A Guarantor agrees to stand by the debt of another. The borrower is responsible for the mortgage. The guarantor must pay if they default and can be a full or a limited guarantee. The guarantor must be advised to seek legal advice and can only be rendered invalid for a few reasons. This does not include a change of occupation.

A capped rate mortgage is a variable interest rate mortgage often set at the lenders SVR and will move up and down, but will not exceed the cap within the special deal term. The Cap is the highest the rate will go.

Waiver of premium is a rider benefit that can be selected on most life assurance and income protection insurance policies. It is designed to maintain the premiums when the policy holder is unable to pay due to sickness. The cost is added to the premium and will often have a minimum deferral period of 13 weeks.

A Higher Lending Charge (HLC) is a charge invoked by a lender if the borrower needs to borrow above the lenders maximum LTV threshold. The HLC is charged at a set percentage for any amount borrowed above the maximum LTV threshold. The value of the property is £200,000 and 80% LTV is the maximum borrowing of £160,000 (80% of £200,000). As they need to borrow £180,000 they are borrowing £20,000 above the threshold (£180,000 (required borrowing) less £160,000 (80% LTV threshold). The £20,000 is charged at a one off 7% = £1,400. 

When an adviser gathers the information to provide a mortgage recommendation they must first establish affordability. A self-employed borrower will have to provide information confirming their income and expenses using their self-assessment details and the Net Profit figure is used. This is calculated using: The record of  the turnover (income from the business activity) and expenditure. Gross profit = Gross turnover less raw materials and goods purchased to sell (i.e. stock). The Net profit = Gross profit less expenses.

When a lender offers a high LTV mortgage they often require a HLC. This is often used to buy a mortgage indemnity insurance guarantee (MIG) policy that is designed to protect the lender if the property is repossessed and sold for less than the outstanding mortgage. The MIG policy is provided by an insurer who then has the right to sue the borrower for the amount paid to the lender under their rights of Subrogation.

A Cashback mortgage  offers a genuine non repayable sum that is either a fixed amount or a percentage of the amount borrowed. The amount is not added to the loan and does not need to be paid back as long as the borrower stays with the lender for a set term. The lower the LTV, the higher the cashback. 

Mortgage payment protection insurance (MPPI) is a short term income replacement insurance policy designed to cover the monthly mortgage payments in the event that the borrower cannot work due to accident, sickness or unemployment (the self-employed are excluded from the unemployment element). It is a pure protection policy with no surrender value and can be obtained relatively cheap as there is no medical underwriting.

UK Residential mortgage regulation only came into force in October 2004. Any mortgage taken out before that date and any mortgage taken out since 2004 where the borrower or the property does not meet the FCA regulated mortgage definition is treated as an unregulated mortgage and will not be covered by the FOS or the FSCS.