Money Jargon - The Letter S
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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 S
On this page we explain,
Second Homes > Secured Loan > Self Cert Mortgage > Self Employed
Mortgage > Shop Around > Stamp Duty > Standard Cover > Store Card > Structural Survey
Second Homes
A second home is a property owned but not lived in for most of the time. A holiday home or villa are examples of second homes. Purchasing a second home can be a way of investing capital in the housing market. So long as mortgage rates are low, you may be able to make an investment in a second home. Weigh up all the costs involved before delving into such a huge investment.
You could choose to rent out your second home during the times that you are not using it, this would help towards the costs of the property.
Secured Loan
A loan that is secured on a property is also called a ''homeowner loan.'' A secured loan is finance which is borrowed and then repaid over a set term. The loan is secured upon property, usually the home, this means that the lender has more security should repayments not be made. Should repayments be missed for an extended period of time, then the lender can legally seize the property and resell it in order to recoup the debt they are owed. So your home may be at risk if repayments are not made. Secured loans usually come with better rates than tenant loans because of their security, this means that they will cost you less over the full term. The ability to get a secured loan will still be reliant on your credit status.
Self Cert Mortgage
A self certification mortgage is a mortgage that is more often taken out by the self employed, it is reliant on the accounts of the self employed. A self cert mortgage is usually taken out by borrowers who do not have three years of business accounts.
Self certification mortgages are a mortgage product offered on the basis of a self employed person stating what their income is likely to be, rather than being able to provide definite evidence of their income. An accountant may be required to back up this statement made by the self employed but with two or three years accounts available it should be enough to satisfy the lenders. Self employed people can find themselves with an adverse credit or non status rating because they can not provide any proof of income or have little or no credit record.
Mortgage lenders are more concerned about lending to customers who can not prove their earnings using pay slips, and so the self employed who opt for a self certification mortgage are likely to face greater charges and higher repayments. The lender considers self certification mortgages to be of greater risk to themselves.
Self certification mortgages come with a higher interest rate because should the business fail the borrower could be left with large debts and arrears, there is a possibility they could lose their home in order to repay debts and this means that even the mortgage lender may be unable to recover their outlay because of insufficient loan security.
Self Employed Mortgage
A self employed mortgage is a mortgage that relies on self certification.
Being self employed can make it harder to get a mortgage. If you are lucky you could be certified with over 3 years accounts, but if you have less than 3 years accounts then you are classed as self certified.
If you already hold a mortgage on a property and are looking at becoming self employed you should inform your mortgage lender. Your mortgage agreement would have been made upon your employed status at that time, and any change in this could affect the agreement.
Shop Around
Shopping around is a term used when actively seeking cheaper deals and better offers on financial products. If you shop around you can contact lenders and obtain quotes for their products. You can then compare lenders, products, and terms to find the best deal for your own personal circumstances. Don't just get two quotes there may be better deals to be found if you try several lenders. You can always have a quote from one lender then proceed to contact another lender to see if they are able to beat that quote. This has the additional benefit of putting the lenders in direct competition, and they will strive to outdo each other resulting in a lower quote for you.
Vehicle Insurance Quotes and Shopping Around
Shopping around for vehicle insurance could save the average motorist a lot of money on premiums. Despite this, millions of motorists only obtain a single quote when they renew their insurance cover. Additionally many motorists who have been with their current insurer for a few years said that their premiums increased the last time they renewed their policies, this is the time to shop around.
Competition is vast in the vehicle insurance market, therefore shopping around for quotes should save you a significant amount of money. Don't simply accept a premium which is high without first checking around to see what else is available. Apply online for quotes, the more people use the internet for quotes, the lower the overheads will be for the insurers, the lower the overheads the cheaper the insurance or finance can be.
Stamp Duty
Stamp duty is a tax charged on the purchase of property. It is calculated as a percentage of the properties value, this means that the higher the property value, the higher the stamp duty charged.
The stamp duty threshold has been raised in the past to help first time buyers obtain mortgages and assist families climb on to the housing ladder. The fact that the stamp duty threshold had been raised meant that a lot of properties no longer fell into the stamp duty threshold.
Stamp duty land tax will require buyers to complete a self assessment form. Although tax thresholds remain the same, the forms reveal those home buyers paying over the odds for fixtures and fittings in return for the sale price being fixed below a particular threshold. The tax office does have the power to insist buyers it suspects of tax evading, pay the full stamp duty amount. There could also be fines and interest charges for the buyers and sellers involved.
Standard Cover
Standard cover is the term given to the most basic insurance cover provided by a particular product. Usually standard cover will protect against most of the possible occurrences that can be insured against, and is often sufficient for persons needs. You should however take time to read all insurance documents, understand what the exclusions are, what you are covered for and what you are not. This way you can decide if you believe you require extra cover.
The precise terms, conditions and depth of cover is dependant on the insurer and their products. It is usually possible to add items to a standard cover policy for a fee, this would provide an item with enhanced protection should you deem it more valuable..
Store Card
Store cards are a form of consumer credit, essentially they are a line of credit which can only be used in a single shop or chain of stores. The store card comes with pre-set rates and with stringent terms. A credit check on applicants is usually run in order to determine the level of credit the holder will be granted.
A store card does not allow the holder to draw cash and just like credit cards you will be sent a monthly bill, which you can either pay off in full or opt to pay the minimum amount. APR's and interest rates are usually higher than other plastic with sharp penalty charges for any defaults or late payments.
A store card will enable the holder to make savings on items in stores, but remember if you do not pay the full amount due each month, these savings will be worthless due to the interest you will be charged.
Structural Survey
The term ability to pay means simply just that, before borrowing finance you should consider whether you have a sufficient income to meet the repayments. A simple way to ensure you have sufficient income to meet your obligations is to compare your outgoing expenses against your incoming. See what you have left each month and compare this to the repayments on any finance taken out. If you have more coming in than is going out, will the difference cover the cost of the finance you are considering applying for.
