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--A-- Back to Top
Accident insurance: Insurance which pays benefits in the event of an accident.
Accidental death insurance: Insurance which pays a lump sum in the event of death of the insured
Accounts payable: Amounts owed by an individual to another for goods or services it has obtained
Act of God: An unpreventable and unpredictable event which could cause loss or damage to buildings, land and persons.
Annual percentage rate (APR): Where interest on loans is expressed as other than a yearly rate
Assured: In the UK the assured is a person (or people) who have entered into a life assurance contract
ATM card: A plastic card enabling the holder to access an automated teller machine to obtain cash
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Bankruptcy: A situation where an individual is incapable of settling his/her debts and has been served a bankruptcy order by a court.
Base rate: The lowest rate at which a bank will charge interest.
Base rate tracker mortgage: A mortgage in which the rate of interest paid by the borrower follows movements in the base rate.
Bailiffs: Employed mainly by the Court to enter into your property and take goods to sell at auction to cover debt that you owe to a lender who has previously issued a CCJ to which you have failed to pay.
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Capital: The overall assets of an individual less liabilities.
Charge card: A plastic payment card enabling the holder to obtain goods and services without the requirement to pay cash.
County Court Judgment: A judgement issued by the court in order for you to make payments to a debt you owe when you have failed to keep to an original agreement with the lender and not made any attempts to come to an agreement of repayment
Cheque card: A card, issued by a bank (or a building society in the UK), which guarantees the payment of a cheque to the recipient and which supports a cheque for obtaining cash, both up to a stated value.
Commercial mortgage: A mortgage on a non residential building
Cooling off period: The 14 day period during which a new policy holder can cancel an insurance/assurance policy
Credit card: A plastic payment card which allows the owner to obtain goods and services without the requirement to pay cash and on credit terms.
Credit rating: A rating used by banks, insurance companies, mortgage companies and other financial institutions making loans which they use to judge an individual or company's credit worthiness.
Credit reference agency: An agency which holds information about the credit reliability of consumers and makes the information available at a fee to companies offering credit terms (e.g. credit card companies, mail order companies).
Credit file: A file held by authorised companies with financial history regarding credit applications and credit you have borrowed.
Creditors: A person or company whom lends you money (usually a bank, building society or credit card company).
Critical illness cover: Insurance which covers the insured against specified critical illnesses such as cancer, heart attack and multiple sclerosis etc. In the event that the insured contracts one of the specified illnesses, the insurers would pay a lump sum rather than an income as in the case of permanent health insurance.
Current account: A bank account which offers a number of facilities including cheque book for debt settlement, deposits, direct debits and where applicable, overdrafts. This type of account is normally used for ongoing transactions (for example monthly direct debits and writing of cheques etc.) as opposed to a deposit account.
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Debt: Money owed by an individual or company to another individual or company.
Debt consolidation: Borrowers who have a number of debts on different credit cards, store cards, overdrafts and loans may consider arranging a single competitively priced loan and using the cash to clear the balances outstanding. Effectively this consolidates all their debts into a single loan which can then be cleared in a disciplined fashion.
Debt Management Plan: This is a repayment scheme administered by Consumer Credit Counselling Service for people unable to pay their creditors the full contractual payments.
Default Notice: A notice issued by a creditor when a financial agreement that was been made between you and your creditor fails because the arrangement has not been kept. A default notice is the lender informing you that they are intending to take step to recover the money you owe them.
Discounted rate mortgage: A mortgage which guarantees the interest rate charged will remain a set number of percentage points below the lender's standard variable rate. The rate changes as base rate moves up and down, but the relationship between base rate and the rate you pay remains constant.
Disposable income; The amount of money which an individual has available to spend on inessential items after essential bills have been met.
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Earned income: Income that comes from work - such as a salary or wages. As distinct from unearned income - bank interest and company dividends etc. Income from pensions is also classified as earned income.
Endowment insurance: A cash value life insurance policy with a fixed term. Premiums are applied to give life insurance cover for the face amount and at the end of the term the cash value will equate to the face amount and be payable.
Endowment mortgage: An interest-only mortgage ultimately repaid by the proceeds of an endowment assurance policy which is assigned to the lender providing the mortgage. The policyholder pays the lender's interest only, for the term of the mortgage. The sum assured, which is payable on maturity or prior death of the policyholder, is used to repay the mortgage. Policies are usually with profits, (or low cost endowment), unit linked or unitised with profits and sometimes this provides some additional capital for the policyholder after the lender has been repaid.
First mortgage: A mortgage which carries priority over any subsequent mortgages if the borrower goes into default and his/her assets have to be sold to pay creditors.
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Freehold: The permanent ownership of land or buildings which can be legally passed on to heirs and the most usual form of ownership for houses. Also known as property that is held in 'fee simple'.
Finance: To raise money through the sale of debt and/or equity.
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Gross: Before any deductions, particularly tax deductions.
Gross income: The total income of a person before deductions. This for example could be a person's salary plus bonuses, plus benefits in kind (e.g.company car and medical insurance) plus income from shares etc. See net income.
Guarantor: A person who commits to guarantee the debts of another. For example if an individual fails to meet his/her obligations on say hire purchase repayments, the guarantor will be obliged to make those repayments.
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Household insurance: Insurance covering the structure or contents of a house. This type of insurance now tends to include the option of cover for additional items such as legal expenses. Also some companies now offer no claims bonuses similar to those given by motor insurance companies.
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Individual Voluntary Arrangement (IVA): A means of protecting yourself from your creditors by entering into a legally binding agreement supervised by an Insolvency Practitioner.
Informal Arrangement: This is the simple term for arranging reduced payments to your creditors without the assistance of a third party.
Insolvency: The inability of a person or company to settle debts when they become payable.
Interest: The charge you pay if you borrow money, and the income you receive if you lend it or invest it in an income-producing bank account or in a security like a bond or gilt.
Interest only mortgage: A mortgage where regular payments (usually monthly) only meet the interest requirements. The interest rate is usually variable and linked to prevailing rates but can be fixed for a given period. The capital amount outstanding remains approximately the same and the borrower will need to make additional provision for repaying this amount at the end of the term of the loan.
Interest rate: The percentage rate at which interest is charged on a loan or paid on savings etc.
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Joint account: Typically a bank or brokerage account in the names of two (or more) people. Arrangements can be made such that either individual or all signatures are required when drawing checks/cheques.
Joint liability: The legal liability of two or more people for claims against or debts incurred by them jointly. If three people have joint liability and are indebted to another party, they may only be sued as a group and not individually.
Joint ownership: Equal ownership of property by two or more people. In the event of the death of one of the owners, title passes to the survivor (or survivors in equal amounts).
Joint mortgage: A mortgage with multiple investors.
Judgement; A ruling by a court of law. An example is the ordering of a court to a person to settle a debt to another.
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Late charge: A charge imposed by a lender to a borrower when the borrower fails to make payment on the due date.
Litigation: The process of a person or company taking legal action against another.
Loan: An advance of money from a lender to a borrower over a period of time. The borrower is obliged to repay the loan either at intervals during or at the end of the loan period together with interest.
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Mortgage: A loan in which the borrower (the mortgagor) offers a property and land as security to the lender (the mortgagee) until the loan is repaid. Repayments of the loan are usually made on a monthly basis over a long period of time, typically 25 years. In the UK, the most common forms of mortgage are the repayment mortgage and the interest only mortgage.
Mortgage life insurance: A life insurance policy which pays off the outstanding balance of a mortgage in the event of the death of the insured.
Mortgagor: A person or company who takes out a loan and offers a property and the land on which it is built as security.
Mortgagee: A company or institution such as a bank or building society which makes loans secured by property and the land on which it is built.
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Non-Priority Debts: Non-Priority Debts are those where the creditor cannot deprive you of liberty, home or essential goods and services.
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Ombudsman: An independent official who investigates the complaints of individuals against companies or public authorities. Ombudsmen do not have any formal power to reverse decisions but they have substantial moral authority over companies or national or local government agencies.
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Pay as you earn (PAYE): People who earn income from employment or who receive a pension are liable for income tax under the PAYE system.
Personal loan: Loans available from banks and other financial institutions to private individuals for personal use such as the purchase of a motor vehicle, holiday or similar item. Repayment periods vary from one year to five years. No collateral is asked for or given for the loan.
Priority Debts: Priority debts are those where non-payment gives the creditor the right to deprive you of your liberty, home or essential goods and services.
Property: Anything which is owned: both tangible (Can be touched) and intangible. (intellectual property)
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Remortgage: The arranging of alternative finance for the purchase of a property which is already mortgaged. For example obtaining a mortgage with a lower interest rate to replace the existing mortgage.
Repayment charges: Most fixed, capped and discounted mortgages, and those offering cash incentives, impose a financial penalty on customers who redeem their mortgages before the special deal comes to an end. This may be a percentage of the total advance, the sum repaid or the balance outstanding.
Repayment mortgage: A mortgage where throughout the term, regular payments (usually monthly) are made to partly repay interest on the capital and to partly repay the capital itself (the amount of the loan). Initially the largest proportion of the repayments will be used to pay interest since the capital amount outstanding is at its highest value.
Repossession: Process by which a creditor with a loan secured on house or goods (e.g. car) can take possession if you do not maintain agreed payments.
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Second mortgage: The taking out of a mortgage on a property which is already mortgaged. This can be used to raise capital if the property has significantly increased in value and would involve finance companies rather than banks or building societies. Since the first mortgagee (lender) usually holds the deeds of the property, the second mortgagee will carry a higher risk and thus charges a considerably higher rate of interest.
Secured Debt: Money borrowed that is secured on an asset, i.e. house, car or furniture, if terms of payment are not kept to, the lender may demand the monies back by the sale or return of the asset that money was secured on.
Secured loan: A loan where the borrower offers an asset to which the lender has access in the event of the borrower failing to make the loan repayments.
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Utilities: Companies which provide essential services such as electricity, gas and water etc.
Unsecured Debt: Refers to a loan, credit card, store card or catalogue where monies are not secured on any asset or property.
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Variable rate mortgage (VRM): A mortgage where the interest rate is not fixed and which is dependent on influences such as interest rates on Treasury securities in the US or base rate in the UK.
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Writ: A written order issued by a court instructing the defendant to appear in court to answer charges made by the plaintiff. | 
