Daily Interest – When the interest paid on a loan is calculated daily following each payment. This may be preferential to annual interest as any interest is calculated on the new balance and so can reduce as payments continue to be made.
Defective Title Policy – This is necessary following the discovery of a defect in the title specified in the policy schedule. It provides cover in the event of any person enforcing or attempting to enforce any interest adverse to the title of the insured to the property.
Deposit - This is a percentage of the cost of the property and is paid by the purchaser to the vendor when contracts are exchanged. In addition the buyer may be liable for a reservation charge. This is paid by the buyer as a sign of commitment when they initially agree to purchase the property.
Drawdown Date – The date when the mortgage officially starts is known as the draw down date.
Drawdown Deadline – This is the date that an agreed mortgage must start by. Mortgage offers/funds are often only available for a certain period after which the transaction would need to be renegotiated and the purchaser may incur further costs.
Early Repayment Charge (ERC) – When a mortgage deal is reached and agreed upon an early repayment charge is often written into the contract. This charge is enforced in the event of the loan being repaid fully or partly repaid within a certain period such as a fixed rate period or while discount applies. It acts like an insurance policy on the part of the mortgage lender against the client taking their custom elsewhere.
Endowment Mortgage – This term describes an interest only mortgage supported by an endowment policy (see endowment policy).
Endowment Policy – This is a complicated financial product incorporating both life insurance and investment growth in the same package. Most commonly used in the eighties and nineties as a way of repaying a mortgage, however many of the policies taken out at that time did not mature as expected and the final lump sum was not large enough to fully pay off the mortgage as had been intended. The idea behind this policy is that the borrower does not repay any of the capital borrowed. Instead monthly premiums are paid to an insurance company. These premiums are then invested and should provide a lump sum large enough to repay the loan in full at the end of the pre-arranged period.
Equity - This is the value of a property in excess of any charges upon it.
Essential Repairs – Before a mortgage loan can be issued certain work may be required to be carried out on the property. The need for this work may have been brought to the lenders attention through the surveyors report.
Exchange of Contracts – Significant in England and Wales (but not Scotland) this is when the purchaser and vendor become legally bound to the sale of the property. At this point the purchaser would need to take out contents insurance.