Mortgages Glossary

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Your initial mortgage appointment is without obligation. Embrace Financial Services normally charge a fee for their services; however, it is payable only on the submission of your mortgage application. The fee will depend on your circumstances but the standard fee is £549. Complex cases usually attract a higher fee. Embrace Financial Services will discuss and agree the fee with you prior to submitting any mortgage application.



A recommendation about the most suitable mortgage for you is made by a qualified adviser, who is regulated by the Financial Conduct Authority.

Annual Percentage Rate of Change (APRC)

The overall cost of a mortgage, including the interest and fees.

Approved in Principle / Agreement in Principle

A certificate some lenders will give you showing the amount they will probably be prepared to lend you. This is not a guarantee but can be helpful when registering with estate agents.


Base Rate

In the UK the interest rate set by the Bank of England for lending to other banks and is used as the benchmark for interest rates generally.


Cashback Mortgage

Some lenders offer "cashback" on completion of your house purchase as part of the mortgage deal. This could be a fixed lump sum, or an agreed percentage of the mortgage loan. Remember to check whether there will be conditions attached.


Discounted Variable Rate Mortgage

Features a set percentage discount below your lender's Standard Variable Rate for a predetermined length of time. Your monthly payments can still go up and down with this type of rate.


Early Repayment Charge

It's important to remember that if you repay your mortgage early it can mean you end up paying an additional payment depending on the type of mortgage you have.


Financial Conduct Authority

A body that regulates the financial services industry in the UK.

Fixed Rate Mortgage

A fixed interest rate is applied to your mortgage for a predetermined time.


Flexible features may apply to many types of mortgages. Features could include the facility to overpay or take payment breaks amongst others. Your Financial Consultant will be able to advise you about the different options available.


Higher Lending Charge

Is a charge levied to pay for an insurance to protect the lender from financial loss in case you fall significantly behind with your mortgage payments and your property is repossessed.


Interest Only Mortgage

You pay the interest on your mortgage to the lender each month until the end of the mortgage term. The capital borrowed does not reduce and it is your responsibility as a borrower to ensure that you have a method or means of repaying the capital at the end of the term.


Joint Mortgage

A mortgage where there is more than one individual named responsible for the mortgage.


Lender's Arrangement Fee

This fee may be charged by the lender to cover their administration costs in setting up your mortgage.

Lender's Standard Variable Rate

The normal interest rate charged by the lender on mortgages without discounts or deals.

Loan To Value Ratio

The loan-to-value (LTV) ratio represents the value of the loan you take out and the value of the property as a whole, expressed as a percentage.

To work out the (LTV), just take the amount you need to borrow, divide it by the value of the property and then multiply by 100 to get its percentage value.

For example, if the property is worth £200,000 and you need to borrow £180,000 for the mortgage than your LTV is 90%.


Mortgage Term

This is the period of time over which your mortgage is proposed to run as defined in your mortgage offer. Remember the longer your mortgage runs, the more interest you are charged overall so care needs to be taken to ensure that the term chosen is suitable.


Repayment Mortgage

Your monthly repayment includes part interest and part capital repayment. So long as you meet all of the payments required by the lender on time, your mortgage will gradually reduce until it is repaid in full at the end of the mortgage term.


Tracker Rate Mortgage

A mortgage with an interest rate linked to a particular base rate, which it moves up and down with.


Valuation Fee

Normally charged by the lender to carry out a basic inspection of the property. The resulting valuation report is solely for the lender's benefit and is used to assess the suitability of the property to act as security for the mortgage.