.UK: individual voluntary arrangements.
Inheritance Tax (IHT)
Regulation
A tax on the estate of someone who has died, charged at 40% on the value above the available tax-free bands: the £325,000 nil-rate band and, where a home passes to children or grandchildren, the residence nil-rate band of up to £175,000.
Inheritance Tax (IHT): Full definition · used on 22 pages
Inheritance Tax is paid from the estate by the personal representatives. The nil-rate band is £325,000, and the residence nil-rate band adds up to £175,000 where a home, or a share of one, goes to children or grandchildren. The residence band tapers away by £1 for every £2 that the estate is worth over £2 million. Unused bands can pass to a surviving spouse or civil partner, and both bands and the taper threshold are frozen until 5 April 2031. The rate is 40%, or 36% on some assets where 10% or more of the net estate goes to charity, and what passes to a spouse, civil partner or charity is normally exempt.
The tax is due by the end of the sixth month after the death, with interest after that at Bank Rate plus 4 percentage points. The tax on land, buildings and some business assets can be paid in 10 yearly instalments, usually with interest on the unpaid balance, and from 6 April 2027 most unused pension funds will count towards the estate. GOV.UK: how Inheritance Tax works.
Insolvency practitioner (IP)
Lending and affordability
A person licensed to act in insolvency cases, such as proposing and running an individual voluntary arrangement or acting as a trustee in bankruptcy.
Insolvency practitioner (IP): Full definition · used on 9 pages
In an individual voluntary arrangement, the insolvency practitioner acting as the nominee helps the debtor draft the proposal and puts it to the creditors. Once it is approved, the practitioner acting as the supervisor receives the payments, pays the creditors after deducting fees, and issues the completion certificate at the end (Insolvency Service: IVA Protocol 2025). Under the protocol's standard terms the debtor needs the supervisor's prior written approval for credit of more than £500, so a mortgage or remortgage during an IVA starts with the supervisor.
Insolvency practitioners are licensed and regulated by recognised professional bodies, and only a licensed practitioner can set up an IVA. In Scotland only a licensed insolvency practitioner can arrange a trust deed, and the practitioner then acts as its trustee. GOV.UK: find an insolvency practitioner.
Insurable interest
Insurance
The financial stake a policyholder must have in the life or event insured. For life cover, the law limits what can be recovered to the value of that stake.
Insurable interest: Full definition · used on 1 page
Insurable interest is the financial stake a policyholder must have in the life or event it insures. The Life Assurance Act 1774, which applies in England, Wales, Scotland and Northern Ireland, makes a policy on a life void where the person for whose benefit it is made has no interest in that life, or where it is made by way of gaming or wagering, and provides that no greater sum can be recovered than the value of the interest (legislation.gov.uk: Life Assurance Act 1774).
For key person insurance, the business's interest is the money it would lose if the person died, such as lost profit, the cost of a replacement or a loan the person supports. That is why insurers ask a business for accounts and details of the person's role, and limit the sum assured to what the evidence supports.
Insurance-backed guarantee (IBG)
Valuation
A contractor's guarantee for specialist work, such as Japanese knotweed treatment, with an insurance policy behind it so the cover continues if the contractor stops trading.
Insurance-backed guarantee (IBG): Full definition · used on 2 pages
An insurance-backed guarantee has two parts: the contractor's own guarantee to come back and put right a covered problem during the guarantee period, and a separate insurance policy that keeps that cover valid if the contractor becomes insolvent or ceases to trade.
For Japanese knotweed, the RICS professional standard expects a management plan to carry a guarantee of at least 5 years after the remediation contract is complete, with third-party insurance behind it, and expects most lenders to want one at management categories A and B. The PCA code of practice says knotweed guarantees most commonly cover 5 or 10 years. The guarantee should be transferable to later owners. The minimum term and the evidence a lender accepts are set by each lender.
Insurance underwriting
Insurance
An insurer's assessment of the risk in an application for cover, which decides whether it offers the cover and on what terms.
Insurance underwriting: Full definition · used on 2 pages
Insurance underwriting looks at the person to be insured: health and medical history, lifestyle and smoking, occupation, hazardous pursuits and travel. The insurer uses the answers on the application and, where it asks, a report from the applicant's GP or specialist. It ends in one of five decisions: standard terms; an increased premium, called a premium loading; an exclusion, which removes claims from a specified cause; a postponement until a set time has passed or results are known; or a decline. Criteria and approaches vary between insurers, so the same facts can lead to different decisions (MoneyHelper: buying insurance if you are ill or disabled).
In England, Wales and Scotland the Equality Act 2010 allows an insurer to treat a disabled applicant differently only by reference to relevant information from a source on which it is reasonable to rely. Insurance underwriting is separate from a lender's underwriting of a mortgage application, which assesses the borrower, the property and the loan.
Interest coverage ratio (ICR)
Buy-to-let
Income divided by interest costs over the same period, often expressed as a percentage in buy-to-let lending.
Interest coverage ratio (ICR): Full definition · used on 76 pages
Income divided by interest costs over the same period, often expressed as a percentage in buy-to-let lending.
In buy to let, the Prudential Regulation Authority defines it as the expected monthly rent divided by the monthly mortgage interest at a stressed rate that allows for likely rate rises, and describes 125% as the current industry minimum (Bank of England: SS13/16). Lenders are also expected to allow for the tax on the property, so some ask higher-rate taxpayers for more cover than basic-rate taxpayers or companies. The required ratio, the stress rate, the rent the lender accepts and other borrowing limits vary by lender, and the result is only one of the limits on the loan. See also rental stress test and top slicing.
Interest-only mortgage
Residential
A mortgage where regular payments cover interest, while the capital remains due at the end of the term.
Interest-only mortgage: Full definition · used on 22 pages
A mortgage where regular payments cover interest, while the capital remains due at the end of the term.
The borrower needs a repayment strategy acceptable to the lender. Making the interest payments does not reduce the original borrowing.
Sources: MoneyHelper: mortgage repayment options.
Investment valuation
Valuation
A property valuation that considers the income the property can generate and the return required by market participants.
Investment valuation: Full definition · used on 93 pages
A property valuation that considers the income the property can generate and the return required by market participants.
Rent, operating assumptions, lease terms and an appropriate yield influence the result. A lender may commission another valuation basis, so rental income alone does not establish the amount it will lend.
Lenders and valuers often call an income-based valuation an MV1 (market value 1) valuation. The label is used loosely, so the lender's valuation instruction states the basis it wants.
IR35
Specialist lending
The off-payroll working rules: tax law that decides whether a contractor working through their own limited company should pay tax and National Insurance as if employed by the client.
IR35: Full definition · used on 5 pages
The rules apply where a worker provides services to a client through their own intermediary, usually a personal service company. In most cases the client decides the worker's status and issues a status determination statement; where the client is small and outside the public sector, the contractor's own company decides. If the work is inside IR35, the fee payer deducts income tax and employee National Insurance before paying the contractor's company.
HMRC says the rules are unlikely to apply to someone employed by an umbrella company. IR35 settles who deducts tax, not whether a lender will lend: lenders publish their own rules on how they read a contractor's income. GOV.UK: understanding off-payroll working (IR35).
J5 terms
Japanese knotweed
Valuation
An invasive plant that spreads through underground stems called rhizomes, and a new plant can grow from a piece of rhizome as small as 1cm. Valuers and surveyors who find it at or next to a home place it in an RICS management category from A to D.
Japanese knotweed: Full definition · used on 10 pages
Japanese knotweed (Reynoutria japonica, formerly Fallopia japonica) is a perennial introduced to the UK in the mid-19th century. It grows tall, hollow, bamboo-like canes that die back in winter, and its rhizomes can lie dormant in the soil for long periods and regrow if disturbed. In England and Wales, planting it or causing it to grow in the wild is an offence under the Wildlife and Countryside Act 1981, and contaminated soil may be controlled waste.
Since 23 March 2022, RICS valuers and surveyors place knotweed at a residential property in a management category under the RICS professional standard: A where it is damaging a structure, B where it affects amenity space such as a garden or driveway, C where it is present without either, and D where it is on adjoining land within 3 metres of the boundary. At A and B most lenders are expected to require a management plan with an insurance-backed guarantee, often with a retention. The categories replaced the 7 metre distance test used since 2012.
Jersey mortgage
Specialist lending
A loan secured against property in Jersey under the island’s property law and the lender’s applicable requirements.
Jersey mortgage: Full definition · used on 7 pages
A loan secured against property in Jersey under the island’s property law and the lender’s applicable requirements.
Property ownership, registration and borrower eligibility differ from mainland UK arrangements. Check the legal security and regulatory status of the specific lender and agreement rather than assuming UK mortgage rules apply.
Joint borrower sole proprietor (JBSP)
Residential
A mortgage where a supporting borrower's income is used for affordability but they take no share of the property. All borrowers are jointly liable for the debt; only the buyer is on the title.
Joint borrower sole proprietor (JBSP): Full definition · used on 27 pages
A joint borrower sole proprietor mortgage separates liability from ownership. A parent or other supporter is named on the mortgage, so their income counts towards affordability, but not on the title deeds.
Because the supporter takes no beneficial interest, the purchase does not attract the additional dwelling surcharge on their account, and the buyer's first-time buyer relief is preserved where it would otherwise apply.
The supporter is jointly and severally liable for the whole debt, and the mortgage appears on their credit file. Lenders differ on the maximum number of borrowers and on whose age sets the maximum term.
Joint mortgage
Residential
A mortgage taken out by two or more borrowers, each of whom is responsible for the whole debt.
Joint mortgage: Full definition · used on 15 pages
Joint borrowers are jointly and severally liable: each is responsible for the whole mortgage, whoever makes the payments, and the lender can pursue any of them for arrears. If one borrower dies, the others still have to repay the whole debt (MoneyHelper: joint loans).
The lender assesses every borrower's income, commitments and credit file, and the joint account links the borrowers' credit files as a financial association. Who owns the property, and in what shares, is a separate question, settled by how the title is held (as joint tenants or tenants in common in England and Wales), by any declaration of trust and, without one, by what a court finds the owners intended. A borrower can be removed only with the lender's agreement, usually through a transfer of equity or a remortgage, with the remaining borrowers' income assessed alone.
Joint venture development finance
Development finance
Development funding where the funder provides most or all of the equity as well as the debt, and takes a share of the profit instead of charging the developer for that equity.
Joint venture development finance: Full definition · used on 6 pages
In a joint venture the funder supplies the equity a developer would normally have to find, and is paid out of the scheme's profit rather than through interest on that portion.
The structure is usually a special purpose vehicle owned by both parties, with the profit split, any priority return, and the treatment of cost overruns all set out before drawdown.
It suits a developer with a consented scheme and no equity, or with more schemes than equity. The cost is a share of the profit, so it is compared against conventional funding and mezzanine on what the developer keeps, not on the headline rate.
K1 term
Key person insurance
Insurance
A life policy, often with critical illness cover, that a business takes out and owns on a person whose death or serious illness would cost it money. The business pays the premiums and receives any payout.
Key person insurance: Full definition · used on 6 pages
Key person insurance, also called keyman insurance or key person cover, is usually term life cover, often with critical illness cover, on a founder, director, salesperson or specialist whose loss would cause the business financial harm. The business is the policyholder and the beneficiary; the insured person's family receive nothing from it. The business must have an insurable interest in the person's life, and insurers ask for evidence, such as accounts, that justifies the sum assured.
The sum is usually justified by a multiple of the person's remuneration, their share of gross profit over the time needed to replace them, the cost of recruiting a replacement, or borrowing that depends on them. HMRC treats the premiums as a trading expense where the sole purpose is to meet a loss of trading income and a life policy is term insurance with no other benefits, and a payout on such a policy is then a trading receipt (GOV.UK: HMRC Business Income Manual, BIM45525). It differs from shareholder protection, which pays the remaining owners, and a relevant life policy, which pays an employee's family.
L18 terms
Land and Buildings Transaction Tax (LBTT)
Fees and charges
The tax on residential and commercial land and property transactions in Scotland, which replaced Stamp Duty Land Tax there in 2015 and is administered by Revenue Scotland.
Land and Buildings Transaction Tax (LBTT): Full definition · used on 26 pages
Revenue Scotland manages and collects the tax, and the Scottish Government sets its rates. Buying an additional home, or residential property through a company, usually also brings the Additional Dwelling Supplement. Revenue Scotland: LBTT.
Land bridging loan
Bridging finance
A short-term loan secured against land, used to fund a purchase or release capital before an agreed repayment event.
Land bridging loan: Full definition · used on 56 pages
A short-term loan secured against land, used to fund a purchase or release capital before an agreed repayment event.
Planning status, access, permitted use and saleability affect the security assessment. Repayment may depend on a sale or subsequent finance, which must be assessed separately.
Land Transaction Tax (LTT)
Fees and charges
The tax on buying land and property over a certain price in Wales, which replaced Stamp Duty Land Tax there in 2018 and is collected by the Welsh Revenue Authority.
Land Transaction Tax (LTT): Full definition · used on 25 pages
Higher residential rates may apply where the buyer already owns one or more residential properties, unless they are replacing their main residence. Wales has no separate first-time buyer relief. Welsh Government: Land Transaction Tax.
Large panel system (LPS)
Valuation
A method of building blocks of flats and some houses from large precast concrete panels, used mainly in the 1960s and 1970s. Lenders treat LPS as non-standard construction, and many decline it.
Large panel system (LPS): Full definition · used on 3 pages
Government guidance to councils describes large panel system buildings as built from large precast concrete panels, many between 1963 and 1978. After the 1968 gas explosion and partial collapse at Ronan Point, councils were told to appraise and, where necessary, strengthen such blocks, and later guidance says every LPS building's structural history and condition should be known and monitored.
Many lenders decline LPS; some consider an LPS house with a satisfactory structural engineer's report but not an LPS flat. See mortgages on ex-council flats and non-standard construction mortgages.
Leasehold
Planning and tenure
Ownership of a property for a fixed number of years under a lease, with the freehold held by someone else. The years left on the lease, not the property itself, often decide whether it can be mortgaged.
Leasehold: Full definition · used on 51 pages
A leaseholder owns the right to occupy for the term of the lease. Lenders set a minimum unexpired term, often expressed as a number of years that must remain at the end of the mortgage term, although some lenders set a minimum lease at completion instead, and the figures vary by lender.
A lease below that threshold is not unmortgageable, but it narrows the lender list sharply and can push the case towards a lease extension before purchase, or bridging finance to buy and extend.
Ground rent terms matter separately from the term length: an escalating ground rent can make a flat unacceptable to some lenders even on a long lease.
Let-to-buy mortgage
Buy-to-let
Mortgage finance for letting an existing home while buying another property to live in.
Let-to-buy mortgage: Full definition · used on 5 pages
Mortgage finance for letting an existing home while buying another property to live in.
The existing home is financed on terms permitting the letting, while a separate residential mortgage may fund the new home. The two applications and completion arrangements need to be coordinated.
Life insurance
Insurance
Insurance that pays out if the person insured dies while the policy is in force, used to repay a mortgage or to support the people who depend on them.
Life insurance: Full definition · used on 12 pages
Life insurance pays out on the death of the person insured, as a lump sum or, on some policies, as regular payments. Term policies run for a fixed period: level cover stays the same throughout, decreasing cover falls each year and is designed for a repayment mortgage, and increasing cover rises over the term. Whole of life policies pay out whenever death occurs, as long as the premiums are kept up. A joint policy pays once, on the first death, while two single policies pay on each death, and a policy can be written in trust so the payout goes to the people chosen (MoneyHelper: what is life insurance).
Term life cover with no cash-in value is a pure protection contract in the FCA's terms, and advising on or arranging it is insurance distribution under the FCA's Insurance: Conduct of Business sourcebook (ICOBS), separate from the mortgage rules. Before offering cover an insurer carries out insurance underwriting, and the applicant's answers are subject to the duty described under consumer insurance disclosure. Life insurance is not a legal requirement for a mortgage.
Lifetime ISA (LISA)
Residential
A tax-free savings account with a government bonus that can be used towards buying a first home or kept for later life, subject to an age limit for opening, a property price limit and a charge on other withdrawals.
Lifetime ISA (LISA): Full definition · used on 12 pages
Savings and the government bonus can go towards a first home bought with a mortgage, through a conveyancer, at least 12 months after the first payment in and within the scheme's price limit. Other withdrawals before later life carry a withdrawal charge.
The age limit, yearly allowance, bonus and price limit are set by the government; GOV.UK: Lifetime ISA has the rules in force.
Lifetime mortgage
Residential
A loan secured on your home, for homeowners above a minimum age, that is usually not repaid in full until the last borrower dies or moves into long-term care, with interest either paid or added to the loan.
Lifetime mortgage: Full definition · used on 4 pages
The FCA defines a lifetime mortgage as a regulated mortgage, open only to older customers above a specified age, on which the lender does not seek full repayment until a specified life event (FCA Handbook glossary: lifetime mortgage). Interest can be rolled up and added to the loan, partly paid or paid in full, and a drawdown version pays the money in instalments. Where interest rolls up it compounds, so the balance grows faster each year, and the FCA's affordability rule does not apply to that kind of loan.
The Equity Release Council says the youngest applicant needs to be at least 55. Plans meeting its standards fix the rate, or cap it, for life, give the right to stay in the home and to move to a suitable property, allow repayments without a charge within the provider's criteria, and carry a no negative equity guarantee. It is one form of equity release.
The Scottish Government's shared equity schemes for first-time buyers and priority groups who cannot afford the whole price of a home. The government funds part of the price and holds that share of the home, and the buyer pays for the rest with a mortgage and deposit.
LIFT (Low-cost Initiative for First Time Buyers): Full definition · used on 12 pages
LIFT has two parts. Under Open Market Shared Equity the buyer purchases a home on the open market, priced within a threshold set for the area and the size of home, and usually funds 60% to 90% of the price. Under New Supply Shared Equity the buyer purchases a new home from a housing association or council and usually funds 60% to 80%. The Scottish Government holds the rest.
The buyer has the whole title and grants the government a standard security for its share. On the open market scheme the buyer can increase their share later, and on a sale the government receives its percentage of the selling price. The mortgage must be a repayment mortgage. Purchases through LIFT are outside the Mortgage Guarantee Scheme, whose rules leave out shared equity schemes. Eligibility, price thresholds and funding are set for each financial year (mygov.scot: Open Market Shared Equity).
Limited liability partnership (LLP)
Buy-to-let
A business with two or more members that is a legal entity separate from them. Members pay tax on their profit shares like partners, but are not personally liable for business debts it cannot pay.
Limited liability partnership (LLP): Full definition · used on 28 pages
An LLP is a body corporate formed under the Limited Liability Partnerships Act 2000. Its members are not personally liable for debts the business cannot pay, its designated members send annual accounts to Companies House, and each member pays tax on their share of the profits through Self Assessment, as a partner in an ordinary partnership does (GOV.UK: limited liability partnerships). A member who meets the salaried member conditions is taxed as an employee instead (see salaried member).
For a personal mortgage, lenders assess a member on their profit share from the tax calculation and the LLP's accounts. Some landlords hold property through an LLP; lenders that accept LLP borrowers assess the members behind it and may ask for personal guarantees.
Listed building mortgage
Specialist lending
A mortgage secured against a building formally listed for its architectural or historic interest.
Listed building mortgage: Full definition · used on 19 pages
A mortgage secured against a building formally listed for its architectural or historic interest.
The lender assesses the property’s condition and any proposed work. Listing can affect which alterations are permitted, and listed building consent is a separate consideration from mortgage approval.
Sources: GOV.UK: historic environment.
Loan-to-cost (LTC)
Development finance
The loan amount expressed as a percentage of the project costs included in the lender’s calculation.
Loan-to-cost (LTC): Full definition · used on 30 pages
The loan amount expressed as a percentage of the project costs included in the lender’s calculation.
The included costs and loan amount must be stated. Loan-to-cost is different from loan-to-value or loan-to-GDV, and a development facility may be limited by more than one of these measures.
Loan to gross development value (LTGDV)
Development finance
The size of a development loan expressed as a percentage of the scheme's gross development value, the valuer's figure for what it will be worth once finished.
Loan to gross development value (LTGDV): Full definition · used on 30 pages
Loan to gross development value divides the total facility by the gross development value (GDV) reported by the lender's valuer. It is one of two caps on a development loan. The other is loan to cost (LTC), and the facility is set at whichever of the two gives the smaller loan.
The percentage a lender will lend to varies by lender, by the type of scheme and by the developer's experience, so a quote should state both the LTGDV and the LTC it is based on. Property development finance shows how the two caps work together.
Loan to income (LTI)
Lending and affordability
The size of a mortgage compared with the borrower's gross annual income, usually expressed as a multiple of that income.
Loan to income (LTI): Full definition · used on 68 pages
Lenders set a maximum multiple as one of the limits on residential borrowing, alongside their affordability assessment. The Bank of England's Financial Policy Committee limits the share of new residential mortgages lenders can make at high loan to income ratios, to guard against excessive household debt. Bank of England: high loan to income lending.
Loan-to-value (LTV)
Lending and affordability
Borrowing expressed as a percentage of the property value the lender is using. A quote should say which loan amount and which valuation basis its LTV calculation uses.
Loan-to-value (LTV): Full definition · used on 425 pages
Loan-to-value, or LTV, expresses borrowing as a percentage of the property value used by the lender. A bridging quote should explain which loan amount and valuation basis are used in its LTV calculation.
For a simple first-charge example with no other secured debt:
£150,000 gross borrowing ÷ £200,000 lender valuation × 100 = 75% gross LTV.
This is an arithmetic illustration, not an available product, lender maximum or borrowing recommendation. It does not show how much cash would remain after deductions.
For a second charge or a facility secured on several properties, ask how existing debt, the additional loan and the relevant property values are treated. A calculation based only on the new loan can give an incomplete picture of the security position.
Lodger
Residential
Someone who rents accommodation in a home shared with the resident landlord.
Lodger: Full definition · used on 5 pages
Someone who rents accommodation in a home shared with the resident landlord.
A homeowner should check whether their mortgage and insurance permit a lodger. Renting part of an occupied home differs from letting the entire property, and the legal arrangement depends on how the accommodation is shared.
Low income mortgage
Residential
A standard residential mortgage taken out on a modest income. How much can be borrowed depends on the lender's affordability rules, the income it counts and the schemes it lends on.
Low income mortgage: Full definition · used on 14 pages
There is no separate low income product and no legal minimum income for a mortgage in the UK. The loan is an ordinary residential mortgage, and the lender assesses affordability under the Financial Conduct Authority's responsible lending rules: income after tax, committed spending and living costs, with the payment tested against likely future interest rates (FCA Handbook, MCOB 11.6).
Lenders differ on whether they set a minimum income, which benefits and second incomes they count, the income multiple they apply and the longest term they allow. On a modest income those rules decide the size of the loan. Schemes such as shared ownership, First Homes and Right to Buy, a family member's income under a joint borrower sole proprietor mortgage, or a larger deposit then decide what that loan can buy.
M18 terms
Making Tax Digital for Income Tax
Regulation
HMRC's system for sole traders and landlords whose qualifying income is above a threshold: digital records, quarterly updates of income and expenses sent through compatible software, and a tax return at the end of the year.
Making Tax Digital for Income Tax: Full definition · used on 5 pages
Making Tax Digital (MTD) for Income Tax applies to sole traders and landlords registered for Self Assessment whose qualifying income is above a threshold. Qualifying income is total turnover from self-employment and property before expenses. From 6 April 2026 it applies where qualifying income was over £50,000 in 2024 to 2025; the threshold falls to £30,000 from 6 April 2027 (2025 to 2026 income) and £20,000 from 6 April 2028 (2026 to 2027 income). Employment income, dividends and a partner's share of partnership profit do not count towards it, and partnerships are not yet included (GOV.UK: work out your qualifying income).
Those in MTD keep digital records and send HMRC a quarterly update through compatible software. Each update is cumulative from the start of the tax year and gives totals for each category of income and expense, and a tax return still follows at the end of the year. For a self-employed mortgage the updates are current-year figures; lenders still assess the annual tax calculation, and whether a lender takes quarterly figures into account is its own decision.
Management accounts
Lending and affordability
Accounts a business prepares for its own use for part of a year, such as a month, a quarter or the year to date, showing income, costs and profit since the last annual accounts.
Management accounts: Full definition · used on 7 pages
Management accounts are prepared by or for the business, usually by its bookkeeper or accountant, to track trading between sets of annual accounts. They are not filed with HMRC or Companies House and are not audited, so a lender treats them as supporting evidence rather than as the income it assesses.
For a mortgage they show current trading: whether a business whose latest year's net profit fell has since recovered, or whether a new business is trading at the level its first figures suggest. A lender that considers them may want them prepared or confirmed by an accountant and read alongside business bank statements. Sole traders and landlords in Making Tax Digital for Income Tax also hold year-to-date totals in their cumulative quarterly updates to HMRC, which serve a similar purpose; partnerships and companies are outside that scheme and rely on management accounts. Whether a lender gives either any weight is set by its own criteria.
Mezzanine finance
Development finance
Finance that sits between senior debt and the borrower’s equity in a project’s funding structure.
Mezzanine finance: Full definition · used on 26 pages
Finance that sits between senior debt and the borrower’s equity in a project’s funding structure.
In property development it is often subordinate borrowing secured by a second charge or other security. The senior lender’s consent and the agreement between creditors affect how it operates. It increases debt commitments and is repaid according to the agreed priority and exit terms.
Missed payment (late payment marker)
Lending and affordability
A payment not made as agreed, which the lender reports to the credit reference agencies as a status number for each month the account is behind.
Missed payment (late payment marker): Full definition · used on 58 pages
Lenders that share data with the credit reference agencies report each account every month. When a payment is not made as agreed, the account is reported as in arrears, with a status code for how many months behind it is: 1 for one month, 2 for two, and so on up to 6 under the credit industry's Principles for the Reporting of Arrears, Arrangements and Defaults.
A missed payment is the lightest form of adverse credit. It is a different entry from a default, which a lender may record once an account is 3 months in arrears and normally by 6. A temporary reduced payment agreed with the lender is flagged as an arrangement to pay, although arrears may still be reported against the original terms. Negative information such as a missed payment usually stays on a credit report for six years.
Mortgage lenders look at how many missed payments there are, how recent they are, the highest status reached and which account they are on, and some apply a separate, stricter limit to missed mortgage payments.
Missives
Planning and tenure
In Scotland, the letters exchanged between the buyer's and seller's solicitors that settle the terms of a property sale. Once missives are concluded they form a binding contract.
Missives: Full definition · used on 16 pages
After the buyer's offer and the seller's qualified acceptance, the solicitors exchange missives to agree the conditions. The concluding missive makes the contract binding, and a buyer who withdraws after that can have to pay the seller damages. Buyers are advised to insure the property from conclusion of missives unless the missives say otherwise (mygov.scot: making an offer). Where the offer incorporates the Scottish Standard Clauses (Edition 6), the risk of damage to or destruction of the property stays with the seller until settlement, so the buyer's solicitor confirms from the missives when the buyer's buildings insurance needs to start (Law Society of Scotland: Scottish Standard Clauses, Edition 6). mygov.scot: missives.
Mixed-use property
Fees and charges
Property with both residential and non-residential parts bought in one transaction, such as a shop with a flat above. The UK land taxes charge it at their non-residential rates.
Mixed-use property: Full definition · used on 88 pages
For Stamp Duty Land Tax in England and Northern Ireland, a purchase that includes both residential and non-residential property, such as a shop with a flat above, is charged at the non-residential and mixed rates: nil up to £150,000, 2% to £250,000 and 5% above, as at October 2026. The higher rates for additional dwellings do not apply to a mixed purchase (GOV.UK: buying an additional residential property).
Wales charges Land Transaction Tax on mixed use property at its non-residential rates, and its higher residential rates do not usually apply. Scotland charges Land and Buildings Transaction Tax at non-residential rates on the whole price, but the Additional Dwelling Supplement can apply to the part of the price attributable to a dwelling (Revenue Scotland: LBTT4011 mixed transactions). Whether a property counts as mixed use depends on the facts at the date of purchase, so a conveyancer or tax adviser confirms it.
Modern methods of construction (MMC)
Valuation
A broad term for building homes using offsite manufacture, such as factory-built modules or panels, or onsite techniques that reduce labour, as set out in the government's seven-category definition framework.
Modern methods of construction (MMC): Full definition · used on 6 pages
The framework published in 2019 runs from category 1, factory-made three-dimensional structural units, and category 2, two-dimensional panel systems, through other pre-manufactured components to categories 6 and 7, site-based improvements.
Lenders consider MMC homes case by case. Some ask for accreditation such as BOPAS, developed with mortgage lenders to show an offsite system will last more than 60 years, and an acceptable structural warranty.
Monitoring surveyor
Development finance
A chartered surveyor appointed for a development lender to assess the scheme's risks, inspect progress and certify each drawdown before the lender releases funds.
Monitoring surveyor: Full definition · used on 16 pages
RICS calls the role the lender's independent monitoring surveyor; it is also known as a project monitoring surveyor or bank monitor. During construction the surveyor visits the site, reviews spending against the budget and the cost to complete, agrees progress and the drawdown amount with the borrower, and issues a drawdown certificate to the lender with a report on any emerging risks.
The surveyor acts for the lender, not the developer. See drawdown and property development finance.
Mortgage
Lending and affordability
A loan secured against property, repaid over an agreed term, where the lender holds a legal charge over the property until the debt is cleared.
Mortgage: Full definition · used on 803 pages
A loan secured against property, repaid over an agreed term, where the lender holds a legal charge over the property until the debt is cleared.
The charge is what separates a mortgage from unsecured borrowing: it gives the lender a route to recover the debt from the property itself, which is why the property is assessed as closely as the borrower. Rate, term, repayment method and the criteria applied all follow from what the property is and what it is used for.
Your home may be repossessed if you do not keep up repayments on your mortgage.
Mortgage Charter
Regulation
A set of commitments by UK mortgage lenders, published by HM Treasury and reaffirmed in March 2026, on supporting residential borrowers worried about their payments, including switching to a new deal at the end of a fixed rate without another affordability check.
Mortgage Charter: Full definition · used on 2 pages
The Mortgage Charter was introduced in 2023, and HM Treasury published the current version on 26 March 2026, when lenders reaffirmed their commitment to it. Its signatories represent approximately 90% of the mortgage market. The commitments apply to regulated residential mortgages, not to buy to let.
Lenders support customers who are up to date with payments in switching to a new deal at the end of a fixed rate without another affordability check, where they are not borrowing more or changing the repayment type or term, which is how a product transfer can work. A new deal can be locked in up to six months ahead. Up-to-date customers can also, once, switch to interest-only payments for six months or extend the term with the option to go back within six months, without a new affordability check. Contacting a lender about payment worries does not affect the credit file, a borrower will not be forced to leave their home without consent, except in exceptional circumstances, within a year of the first missed payment, and customers in arrears are asked to keep working with their lender (HM Treasury: Mortgage Charter).
Mortgage Guarantee Scheme
Residential
A government scheme under which HM Treasury guarantees participating lenders against part of their losses on eligible high loan-to-value mortgages, so they can lend to buyers with small deposits.
Mortgage Guarantee Scheme: Full definition · used on 17 pages
Under the 2025 scheme rules an eligible loan is a repayment regulated mortgage on a UK home the borrower will live in, for a first-time buyer or home mover, with a loan-to-value above 90% and no more than 95%. Buy-to-let loans and shared ownership or shared equity purchases are outside it, and value means the valuation or, if lower, the price.
The guarantee is between the government and the lender. The borrower takes an ordinary mortgage, and each lender still applies its own lending and property criteria. GOV.UK: 2025 Mortgage Guarantee Scheme.
Mortgage offer
Lending and affordability
A lender's formal written offer to lend on a particular property, issued after its underwriting and valuation. It is binding on the lender but carries conditions and a date by which it must be used.
Mortgage offer: Full definition · used on 86 pages
For an MCD regulated mortgage contract, the kind of regulated mortgage normally used to buy a home, the FCA requires the lender to set out a binding offer in an offer document and to give the borrower a reflection period of at least seven days, during which the offer stays binding and can be accepted at any time (FCA Handbook: MCOB 6A.3). The offer can carry lawful conditions. The FCA's guidance gives as examples a material change after the offer, such as loss of employment or further secured borrowing that is likely to affect affordability, a change affecting the condition, value or title of the property, and the borrower knowingly giving incomplete or inaccurate information. A lender cannot use conditions to avoid a proper affordability assessment before it makes the offer.
Each offer has a validity period set by the lender. If completion is delayed beyond it, the lender may extend the offer, sometimes after fresh checks, or ask for a new application. The offer is separate from the purchase contract, so a withdrawal after exchange of contracts does not release the buyer from the purchase.
A short-term policy that pays the monthly mortgage payment for a limited period if illness or injury, and under some policies unemployment, stops you working.
Mortgage payment protection insurance (MPPI): Full definition · used on 1 page
Mortgage payment protection insurance (MPPI) is a short-term policy that pays the monthly mortgage payment if the policyholder cannot work because of illness or injury, and some policies also pay on unemployment. It pays for a limited period set by the policy, such as one or two years, and covers only the mortgage payment rather than income.
The FCA Handbook classes this kind of cover as a payment protection contract: a non-investment insurance contract with general insurance elements whose benefits protect the policyholder's ability to keep making payments (FCA Handbook: glossary, payment protection contract). It is narrower than income protection insurance, which replaces part of income for as long as its benefit period allows, and it is separate from Support for Mortgage Interest, the state loan towards mortgage interest for people getting a qualifying benefit.
Mortgage valuation
Valuation
A limited inspection and valuation carried out for the lender to check that the property is reasonable security for the loan. It is for the lender's benefit and is not a survey of the property's condition.
Mortgage valuation: Full definition · used on 80 pages
The lender instructs its own valuer and lends on that figure, not on the agreed price: on an ordinary purchase, lenders that state a basis lend on the lower of the price and the valuation, so a down valuation reduces the loan or raises the loan-to-value. Some properties are valued by an automated valuation model or a desktop valuation instead of an inspection.
Because it is not a survey, defects that would be costly to put right may not appear in it; a buyer who wants a view of condition commissions an RICS Home Survey. RICS: mortgage valuations and surveys.
Mortgagee in possession clause
Planning and tenure
A clause in a section 106 agreement that frees a mortgage lender which repossesses a restricted home from the agreement's sale and occupancy restrictions, so it can sell the home and recover the loan. Some clauses apply at once and others only after the home has been offered to eligible buyers for a set period.
Mortgagee in possession clause: Full definition · used on 1 page
A lender that repossesses a home has to sell it. If a section 106 agreement bound the lender as well, it could sell only to eligible buyers at the restricted price, so lenders that accept restricted homes look for a clause releasing or relaxing those terms on a repossession sale. The wording varies: some clauses release the lender at once, some after a period offering the home to eligible buyers, the council or a housing association, and some reimpose the restrictions on later owners.
For First Homes, government guidance says a mortgagee exclusion clause should be in every planning obligation: a lender enforcing its security can sell on the open market at open market value, and once the lender is repaid the council receives the remaining proceeds up to the value of the discount (GOV.UK: First Homes guidance). The clause differs from the mortgagee protection clause in a shared ownership lease, under which the landlord can cover part of a lender's loss.
The part of the FCA Handbook that sets the rules for regulated mortgage business, covering lenders, administrators and the intermediaries who arrange and advise on regulated mortgages.
Mortgages and Home Finance: Conduct of Business sourcebook (MCOB): Full definition · used on 93 pages
MCOB applies to regulated mortgage contracts and other home finance, such as equity release and home purchase plans. It covers how firms advise and sell, what they must disclose, and how a lender assesses affordability before lending.
A lender must not enter into a regulated mortgage unless it can show the mortgage is affordable, and in that assessment it must consider likely future interest rates over at least five years unless the rate is fixed for five years or more. An interest-only loan needs a clearly understood and credible repayment strategy. Where an existing customer takes a new deal with the same lender with no additional borrowing and no change material to affordability, the affordability rule does not apply. FCA Handbook: MCOB.
MUFB bridging finance
Bridging finance
A short-term loan on a multi-unit freehold block, repaid by refinancing the block or selling some or all units.
MUFB bridging finance: Full definition · used on 4 pages
A short-term loan on a multi-unit freehold block, repaid by refinancing the block or selling some or all units.
The lender may value the whole block as one investment rather than add up the separate flat values. That choice, and the rent the exit lender accepts, can change how much can be refinanced.
Multi-unit freehold block (MUFB)
Buy-to-let
A multi-unit freehold block is a building containing multiple self-contained residential units held under one freehold title.
Multi-unit freehold block (MUFB): Full definition · used on 41 pages
A multi-unit freehold block is a building containing multiple self-contained residential units held under one freehold title.
Each unit has its own living facilities, unlike a typical shared-facility HMO. The title structure, leases, unit layout and rental income affect the lender’s assessment; the units do not necessarily have individual leasehold titles.
N14 terms
Net bridging advance
Bridging finance
The money available from a bridging loan after deductions such as fees and retained interest.
Net bridging advance: Full definition · used on 6 pages
The money available from a bridging loan after deductions such as fees and retained interest.
A retained-interest loan can provide much less cash than its headline gross amount. Rolled-up interest instead increases the balance over time, so the net advance and final redemption figure must be considered separately.
Net loan
Bridging finance
The cash actually released to the borrower after retained interest and any deducted fees are taken out of the gross loan. This is the figure a purchase or a works budget has to be built on.
Net loan: Full definition · used on 9 pages
The net loan is what reaches the borrower or the solicitor on completion, once retained interest and any fees taken from the advance have been deducted from the gross loan.
The gap between the two widens with the length of the term and the rate, because retained interest is calculated for the whole term at the outset. Any quote worth comparing states both figures, and states which of them the loan-to-value percentage refers to.
Net profit (self-employment)
Lending and affordability
A self-employed person's business income after allowable expenses: the figure on the self-employment pages of the Self Assessment return and the income a lender reads for a sole trader.
Net profit (self-employment): Full definition · used on 36 pages
Net profit is turnover less allowable business expenses, after capital allowances where they apply. For a sole trader it is taxable income, and Income Tax is charged on it through Self Assessment. On the cash basis, the standard method for sole traders, most equipment is claimed as an expense when it is paid for and capital allowances are claimed only on cars; under traditional accounting, capital allowances are claimed on equipment and vehicles (GOV.UK: expenses if you are self-employed).
Mortgage lenders read net profit from the tax calculation or the accounts, and turnover is not counted as income. Each lender decides which year, or which average of years, to use, and every pound of expenses claimed lowers the figure a lender reads as well as the tax due. A partner's equivalent is their share of the partnership's profit.
New build mortgage
Residential
A mortgage subject to a lender’s new-build rules on property condition, incentives, construction cover and completion timing.
New build mortgage: Full definition · used on 24 pages
A mortgage subject to a lender’s new-build rules on property condition, incentives, construction cover and completion timing.
The definition of new build varies by lender. Incentives must be disclosed, construction cover must be accepted, and the mortgage offer must remain valid when the property is ready to complete.
New build warranty
Valuation
An insurance-backed warranty on a newly built or converted home that covers defined defects, normally for ten years after completion. Mortgage lenders look at the warranty, or other build assurance they accept, when lending on a new home.
New build warranty: Full definition · used on 18 pages
LABC Warranty describes a structural warranty as an insurance policy against defects in new buildings, normally for ten years after completion. NHBC's Buildmark, for example, combines insolvency cover after exchange, a two-year builder warranty and eight years of insurance against defects to certain parts of the home. LABC itself is Local Authority Building Control, the membership body for council building control teams in England and Wales; LABC Warranty is a separate business that provides warranties in partnership with it.
Where a home has no warranty, some lenders consider a Professional Consultant Certificate instead. Modern methods of construction may also need system accreditation.
NIE number
Specialist lending
Spain's identification number for foreigners who have economic, professional or social dealings in Spain, needed for tax transactions such as opening a bank account or buying property.
NIE number: Full definition · used on 4 pages
The NIE, Número de Identidad de Extranjero, identifies the holder to the Spanish public administration but does not give the right to live in Spain or prove residence. Buyers outside Spain can apply through a Spanish embassy or consulate, or a representative. See Spanish mortgages. Spanish Consulate General in London: NIE.
Nil valuation
Valuation
A lender's valuer reporting that a property is not acceptable security for that lender at any value, so the lender will not lend on it. It reflects the property measured against that lender's criteria, not the price agreed.
Nil valuation: Full definition · used on 9 pages
A mortgage valuation normally gives a figure. A nil valuation is reported instead, usually when the property falls outside the lending criteria of the lender that instructed the valuer, for example because of the way it was built, cladding or structural problems. RICS explains that nil valuations are usually due to the lender's criteria, so the valuer is acting on its client's instructions, and that a borrower who thinks the property was assessed wrongly against those criteria should raise it with the lender. RICS: concerns about valuations.
A nil valuation is different from a down valuation, where the property is acceptable security at a lower figure. Because each lender sets its own property criteria, a property one lender values at nil can be acceptable to another, such as a lender that accepts non-standard construction, or once the problem has been put right.
No negative equity guarantee
Regulation
A protection on lifetime mortgages that meet the Equity Release Council's standards: you or your estate will never owe more than the home sells for, provided the terms are kept.
No negative equity guarantee: Full definition · used on 1 page
The no negative equity guarantee is one of the Equity Release Council's product standards. If the home is sold for the best price reasonably obtainable and the terms of the loan are kept, the borrower or the estate never owes more than the property is worth, after reasonable sale costs, even if the lifetime mortgage balance has grown larger (Equity Release Council: standards).
It applies to plans that meet the Council's standards. It protects the estate against a shortfall, but where rolled-up interest takes the balance to the sale price, nothing is left after the loan is repaid. It is distinct from negative equity on an ordinary mortgage, where the borrower stays liable for any shortfall.
Nomination agreement
Commercial
An agreement under which a university or college arranges for its students to occupy rooms in purpose-built student accommodation, sometimes guaranteeing payment for a set number of rooms.
Nomination agreement: Full definition · used on 3 pages
Under some agreements the accommodation provider sets aside a defined number of rooms and the university pays for them by a guaranteed payment; under others the university refers students and may or may not have to pay for rooms left empty. See purpose-built student accommodation and PBSA finance.
Non-standard construction
Valuation
A way of building a home that a lender does not class as standard under its own property criteria. Each lender keeps its own list, so the same home can be standard at one lender and non-standard at another.
Non-standard construction: Full definition · used on 66 pages
Lenders define standard construction differently. Some require brick or stone walls with a tile or slate roof, while others treat thatch and modern timber frame with a masonry outer wall as standard or traditional construction.
Homes often treated as non-standard include precast reinforced concrete (PRC) systems such as Cornish and Woolaway, steel systems such as BISF, large panel system blocks and timber kit homes such as Colt, along with single skin walls, spray foam insulation and, at some lenders, flat roofs, deck access or thatch.
The lender decides from the exact system and build year, any repair certificate or accreditation, the outer walls, warranty and insurance, and its valuer's view of condition and saleability.
Non-status bridging loan
Bridging finance
A term used for bridging finance assessed mainly on the property security and proposed exit rather than conventional income multiples.
Non-status bridging loan: Full definition · used on 19 pages
A term used for bridging finance assessed mainly on the property security and proposed exit rather than conventional income multiples.
It does not mean no checks, guaranteed approval or an exemption from regulation. Lenders still apply borrower, credit, identity and repayment requirements appropriate to the loan.
Non-utilisation fee (commitment fee)
Fees and charges
A fee a lender charges on the part of a facility's limit that is available but not drawn, for keeping that money committed to the borrower.
Non-utilisation fee (commitment fee): Full definition · used on 5 pages
Revolving credit facilities, and some development facilities, charge interest only on the money drawn. The lender still has to keep the rest of the limit available, so the facility agreement may add a non-utilisation fee, also called a commitment fee, calculated on the undrawn balance and charged at the intervals the agreement sets.
Each lender sets the fee, usually as a percentage of the undrawn amount. It makes a facility that is kept mostly undrawn cost more than one drawn steadily, so the expected level of use belongs in any comparison between a revolving credit facility and separate loans. Compare it with the arrangement fee on the limit and the interest on each drawdown.
Notice to complete
Residential
A formal notice that one party to a property contract serves on the other after a missed completion date, requiring completion within a fixed period. Under the Standard Conditions of Sale used in England and Wales the period is ten working days.
Notice to complete: Full definition · used on 5 pages
Under the Law Society's Standard Conditions of Sale (Fifth Edition, 2018 Revision), a party who is ready, able and willing to complete can serve a notice to complete once the time for completion on the completion date has passed. The parties must then complete within ten working days, not counting the day the notice is given, and time is of the essence, so the deadline is strict. A buyer who paid a deposit of less than 10% must pay the balance up to 10% when the notice arrives (Law Society: Standard Conditions of Sale).
If the buyer fails to complete in time, the seller can rescind the contract, forfeit the deposit, resell and claim damages. Until completion, a buyer in default also pays compensation at the contract rate on the price less the deposit; unless the contract sets another rate, the contract rate is the Law Society's interest rate (Law Society: interest rate). Scotland and Northern Ireland contracts have their own terms on late payment.
Nursery mortgage
Commercial
A commercial mortgage secured against premises used for a nursery or childcare business.
Nursery mortgage: Full definition · used on 1 page
A commercial mortgage secured against premises used for a nursery or childcare business.
The lender considers the property, permitted use and the income supporting repayments. Requirements differ for an owner-operated nursery and a property let to a separate nursery operator.
O7 terms
Occupancy restriction
Planning and tenure
A condition or legal restriction limiting who can occupy a property or how it can be used.
Occupancy restriction: Full definition · used on 41 pages
A condition or legal restriction limiting who can occupy a property or how it can be used.
Examples include holiday-only use, seasonal occupation or an agricultural occupancy condition. The exact wording and legal basis affect mortgage eligibility and must be checked for the particular property.
Occupation contract
Regulation
The agreement setting out a contract-holder’s rights and responsibilities when renting a home under the Renting Homes framework in Wales.
Occupation contract: Full definition · used on 5 pages
The agreement setting out a contract-holder’s rights and responsibilities when renting a home under the Renting Homes framework in Wales.
This framework replaced most residential tenancy and licence arrangements in Wales from 1 December 2022. Standard and secure contracts have different rules; a standard contract may be fixed term or periodic.
Sources: Welsh Government: occupation contracts.
Off-plan mortgage
Residential
A mortgage arranged for the purchase of a new home before its construction is complete.
Off-plan mortgage: Full definition · used on 14 pages
Buying off-plan means committing to a property before it has been completed. The expected completion date and the mortgage offer’s expiry need to be considered together.
Read the off-plan mortgage guide. MoneySavingExpert also explains buying a new-build home.
Offset mortgage
Residential
A residential mortgage linked to a savings account with the same lender, where interest is charged on the mortgage balance less the savings balance. The savings reduce interest instead of earning it.
Offset mortgage: Full definition · used on 16 pages
An offset mortgage links a savings account to the mortgage and charges interest only on the difference between the two balances. The savings earn no interest of their own: the return is the mortgage interest they stop the borrower paying.
Because that return is not interest, it is not taxed, which is what makes an offset worth more to a higher-rate taxpayer than a savings account paying the same headline percentage.
The borrower usually elects whether the saving reduces the monthly payment or shortens the term. Offset products typically carry a small premium over the equivalent standard rate, so an offset pays when the interest saved exceeds that premium on the whole loan.
Offshore company mortgage
Specialist lending
Property finance where the borrowing company is incorporated outside the country in which the property is located.
Offshore company mortgage: Full definition · used on 2 pages
Property finance where the borrowing company is incorporated outside the country in which the property is located.
For UK property, a lender must accept the company’s jurisdiction and ownership structure. Company documents, beneficial ownership checks and legal advice on borrowing and security are part of the assessment.
Open market value
Valuation
An estimate of the price a property would achieve in a market transaction under the assumptions stated in the valuation.
Open market value: Full definition · used on 126 pages
An estimate of the price a property would achieve in a market transaction under the assumptions stated in the valuation.
A restricted marketing period or another special assumption can produce a different figure. The lender decides which valuation basis it accepts; it does not always use a fixed 90-day or 180-day figure.
Own occupation (income protection)
Insurance
An income protection definition that pays if illness or injury stops you doing your own job, even if you could do a different one.
Own occupation (income protection): Full definition · used on 2 pages
Own occupation is the widest of the occupation definitions an income protection policy can use to decide whether a claim pays. The policy pays if illness or injury stops you doing your own job, the role you had just before you became unable to work, even if you could do a different one.
Narrower definitions pay in fewer circumstances. Suited occupation pays only if you cannot do any job suited to your experience, and activities-based definitions, sometimes called activities of daily work, test whether you can carry out everyday work tasks and are the narrowest. Own occupation cover raises the premium, and some insurers offer only a narrower definition for manual or higher-risk jobs. The Financial Ombudsman Service explains how it applies these definitions to claims (Financial Ombudsman Service: income protection insurance).
P30 terms
Part and part mortgage
Residential
A mortgage with both capital repayment and interest-only portions, requiring a plan to clear the interest-only balance.
Part and part mortgage: Full definition · used on 22 pages
A mortgage with both capital repayment and interest-only portions, requiring a plan to clear the interest-only balance.
Payments reduce the repayment portion over the agreed term. The interest-only capital remains due unless separately repaid, and the lender must accept the proposed repayment strategy.
Partnership agreement
Lending and affordability
The agreement between partners, or between the members of an LLP, that sets out how profits, capital and decisions are shared, including each partner's profit-sharing ratio.
Partnership agreement: Full definition · used on 3 pages
A partnership agreement records the terms on which the partners carry on the business: each partner's share of profits and losses, the capital each contributes, drawings, decision making and what happens when a partner joins or leaves. Where the partners have not agreed otherwise, the Partnership Act 1890 entitles them to share equally in the capital and profits (legislation.gov.uk: Partnership Act 1890, section 24). A deed of admission records a new partner joining on stated terms, and an LLP agreement does the same job for the members of a limited liability partnership.
For a mortgage, the agreement is the evidence of a partner's current share when it is new or has changed and no tax return yet shows it. Some lenders accept the agreement with an accountant's letter confirming the share, and others wait for a return under the new ratio.
Partnership mortgage
Residential
A residential or buy to let mortgage in a partner's or LLP member's own name, where the lender assesses their share of the firm's taxable profit rather than the firm's total profit or their drawings.
Partnership mortgage: Full definition · used on 9 pages
A partnership mortgage is an ordinary mortgage taken by an individual who is a partner in a partnership or a member of a limited liability partnership. The firm is not the borrower. Each partner pays tax on their share of the profits through Self Assessment (GOV.UK: set up a business partnership), and the partnership's tax return allocates the profit between the partners, so the share appears on the partner's own tax calculation whether or not it was drawn. Lenders read that share, alongside the partnership accounts, as the partner's income.
The share can be harder to evidence when it is new or has changed, for example after a promotion to equity partner or a change in the partnership agreement. Some lenders accept the current share on the agreement and an accountant's letter, and others wait for a tax return that shows it. An LLP member who meets the conditions for a salaried member is taxed as an employee and is usually assessed on payslips instead. A mortgage on the partner's own home is a regulated mortgage.
Pay As You Earn (PAYE)
Lending and affordability
HMRC's system for collecting Income Tax and National Insurance from employment: the employer deducts them from pay through payroll before the employee is paid.
Pay As You Earn (PAYE): Full definition · used on 19 pages
An employee's payslips, and the P60 an employer gives after each tax year showing the tax paid, are the usual income evidence for an employed applicant. A contractor employed through an umbrella company is also paid through PAYE. Income that is not taxed through PAYE, such as self-employed profit, is evidenced in other ways, such as tax calculations and accounts. GOV.UK: PAYE for employers.
Permitted development
Planning and tenure
Development allowed by a grant of planning permission in legislation, subject to the relevant limits and conditions.
Permitted development: Full definition · used on 22 pages
Development allowed by a grant of planning permission in legislation, subject to the relevant limits and conditions.
Some rights require prior approval before work begins. Article 4 directions can remove specified rights, and building regulations or listed building consent may still apply. Check the rules for the relevant UK nation and site. GOV.UK planning guidance.
Personal guarantee
Buy-to-let
A contractual promise by a person to meet another borrower’s obligations if the borrower does not pay.
Personal guarantee: Full definition · used on 47 pages
A contractual promise by a person to meet another borrower’s obligations if the borrower does not pay.
A company director may give a guarantee for company borrowing. Its scope, limits and enforcement terms are set by the document and can expose personal assets despite the company’s limited liability.
Portfolio landlord
Buy-to-let
A landlord with four or more mortgaged buy-to-let properties. The definition triggers a wider assessment of the whole portfolio, not only the property being financed.
Portfolio landlord: Full definition · used on 47 pages
A portfolio landlord is a borrower with four or more mortgaged buy-to-let properties, counted across all lenders and including property held jointly. The threshold comes from Prudential Regulation Authority underwriting standards.
Once a borrower crosses it, lenders assess the whole portfolio rather than the subject property alone. That normally means a portfolio schedule, a business plan or cash flow, and tests applied across every property: an aggregate loan-to-value cap, an aggregate rental coverage test, and often a limit on the borrower’s total exposure to that lender.
A portfolio that passes on the subject property can still fail on the aggregate position, which is why lender selection changes at this point.
Portfolio mortgage
Buy-to-let
Finance arranged for a landlord with several properties, either through separate mortgages or a facility covering multiple properties.
Portfolio mortgage: Full definition · used on 42 pages
Finance arranged for a landlord with several properties, either through separate mortgages or a facility covering multiple properties.
A borrower with four or more distinct mortgaged buy to let properties is a portfolio landlord under the Prudential Regulation Authority's underwriting standards, and banks and building societies lending to one look at the whole portfolio, its rent, borrowing, assets, liabilities, business plan and cash flows, as well as the property being financed (Bank of England: SS13/16). A facility secured on several properties can make each of them security for the whole debt (cross-collateralisation), so check which properties secure each loan and any conditions on selling or refinancing one of them.
Porting
Residential
Moving an existing mortgage deal to a new property when moving home, so the current rate and terms continue on the existing balance, subject to the lender's approval.
Porting: Full definition · used on 2 pages
Porting is treated as a new application, so the borrower must meet the lender's affordability checks and the new property must be acceptable security. Often only the existing balance stays on the current fixed or discounted deal, and any extra borrowing goes on a separate deal with its own fees and charges. Where the new mortgage is smaller, the part repaid may attract an early repayment charge. See fixed term mortgages.
Potentially exempt transfer (PET)
Regulation
A lifetime gift from one individual to another that is free of Inheritance Tax when it is made and becomes fully exempt if the giver lives for seven years afterwards.
Potentially exempt transfer (PET): Full definition · used on 7 pages
Most outright gifts between individuals, such as money given towards a child's house deposit, are potentially exempt transfers under section 3A of the Inheritance Tax Act 1984. No tax is due when the gift is made. If the giver lives for seven years, the gift is exempt and no longer counts towards their estate. If the giver dies within seven years, the gift becomes chargeable and is set against the giver's nil-rate band (£325,000, fixed until 5 April 2031, or more where a late spouse's or civil partner's unused band is transferred) before the rest of the estate, although it does not use the residence nil-rate band.
Tax is due on the gift itself only where the gifts in the seven years before the death exceed the nil-rate band. Taper relief then reduces the 40% rate to 32%, 24%, 16% or 8% for gifts made three to seven years before the death, and the person who received the gift pays. The £3,000 annual exemption, with one unused year carried forward, and the wedding and civil partnership exemptions take part of a gift out of the calculation at once. A gift the giver keeps benefiting from is a gift with reservation and is treated differently. See Inheritance Tax and gifted deposit, and gov.uk: rules on giving gifts.
PRA supervisory statement SS13/16
Buy-to-let
The Prudential Regulation Authority's underwriting standards for buy-to-let mortgages, which set how lenders test rent against interest at a stressed rate, when personal income can support the rent, and how portfolio landlords are assessed.
PRA supervisory statement SS13/16: Full definition · used on 33 pages
SS13/16 expects lenders regulated by the Prudential Regulation Authority to assess buy-to-let affordability with an interest coverage ratio test, the expected rent divided by the interest at a rate that allows for likely future increases, or with an income affordability test, and it lets personal income supplement the rent. The future-rate assumption does not apply where the rate is fixed or capped for five years or more.
It also treats a borrower with four or more mortgaged buy-to-let properties as a portfolio landlord, whose whole portfolio is assessed. Each lender sets its own coverage ratio and stress rate within the statement. The text in force is published by the Bank of England.
Pre-let
Development finance
A letting agreed with an occupier before or during a development, so the finished building has a tenant in place. On a commercial scheme the lease terms feed the valuation of the completed building.
Pre-let: Full definition · used on 5 pages
RICS development valuation guidance treats pre-lets and pre-sales together: lettings or sales agreed by the developer before or during the development. A commercial scheme's gross development value is an investment value of the rent the finished building will earn, so a pre-let gives the valuer an agreed rent and tenant to work from. On the cases we arrange, a speculative scheme with no pre-let takes the same LTGDV percentage.
A way of building houses from factory-made reinforced concrete sections, used widely after the Second World War. Several PRC house types were designated defective, and lenders treat PRC as non-standard construction, often lending only where a recognised repair has been carried out.
Prefabricated reinforced concrete (PRC): Full definition · used on 10 pages
Many PRC homes were built after the Second World War, when traditional materials and skilled labour were scarce. In the early 1980s defects in design and construction were found in a number of system-built homes, and several PRC types, such as Airey, Cornish Unit, Orlit, Reema, Wates and Woolaway, were designated defective.
Repairs are carried out under a recognised scheme: many earlier repairs were certified by PRC Homes Ltd, an NHBC subsidiary, and BRE runs a repair scheme with a register of repaired homes for lenders. Unrepaired PRC is declined by almost every lender that publishes a policy, and lenders that consider repaired PRC usually want the repair certificate and, at some, the adjoining homes repaired too. See PRC construction mortgages and non-standard construction mortgages.
Prime postcode mortgage
Specialist lending
A mortgage on a high-value home in a sought-after location, often assessed by a specialist lending team.
Prime postcode mortgage: Full definition · used on 20 pages
A mortgage on a high-value home in a sought-after location, often assessed by a specialist lending team.
A sought-after location does not remove affordability or valuation checks. Large loans, limited comparable sales and overseas income may require individual assessment.
Private bank mortgage
Specialist lending
A mortgage provided by a private bank, often assessed alongside the borrower’s wider assets, income and banking relationship.
Private bank mortgage: Full definition · used on 30 pages
A mortgage provided by a private bank, often assessed alongside the borrower’s wider assets, income and banking relationship.
The bank sets its own eligibility and repayment requirements. A private-bank mortgage is different from a property loan made by a private individual; the phrase private mortgage can refer to either, so identify the actual lender and agreement.
Private residential tenancy (PRT)
Regulation
The open-ended tenancy used for most new private lets in Scotland since 1 December 2017, under the Private Housing (Tenancies) (Scotland) Act 2016.
Private residential tenancy (PRT): Full definition · used on 8 pages
The open-ended tenancy used for most new private lets in Scotland since 1 December 2017, under the Private Housing (Tenancies) (Scotland) Act 2016.
A private residential tenancy has no fixed term, so a landlord cannot end it simply because a fixed period has passed. England and Wales have different tenancy systems.
Probate loan
Specialist lending
Short-term finance against an estate before it is wound up: an executor loan to pay Inheritance Tax or costs before the grant, an inheritance advance to a beneficiary, or a bridging loan on estate property after the grant.
Probate loan: Full definition · used on 6 pages
A probate loan lets the people dealing with an estate, or someone who will inherit from it, use its value before the assets are collected and distributed. An executor loan is made to the personal representatives, usually to pay the Inheritance Tax that has to be paid before the grant, and the estate repays it from the first assets sold. An inheritance advance pays a beneficiary part of their expected share early: some providers buy that part of the share, so there is nothing to repay, and others lend against it. A probate bridging loan is secured on estate property once the grant is issued and is repaid on sale or refinance.
Which FCA rules apply depends on the borrower and the security. Credit to individuals can be regulated consumer credit, and a loan to an individual secured on a home is normally a regulated mortgage contract, whoever lives there, unless it is a business loan on a property no borrower or close relative will live in. Providers generally present an advance written as a purchase of part of a share as a sale and not a loan, though an agreement that makes the beneficiary repay a shortfall can be credit. HMRC's Direct Payment Scheme and the instalment option on property can reduce or remove the need to borrow.
Product fee
Fees and charges
A charge associated with taking out a particular mortgage product.
Product fee: Full definition · used on 68 pages
A charge associated with taking out a particular mortgage product.
Lenders may use terms such as arrangement, booking or completion fee, but those charges are not always interchangeable. Check when each fee is payable, whether it is refundable and whether adding it to the loan incurs interest. Compare the fee and rate together over the relevant period.
Product transfer
Residential
Moving to a new mortgage deal with the existing lender, on the same property, instead of remortgaging to a different lender.
Product transfer: Full definition · used on 36 pages
A product transfer is usually simpler than a remortgage: where there is no additional borrowing and no change to the terms likely to matter for affordability, the FCA's affordability rule does not apply, so the lender does not have to reassess it, and many lenders need no new valuation or legal work. It compares only that lender's own range, so it is weighed against what a remortgage would offer.
Where more is borrowed, or something material to affordability changes, the lender assesses the case in the usual way.
A certificate from a qualified professional, such as an architect or surveyor, who inspected a new or converted home at stages during the build, confirming its progress and conformity with the approved drawings. Some lenders accept one as build assurance for a mortgage.
Professional Consultant Certificate (PCC): Full definition · used on 13 pages
On the standard form published by UK Finance, the consultant confirms they visited the site at appropriate stages from the start of construction to check progress and conformity with drawings approved under the building regulations, that they have experience of designing or monitoring residential construction or conversion, and that they remain liable for six years from the date of the certificate. The first buyer and the mortgage lender rely on it.
It is one of the forms of build assurance a lender may consider for a newly built or converted home, alongside a new build warranty. Whether a lender accepts one, and on what terms, varies by lender. UK Finance: Professional Consultant's Certificate (England and Wales).
Professional mortgage
Residential
A residential mortgage assessed under a lender's criteria for people in listed professions, which can allow a higher income multiple or more flexible evidence of income than its standard rules.
Professional mortgage: Full definition · used on 7 pages
Some lenders keep a list of professions, which can include medicine, law, accountancy, teaching and other careers with a recognised qualification or registration, and apply different criteria to applicants on it. The differences are usually in how much the lender will lend against income, the evidence it accepts and how it treats an early career stage, such as a first contract, a training post, a pupillage or locum work. In Mortgage Lane's experience lenders lend up to 5 times income as standard and up to 6 times for professionals and specialist products, subject to affordability.
The mortgage itself is an ordinary residential mortgage, priced on the loan-to-value like any other. Each lender sets its own list of professions, the qualification it wants to see, any minimum income and the maximum loan, so the same applicant can be treated as a professional by one lender and assessed on standard criteria by another. Lending at 4.5 times income or more also counts towards the Bank of England's limit on high loan to income mortgages (Bank of England: high loan to income lending).
Profit on cost (POC)
Development finance
A development's expected profit as a percentage of its total cost: the gross development value less all costs, divided by those costs.
Profit on cost (POC): Full definition · used on 5 pages
Profit on cost compares what a scheme should make with what it costs to deliver, counting land, build, professional fees, contingency and finance costs. As an illustration, a scheme with a gross development value of £2,400,000 and total costs of £1,900,000 makes a profit of £500,000, a profit on cost of about 26.3%.
Development lenders look at it alongside the loan to cost and loan to GDV caps. The minimum a lender wants, if any, varies by lender and structure; in our experience joint venture funding often sets no minimum.
Profits method valuation
Valuation
A way of valuing trade related property, such as a hotel or pub, from the profit a reasonably efficient operator could make there, capitalised at a rate of return that reflects the risk.
Profits method valuation: Full definition · used on 2 pages
RICS guidance VPGA 4 sets out the steps. The valuer assesses the fair maintainable turnover (FMT) a reasonably efficient operator (REO) would expect to achieve with the property properly equipped, repaired, maintained and decorated, then the fair maintainable operating profit (FMOP) that operator would expect from it, after all its costs and an annual allowance for decoration, refurbishment and renewing the trade inventory. The FMOP is capitalised at a rate of return checked against comparable transactions. Where a new operator would improve the trade by works, the cost of those works and an allowance for the delay in reaching the FMT are deducted, as is the cost of any repairs and decoration needed to reach it. Personal goodwill, the profit that depends on the current operator alone, is excluded (RICS Valuation Global Standards).
For a trading property the result is reported as market value as a fully equipped operational entity having regard to trading potential, the basis of a going concern valuation. A lender often asks for a second figure on the assumption that trade has ceased, often called the vacant possession value.
Property flip finance
Bridging finance
Short-term property funding for a purchase, refurbishment and resale, with the sale proceeds intended to repay the debt.
Property flip finance: Full definition · used on 2 pages
Short-term property funding for a purchase, refurbishment and resale, with the sale proceeds intended to repay the debt.
The expected resale price must cover the purchase, works, taxes, borrowing costs and selling costs. A delay or cost overrun reduces the margin and may leave a repayment shortfall.
Property schedule
Buy-to-let
A list of every property a landlord owns, with its value, mortgage, lender, monthly payment and rent, which lenders use to assess a portfolio as a whole.
Property schedule: Full definition · used on 3 pages
A property schedule sets out, for each property, the address, how it is owned (alone, jointly or through a company), its estimated value, the outstanding mortgage, the lender, the monthly payment, the rent and the tenancy. Lenders use it to work out the aggregate loan to value and the rental cover across the portfolio, and the number of mortgaged properties on it can be checked against credit reference data.
The Prudential Regulation Authority's buy to let underwriting standards list the borrower's full portfolio of properties and outstanding mortgages among the information a lender may ask a portfolio landlord for, together with assets and liabilities, a business plan and the cash flows of every property (Bank of England: SS13/16). Some lenders ask for the schedule on their own template.
Protected trust deed
Lending and affordability
A legally binding agreement in Scotland between a person and their creditors to pay all or some of what they owe, which becomes protected when enough creditors accept it.
Protected trust deed: Full definition · used on 9 pages
A trust deed is Scotland's comparable route to an individual voluntary arrangement, which is not available in Scotland. It covers unsecured debts such as credit cards and personal loans. Once the trust deed is protected, creditors cannot chase the debtor, add interest or take court action, and the trust deed must be protected for the remaining debts to be written off at the end (mygov.scot: what is a trust deed).
Payments usually run for four years, and the credit rating is affected for six years from the date the trust deed begins. The home may have to be included, with only the debtor's share of the equity counted on a jointly owned home, unless the trustee agrees before signing that it is left out. Protected trust deeds are listed on Scotland's Register of Insolvencies. Lenders treat a current or past trust deed as adverse credit.
Protection insurance
Insurance
Insurance that pays a lump sum or a regular income if the person covered dies, is diagnosed with a specified serious illness or cannot work because of illness or injury. It protects people and their income rather than property.
Protection insurance: Full definition · used on 7 pages
The main types are term life insurance, paid if the person covered dies within the term; family income benefit, life cover paying a regular income to the end of the term instead of a lump sum; critical illness cover, paid on diagnosis of a condition that meets the policy definition; and income protection, a monthly benefit while illness or injury stops you working. A business can insure a person it depends on with key person insurance. Buildings and contents insurance covers property rather than people and is general insurance.
The FCA Handbook defines a pure protection contract as long-term insurance that pays only on death or incapacity due to injury, sickness or infirmity and has no surrender value, or none above a single premium (FCA Handbook: pure protection contract). Advising on and arranging protection and general insurance is insurance distribution, regulated under the FCA's Insurance: Conduct of Business sourcebook (ICOBS), not the mortgage rules in MCOB. Before taking out or changing cover as a consumer, you have a duty to take reasonable care not to make a misrepresentation to the insurer (Consumer Insurance (Disclosure and Representations) Act 2012, section 2). A consumer or small business whose complaint is not resolved can take it to the Financial Ombudsman Service.
Prudential Regulation Authority (PRA)
Regulation
The part of the Bank of England responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms.
Prudential Regulation Authority (PRA): Full definition · used on 47 pages
Prudential regulation is about firms' financial safety, such as the capital they hold and how they manage risk, while the FCA regulates how firms conduct their business. For property lending, the PRA's best-known rules are its buy-to-let underwriting standards in SS13/16. Bank of England: Prudential Regulation Authority.
Pub mortgage
Commercial
A commercial mortgage used to buy or refinance premises used as a public house.
Pub mortgage: Full definition · used on 17 pages
A commercial mortgage used to buy or refinance premises used as a public house.
The lender considers whether the borrower operates the pub or lets it to an operator. Trading performance, lease income and the property’s valuation are assessed as applicable. A going-concern valuation and a property-only valuation measure different things.
Accommodation built specifically for students and valued as an operating asset on its stabilised income, rather than against residential comparables.
Purpose-built student accommodation (PBSA): Full definition · used on 13 pages
PBSA is a commercial-style asset. Planning use is usually sui generis, value is the net operating income capitalised at a yield, and the letting model is either a nomination agreement with a university or a direct let to students.
The asset runs on the academic year, so a scheme that misses the September intake has missed its income for twelve months. That timetable, more than the build programme, is what lenders underwrite.
Development is funded on the commercial ceilings against investment value, and the exit is a refinance onto investment lending or a sale to an institutional buyer.
Q3 terms
Qualified Teacher Status (QTS)
Specialist lending
The professional status that qualifies a teacher to teach in maintained schools in England and in Wales. Scotland and Northern Ireland register teachers through their own teaching councils.
Qualified Teacher Status (QTS): Full definition · used on 1 page
In England QTS is a legal requirement in maintained schools, and most teachers in academies and free schools hold it. Overseas-trained teachers can teach in most roles that need QTS for their first 4 years without it (Department for Education: recruit teachers from overseas). The Children's Wellbeing and Schools Act 2026 allows the QTS and statutory induction requirements to be extended to academies, and the Department for Education has said they will apply in primary and secondary academies from 1 September 2027. A teacher in England must hold QTS before starting the two-year statutory induction as an early career teacher. In Wales a newly qualified teacher must hold QTS and register with the Education Workforce Council before induction. In Scotland teachers register with the General Teaching Council for Scotland, moving from provisional to full registration after probation, and in Northern Ireland with the General Teaching Council for Northern Ireland.
For a mortgage, lenders whose professional criteria include teachers usually ask for evidence of QTS or the equivalent registration before applying their higher income multiple. See professional mortgage.
Qualifying loan interest relief
Fees and charges
Income tax relief on interest an individual pays on a loan used for certain purposes, such as buying shares in or lending to a close company, or buying into a trading or professional partnership.
Qualifying loan interest relief: Full definition · used on 1 page
Qualifying loan interest relief is income tax relief on interest an individual pays on a loan used for a qualifying purpose, under Part 8, Chapter 1 of the Income Tax Act 2007. The purposes include buying ordinary shares in, or lending to, a close company that is not a close investment-holding company, where the individual owns more than 5% of the ordinary share capital, on their own or with associates, or holds some shares and works for the greater part of their time in managing the company, and money lent is used wholly and exclusively for the company's business. They also include buying into a trading or professional partnership, or contributing capital to or lending to one for its business.
The relief is claimed through Self Assessment and does not apply to overdrafts or credit cards. It counts towards the limit on certain income tax reliefs, the greater of £50,000 and 25% of adjusted total income in a tax year (GOV.UK: HS340). Interest on borrowing used personally does not qualify.
Quantity surveyor (QS)
Development finance
A construction professional who estimates and controls the costs of a building project, working out the quantities and costs of materials, time and labour and monitoring spending at each stage.
Quantity surveyor (QS): Full definition · used on 9 pages
On a development loan the lender's own surveyor reviews the developer's costings and certifies the work before each drawdown: see monitoring surveyor. National Careers Service: quantity surveyor.
R26 terms
Re-bridging
Bridging finance
Refinancing an existing bridging loan with a new bridging loan on the same property, usually from a different lender, to give the original exit more time.
Re-bridging: Full definition · used on 20 pages
Re-bridging moves the debt from one bridging loan to another when the planned exit, such as a sale, a refinance onto a term mortgage or the completion of works, has not happened by the end of the first loan's term. The new loan repays the existing lender's redemption figure, including any rolled-up interest, exit fee and extension or default charges, and adds its own arrangement fee, valuation, legal costs and interest, so the debt and the loan to value rise with each refinance.
It differs from an extension, where the existing lender keeps the loan for longer, and from a remortgage onto a term mortgage, which is an exit from bridging. The new lender values the property and tests the exit strategy again. A re-bridge on a home lived in, or to be lived in, by the borrower or a related person, such as a spouse, partner, parent or child, is normally a regulated mortgage contract, and where its term is 12 months or less the FCA's rules for regulated bridging loans apply (FCA Handbook: MCOB 11.6).
Rebuild cost
Insurance
The cost of demolishing a home, clearing the site and rebuilding it to current building regulations, including professional fees but not the land. It is the basis for the buildings sum insured.
Rebuild cost: Full definition · used on 3 pages
Rebuild cost, also called reinstatement cost, assumes a total loss: the building is demolished and rebuilt on the same site to a similar design. The RICS professional standard for reinstatement cost assessments builds the figure from a net rebuilding cost plus allowances for debris removal and demolition, professional fees, and changes needed to meet current Building Regulations, and says the figure for insurance purposes has no direct relationship to market value (RICS: reinstatement cost assessment of buildings). The land is not included.
A rebuild cost calculator gives an estimate for a standard home, while a listed, older or unusual home needs a surveyor's assessment. If the buildings insurance sum insured is below the rebuild cost, a policy with an average clause pays only the same proportion of each claim (Financial Ombudsman Service: underinsurance in home insurance complaints).
Redemption statement
Lending and affordability
A lender's statement of the amount needed to repay a loan in full on a given date, including interest and any charges due on repayment.
Redemption statement: Full definition · used on 10 pages
A redemption statement sets out the capital outstanding, the interest to the stated date and any fees or charges due on repayment, such as an exit fee, an early repayment charge or arrears and default charges. It is valid for the date shown, and many statements also give a daily amount to add for each day after it.
A new lender or a buyer's solicitor relies on it to repay the old loan on completion, so it is the figure a refinance or a sale has to cover. On a bridging loan with interest rolled up, or with charges for running past the end date, the redemption figure can be well above the original advance. Where interest was retained at the start, the statement shows whether any unused part is credited back, which depends on the loan agreement.
Refurbishment finance
Development finance
Finance for improving an existing property, from repairs and modernisation to more extensive renovation works.
Refurbishment finance: Full definition · used on 48 pages
Finance for improving an existing property, from repairs and modernisation to more extensive renovation works.
The scope of works determines whether a refurbishment bridge, development facility or another loan is suitable. Structural work, permissions, drawdown conditions and the planned exit affect the available funding.
Regulated mortgage
Regulation
A mortgage contract that falls within the UK statutory definition of a regulated mortgage contract and the applicable FCA rules.
Regulated mortgage: Full definition · used on 87 pages
A mortgage contract that falls within the UK statutory definition of a regulated mortgage contract and the applicable FCA rules.
Under article 61 of the Regulated Activities Order, a contract is a regulated mortgage contract where a lender provides credit to an individual or to trustees, the obligation to repay is secured by a mortgage or charge on land in the UK, and at least 40% of that land is used, or intended to be used, as or in connection with a dwelling. Exclusions in article 61A take out some contracts that meet those tests, such as investment property loans, second charge business loans and some second charge bridging loans. In practice, lending secured on a home the borrower or a close relative lives in is regulated, while lending to a company, or for investment property, generally is not.
Classification depends on the borrower, security, residential use and any statutory exclusion. It is not determined by the product’s name alone. Consumer buy-to-let is a separate framework. FCA definition of a regulated mortgage contract; article 61 of the Regulated Activities Order.
Relevant life policy
Insurance
A life policy that an employer pays for on an individual director or employee, paying a lump sum to the person's family or other beneficiaries if they die in service.
Relevant life policy: Full definition · used on 1 page
A relevant life policy is death-in-service cover for one director or employee, paid for by the employer. HMRC's guidance describes it as a policy paying a lump sum on the person's death before an age no higher than 75, with no surrender value, with beneficiaries limited to individuals and charities, and where tax avoidance is not a main purpose. The policy is usually written in trust for the person's family.
A payment from a relevant life policy is outside the tax charge on employer-financed retirement benefits schemes, and the premiums can be exempt from a benefit in kind charge under section 307 of the Income Tax (Earnings and Pensions) Act 2003, depending on the circumstances (GOV.UK: HMRC Employment Income Manual, EIM15045). Whether the employer can deduct the premiums turns on the wholly and exclusively test. It protects the family, unlike key person insurance, which pays the business.
Remortgage
Residential
Moving a mortgage to a new lender on the same property, either to a better rate or to release equity. A product transfer, by contrast, stays with the current lender.
Remortgage: Full definition · used on 163 pages
A remortgage replaces the existing loan on a property with a new one from a different lender. It is a full application: the new lender underwrites the borrower, values the property and instructs a legal process to redeem the old charge and register its own.
The two reasons for one are rate and capital. Moving at the end of an initial period avoids reverting to a standard variable rate, and a remortgage can raise a larger loan against a property that has risen in value or been improved.
Staying with the current lender on a new product is a product transfer, not a remortgage. It is quicker and usually needs no valuation or legal work, but it compares only that lender’s range.
Rent control area
Regulation
An area of Scotland designated by Scottish Ministers under the Housing (Scotland) Act 2025, where rent increases on most private residential tenancies are capped.
Rent control area: Full definition · used on 2 pages
An area of Scotland designated by Scottish Ministers under the Housing (Scotland) Act 2025, where rent increases on most private residential tenancies are capped.
Designation is made by regulations the Scottish Parliament must approve, after a council report and a consultation. The Act sets a maximum permitted increase in a designated area, linked to inflation, which Scottish Ministers can change by regulations. Separate regulations made by Scottish Ministers can exempt some properties from the cap, such as qualifying build to rent and mid-market rent homes. mygov.scot publishes whether any area has been designated. A rent control area is separate from a short-term let control area, which is a planning designation.
Sources: Housing (Scotland) Act 2025, section 9; Private Housing Rent Control (Exempt Property) (Scotland) Regulations; mygov.scot: rent pressure zones.
Rent to Buy
Residential
A scheme in England, outside London, that lets a working first-time buyer rent a home at a discounted rent so they can save for a deposit.
Rent to Buy: Full definition · used on 2 pages
The rent is set below the local market rent, and eligibility includes being in work, being a first-time buyer and being able to pay the rent and save at the same time. London has a separate scheme, London Living Rent. GOV.UK: Rent to Buy.
Rental stress test
Buy-to-let
A lender’s calculation of whether rental income provides sufficient cover for mortgage commitments at its chosen assessment rate.
Rental stress test: Full definition · used on 175 pages
A lender’s calculation of whether rental income provides sufficient cover for mortgage commitments at its chosen assessment rate.
The lender defines the required cover, assessment rate and treatment of costs. The rate may differ from the pay rate, and the result is only one of the limits on borrowing.
Renters' Rights Act 2025
Regulation
The Act that reformed private renting in England, turning assured shorthold tenancies into rolling assured periodic tenancies and ending 'no fault' evictions under section 21.
Renters' Rights Act 2025: Full definition · used on 15 pages
On 1 May 2026 existing assured shorthold tenancies in England became assured periodic tenancies with no end date, and a landlord now needs a legal ground for possession and a section 8 notice. A separate provision means a long lease of more than 21 years can no longer be an assured tenancy, whatever its ground rent. Wales and Scotland have their own systems: occupation contracts and private residential tenancies. GOV.UK: Renters' Rights Act overview for landlords.
Repayment mortgage
Residential
A mortgage whose scheduled payments cover both interest and part of the capital borrowed.
Repayment mortgage: Full definition · used on 33 pages
A mortgage whose scheduled payments cover both interest and part of the capital borrowed.
If all required payments are made, the capital is repaid by the end of the agreed term. Changing the rate, term or balance changes the payment needed.
Sources: MoneyHelper: mortgage repayment options.
Residential mortgage
Residential
A loan secured against a property that the borrower intends to occupy as a home.
Residential mortgage: Full definition · used on 199 pages
A loan secured against a property that the borrower intends to occupy as a home.
The lender assesses the borrower’s ability to make payments and whether the property is acceptable security. The agreed repayment method determines how interest and the amount borrowed are repaid.
Sources: MoneyHelper: mortgage repayment options.
Retail Prices Index (RPI)
Lending and affordability
An older measure of inflation that the Office for National Statistics still publishes because it is written into many contracts, such as ground rent reviews and earlier Help to Buy equity loans. It is not an accredited official statistic, and the ONS discourages its use.
Retail Prices Index (RPI): Full definition · used on 5 pages
English Help to Buy equity loans taken from 2013 to 2021 raise their interest rate each April by RPI plus 1%, and some leases link ground rent increases to RPI. Lenders that set ground rent limits often accept RPI-linked increases but not compounded RPI.
Retained profit
Lending and affordability
Profit a company keeps after corporation tax and dividends, which adds to its reserves and which some lenders count towards a director's income.
Retained profit: Full definition · used on 16 pages
Retained profit is the part of a company's profit after corporation tax that is not paid out as dividends. It stays in the company's reserves, where it can fund the business or be paid out later, since a company can pay dividends from its available profits of previous financial years as well as the current one (GOV.UK: taking money out of a limited company).
A director who takes a salary and only part of the profit as dividends pays less personal tax in that year, and the rest is retained. A lender reading salary and dividends does not see the retained part. A lender reading salary plus share of net profit counts the director's percentage of the year's profit whether drawn or retained, and some of those lenders check that the company holds the cash to pay it out and that drawing it would not harm the business. Retained profit and cash are different things: a company can show retained profit that is tied up in stock, equipment or money owed by customers.
Retention (mortgage)
Valuation
Part of a mortgage advance that the lender holds back at completion until specified work is done or evidenced, such as essential repairs or a Japanese knotweed management plan.
Retention (mortgage): Full definition · used on 24 pages
A retention is set out in the mortgage offer. The lender advances the rest of the loan at completion and releases the retained amount once the condition is met, on the evidence it specifies, which can include a further inspection by its valuer. Until then the borrower funds the difference from their own money, so a retention raises the cash needed at completion.
A retention can follow a mortgage valuation that identifies work the lender wants done. For Japanese knotweed, the RICS professional standard anticipates retentions at management categories A and B and says one ought not to be imposed at category C. Lenders differ: some do not make retentions, and ask instead for the work or the plan to be in place before completion.
Retirement interest-only mortgage
Residential
An interest-only mortgage for older borrowers, with the interest paid every month and the loan usually repaid when the home is sold after the last borrower dies or moves into long-term care.
Retirement interest-only mortgage: Full definition · used on 6 pages
The FCA defines a retirement interest-only mortgage as an interest-only mortgage that requires the interest to be paid in full over the term, is open only to older customers above a specified age, and under which the lender cannot seek full repayment until a specified life event, unless the customer breaks the terms (FCA Handbook glossary: retirement interest-only mortgage).
It is a regulated mortgage assessed under the standard mortgage rules, so the lender checks that income, including pensions, covers the interest. Because the interest is paid, the balance does not grow, unlike a lifetime mortgage on which interest rolls up. Minimum ages vary by lender.
Revenue per available room (RevPAR)
Commercial
A hotel trading measure: room revenue divided by the number of rooms available, sold or not, so it reflects both the price achieved and how full the hotel is.
Revenue per available room (RevPAR): Full definition · used on 7 pages
RevPAR is read with occupancy and the average daily rate (ADR), which divides the same revenue by rooms sold. Visit Wales: accommodation occupancy survey definitions.
Revolving credit facility
Commercial
A secured facility with an agreed limit that can be drawn, repaid and drawn again, with interest charged only on the balance outstanding.
Revolving credit facility: Full definition · used on 22 pages
A revolving credit facility secured on property works like an overdraft against the equity. The limit is set from the value and the lender's loan to value, less any existing charges, and the borrower draws against it, repays and draws again during the availability period.
Interest is charged on the drawn balance rather than on the limit, and a facility can add a non-utilisation fee on the undrawn part. Once the fees are counted, that can make it cheaper than a term loan for a borrower whose need is intermittent, and dearer for one who stays fully drawn.
Bridging lenders offer revolving bridging facilities to repeat purchasers, and some commercial lenders and private banks offer longer facilities against buy to let portfolios and commercial property. It suits portfolio landlords and developers funding deposits, refurbishments and auction purchases, where the money is needed quickly and repaid from a sale or a refinance.
RICS Home Survey
Valuation
A survey of a home's condition by an RICS surveyor for the buyer, at Level 1 (condition report), Level 2 (formerly the HomeBuyer Report) or Level 3 (the most detailed, formerly the building survey). It is separate from the lender's mortgage valuation.
RICS Home Survey: Full definition · used on 13 pages
Level 1 describes the property's condition, risks and urgent defects without repair advice or a valuation. Level 2 suits conventional properties and has a version that includes a valuation. Level 3 is the most comprehensive report.
A mortgage valuation is carried out for the lender, and RICS warns that it is not a survey: defects that would be costly to put right may not appear in it. Scotland has its own Home Report. RICS: home survey types.
Right to Acquire
Residential
A scheme in England under which an eligible housing association tenant can buy their rented home at a discount, broadly where the home was built, bought or transferred to the association after 31 March 1997.
Right to Acquire: Full definition · used on 3 pages
The tenant must meet the eligibility rules, including time with a public sector landlord, and the landlord must be registered with the Regulator of Social Housing. Council tenants use the Right to Buy instead. Wales has legislated to abolish the Right to Acquire. GOV.UK: Right to Acquire.
Right to Buy mortgage
Residential
A mortgage used by an eligible tenant to purchase their home through the Right to Buy scheme in England.
Right to Buy mortgage: Full definition · used on 23 pages
A mortgage used by an eligible tenant to purchase their home through the Right to Buy scheme in England.
Scheme eligibility and the discount are separate from mortgage approval. The lender still assesses the borrower and property; the scheme also places conditions on a later sale.
Sources: GOV.UK: Right to Buy.
Rolled-up interest
Bridging finance
Interest that is added to the outstanding loan rather than paid as it falls due, with repayment deferred to a later date.
Rolled-up interest: Full definition · used on 28 pages
Interest that is added to the outstanding loan rather than paid as it falls due, with repayment deferred to a later date.
The balance increases as interest is added. Whether further interest is charged on accrued interest depends on the agreement, so compare the stated calculation method and total redemption amount rather than assuming every facility compounds in the same way.
The professional body for chartered surveyors. It sets qualifications and standards, regulates its members and firms, and runs the registration scheme for valuers who carry out valuations to its Red Book standards.
Royal Institution of Chartered Surveyors (RICS): Full definition · used on 24 pages
RICS works under a Royal Charter and independently regulates chartered professionals and firms. Members who carry out most valuation work must be registered under its Valuer Registration Scheme, which checks they meet the Red Book standards, and can then use the RICS Registered Valuer designation.
RICS also publishes the Home Survey levels a buyer can choose from, and professional standards on particular valuations, such as buy-to-let and HMO property. Some schemes require an RICS valuation: repaying a Help to Buy equity loan, for example, needs one from an independent RICS-registered surveyor. RICS: about RICS.
Rural mortgage
Specialist lending
A mortgage for property in a rural setting, potentially including land, outbuildings or agricultural use.
Rural mortgage: Full definition · used on 28 pages
A mortgage for property in a rural setting, potentially including land, outbuildings or agricultural use.
The location alone does not create a separate loan type. The lender considers residential or business use, acreage, access and restrictions to decide whether residential, agricultural or commercial finance is appropriate.
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 14 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 30 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 13 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 4 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 30 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 32 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 24 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 24 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 5 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 70 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 56 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 48 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 23 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 1 page
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 3 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 4 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 18 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 59 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 354 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 42 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 116 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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