A

Advance

The amount of money that is lent by your loan agreement.

Arrears

Arrears are any payments that have been missed, late or underpaid on any loan or agreement with creditors.

Assets

These are items of value, which can be sold to raise money for creditors if someone fails to make repayments. Assets include your home, car or shares.

B

Bad Credit

Otherwise known as Poor Credit, and describes any loan or credit that has not been kept to the borrowers credit terms and agreements.

Balance

The amount of money that you owe to your creditors at a set point.

Bankruptcy

This should only ever be considered as a final option for any debtor. It means that the debtor is unable to make any repayments on their debts. Their lenders will seize any assets, such as your home or car, in order to get some form to repayment. 

Bankruptcy Order

This is a Court Ruling which makes an individual bankrupt, and can happen with or without their consent.

Black Listed

A person will become Black Listed when they have a very poor credit history. A note will be put against their credit file that says they are a severe lending risk.  

C

Charging Order

A Charging Order is a way for creditors to collect their outstanding debt, and it is imposed or reinforced by the court. The Order effectively turns unsecured debt into secured, as it gives the creditor priority over assets when a property is sold, and can even force a sale. 

Consolidation Loan

A Consolidation Loan is one loan which is used to pay off multiple forms of debt, such as credit cards, store cards or car loans.

County Court Judgement (CCJ)

A CCJ (County Court Judgement) is a legal order against a person or company. It will ensure that any outstanding payments are met, and is a result of debtors not making the required minimum repayments. 

Credit Search

A Credit Search will be performed by a lender when you are applying for a loan, remortgage or anything that means you are borrowing money. The search will provide details of your credit worthiness and includes information like how many times you have been turned down for a loan and whether you have defaulted on any of your debts.

Creditor

A creditor is a person or company that has lent you money.

D

Debt

The amount of money that you owe to a creditor.

Debt Consolidation Loan

This is a loan which you use to consolidate your existing unsecured debt. Advantages of this is that you only have one payment to make and it can lower your monthly payments.

Default

This means that you are in payment arrears as you are at least 30 days behind the repayment date. This could lead to further legal action such as a CCJ.

Discharged Bankrupt

This refers to a person who has been made bankrupt and then discharged from it, as they have either repaid it or their debt has been written off.

Disposable Income

The amount of money that you are left with when all of your living expenses have been subtracted from your take-home pay. Otherwise known as Surplus Income.

E

Early Repayment Charge

This can sometimes be chargeable if the loan or mortgage is repaid early. It is otherwise referred to as a settlement charge.

Earnings

Otherwise know as income, and it is minus any taxes or insurance that you pay.

Equity

The equity in your home is the value of the property minus any secured loans that you might have on it, such as a mortgage. The more equity you have then the greater chance you have at getting a secured loan at a good interest rate.

F

Fixed Rate

This can usually apply to a mortgage, and means that you will be paying a fixed amount of interest for a specific number of years.

Flexible Rate

Will usually apply to a loan or mortgage and means that it will allow you to make a variety of payments, which you can increase of decrease to suit your circumstances.

Frozen Account

A bank account will become frozen if there is dispute between the account owner and the bank. The owner will not be able to make any further transactions until the problem has been resolved.

G

Gross Income

This is the pay before any deductions have been made, such as tax or National Insurance. 

H

Hire Purchase (HP)

A form of credit where you hire an item, often a car, for a certain period of time whilst making a monthly payment.

Homeowner Loan

This is when a loan is secured against you house, which will be a risk if you fail to make the required repayments. This is otherwise known as a secured loan

I

Individual Voluntary Arrangement (IVA)

An IVA is Government legislation, introduced as an alternative to bankruptcy. It is a repayment plan agreed with creditors, most suitable for those with debts over £15,000.

Insolvency Practitioner

An Insolvency Practitioner (or an IP) is a person who deals with matters of insolvency. Their profession is regulated under the Insolvency Act 1986 and they are seen as experts under law. You should always take advice from an IP is you wish to declare yourself bankrupt.

Interest Rate

The amount that you are being charged to borrow money, usually dependant on the type of borrowing, your credit history and the lender.

Irregular Bill

This is a payment which is not regular, such as a one off payment for car tax or TV license.

J

Joint Application

This is otherwise known as a dual application, and means that a mortgage or loan can be applied by two or more applicants. This can increase the amount that you are allowed to borrow.

Joint Liability

This is the legal liability on any debts that are occurred between two or more people, such as through a joint credit card. This means that each party is responsible for the debt.

L

Late Fees

Late Fees are additional charges that the debtor will have to pay when they make a payment after the due date. The amount will be specified in the original terms and conditions.

Loan Application

This is the process that you will need to go through in order to be accepted for a loan. The best way to do this is to call Debt Consolidation on 0800 048 3674 or try the Debt Consolidation 1 Minute Loan Test.

Loan to Value (LTV)

The size of your loan or mortgage as a percentage of the property price.

M

Monthly Expenses

This is the amount of money which you will need each month in order to pay your essential commitments, such as mortgage and utility bills.

Mortgage

A long term loan which is used to help buy a property. The loan is held against the property incase you fail to make repayments.

Mortgage Term

This term will be the number of years that it will take for you to payback your mortgage. This is most commonly a 25 year period.

N

Negative Equity

This is when the market value of the property is worth less than the mortgage itself.   

Net Income

This is your actual take home pay after any deductions have been made. Deductions can include pension contributions or income tax. 

Non-Priority Debt

These are when a creditor cannot deprive you of liberties or essential services because the debtor has failed to pay. For example, failing to pay your credit card bill will not result in your gas being switched off, but if you fail to pay your gas company then they have the right to do this.

Non-Status Borrower

This is where the borrower has a poor credit rating and therefore struggles to get accepted for finance.

O

Overdraft

The money owed on your current account, that has been leant by your bank.

P

Past Arrears

Past arrears are missed payments which will usually have happened within the last 12 months. You may find that a Debt Consolidation Loan will reduce the chance of you missing a payment, as instead of multiple creditors you will just have one payment to make.

Positive Equity

This is when the market value of the property increases so that it becomes greater than the value of the mortgage on it.

R

Redemption Penalty

This is a charge given by your lender for when a financial agreement is settled early. It dependant on your lender and will be stated in your conditions.

Remortgage

When you switch your mortgage without moving home. This is usually done so that you are able to achieve a better rate.

Repossession

The lender will take the legal ownership of the property, when the borrower falls so far behind in repayments.

S

Secured Loan

This is a loan where an asset, such as your house or car, is secured against it. So if you are unable to keep repayments then you will lose that asset.

Self-Certification

This is where the borrower makes a statement about their income, and this type of application is often used by those who cannot prove their income, for example if they are self-employed

Standard Variable Rate

This is the changeable mortgage rate which is charged the majority of lenders, which falls in line with the fluctuating base rate.

Sub-Prime

A sub-prime lender is one which is willing to finance people who have adverse credit status.

T

Tenant Loan

A tenant loan is usually a form of an unsecured loan, as the tenant does not have any property for a security of payment.

Term

The repayment length of your borrowings.

U

Unsecured Loan

This means that the loan is not secured against any of your assets, which means that it will usually come with a higher interest rate as there is a higher risk to the lender. Otherwise known as a Personal Loan.

V

Variable Interest Rate

The rate of interest which fluctuates in accordance with normal interest rates throughout the lifetime of the loan.

W

Warrant of Execution

This is an order issued by court which allows the creditors to use the court bailiffs to go to the debtors home, so that goods can to be taken and sold to go towards the debt.

DebtConsolidation.co.uk is a trading name of Ask Finance Ltd which is registered in England and Wales (company number 4229724), Jackson House, Sibson Rd, Sale, Manchester, M33 7RR. Ask Finance is licensed under the 1974 consumer credit act to carry on the business of consumer credit, consumer brokerage, debt adjusting and debt counselling. Consumer Credit License No: 507130. Ask Finance is authorised and regulated by the Financial Services Authority (FSA) - FSA No: 300490 - for the provision of mortgage advice and arranging insurance.