Mortgage terms are the commonly used terms surrounding a mortgage. They help you understand how a home loan is structured and which choices you make.
Important terms
- Principal: the amount borrowed.
- Interest and fixed-interest period: the period for which the interest rate is fixed.
- Annuity mortgage: a constant gross monthly amount, with much interest and little repayment at the start, and the reverse later on.
- Linear mortgage: an equal repayment amount each period, causing the monthly costs to fall.
- Interest-only mortgage: only interest, no repayment during the term.
- LTV (loan-to-value): the ratio of the loan to the value of the home.
- NHG: National Mortgage Guarantee.
- Mortgage interest deduction: the deductibility of mortgage interest under certain conditions.
- Refinancing: replacing an existing mortgage, possibly with an early-repayment penalty.
- Appraised value and forced-sale value: the appraised value and the expected proceeds in a forced sale.
Application
- Comparing mortgage forms and providers.
- Understanding your monthly costs and conditions.
Related terms
- Mortgage
- LTV
- Forced-sale value
- Buyer’s costs
- Land registry
- Chain clause
Want to learn more about construction terms? Visit our knowledge base at fredsdiyplans.com.