Home & Capital - Jargon buster

Jargon buster

Some terms you may not be familiar with...

The APR is the total charge for credit expressed on an annualised basis and includes not just the interest charge but also other charges for arranging a lifetime mortgage concerned such as legal fees, arrangement fees, intermediary fees, and valuation fees, as set out in section 11 of any Key Facts Illustration of a lifetime mortgage product.

The APR itself is shown in section 15 of any lifetime mortgage illustration.

Attitude to risk

Concerns how you feel about your money and savings. Are you very cautious and like to play it safe, or are you prepared to take a risk with your money?

Charge

A legal charge is a formal document giving a lifetime mortgage lender the right to be the first to be repaid any amount owed when the property is sold.

Compound interest

This is how interest is added to interest at each charging period, such as monthly or yearly.

Example;

6% compound interest charged annually on £1,000 over five years (to nearest £):

Year	Amount owed at start of year	Interest rate	Interest Sum	Interest (£)	Amount owed at end of year
1	£1,000	6%	£1,000 x 0.06	£60	£1,060
2	£1,060	6%	£1,060 x 0.06	£64	£1,124
3	£1,124	6%	£1,124 x 0.06	£67	£1,191
4	£1,191	6%	£1,191 x 0.06	£71	£1,262
5	£1,262	6%	£1,262 x 0.06	£76	£1,338

As a rule of thumb, the amount owed, including accrued interest, will typically double every 12 years, assuming an interest rate of 6%.

Net Sale Value

The net sale proceeds received from the final sale of a property, after all legal and selling costs, such as estate agents fees, have been deducted.

No Negative Equity Guarantee

A guarantee, provided by Safe Home Income Plans (SHIP), which ensures that at the end of an equity release plan upon death or move into long term care of the (last) plan holder, you will never owe more than the amount of your home.

Rolled up interest

You do not re-pay interest during your lifetime. Instead interest is added to the lifetime mortgage, on a compound interest basis as shown above and repaid upon your or the last surviving planholder's death or move into long-term care.

Unbiased advice

Some financial advisers only provide advice on products from a limited list of companies. It is best to receive advice that is impartial and covers all regulated equity release products.

As equity release advisers, Home & Capital provide whole of market advice on all products from any lifetime mortgage or home reversion plan provider who are members of Safe Home Income Plans (SHIP) to give you added protection. This is the vast majority of all regulated equity release providers.