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Financial Services Glossary

100% Mortgages
A 100% mortgage means that a mortgage lender lends you the full amount that your property costs. If the house you are buying costs £100,000, you borrow the full amount of £100,000, so there is no money down, no deposit required. This can be a desirable option for first-time home buyers.
Account Review
A review of a consumer's credit history by one his/her creditors.
Accrued Interest
The amount of interest owing but not paid.
Additional Borrowing
An option available for existing borrowers, if you need to borrow money for a large purchase or to complete repairs (usually home-related). The additional borrowing amount is simply added to an existing mortgage.
If you cannot meet liabilities and are made bankrupt either by self-petition or by the petition of the creditors, a judge will decide you are bankrupt and your affairs will pass under the control of a trustee.
Adjustable Rate Mortgage Loans (ARM)
Also know as a variable-rate mortgage or a floating-rate mortgage, an adjustable rate mortgage has an interest rate that specifies periodic changes in response to the prime rate. As it's riskier than a fixed interest rate, you pay lower interest at the start of the ARM than you would with a fixed rate mortgage.
Administration Order
A term applied to an order made by the court in cases of small bankruptcies. If your liabilities do not exceed £5,000, the court can make an Administration Order for the payment of debts by instalments based on certain conditions.
Advance Corporation Tax
A basic rate tax paid by companies on dividend payments distributed to shareholders.
AER, short for Annual Equivalent Rate, is a rate that's generally used to quote interest paid on savings accounts and investments if the interest was compounded and paid annually instead of monthly, for example.
Affinity Card
A credit card offered by a lending institution and a non-financial group like a school, charity, sports team, or airline. Also known as a co-brand card, an affinity card offers special discounts or deals from the non-financial group.
Allocation Rate
The actual amount of net money invested in a pension, life insurance, or any type of investment, as financial companies take a certain percentage of money for other charges and fees. As a rule, the lower the allocation rate, the worse the contract will be for the value of your money.
Amortization Period
The actual number of years it will take to repay a mortgage loan in full or reducing mortgage debt to zero.
Annual Fee
The yearly fee charged by a lender to maintain an account.
Annual Percentage Rate (APR)
The cost of credit at a yearly rate. Knowing the APR allows you to effectively compare loans, even when they are structured differently.
Any investment that you provide a lump sum upfront and then receive set payments (usually monthly) over a scheduled amount of time; a good example would be a retirement investment.
The actual cost of borrowing credit, expressed as a yearly rate or percentage of the loan amount.
The backlog of debt payments that are overdue or haven't been made that are building up over time.
Any holding that has a monetary value or use. Houses, real estate, cars, jewellery, and stocks & bonds are considered assets.
Accident, Sickness, and Unemployment Policies are insurance policies providing short-term coverage and can only be claimed for a maximum of 1-2 years. The maximum benefit for ASU is £1,500 per month, but can be claimed on top of sick pay, etc.
An automated teller machine—an electronic device that dispenses money, accepts deposits, and gives account balances when you use an authorized bank card and PIN number.
AVC (Additional Voluntary Contributions)
AVCs are extra amounts of money that you may choose to save to add to your pension when you retire.
Average Annual Return
The average percentage profit that your investment will make on a yearly basis.
Balance Transfer
The act of transferring debt from one credit card company to another usually because one card has better terms rates and terms; in essence, repayment of one credit card with another source of credit.
Balloon Mortgage
A mortgage that offers a low interest rate for shorter-term financing (normally between five and ten years), at which point you must pay off the outstanding balance in a lump-sum payment.
Bank Draft
A cheque or written instruction, written by one bank to another which agrees to pay a sum of money to the person specified on the draft.
Bank of England
The Bank of England is the central bank of the UK. While it was established privately in 1694, it was nationalised by the British Parliament in 1946. The Bank of England prints all English bank notes, publishes banking data, and determines interest rates.
Bankruptcy Order
An order of the court that declares an individual bankrupt--someone who has insufficient assets to cover his/her debts.
Base Rate
Set by the Bank of England, the base rate is the lowest rate of interest a lender will charge.
Also called the grantee, the beneficiary is the person(s) or entity entitled to the benefit of any trust arrangement.
A bond is essentially an IOU or a debt security, usually offered by governments or public companies, by which the authorized issuer owes the holders a debt and is obliged to repay it at a later date.
Bridging Loan
A bridge or bridging loan is a short-term loan (usually one to three months) taken out to cover the period between the end of one loan and the start of another, most often arranged to cover the gap between buying a new property and selling an existing one.
British Bankers Association (BBA)
A trade association for banks who operate in the UK.
A broker is a middle-person, arranging deals between borrowers/buyers and lenders/sellers, for a fee or commission.
Building Society
A building society is a mutual organisation (owned by its members) whose principal purpose is to provide mortgages, savings accounts, and other financial services; it doesn't pay dividends to shareholders so it can pass along savings to members.
Business Current Accounts
A non-interest-generating bank account, especially designed with businesses in mind, that allows the accountholder(s) to withdraw money on demand via direct debit, cash machines, or cheques.
Buy-to-Let Mortgage
A buy-to-let mortgage is needed when a property is purchased for investment purposes and rented out to a tenant. These mortgages typically require a large deposit (15-20% of a property's value), are set at slightly higher interest rates, and require that the purchaser's rental income is 130-150% of the interest payable on mortgage.
A sum of money that has been invested or borrowed as a lump sum, excluding costs and interest.
Capital Asset
Tangible property, including land, property, buildings, equipment, and other long-term or permanent valuables used in a business.
Capital Gain
A positive difference between the purchase price and the selling price of an investment; a profit made from selling a capital asset.
Capital Gains Tax
Taxes on any profit you made from the sale of a capital asset, such as land, real estate, equipment, furniture, etc.
Capital Loss
A negative difference between the purchase price and the selling price of an investment; a loss suffered from selling a capital asset.
Capped Rate Mortgages
A mortgage that is guaranteed to not rise above a specific interest rate within a set period of time—usually one to five years. You benefit from falling interest rates, but are protected from rate rises; however, there are often stringent policies on repayment and terms.
Carbon Offsetting
The act of “neutralising” greenhouse gas emissions. “Carbon offsets,” measured in tons of CO2, are credits bought and sold through a number of brokers and retailers.
Cash ISA
Individual savings accounts that are tax-free up to £7,000 each financial year (April 6 th -April 5 th ).
Cashback Mortgages
The lender provides the borrower with a cash rebate upon completion of the mortgage (closing date), the amount being either a fixed rate or a percentage of the amount borrowed.
Certificate of Unenforceability
Applicable in Northern Ireland, when a judgment has been filed with the court against the debtor, but the court has issued a certificate for the debtor's protection which prevents collection of the debt. This certificate is issued as part of a bankruptcy action. After six months, the creditor may reapply to have the debt paid.
Child Trust Fund
A long-term savings and investment account for children in the UK.
The UK's fraud prevention service with 270 members in banking, credit cards, asset finance, retail credit, mail order, insurance, savings and investments, telecommunications, factoring, and share dealing.
Citizen's Advice Bureau
Helps people resolve their legal, money and other problems by providing free information and advice from over 3,000 locations, and by influencing policymakers.
Money or benefits that are given, but are retracted because of unique circumstances. For example, if you purchase certain investments that have taxable benefits, but sell those investments before they mature, the benefits must be returned.
CML is the Council of Mortgage Lenders, representing 98% of UK residential lenders. It helps promote good lending practices and ways to protect borrowers.


Assets acceptable as security for a loan or other obligations.
Commercial Mortgages
Commercial mortgages provide financing necessary for purchasing property used for business purposes (factories, offices, warehouses, shops, etc.). While they often have higher interest rates than residential mortgages, they're generally more flexible and offer extra incentives.
Common Shares
Securities of equal ownership in a corporation, with voting rights, and a share of the company's success through dividend earnings.
Compound Interest
Interest calculated (either daily, monthly, quarterly, annually, etc.) on both the principal amount of money loaned, earned, or saved and on the previously paid interest.
Compounded Annual Rate (CAR)
The average year-over-year growth of an investment.
Conditional Insurance
An insurance policy that must be taken out on certain insurance products before a lender will grant you a mortgage. For example, lenders require that you have home insurance before finalizing a mortgage, as they technically own the property and want to protect it.


Consequential Loss
An indirect loss resulting from direct damage; for example, spoiling of frozen foods caused by fire damage to refrigeration equipment.
Consolidation/Consolidated Loan
A loan program that amalgamates various loans into one single payment, usually with a much lower interest rate and longer repayment terms.
Consumer Credit License
A license issued by the Office of Fair Trading given to those businesses operating in the consumer credit industry.
Consumer Debt
Debt incurred for items that aren't considered tangible investments such as credit card debt, car loans, and personal loans made by family members.
Consumer Price Index
The official measure of inflation of consumer prices of the United Kingdom, calculated on a monthly basis by sampling goods and services that a typical household might buy.
The legal process of transferring property ownership between buyer and seller.
Cooling Off Period
A period after an exchange of contract during which time the contracts may be cancelled. Cooling off periods vary and may only apply to certain investments.
A second individual who signs a promissory note with a borrower, taking on equal liability for an outstanding debt, guaranteeing that the loan will be paid if the borrower defaults.
County Court Judgment
A decision or judgment from a County Court against a debtor who has refused or failed to pay monies for which a creditor claimed to be owed and is suing.
Cover Note
A provisional document issued by an insurance company confirming that a temporary insurance policy is in effect until a full policy is paid for and issued.
A trust or promise to buy now and pay later under designated terms for goods or services.
Credit Bureau/Credit Reference Agency
An agency that gathers information about consumers' credit relationships and provides creditors with credit reports and scores on consumers.
Credit Card
A plastic card with a magnetic strip issued by a bank, corporation, or company authorizing the holder to buy goods and services on credit, i.e. pay for them later. Credit amount and interest rates charged are established by lender.
Credit Crunch
A short supply of available loans for businesses and consumers, usually causing a rise in interest rates, or in more troubled markets, credit rationing—meaning that some borrowers are not able to get loans at all.
Credit Fraud/Identity Theft
A crime that involves using another's name or other personal information to acquire credit, make purchases, or transact business in that name.
Credit History
A record of how you have paid credit accounts in the past. It is used as a guide to determine whether or not you are likely to pay future accounts on time.
Credit Limit
The maximum amount of credit that a bank or financial institution will extend you for a particular line of credit, based on a your credit history.
Credit Rating/Score
A score and an analysis of the information contained within your credit report. Each piece of information in your report is given points based on how it compares to people who pay their bills and loans on time. The more positively it compares to these people, the higher your score and overall credit rating becomes.
Credit Repair Agencies/Credit Clinics
Companies that claim they can "clean up" or "erase" your bad credit.
Credit Report
A record or file used by a prospective lender or employer that chronicles the credit standing of a prospective borrower. It is used to help determine creditworthiness of the potential borrower.
Credit Risk
The likelihood of a consumer to pay back an outstanding debt.
An assessment of a consumer's past credit behaviour that allows a potential lender to decide whether or not to extend credit

Current Account


A non-interest-generating bank account that allows the accountholder(s) to withdraw money on demand via direct debit, cash machines, or cheques.
Customs Debt Management Service
Customs Debt Management Service, part of HM Revenue and Customs, handles tax collection and account recovery for England, Wales, Scotland, and Ireland.
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