Glossary - Letter P

Money Healthcheck 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 P

On this page we explain,
Payment Break > Payment Protection > Personal Loan > Pet Insurance > Poor Credit > Property Redevelopment > Property Valuation

Payment Break

Payment breaks are also known as payment holidays. If you find yourself unable to make financial repayments due to an unforseen event or circumstances, then it is beneficial to have a taken out a financial product that allows payment breaks. Products, such as flexible mortgages, allow the holder to temporally stop making repayments for a limited or agreed term. Payment breaks however only usually allowed after having made overpayments.

Payment Protection

Payment protection is an insurance policy which provides you with a means of protecting your mortgage payments shoulder the unforeseen happen and you are unable to make payments for a while. When you take out a mortgage, life cover is usually provided by an endowment or a mortgage protection policy. Payment protection insurance is worth considering if it gives you piece of mind. It may be that you have been made redundant and need time to find another job, or you may become ill and need time to recover before you can go back to work. These are times when payment protection would be a useful thing to have.
When considering a payment protection policy, check carefully what it covers as the basic cover protects your mortgage payments only if you lose your job. Additional cover is available for risks like accidents, sickness and long term unemployment. Before buying any policy, check the details carefully to make sure you're aware of what is covered and what is excluded.

Personal Loan

Personal loan is a term used to describe loans available to homeowner loans as well as tenants. A Personal loan is taken out by an individual, the lender should be able to tailor the loan to some degree to suit the borrowers needs. Interest rates will depend on the individuals credit rating and security. If the borrower has a bad credit history and a low credit score then they will probably find they will be charged a higher interest rate. The better the credit score the lower the APR.

Secured Loans or Home Loans
A homeowner loan can also be called a secured loan. Secured loans are usually secured on the borrowers property. The fact that the lender has more security (the borrowers property) should repayments not be made, means that secured loans usually come with lower interest rates. This does however mean that the borrowers property is at risk should they fail to keep up payments. The property could be legally repossessed by the lender and sold in order to recoup the debt owed to them.

Unsecured Loans or Tenant Loans
Tenants will not have a property to use as security on a loan, it could be that they live in a council or housing association property. Tenants may be considered a higher risk by lenders, this often means that the lender will charge a higher interest rate for an unsecured loan, term and conditions may be less flexible. This should not put borrowers off, as applying for a personal loan and managing to keep up regular payments would help create and improve their credit rating for the future. A good credit score in the future would make finance easier to obtain.

Pet Insurance

Pet insurance is an insurance policy which covers family animals against the unexpected or expensive costs of veterinary care. Our Pets are very precious to us, but there are times when they require a little extra attention. Vet bills as we all know can be very expensive, and surgery even more so, but we want our pets to be healthy and enjoy life and we will pay the price to get them back on their feet.
Pet insurance policies can be paid for by monthly premiums or one total payment can be made each year. Premiums are carefully calculated taking into account average veterinary fees, where you live, the age of your pet and it’s breed. Pet insurance as with any other form of insurance has a excess, this is the uninsured amount of money you have to pay towards the cost of any initial treatment your pet requires. You should make sure you know what the excess is on your policy.
So pet insurance is a shrewd move, and can protect owners from costs of several hundreds of pounds for just a few pence a day.

Poor Credit

This is a term used to describe a low rating in credit scoring, often due to a bad credit repayment history. CCJ's (county court judgments), mortgage defaults, loan arrears or other credit debt repayment problems lay on the persons financial record and lead to a low credit score. Credit scoring is examined by lenders to determine the level of risk they may be taking should they decide to lend to you.Even with a poor credit score it is still possible to find a lender who is willing to grant you finance. It is worth remembering that it is impossible to hide your credit score as everyone's credit history is recorded and held on a national credit database, any potential lender can access the database. They can then decide for themselves whether the risk is acceptable to them.

Property Redevelopment

Property redevelopment is a term used to describe the process of buying and then altering a buildings current condition.
You could be looking at modernizing an old town house or even returning a property to its original design of build and condition. Redevelopment often entails using original period features, which can increase the value of the property greatly. Once the property redevelopment is complete it can be placed back on the market for a resale, the property will now be habitable and freshly decorated and the sale of the property should make you a tidy profit, which could if you wish then be used to purchase your next property development project.
If you are looking at property development as a way of investing capital, then you should have a professional approach, buying to let can ensure that your investment will grow whilst still having some income to help pay off any financial commitments on the property. When developing property ensure you are aware of all the requirements needed, approach the development logically and have a suitable plan, this will save you time and money.

Property Valuation

A property valuation is a quick survey of a building by a surveyor, with the purpose of assessing its value and worth. The valuation is important to the lender as they use this valuation to determine how much mortgage is worth lending on a property. The potential borrower is the one who pays for the property valuation, a surveyor will look around the property as well as find out what properties in near vicinity have sold for. They will be able to judge whether the property is in line with its neighbours as far as value is concerned.
The greater the value of the property the higher the valuation costs will be, the lower the value of the property the lower the valuation costs.