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Mortgage jargon

This content applies to England & Wales

Mortgage arrears terminology.

Although the term 'mortgage' refers to the legal charge that a lender holds over a property as security for the money it has lent, many people now use 'mortgage' to describe the loan itself.

In this section, the term 'mortgage' is used to refer to the loan, while 'legal charge' is used to describe the means by which the loan is secured on the property.

The legal term for a mortgage lender is 'mortgagee', but throughout this section, the term 'lender' is used instead. Similarly, the legal term for borrower is 'mortgagor', but the term 'borrower' is used.

A standard residential mortgage is known as a 'first charge loan'. The term 'second charge loan' refers to a secondary loan or mortgage, taken out in addition to a first charge loan and secured against the equity in a property. Such loans are also known as 'secured loans'. A second charge loan could relate to the purchase of large consumer goods such as a car or home improvements, but could also be taken out to consolidate other debts and sometimes arrears. Taking out a second charge loan is not the same as remortgaging.

'Remortgaging' refers to ending the current mortgage agreement and entering into a new one with a different lender, for example to obtain lower monthly payments or to enter a fixed-rate agreement. The borrower takes out a new mortgage which pays off the old mortgage. Where a first charge loan is remortgaged, the replacement mortgage remains a first charge loan. The term remortgaging does not apply to the situation where a borrower switches to a new mortgage product with the same lender.

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