Financial Terminology: Jargon Buster A - E

A

1. Account holder The person who has a personal loan account.

2. Advance The mortgage loan itself is called the advance.

3. APR (Annual Percentage Rate) An interest rate designed to show you the total annual cost of getting credit. It should include all the interest and charges payable by you as a condition of taking the loan. Where taking Payment Protection Insurance is a condition of taking the loan, this should also be included in the APR. The typical APR is the APR that 66% of customers applying for the providers credit card can expect to get.

4. Applicant You become an applicant when you complete and submit an application form for a personal loan.

5. Applied or nominal interest rate The rate used to calculate the interest due on your mortgage.

6. Arrangement fee The fee payable to the loan provider by you (the applicant) to open the account.

7. Arrears Mortgage payments which have not been paid and are overdue.

B

1. Bank of England base rate The Bank of England sets or reviews their interest rate on a monthly basis and this is the main factor influencing interest rates charged by mortgage and other lenders.

Each total credit score is associated with a prediction of how likely a person with that score is to default.

2. Buildings insurance Covers your actual building(bricks and mortar) and is usually required as soon as you exchange contracts on your house.

C

1. Capital The amount you owe excluding costs and any interest outstanding.

2. Capital and interest mortgage This is when your monthly payments go to pay off the outstanding mortgage in addition to the interest on the mortgage. At the end of the term you will have no more to pay. Also called a repayment mortgage.

3. Capped rate This is a mortgage where a maximum interest rate is agreed which the rate cannot go above. This deal lasts for a set period of months or years. Should the variable rate go below the maximum, the pay rate falls with it.

4. Cashback An amount, either fixed or a percentage of a mortgage, which you can opt to receive when you complete your mortgage. The lender will likely claw back this money through a higher interest rate.

5. Charge-off The removal of an account from a loan provider's books. When an account is charged off, the loan provider absorbs the outstanding balance as a loss. Charge-off is also referred to as Write-off.

6. Closing administration charge A final charge made by the lender to cover their administration costs when a mortgage is fully repaid.

7. Completion This is end of the mortgage process, when the contracts are signed, all questions have been answered and the keys are handed over and the funds transferred. Happy moving!

8. Consumer Credit Act (CCA) The Act which defines how personal loans may be advertised, and what rules need to be followed by loan providers in the presentation of loan features such as the interest rate and typical APR that are applicable. The Act also covers the information that needs to be available to the consumer such as product terms and conditions.

9. Contents insurance Insurance that covers your personal belongings

10. Contract A contract is a binding agreement between two and more parties. In the context of house buying, a contract is signed by both the buyer and the seller and then 'exchanged' between the respective solicitors, at which point the house sale is binding on both sides.

11. Conveyancing The legal work involved in the sale or purchase of land.

12. Credit Reference Agency (CRA) An agency that gathers and maintains information on the debts and repayment records of individuals and businesses. CRAs prepare reports that are used by personal loan providers to view an applicant's credit history. There are two such agencies for consumer credit in the UK - Experian and Equifax.

13. Credit scoring The process by which your credit worthiness is checked. Weights or 'scores' are associated with your personal attributes, such as your income and the time spent at your current address. These 'scores' are added to give a total credit score. The loan provider then checks this score against the minimum required to be accepted for their loan, determining whether they accept you or not.

D

1. Debt consolidation The process of combining all outstanding debts in one loan account. For example, you may have an existing loan with a balance of £2,500, a credit card balance of £1,000 and a store card balance of £500. These could all be consolidated into one loan of £4,000. The purpose is usually to lower monthly repayments, through either lower interest rates on the new loan, or lower repayments from an extended repayment term, or both.

2. Default Non-payment of an account according to the terms of the loan agreement. If you are declared in default, your account may be subject to higher interest rate and other charges. Failure to keep up with repayments may result in the fact being registered at the two main consumer credit agencies in the UK- Experian and Equifax. This may reduce your chances of obtaining credit in the future. If the loan is secured against your home, your home may also be at risk.

3. Deferred payment Delayed payment. Also referred to as a deferred start, this facility allows you to delay the date on which the first repayment is due. The deferred period could be from one to three months, meaning a loan opened on the 1st January may not require repayments to start until 1st April.

4. Deposit The deposit paid towards the total price of the property, normally payable at exchange of contracts.

5. Direct debit Apre-authorized debit on the payer's account initiated by the payee. Most loan providers would require you to set up a direct debit to make the monthly repayments on the loan.

6. Discounted rate This is where the lender makes a guaranteed reduction off the standard variable rate for an agreed period of time. After the period ends, the borrower will go onto the Standard variable rate. often used by loan providers as an added incentive to apply for a loan.

7. Drawdown date The date when the contracts have been completed and the mortgage starts.

E

1. Early repayment charge (ERC) / Early settlement penalty The charge payable to some loan providers should the loan be repaid in full before the full term of the loan has expired. For example, an arranged loan over 36 months may incur an ERC if it is repaid after 24 months, or any point before the 36 months has been reached. The average ERC can amount to the equivalent of 2 months interest.

2. Early redemption charges Redemption is when the borrower pays off the capital and the interest on the mortgage and thus has full rights to the property. Early redemption fees are the charges incurred for paying off the mortgage early, either to buy the house outright or when you re-mortgage. Always ask about these before you take out a mortgage.

3. Endowment Endowments are life assurance policies with an investment element designed to pay off the outstanding capital on an interest-only mortgage. There are a few types of endowments, such as 'with profits', 'unitised with profits' and 'unit-linked'. in the 1980s, these were sold to customers by salesman who promised that they would be guaranteed to pay off the mortgage at the end of the term. This is not the case, and many endowment holders are having to bump up their premiums.

4. Equity In housing terminology, equity is the difference between the value of the property and the money owed on the property. So if the property is valued at £200,000 and you owe £150,000 on the mortgage, you have equity of £50,000. If you sold at that moment, you would receive £50,000. Should the value of the home be less than the mortgage outstanding then you are in negative equity. Not to be confused with the stock market use of the word "equity", which is completely different.

5. Exchange of contracts In England and Wales (not Scotland), the point when both buyer and seller are legally bound to the transaction.

Richard can be found at www.HallamFinance.com and www.LoansUnited.com

The 7 Powerful Steps To Reverse a Financial Crisis In Your Business (Part One)

I am not a lawyer or financial advisor by any means, but sometimes we need some help in business. From what I've heard statistics show that 85% of all small businesses that start up fail in the first 5 years.

So, there's a good chance that there will come a time when you look at your bank account and say to yourself, "I don't have enough money to pay my bills", or at the very least say, "I can't go on holidays because there's not enough money to pay for it".

You have recognised the red flags that warn you in business that something is wrong. People with money didn't come about it by luck. Many times they have had their business go broke and have had to start again.

They may have gone broke in the first place because they hadn't learned their lessons well when it came to managing money rather than just make it. If you're in or starting a small business you must be aware of or have access to information on how to handle a cash crisis should it come up in your business.

The hard part is recognising the crisis in the first place so that you can do something to fix it before it is too late. There are 7 steps that may enable you to handle a crisis in your business successfully. Complete the checklists below to assess your situation. Here are the steps:

Step 1. Check If Your Business Is In Crisis Is your business generating enough income to cover your expenses without having to touch your savings? If it is not there are many reasons why this may be the case. This analysis of your situation is not comprehensive enough to cover all situations but should give you a broad picture of your situation.

We have to start from some point in your business to move forward in assessing crisis. I assume that you have sales coming in, you have a marketing program and you are physically able to work.

If any of these things are apparent in your business, for example, no sales coming in the door, you are probably too far-gone to bother assessing your situation. However if not, some of this information may be relevant to a certain degree.

Evaluate the information if it suits, that's great. If it doesn't, discard it. Basically you should proceed if the money side of your business needs attention. Go ahead and complete ("Doc 1") because we need this information to go to the next step, Part 2 of this(see below) article. Add up the monthly expenses then annualise them to find out how much you must earn Per Annum to pay all your expenses. Once that is completed you will have two important pieces of information.

1. How much you spend in your personal life 2. How much you need to earn to support that amount (plus or minus from your present situation).

DOC 1

FIXED DOMESTIC EXPENSES Mortgage Payments or Rent Electricity Rates Fire and General Insurance Personal Accident or Disability Insurance Health Insurance Car Hire Purchase/loan Other Hire Purchase/credit cards Debt Reduction - Personal Loans Overdraft Ect Other Club Dues School fees Food and Living expenses Telephone Other TOTAL MONTHLY

VARIABLE DOMESTIC EXPENSES Medical, Dental, Chemist etc (net After Refunds) Clothing and Footwear School Requisites - Fees, books and sports Dry Cleaning and Laundry Entertainment, Theatre, Amusements Tobacco, Liquor other Personal Items Home Maintenance Running Cost - Second Car and Fares Church, Charities Etc Sports and hobbies Vacations Motor Vehicle (1) Hire Purchase /Lease Other Travelling - Parking tolls Fares Etc Telephone Other - TOTAL MONTHLY

OTHER EXPENSES Memberships Fees and other Self-Education Printing, Stationery, Postage Etc Telephone Newspapers and Periodicals Entertainment and Gifts Centre of Influence & Sub Agency Cost Other overheads - Rent Secretarial Etc TOTAL MONTHLY

SAVING AND ACCUMULATION Life Insurance and Superannuation Investments Saving - Bank, building society etc Other TOTAL MONTHLY

NET ANNUAL INCOME REQUIRED

Dan Cavalli makes it easy for business and people to be the best they can be! For details and to claim your free subscription for Business and part 2 article visit his site at: Small Business Success

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