Money Jargon - The Letter L

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Money Crocodile knows the finance world is full of terms, phrases, buzz words and jargon. The below terms will help you with terms beginning with the Letter L

On this page we explain,
Leasehold > Liabilities > Life Insurance > Loan Insurance > Loan Security > Loan Term > Local Authority Search > LTV > Loyalty Card

Leasehold

Leasehold means that a particular property is owned rather than rented. However the land on which the property stands is not always owned directly by the leasee of the property, it is often the case that the land is held under a lease for a set number of years. When the lease expires, the property and grounds returns to the freeholder. The freeholder is the person or business that holds the deeds to the land. Shops, business premises and flats are commonly sold on a leasehold. Leasehold properties range in duration from between six months to nine hundred and ninety nine years.
Very often if a properties leasehold is close to ending the value of that property can decrease.
A lease agreement will set out the details of the lease agreement so will illustrate such things as the rent and other obligations such as repairs and access rights.

Liabilities

Liabilities refers to all the financial commitments currently held by a person. Financial Liabilities include products like any credit cards, personal loans, maintenance payments, mortgages, hire purchase and any other type of credit outstanding..
Lenders will take any existing liabilities into account when they are evaluating your application for any additional finance. They will consider whether you are already in so much debt that further finance would push you into repayment problems. Any defaults, ccj's or bad credit history will affect any future finance applications

Life Insurance

Life insurance is protective cover against the unforseen event of personal injury or death. With most people their family and their health are theirs number one priority. Life assurance is very important, it ensures the future of loved ones should the worst event happen and a death occurs. Life insurance can can ensure that the relatives of the insured deceased do not encounter hardship for a period of time after their terrible loss. There are many types of life insurance products, with many different benefits. Take the time to study policies available to see if they would be suitable for your needs and requirements.
Some insurance policies can be more flexible than ofthers, taking a break from a career for example, to study or raise a family, then some policies will allow you to suspend the payments, and then restart them later without incurring penalties. Being able to reduce the level of cover may be attractive, when starting new employment to free up funds.

Loan Security

Loan security is a guarantee for lenders. A secured loan has some security (usually property) attatched to the loan which in the event of persistant non payment, can be used to ensure the lender recoups the debt they are oed. The guarantee is usually something that retains it value over time. When a loan is applied for the lender may ask for protection for the loan before agreeing to lend the finance. If the security attatched to the secured loan is property then that property can be seized by the lender and sold in order to recoup the debt owed to them. This process involves the courts so customers will be given ample opportunity to repay their arrears or arrange to pay them subject to agreement with the lender before the last dreaded act of reposession is agreed.

Tenant loans or unsecured loans, are not secured and so not linked to property, this means that the lenders have to pursue their customer in the county courts to recover debt in the event that they fail to repay the loan or default.
Homeowner or secured loans, are protected by being secured on an already mortgaged property. With the secured home owner loan, the property may be at risk of being seized and sold if borrowers do not keep up with repayments.

Loan Insurance

A loan provider may offer you loan insurance cover at the time you take out the loan. This will ensure that your loan repayments are covered should the unforseen happen and you are unable to make repayments for a time. Some loan providers will insist the you take out this insurance. Insurance cover would also be of benefit to you as you will not sink into deep debt if your repayments are covered for a period of time, for example if you should become ill and not be able to work, insurance would ensure your financial commitments are paid untill you are back on tour feet.
Loan insurance is not cheap and can add a substantial amount to the cost of your loan. If you have a poor credit rating due to a bad credit history then loan lenders will more than likely insist that you take out loan insurance.

Loan Term

The 'Term' is the period of time over which finance borrowed is to be repaid. Many finance products come with established terms already arranged, however you may be able to negotiate the loan term subject to individual circumstances.
The length of personal loan terms can vary widely, usually the shorter the term the hiher the repayments will be. A short term will mean the the loan will cost you alot less total interest.
A personal loan with a longer term will mean that monthly repayments are smaller in size and easier to manage, although this means that the total interest paid for the loan will be high and thus the loan will have cost your alot more overall.

Local Authority Search

Property conveyancing is a process carried out by your conveyancer (or solicitor) when buying property. The local authority search will find out if there are any plans that will affect the property you are looking to buy. plans such as road improvements or planning permission for nearby propertites that overlook yours will all be reported in the local authority search. The search will only take in the immediate vicinity around the property and the results will only be current for a limited time, which is worth noting if the process of home buying is taking a long time.

LTV

LTV is short for 'loan to value'. The loan to value is typically given as a ratio expressing the size of the mortgage as opposed to the market value of the property. The best deals on mortgage products may only be available if you are borrowing less than a set proportion of the value of the property.
In other words the greater the deposit the more favourable the deal. The lender is taking a smaller risk if your deposit is large and so will be willing to offer you a good deal. Should you be unable to keep up the repayments then it is likely the your property will be seized by your lender and sold in order to recoup the debt you owe. It is going to be alot easier for your lender to recoup the debt if the property is worth alot more than the debt that you owe them.
The loan to value ratio only really comes in to play in a flat or falling property market, it is at times like this that mortgage lenders could be left with a hard to sell property should the borrower fall behind with their repayments. Indeed, if the housing market and their prices fall far enough, they could be faced with having to sell the property for less than the remaining amount of the mortgage.

Loyalty Card

Loyalty cards are a plastic card that rewards its holders for shopping at a particular shop or chain of stores. Loyalty cards can not be used to draw cash as they offer no line of credit to their holders. Loyalty cards are not credit cards, so you cannot be charged interest, and there are no monthly balances to pay.
Some loyalty cards offer money off particular ranges of products, so if you buy those items you will save money. This can create a two tier pricing structure where customers can be punished for not carrying the loyalty card, but where you are rewarded for using them. If you shop regularly at a store it makes sense to carry their loyalty card but be aware that it does not mean that store will always be the cheapest. iIt may still be worth shopping around.