Borrowing Money - The Jargon

Mortgagee
A lender (also known as a creditor) who advances or lends money for the purchase of a property.

Mortgagor
The borrower (also known as a debtor), who borrows from a lender by mortgaging a property to the lender as security (see Mortgage, above).

Net Amount
The balance after the deduction of tax.

Overpayment
Any amount that is paid against the loan that is more than the usual amount.

Redemption
The settlement of the loan in full. Any collateral pledged against the loan is then removed from the borrower’s obligation to the lender. The lender has no further right to claim any security against the loan.

Redemption penalties
In some cases there are penalty fees payable by the borrower in the event they pay the loan off early. This covers the lender against loss of interest charges and other fees.

Secured Loan
A loan that requires the borrower to pledge assets against the loan. These assets can be seized and sold by the lender in the event that the borrower fails to repay the loan.

Standard Variable Rate
In some cases, a lender will offer an introductory lower interest rate in order to tempt new customers. After the introduction period is over the loan reverts to the Standard Variable Rate, which is the lender’s normal variable interest rate at the time.

Term
The length of time you want the loan. Usually expressed in months or years.

Tie-in period
In some contracts, the lender insists on a tie-in period which prevents the borrower from switching lenders during that time. If the borrower wishes to switch during the tie-in period, then penalty charges are often incurred.

Underwriting
The process by which a lender decides whether a potential creditor is creditworthy and should receive a loan.

Unsecured Loan
A loan that doesn’t require any security to be pledged against it. The lender offers the money based on the borrowers credit history and financial status.

Variable Rate
An interest rate that can go up or down, depending on market conditions.