glossary

Maturity date
Date on which the fixed interest or special conditions on an account end, after which the account normally reverts to an ordinary instant access account.

Maximum balance
See Investment limit.

Minimum balance
This indicates the minimum initial investment acceptable to the account. Some accounts may allow the balance to fall below this once it is operational but you may find the interest rate is appreciably lower.

MIRAS
Stands for Mortgage Interest Relief at Source. This is the way in which tax relief was allowed on mortgage payments. The withdrawal of Miras was announced in the budget, 9th March 1999, by the Chancellor and took effect from April 2000.

Mortgage Indemnity Guarantee (MIG)
This is known under many different names which include the following; Indemnity Premium, Insurance Guarantee Premium, Additional Security Fee, Mortgage Guarantee premium, Mortgage Indemnity Premium amongst others. This is a fee that is payable if a 'high percentage loan to value' is required.
The MIG fee is used by the lender to purchase insurance to cover them in the event that you default on the mortgage and they make a loss on possession and resale of the property. The policy has no benefit to the borrower and offers no protection - indeed if your property is repossessed and the lender claims on the Mortgage Indemnity Insurance then the insurance company that has paid out the claim to the mortgage lender can still pursue you, the borrower, for repayment of that amount.
The actual terms of the MIG will vary considerably from lender to lender and if you are told that this will apply you should check the details. Many lenders will impose this additional fee if you wish to borrow more than 75% of the value of the property and the premium payable will be calculated as a percentage of the amount you wish to borrow over that figure. There are a handful of lenders that do not charge MIG premiums or who charge in a different way. A number of lenders have announced that as an incentive to attract new business they will meet the cost of the Indemnity premium. The terms/conditions as detailed above remain the same - all that has changed is the lender is paying the premium.
Generally the changes that have been announced to date involve mortgage applications where there is a 10% deposit (90% loan to value ratio).Where we are aware of the changes we have made note of the fact in the " details " section of each product. A further point to note is that some lenders who start charging at a set figure, say 80% will back-charge the premium to 75% when calculating the indemnity charge. So if you are borrowing, say, 82% the premium is not charged from 80% but from the 75% level. When discussing your application with your chosen lenders be sure to ask whether MIG applies and at what level it is calculated.

Mortgage Payment Protection Insurance
(MPPI) is insurance which - depending on the type of cover requested - provides you with a means of continuing to pay your mortgage in the event of you losing your job or becoming incapable of working due to sickness or accident. This, like Income Protection Insurance, can give you peace of mind, particularly with current limited social security (DSS) support for distressed mortgage payers.

Mortgage Term
This is the number of years over which the mortgage is arranged. If a capital and interest mortgage is being considered then it is worth looking at shorter terms than the traditional 25 year mortgage as considerable interest savings can be made by reducing the mortgage term by even a couple of years.

Mortgage Valuation
This is the most basic form of survey and is the minimum required by lenders in order to ascertain the suitability of the property as security for their loan. Although the borrower will normally receive a copy of this report it should not be relied upon as a comprehensive report on the condition of the property. A more detailed report (either a Home Buyers Report or Structural Survey) should be commissioned when considering the purchase of a property.

Mutual Society
An organisation owned by its members and run for their benefit e.g. building societies, friendly societies and some life insurance companies.

Ombudsmen
The person responsible for settling any dispute or complaint that is referred to them or escalates to them because the companies own internal procedures have not resolved the problem. There are numerous ombudsmen covering the various institutions: The Financial Ombudsman Service (incorporating the Building Society Ombudsman and the Banking Ombudsman) 0845 0801800 The Pensions Ombudsman 020 7834 9144 (for occupational pension schemes), the Parlimentary Ombudsman 020 7217 4163 (for complaints regarding National Savings).

On-maturity
Where interest earned is credited to an account only on the maturity date e.g. on the second anniversary of a two year bond, and not in between.

Part Endowment
This describes a mortgage where only part of it is covered by an endowment policy. The balance could be arranged on an interest only basis or more commonly on a capital and interest basis.

P.C. Banking
Facility to access your account via a computer modem link. This usually allows you to check your balance, order statements, cheque books etc

Payment Protection
(see Credit Insurance)

Penalty Interest
Loss of interest or charge incurred on partial withdrawal or closure of account where account conditions allow.

Pension Mortgage
This is an interest only mortgage which is supported by a Personal Pension Plan. Interest only is paid to the lender and in addition premiums are paid into a Personal Pension Plan. On retirement a portion of the personal pension fund can be taken as a tax free cash sum and it is this cash lump sum (or a part of it) which is used to repay the mortgage debt. The disadvantage of this type of mortgage is that the mortgage term must run through to anticipated retirement age (for the younger borrower this could exceed 25 years) and part of the retirement fund is used to repay the mortgage debt. The advantage is that the pension premiums attract tax relief at the borrowers highest rate.

PEPs
Personal Equity Plans. These offered the private investor the most tax efficient way of investing in stock market related plans, but ended on 5 April 1999 to be replaced by ISAs. Any balance held in these plans still attracts the same tax benefits, being free of any income tax or capital gains tax liability.

Pep Mortgage
This is an interest only mortgage which is supported by a Personal Equity Plan. Interest only is paid to the lender and at the same time contributions are made to a Pep with the aim that the mortgage debt will be repaid on or before the end of the mortgage term from the proceeds of the Pep. Pep's were withdrawn on 5th April 1999 and were replaced by the Individual Saving Account. Existing Pep plans can remain in force and will remain both income tax and capital gains tax free.

Permanent Health Insurance (PHI)
This is a type of insurance which will pay a proportion of normal income in the event that the policyholder is unable to work due to accident, sickness or disability. These policies are normally used to replace a percentage of full income rather than just the mortgage repayment but the level of cover can be selected up to certain maximum levels. This type of cover should not be confused with ASU/ASR policies which will normally only cover the mortgage payment for a limited period of time. PHI policies can be arranged to pay income until a return to work or normal retirement age.

Personal allowance
The amount of income that can be earned before the individual becomes liable to income tax. Personal allowances are set each year by the Chancellor in his annual budget.

Personal Pension Plan
Personal Pension Plans are designed to cater for pension planning for the self employed or employed in non-pensionable employment. Contributions made to a personal pension plan are exempt from tax at the persons highest rate of tax and the retirement age may be selected at any time from age 50 to age 75. Up to 25% of the pension fund on retirement may be taken as a tax free cash sum and it is this tax free sum which is used to repay the mortgage debt in the case of a Pension Mortgage.

PLC - Public Limited Company
The standard form of public company in the UK that qualifies for listings on the stock market. A public limited company is owned by its shareholders.

Portable
This describes the ability to move a particular mortgage product from one property to another in the event of a property move. This is particularly important if a fixed, capped, cash back or discounted product is taken where early redemption penalties are charged. If the product is not 'portable' then a house move would involve the payment of early redemption penalties even if another mortgage was taken with the same lender.
A portable mortgage means that the same scheme is transferred to the new mortgage for the remainder of the original term e.g. a 5 year fixed rate is taken which has redemption penalties within the first five years. If the borrower decides to move after two years then the same five year rate will apply to the new mortgage for the balance of the remaining three years. If the original product was not portable, however, then redemption penalties would be paid on redemption of the existing mortgage and a new product would have to be taken for the new mortgage.

Postal Account
An account where any withdrawals or investments are made via the post. The bank or building society normally supply pre-paid envelopes for this and some may offer additional facilities to enable instructions to be given via the telephone or fax.

Proxy
Authorisation of a person or legal entity to represent or if necessary act and vote on behalf of another.