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Early redemption penalties

Charges paid to the lender in compensation for lost interest if you redeem your mortgage ahead of schedule. During a discount period you will be severely penalised if you try to switch to another product or mortgage provider. Penalties can be stepped just like discounts and can be particularly severe within the first year. This is to ensure that the costs that the lender endures in setting up the mortgage are always covered. Penalties can be a fixed sum of money, though are often proportion of the loan. With cashback mortgages, you often have to repay the amount of money you received as cashback.

Early repayment period

A period of time that applies to certain types of loan during which a charge will be made if the loan is repaid in full or in part or its terms are varied at the borrower's request.

Easement

The legal term for the right to use someone else's property such as a shared driveway or a footpath.

Eaves

The under part of a sloping roof which overhangs a wall.

Effective age

The age of a structure estimated by its condition rather than its actual age.

Effective gross income

Additional income that a lender considers when assessing the loan application of a potential borrower.

Efloresence

Crystallized salts on the surface of a wall that forms as a result of moisture evaporation.

Eligibility criteria

These are criteria which you must satisfy before an account or service application can be progressed.

Employment status

A term used by lenders to describe potential borrowers' working arrangements. Self-employed applicants are sometimes seen as a greater risk than employees. Many specialist lenders and mortgages have emerged in recent years designed especially for different types of employment status.

Encroachment

An object, such as a fence, which belongs to one property which extends onto another.

Encumbrance

A problem with the title to a property that does not affect the transfer of ownership.

Endowment mortgages

Endowments are unusual products that combine a savings/investment product with an element of life assurance. Their use goes beyond mortgages, and they are quite complicated. As with other interest-only mortgages, you pay interest on the full amount of the capital for the entire duration of the loan term. The remainder of your monthly payment goes towards a premium for an endowment policy. A portion of this premium is invested and used to pay off the capital at the end of the mortgage term. There is not usually any absolute guarantee that your repayments will actually be enough to reach the level of your loan.

Engrossment

The actual deed or document which is executed (signed), as opposed to a mere draft of it.

EPS

Earnings Per Share. Defines the post-tax profit attributable to each share in issue. This is an important feature in indicating a company's performance and is featured in the price earnings ratio (P/E ratio or PER).

Equitable interest

Legal rights in a property that do not include the right to sell its legal title. This may apply to a mortgage lender.

Equity

Your equity in the new home is the amount of your deposit. The bigger your deposit, the lower the proportion of the loan in comparison to the property value. The less that a lender has to contribute to a property the greater their security and willingness to lend you the money will be. A bigger deposit could also be seen as a stronger commitment to the purchase. Over time, a proportion of your repayments will go towards reducing the capital that you owe to the lender, so assuming the value of the property is unchanged, the amount of equity you own will have risen.

Equity linked mortgage

The lender takes ownership of a stake in the equity of the property. This means that they lend you less than the full amount that is required to buy the home. Interest is only charged on the amount that they lend you and not on the full value of the property. When you sell the property, the lender receives payment in proportion to the amount of equity that they own, and therefore benefits from any increase in the price of the property.

Equity release

Equity release or home income schemes allow you to generate either a lump sum or a regular income in return for allowing the lender to take ownership of a portion of your home. These are often used by people in later stages of life who have paid of all or most of their mortgage and who are looking to raise funds without borrowing money.

Escrow account

An account a lender or mortgage servicer establishes to hold funds for the payment of expenses such as homeowner’s insurance and property taxes. Also known as an impound account.

Essential repairs

Work that needs to be carried out on the property before the mortgage completes.

Estate agents

People who buy and sell properties on your behalf in exchange for a fee. Note that no qualifications are required to do this so always check if they subscribe to a professional body.

Estate agents act 1979

A parliamentary act designed to protect consumers from any unscrupulous estate agents. There are no qualifications required to set up in business and so it ensures estate agents can be prosecuted if they do not act lawfully.

Estate agents code of practice

An agreement by members of NAEA, RICS and ISVA, to act and serve to certain levels. Ask your agent for a copy.

Estimated valuation

The amount a surveyor believes a property to be worth.

Euro mortgage

A mortgage taken out by those paid in Euros to avoid the need to exchange currency.

Ex

Means excluding and is append able to a share price quoted for a company in which you may be considering investing. If a share price is quoted ex dividend, this means that you will not receive the next announced dividend when you buy the shares. This has the consequence of meaning you will still receive the next dividend if you sell such shares.

Examination of title

An inspection by a title company of public records and other documents to determine the chain of ownership of a property.

Excess

Applies to an insurance claim and is simply the first part of any claim that must be covered by yourself. This can range from £50 to £1000 or higher. Increasing your excess can significantly reduce your premium. On the other hand, a waiver can sometimes be paid to eliminate any excess at all. Always check the excess in your policy.

Exchange contracts

Contracts are passed to the solicitors of the buyer and seller for them to examine and confirm the legal agreements for buying and selling a property are correct and in order. Once satisfied the solicitors will ask their respective clients to sign the contracts and send a copy to the other solicitor for signature by the other party. This is the 'exchange of contract' and the transaction between the seller and the buyer is then legally binding, and completion usually takes place no more than 2 weeks later.

Exclusions

These are events, instances or possessions which are not covered by your household or other insurance policy. This can be confusing as the main policy may seem to imply that such events, instances, or possessions are covered only to excluded in the small print of the policy. Moral: Read the small print.

Exclusivity agreement

This is an agreement between yourself and the vendor which is a sure-fire way to prevent gazumping as you can specify a sum in the contract that the vendor would have to compensate you with in such circumstances. Use of these agreements is uncommon though, as you have to pay to get a solicitor to draw one up, and not too many vendors would be willing to sign one.

Ex-council

A property which was previously owned by the council but has since been privately bought.

Execution only stockbrokers

Stockbrokers who offer clients a trading facility with no advice, research or recommendations regarding investment style or policy. Is usually cheaper than those offering guidance and often relates to online trading.

Executor

A person appointed to carry out the instructions in a will. If there is no will, a probate court will appoint an executor.

Existing liabilities

Expenses taken into account by a mortgage lender when assessing an applicant’s ability to repay the loan. These include loan repayments, maintenance payments etc.

Extend

Building a structure adjoining an existing property to make it larger.

Extended redemption penalty

This is where the redemption penalty continues beyond a fixed or capped rate period, effectively tying you in to the much higher variable rate for a period of time after the fixed or capped period. As a result, you get stuck paying an uncompetitive rate that eats into the gains you may have made from having the fixed rate or capped rate in the first place.