Advance
The amount of loan the customer borrows.

Applicant
The person applying for the loan facility.

APR (Annual Percentage Rate)
Designed to enable prospective borrows to compare the cost of prospective credit by a standard formula.

Assessed valuation
The value of a property may only be assessed where the property has been owned for at least 6 months. Proof of purchase price must be obtained. The value of the property is assessed by multiplying the purchase price (or District Valuers valuation for ex-Council properties) by the factor on the current Assessed Valuation Factor Chart.

Bankers Automated Clearing System (BACS)
The process of transferring money electronically from one bank to another. This system is used by FN for collecting Direct Debits.

Completion
The time when payment of the advance is made to the customer and the agreement terms commences.

County Court Judgments (CCJ)
A monetary judgment from Country Court requiring the payment of a sum of money by one party to another.

Credit history
An individual's record of financial transactions held on file by Credit Agencies.

Credit reference agency
A credit reference agency holds files on the borrowing records of nearly every adult in the UK. The information is collated from a variety of sources. The file may hold details:

• showing the names of the people listed as living at the same address as you (usually taken from the electoral register)
• your credit agreements details of late payments & defaults - this can be held for up to six years
• court judgments against you - this can also be held for six years.

These agencies do no more than supply information to lenders. The lenders use the information as part of their credit scoring

Credit scoring
A system used by lenders to calculate the statistical probability that a loan they grant to you will be repaid. Different lenders have slightly different rules for assessing risk. Each lender works out the characteristics of 'good' and 'bad' customers, based on its past experience. Homeowners or borrowers with steady incomes may be considered less likely to default.

Each answer you give on your application form will be given a rating. If the total 'score' is above a certain figure, your application is accepted. Because credit scoring is the key to different lenders risk management they do not easily reveal the precise details of how it works.

Credit search & Voters Roll Confirmation
A Credit Search will be undertaken on all addresses covering the past three years. Notwithstanding a valid explanation, applicants must appear on the Electoral Register.

Decision in Principle
Based on information supplied, an initial decision will be made on whether the application can proceed.

Direct Debit
A method of collecting your monthly repayment of the loan directly from your bank or building society. An instruction is completed and signed by you and sent to your bank or building society asking them to honour First National's monthly requests for payment from your account.

Early redemption fee or Early Repayment Charge
A fee payable on complete settlement of the loan before completion of the full term, calculated within limits applied under the Consumer Credit Act 1974, and payable instead of the amount of interest and other charges which would have been payable had the loan run to the end of the term.

Employed applicants
A person who has been appointed as a permanent employee of a business or organisation.

Equifax/Experian searches
The Equifax/Experian credit search will show information registered against the name and address searched. This information will refer to adverse entries such as County Court Judgments (CCJs) and past/present credit transactions, including the insight service.

In the case of married couples, the prime wage earner must be credit searched and a Voters Roll check carried out.

Where the applicants' surnames differ, or where they are not married then each party must have a credit search and Voters Roll check carried out.

Where previous addresses have been provided or established these should also be searched, to a maximum of 5 years history.
Note: We must obtain confirmation of residence for a minimum period of three years. For Further Advances it is only necessary to obtain confirmation of residence since the original account was opened if this is less.

Equity
The difference between the value of the property and the amount of the mortgage and any other outstanding loans secured against it.

Equity calculations
The equity is calculated by multiplying the property value by the equity percentage and deducting the amount outstanding on the first mortgage (or projected balance for low start or deferred mortgages*) and outstanding Local Authority Discount (see Property & Valuations). Any retention made by the first mortgagees should also be deducted.

Fixed rate
The interest rate applicable will not change for a set period of time. When the fixed rate comes to an end, the interest will automatically become a variable rate.

Further advances
An additional loan which can be taken on top of the original loan at a later date.

Income assessment & repayment ability
Establishing that sufficient provable income exists and ensuring that the applicants do not exceed a pre-defined percentage of their combined gross income to support the applicants' current outgoings and intended FN repayment.

Interest
A charge made to the borrower for the loan which is usually calculated as a percentage of the amount outstanding on a day to day basis and applied at the end of each month throughout the life of the loan. If the interest rate is variable, this will be stated clearly in the credit agreement.

Land Registry
A Government organisation that keeps records of properties in England and Wales. Any transfer of ownership has to be registered with HM Land Registry.

Loan period
Number of years or months over which the loan has been agreed to be paid.

Loan to Value (LTV)
The amount of the loan plus the outstanding mortgage balance in relation to the value of the property usually expressed as a percentage.

Local search
This is a search carried out by your solicitor of the records of local authorities to discover issues such as who is responsible for road and footpath maintenance, whether the property has mains drainage and any planning matters that could affect the property or the area. This search is very much for your protection.

Monthly repayment
The agreed repayable amount due each month of the loan term.

Mortgage arrears
Any unpaid sum overdue in relation to a mortgage.

Outgoings
Identified deductible expenses, comprising items such as 1st mortgage commitments, endowment and other credit payments.

Processing
Once a completed application is received, it is then evaluated under underwriting terms to verify or collect additional or missing information during the process. Once all required information has been received, a decision will be made regarding whether and at what rate the applicant qualifies for the loan. The research and evaluation makes up the underwriting process.

Protected Payments Plan (PPP)
An insurance protection cover which ensures monthly repayments are met in the unfortunate event that your customer's are unable to meet their monthly loan repayments due to accident, sickness, unemployment or hospitalisation.

Proof of income
Proof of income is required for new secured loans applications. Income should be proved by provision of 3 up to date consecutive payslips or 1 up to date payslip showing gross to date from a minimum of 3 tax periods.

An employer's letter confirming salary is only acceptable when submitted in support of either of the above proof of incomes and must be confirmed with the writer of the letter by telephone.

Whilst fax copies are acceptable for in principle decisions, original documents must be provided to process the application to completion.

Purchase price
The amount paid for property.

Redemption
The settlement of the loan in full.

Redemption fee
See Early Redemption Fee

Searches
Investigation made by your solicitor to check there is anything to cause concern about the present ownership of the property.

Self-Employed
Persons whose job consists mainly of operating a business or professional practice, alone or in a partnership.

Directors of private companies who own more than 10% of the companies issued share capital (either directly, or jointly with spouse) will be treated as self-employed.

Status
A customer's status is calculated based on a 1st mortgage reference and results of the credit reference agency.

Term
The number of years over which the loan is repaid.

Underwriting
A system used by lenders to decide whether or not to approve applications for credit from customers.

Underwriting terms
The key elements for underwriting secured loans application are:

• Income & Repayment Ability
• Equity
• Status

Valuations
To assist in calculating available equity of the property when underwriting.

Variable Rate
A rate which will fluctuate in accordance with the terms shown in the credit agreement.