Loan Jargon - a comprehensive reference of loan terminology from i Secured Loans

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Late Charge

This is a fee a lender inflicts on a borrower when the borrower fails make a payment on time.

Late Payment

A payment a lender receives after the due date.

Lender

The company that provides the finance for the loan or mortgage.

Lender of last resort

A central bank that lends to banks that can't borrow anywhere else.

Lender's Arrangement Fees

Admin costs incurred by a lender to secure a Secured Loan, which paid by the applicant.

Letter of Licence

A letter sent from a creditor to a debtor giving them a certain period of time to pay the money and undertaking not to bring legal action during that period.

Lessee

A person or company who holds a property by lease.

Lessor

A person or company who lets a property by lease

Level Term Assurance

A life policy that's often associated with a mortgage or loan. The premium goes towards insuring the borrower's life, and will pay off loan in the event of death. This is good for interest-only-loans as the amount owed remains constant throughout the life of the loan.

Liability

A sum of money that must be repaid i.e. a debt.

Liability Insurance

Insurance against legal liability that the insured might incur.

Lien

A legal claim over another's property to protect a debt charged on that property.

Life Assured

The individual who is covered by a life assurance policy.

Life Assurance or Life Insurance

Insurance that pays a specific sum to the insured person's beneficiaries after the death of the insured person.

Life-Cycle Saving Motive

This is a reason an individual has for saving or spending during the course of life e.g. when starting a family or approaching retirement.

Lifetime Cap

A limit on how high the interest rate can rise on a variable rate loan over the lifetime of the loan.

Line of Credit

An agreed loan facility that allows an individual to borrow money.

Loan

Something lent, esp. a sum of money to be returned normally with interest. A loan is money which is borrowed and has to be repaid, usually with interest and other associated costs. The amount to be repaid is according to an agreed schedule, over a set period of time and at an agreed interest rate.

Loan Agreement

A Loan Agreement, or Credit Agreement, sets out the responsibilities of the lender and the borrower. A Loan Agreement provides the borrower with: all the terms and conditions of the loan, details the amount requested to borrow, the term of the loan, the expected repayments and the APR.

Loan Application

The first step to getting a Homeowner Loan requires the borrower to specify basic financial information.

Loan Application Fee

A fee charged for a loan application.

Loan Consolidation

This is the combining of several debts by borrowing the amount owed through one new debt. It is often possible to reduce monthly outgoings by doing this. Savings are made by converting unsecured debts to secured debts because the interest rates on secured loans are usually lower than for unsecured loans.

Loan loss reserves

Money that a bank holds on to cover losses through defaults on loans

Loan Schedule

A list of loan payments: when they are due, and the outstanding balance after each payment is made.

Loan Secured

A loan secured against a property. Known as a Secured Loan.

Loan Term

This is how long you have to replay the loan and is normally expressed in years. You can choose a different terms if it suits you and the lender agrees that you can afford it. With a shorter term, you’ll have higher monthly payments but pay less in total. With a longer term, you’ll pay less each month but more in total.

Loan to Value Ratio (LTV)

The ratio of the loan amount to the value of the collateral. The amount of money needed to borrow compared (as a percentage) to the value of the property. The combined sum of the secured loan and mortgage is compared against the property value.

Low Start Mortgage

A long-term property loan in which the borrower only pays the interest on the loan for the first few years. After that the repayment cover the interest plus the original loan, just like a repayment mortgage. These are popular with first-time buyers

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