44 terms
Glossary
Plain-English definitions of the terms you’ll come across when remortgaging with adverse credit.
A
- Adverse credit
- Negative information on your credit file, such as missed payments, defaults, CCJs, an IVA or bankruptcy. Also called bad or impaired credit. Read more
- Affordability assessment
- The lender’s check that you can afford the mortgage, based on your income, regular outgoings and a stress test at a higher rate.
- Arrangement to pay marker
- A note on a credit account showing you agreed to pay less than the contractual amount, often as part of a debt management plan.
- Arrears
- Payments that are overdue. Mortgage arrears are missed mortgage payments that haven’t yet been paid. Read more
B
- Bankruptcy
- A form of insolvency for people who can’t repay their debts. In England and Wales most people are discharged after 12 months, but it stays on the credit file for 6 years. In Scotland it is called sequestration. Read more
C
- Charging order
- A court order that secures a judgment debt against your property, which may need to be repaid when the home is sold or remortgaged.
- County court judgment (CCJ)
- A court order to repay a debt in England, Wales or Northern Ireland. It stays on your credit file for 6 years unless paid in full within one calendar month. In Scotland the equivalent is a decree. Read more
- Credit file
- The record credit reference agencies hold about how you have managed credit, including accounts, payment history and public records. Also called a credit report.
- Credit reference agency
- A company that holds credit files. The three main UK agencies are Experian, Equifax and TransUnion. You can get your statutory report from each free of charge.
- Credit score
- A number an agency or app calculates from your credit file. Lenders don’t see these scores; they use their own scoring and criteria. Read more
D
- Debt consolidation
- Combining several debts into one, for example by remortgaging and using the extra borrowing to repay cards and loans. It secures those debts on your home. Read more
- Debt management plan (DMP)
- An informal agreement to repay your debts in full at an affordable rate, usually arranged through a debt adviser. It isn’t a legal insolvency. Read more
- Debt relief order (DRO)
- A form of insolvency in England and Wales for people with low income and few assets. It lasts 12 months and stays on the credit file for 6 years.
- Decree
- A Scottish court order to pay a debt, broadly equivalent to a CCJ. Read more
- Default
- A record that a lender closed an account after a run of missed payments. It stays on your credit file for 6 years from the default date, whether or not you pay it. Read more
E
- Early repayment charge (ERC)
- A fee some mortgages charge if you repay or leave the deal before a set date.
- Equity
- The part of your home’s value you own outright: the value minus what you owe on it.
- Equity release
- Ways for older homeowners to take money from their home, such as a lifetime mortgage. It is a specialist product that needs regulated advice.
F
- Financial association
- A link on your credit file to someone you share credit with, such as a joint mortgage or account. You can ask the agencies for a notice of disassociation after you separate.
- Forbearance
- Help a lender offers when you are struggling, such as a temporary payment arrangement or changing the term.
- Further advance
- Extra borrowing from your existing mortgage lender, secured on your home.
H
- Hard search
- A credit search made when you apply for credit. Other lenders can see it.
I
- Individual voluntary arrangement (IVA)
- A formal, legally binding agreement with creditors to repay part of your debts over a set period, supervised by an insolvency practitioner. It stays on your credit file for 6 years from the start date. Read more
- Insolvency Register
- A public register of bankruptcies, IVAs and debt relief orders in England and Wales. Entries are removed after the insolvency ends (for an IVA, 3 months after it ends).
L
- Loan to value (LTV)
- Your mortgage as a percentage of your home’s value. A £150,000 mortgage on a £250,000 home is 60% LTV. Read more
M
- Missed payment
- A payment not made by its due date, recorded on your credit file as a late payment marker for 6 years. Read more
- Mortgage in principle
- An indication of how much a lender might lend, before a full application. Some use a soft search, some a hard search.
N
- Negative equity
- When you owe more on your mortgage than your home is worth.
- Notice of correction
- A statement of up to 200 words you can add to your credit file to explain an entry.
P
R
- Register of Judgments, Orders and Fines
- The official register of county court judgments in England and Wales, run by Registry Trust. Credit reference agencies use it.
- Remortgage
- Replacing your current mortgage with a new one, with your existing lender or a different one, often to get a new deal or borrow more. Read more
- Repossession
- When a lender takes possession of a home because the mortgage hasn’t been repaid. It is a last resort and lenders must follow set steps first.
S
- Satisfied
- Paid in full. A satisfied CCJ or default stays on your file for the full 6 years but shows that it has been paid. Read more
- Second charge mortgage
- A separate loan secured on your home behind your main mortgage. Also called a secured loan or homeowner loan.
- Sequestration
- The Scottish term for bankruptcy. Read more
- Soft search
- A credit search that only you can see, used for eligibility checks and checking your own file. It doesn’t affect your credit.
- Specialist lender
- A lender that assesses applications individually and may consider circumstances that automated high-street scoring would decline.
- Standard variable rate (SVR)
- The lender’s default rate that most mortgages move to when a fixed or tracker deal ends. It is usually higher than deal rates.
- Statutory credit report
- The copy of your credit file each credit reference agency must give you free on request.
- Stress test
- Part of the affordability check, where the lender tests whether you could still afford payments if rates rose.
T
- Transfer of equity
- Changing who owns a property, for example adding or removing a partner, which usually needs the lender’s agreement.
U
- Unsatisfied
- Not yet paid. An unsatisfied CCJ or default generally narrows your options more than a satisfied one. Read more
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