Glossary

Ability to Pay

Refers to the borrower’s ability to make interest and principal payments on debts.

Advance of Discount Loan

An unsecured loan (commonly up to £20,000) offered by your brewery to act as security against your public house in exchange for you signing an agreement to purchase a number of products from them.

Adverse Credit

The term used if the borrower has a poor credit history. This could include previous mortgage or loan arrears, bankruptcy or CCJs.

Amortisation

Repayment of the capital element of a debt over time, often by an equal amount each year.

APR (Annual Percentage Rate)

The interest rate reflecting the cost of a mortgage as a yearly rate.

Arrangement Fee

The fee you pay your lender in return for them providing you with a mortgage.

B&B Mortgage

Also B&B finance, B&B funding, B&B loan, B&B mortgage, bed and breakfast finance, bed and breakfast funding, bed and breakfast loan, bed and breakfast mortgage.

Break Costs

Where money is borrowed for a particular period and is repaid early, break costs may arise.

Bridging Finance

Short-term funding taken until longer-term funding becomes available or an event occurs, eg. a sale completes.

Business Finance Brokers

Stewart Hindley and Partners are independent business finance brokers who can source the best funding for your business. read more

Buy to Let

A property bought to let out rather than to live in.

CCJ (County Court Judgement)

A judgement reached in the County Court generally relating to non payment of a loan, mortgage etc, debt in general.

Charge

Any right or interest to which a freehold or leasehold property may be held. Usually this relates to your claim to the property before the mortgage has been finalised.

Commercial Lenders UK

Stewart Hindley and Partners are independent business finance brokers who can source the best funding for your business from commercial lenders UK. read more

Commercial Mortgage

A loan taken out for purchase of a business.

Commercial Property Finance

Loans and mortgages taken out to fund a business. read more

Commercial Property Lenders

Mortgage and loan companies who fund a business. read more

Completion

The term used when the seller and buyer exchange the finances required to buy a property through their respective solicitors and the buyer becomes the legal owner of the property.

Conveyance

The legal process in which ownership of the property is transferred from the seller to the buyer.

Debenture

A form of security document creating fixed and floating charges over the assets of the charger.

Debt Service

The payments of interest and principal due under a facility for a given period of time.

Early Redemption Fee

The fee most lenders will charge if you decide to sell the property or re-mortgage and redeem your mortgage early.

EBITDA

Earnings Before Interest, Tax, Depreciation and Amortisation. This measures the ability of a business to meet debt service obligations.

Equity and Negative Equity

The amount of value in a property that isn’t covered by a mortgage. Negative equity applies if the money you owe on the mortgage is greater than the value of your property.

Exchange of Contracts

The contract is the written agreement that lays out the terms between the buyer and the seller. The deal is legally binding when contracts are exchanged.

Fixed Rate

The pre-agreed interest rate on a mortgage which is fixed for a set period of time.

Gearing

The ratio of debt (borrowing) to equity (broadly speaking, ordinary share capital). The more a company has borrowed compared with its equity, the more highly geared it is said to be.

Guest House Finance / Guest House Mortgage

Funding for guest house business. Read more

Hospitality Finance

Mortgages and funding raised for businesses in the hospitality sector – eg hotel lending, bed and breakfast finance, pub loan. Read more

Hotel Finance

Mortgages and funding raised for businesses in the hotel sector – also called hotel funding,hotel lending, hotel loan and hotel mortgage. read more

Interest Only Mortgage

The borrower is only required to pay interest on the amount borrowed during the mortgage term.

Intermediary

A broker or advisor who finds the most suitable mortgage for a borrower and arranges the mortgage on their behalf.

Loan to Value Ratio

Ratio of what you are borrowing against the value of the business.

Marriage Value

The increase in value of two separate properties or two separate interests in the same property arising by virtue of common ownership.

Mezzanine Debt

Higher risk, less well secured debt. Mezzanine debt usually attracts a higher rate of interest than senior debt.

MIG (Mortgage Indemnity Guarantee)

A one-off payment when taking out the mortgage which acts as an insurance policy to protect the purchaser against the value of the business falling to less than the mortgage.

Mortgage

A loan to buy a property where the property is used as security against the loan.

Mortgagee

The company lending you the money.

Mortgagor

The person taking out the mortgage.

Non-Status

The lender may not require income details from you or may accept some previous poor credit history.

Overheads (fixed)

These include rent, rates, loan interest, insurance, professional fees and depreciation.

Overheads (variable)

These include wages, utility bills, marketing, telephone and travel expenses.

Partnership

An association of at least 2 people.

Pub Finance

Also known as pub funding, pub loan, pub mortgage. Read more

Re-mortgage

To take out a second mortgage to pay off the first.

Self-Certified

If you are unable to provide proof of income, you may be offered the option to sign a declaration detailing the sources and amount of income you have received.

Sole Trader

You own your business and keep all the profits you make after tax, but equally, any business losses are your losses.

Specialist mortgage

A loan secured on a property, usually run as a business. eg pub mortgage, hotel finance, bed and breakfast loan, marina funding and equestrian finance. Read more

Structural survey

This is carried out by a professional surveyor to check the structure of the property.

Tenure

The nature of an interest in land. Tenure is usually freehold or leasehold.

Term

The period of years over which you take the mortgage and repay it.

Underwriting

The process of evaluating a loan application to determine the risk involved for the lender.

Unencumbered

The property is owned outright and no mortgages or loans are secured against it.

Valuation

An assessment of the property to establish how much it is worth and whether it is acceptable security for your mortgage.

Variable Rate

An interest rate charged by your lender which goes up and down and your repayments vary proportionately.

Vendor

The person or company selling the property.

YP

Years’ Purchase. A calculation of value based on actual or potential income, eg. a property purchased for £5,000,000 that generates net rental income of £200,000 is bought at 25YP.