Here are some of the most common terms you will encounter when applying for a financial product, such as a secured homeowner loan, second charge mortgage or bridging product.

Adverse Credit

If you have a poor credit score and you have missed loan repayments in the past, most lenders will refer to you as being an “adverse credit” risk. You can improve your credit rating by always making sure you make future repayments on time.


This is a term that appears on various loan and mortgage products and is an abbreviation of Annual Percentage Rate. Lending facilities are required by law to show the APR so that borrowers can compare the value of competing products at a glance.


Similar to APR, this stands for Annual Percentage Rate of Charge. You will typically see this term attached to mortgages and second charge borrowing products such as secured homeowner loans.

Bridging Loans

A bridging loan is a short-term product that is usually taken out to secure the purchase of a property whilst awaiting the outcome of a house sale. However, bridging finance can be used to cover the cost of other transactions and activities such as the payment of urgent tax bills, property refurbishment and debt consolidation.

Business Loan

If you need to refurbish your offices, or fund the acquisition of a new piece of machinery, you can take out a business loan to cover the costs. Business loans are typically secured against commercial premises and other real estate assets. However, some lenders will consider other types of collateral such as vehicles and manufacturing equipment.


County Court Judgements are issued by local courts whenever a debtor is unable or unwilling to repay a loan or some other debt in full. Enforced by law, CCJs are also recorded on a borrower’s credit file as a warning to future lenders.

Credit Rating

If you take out a loan, mobile phone contract or sign up with an energy supplier and you do not make the required payments on time, the information is recorded on your credit file. Credit reference agencies use a points system to calculate your rating based on whether or not you have paid your bills on time in the past. If you have a bad credit rating, you will normally find it difficult to obtain finance with competitive rates.

Debt Consolidation

This is where a borrower takes out a new loan in order to pay off their existing financial commitments. A debt consolidation loan can reduce your monthly outgoings whilst lowering the overall amount of interest you need to pay back.

Early Repayment Charge

An early repayment charge is a fee that you may or may not be required to pay should you decide to pay off a loan before the end date of the agreement.


UK Lenders need to be authorised by the Financial Conduct Authority in order to trade in the credit industry. This ensures appropriate protection for borrowers.

Interest Rate

When you take out a loan, the lender makes a profit by charging a fixed or variable interest rate that is required on top of the regular monthly repayments that you are expected to make. This is calculated as a percentage of the overall debt.

Second Charge Mortgage

A secured loan is sometimes referred to as a second charge mortgage or borrowing product. When a property is mortgaged, the original lender has first charge over the property, meaning that they have priority access to any funds acquired from the sale of a building following repossession. In the event of non-payment from the borrower, any remaining funds are paid to the second charge lender.

Secured Loan

A secured loan, or homeowner loan, is an affordable borrowing product that is secured against an asset such as an applicant’s primary residence. If the borrower is unable to pay back the loan, the lender has the legal right to sell the property in order to retrieve their funds.

Last Updated: Apr 28, 2017 @ 4:52 pm

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