Jargon buster "m"
A maintenance charge is sometimes called a service charge, but both relate to the same thing. It is a charge that covers the costs of repair and maintenance of the building concerned. This applies to external portions of the building, along with all communal areas that are indoors, i.e. communal entranceways, stairwells, and so on. If a lift is provided, the charge would apply to maintaining this equipment as well. Other common features include the roof, drainage, guttering, and so on.
Maintenance charges are usually applied to flats and apartments. The land on which they stand is owned by the landowner, while the flat owner owns the property. This is known as a leasehold. These scenarios lead to a maintenance charge applied by the landowner to cover the necessary repairs and maintenance the building would require over time. The tenant or leaseholder would be required and expected to pay the service or maintenance charge. They would be informed of how much it is and how often it should be paid.
Most charges are made either annually or every six months. It is quite common for the landowner to seek the payment in advance of having work done on the properties. However, in some cases, if a big bill comes up, such as for having windows replaced (if leaseholders cannot do so themselves), there might be a larger request for payment. Some landowners hold money in a sinking fund to offset such instances, although this can only be done if the lease permits it. It is always advisable to read the terms of a lease carefully before purchasing a property on a leasehold basis. It should give details of the maintenance charge and terms.
There is some confusion over the official definition of a maisonette. Technically speaking, a maisonette is described as an apartment situated over two levels. It has its own access rather than relying on communal stairwells and shared access with other apartments – another feature that marks it out as a maisonette. However, the term is often used to describe any property that is spread over two levels. Such a property may or may not have separate access in this instance.
A maisonette is therefore different to a standard flat or apartment. A traditional flat will always have shared access, i.e. a communal entrance that leads to that flat along with several others, usually over several floors. Strictly speaking, a maisonette does not have this feature, although some people do refer to properties over two levels that do share an entrance as maisonettes. This is where the confusion has occurred over the years.
Some single-level flat-style properties with their own private entrances are also called maisonettes in some situations. It could reasonably be argued that the style of entrance is more indicative of a maisonette than a flat, which would always have shared entrance points.
If you see a listing in an estate agent for a maisonette, it is a good idea to check the presentation of the property. Is it spread over one floor or two? What kind of entrance does it have? The word maisonette may be misused, but the most important thing is to know what you are viewing if you see a property described as such. You’ll want to know whether its features would suit you.
This is a method of working out the interest on a mortgage on a monthly basis. It is quite common for a lender to calculate the applicable interest each month, rather than annually. The lender will take the interest rate applied to the loan and work out the annual amount of interest due. They would then divide it by 12 to get the amount of interest due each month.
It is also possible to work out daily interest thanks to the improved computer systems now in use. Not all lenders do this though, so you might want to ask your lender how they calculate interest, so you know what to expect.
While interest is applied to all mortgages, it is important to note that repayment mortgages work differently to interest-only ones. The latter require you to pay off only the interest due on the loan each month. The capital amount remains unchanged, so you must put other methods in place to ensure you have the means to clear the debt at the end of the term.
With a repayment mortgage, most of the initial repayments will cover the interest and won’t touch the capital amount borrowed. However, as the years go on, the balance tips in favour of the capital, reducing it quickly to clear the mortgage by the end of the term. So, while monthly interest applies in each case, it works differently depending on the type of home loan you have got in place on your property.
A mortgage deed is a legal document that refers to the mortgage lender’s interest in the property. If the homeowner has sought a mortgage to help them buy their home, it means the lender of that money has an interest in the property. If the homeowner cannot keep up with their payments, the lender would seek repossession of the property to recoup their money.
The deed is not a long document – it typically only covers one or two pages. You should read it carefully prior to signing it. It highlights the terms of the loan you have accepted to help you buy the property. Once signed, it acts as legal proof that you agree to the terms laid out in the mortgage.
As such, the deed will clearly state your name and address and the name and address of the lender of the mortgage as well. It also states the exact sum you are borrowing from the lender. The terms of the deed are also listed and should be read and understood prior to signing. The document basically states that the lender has an interest in the property because they have lent the money to make the purchase possible. So, while you own your property and pay the mortgage on it to make this possible, the deed confirms the lender you chose also has an interest in it. Once the loan is repaid in full, this would no longer be relevant as you would own the property outright and the lender would no longer hold an interest in it.
A mortgage indemnity guarantee is a form of insurance designed to protect the lender who has granted the mortgage to the homeowner to buy their property. Not all property purchases with a mortgage attached require this guarantee. It depends on the loan to value ratio for an individual situation. The higher the LTV is, the more likely it is your lender will require you to take out suitable indemnity insurance before they will agree to provide your home loan. Typically, the LTV value is of around 75% or more in this case. The insurance is also sometimes referred to as a Higher Lending Charge or as an MIG policy (mortgage indemnity guarantee).
The most important element to remember with this type of insurance is that it works in the opposite manner to most other insurance policies. If you insure yourself against loss of some kind, that policy is going to pay out for you if you find yourself in the conditions covered by the policy. For example, if you pay for contents insurance, that insurance policy pays out if your home is broken into and items are stolen.
A MIG policy does not work the same way. In this case, you take out the policy and pay for it as you would with any other policy. However, since it is designed to protect the bank or building society lending you the funds to buy your home, they are the ones who would benefit from a payout if something went wrong and you could not meet your mortgage payments. The amount you would pay for the policy depends on the provider, but it usually represents a percentage of the loan amount that goes above 75% of the loan to value ratio.
A mortgage offer is an offer made to a would-be home buyer to cover the cost of buying a property. If you are looking to buy a property, you would need to apply to a lender to see how much they would be willing to lend you. You must complete their application forms and provide all the necessary paperwork to support your application. This would include evidence of income and outgoings, so the mortgage lender can see that you would indeed be able to afford the amount you wish to borrow.
The time taken to receive a mortgage offer depends on how complex your application is and whether you provide everything required to start with. It is important to note that an offer in principle is not the same as an official offer made by a lender. It is much quicker to receive an offer in principle, yet it may not match the final amount the lender is willing to grant you. The lender gives you an idea of what they might lend you based on an initial summary of your financial situation. You must then make the official application to be able to receive a formal mortgage offer.
Basic checks are made into your financial situation prior to providing you with an offer in principle. Following the formal application, you would then receive a mortgage offer. This is typically valid for at least three months, but some lenders increase the validity to as much as six months. Always check with your lender to see how long your mortgage offer will last.
This is a type of insurance designed to cover your monthly mortgage payment for a specified time, typically one year. For the policy to pay out, you must meet the terms of the cover. This usually means being made redundant, being incapacitated and unable to work because of an accident, or becoming ill.
Since the mortgage payment is usually the biggest financial outgoing most people have, MPPI provides peace of mind that it would be covered for several months if something unforeseen happened. The one-year term is usually the longest you can expect it to pay out for.
This is not a required form of insurance. If you already have savings put by to cover being out of work for any reason for a year, you may not wish to pay the monthly premiums for additional cover. That said, it is worth looking at how much your monthly mortgage payments are. You could cover part of those payments with your savings and get a suitable MPPI policy to cover the remainder. It’s also worth exploring how much redundancy money you would be entitled to if you lost your job. This might be enough to cover your payments for several months. This is particularly important since MPPI policies don’t usually kick in for a few months anyway.
It is very important to read the terms and conditions attached to a policy of this kind. Some cover illness only whereas others cover unemployment. More expensive policies cover these and provide accidental cover as well. Make sure you know what you are buying and what the monthly premium would be. Furthermore, some policies only cover specific medical conditions and exclude others. All the details should be listed in the small print.
A mortgage valuation is requested by the bank or building society that is considering lending you the money to buy a property. The valuation is designed to provide the lender with appropriate information to decide whether the property is safe to lend on. It will also provide the current market value of the property. This means the lender will find out how much it can loan based on that market value. The valuation takes place for the benefit of the lender rather than the benefit of the would-be buyer.
You would typically pay for the report to take place, although it is unlikely you would receive a copy. You may not even see what the surveyor has written about the property. The report would include details of the condition of the property, which could affect its value. For example, if significant work was required to make the property habitable, it would be valued at less than the amount it would be once the work was completed. The condition of a property could influence whether the lender goes ahead with a mortgage offer or whether they decide to revise down the amount they are willing to lend.
However, a mortgage valuation does not go into the same depth a survey would. If there are obvious issues, these will be noted in the report, but anything else would not be. A lender would not opt for a full structural survey, for instance, as this doesn’t provide the likely value of the property. They only require enough information to base their mortgage offer on if they decide to provide the applicant with one.
A multiple agency scenario describes a situation where you employ the services of more than one estate agent when selling your property. The agent who succeeds in selling your property will then take the whole fee for doing so.
There are advantages and disadvantages to adopting the multiple agency route when selling. On the positive side, it could mean you can sell your home faster, as details of the property should reach more people. However, the negatives are that you may end up paying more in fees than you would if you stuck with a single estate agent. It also tends to give the impression you are having trouble selling your property, even though this may not be true. Prospective buyers might receive information about your home from several estate agents, which could make you look desperate to sell for some reason.
Buyers also tend to be less confident when they receive details of the same property from several sources. If they have received information from more than one source, other would-be buyers will too. This means there could be an increased chance of another buyer appearing, making it more difficult to place a successful offer on the property.
That said, it can also depend on the state of the market. The multiple agency approach tends to work better when there are lots of properties available in a sluggish housing market. It ensures the property is seen by as many people as possible, thereby raising the chances that someone will take interest in it.