Glossary

Commercial Mortgage - A loan granted for a commercial purpose, normally secured against commercial property, although residential property may be used. Usually carries a higher rate of interest than a residential mortgage because the lender perceives a higher degree of risk. Due to complex and individual nature of each business their financial solutions are also structured individually as such each case needs thorough assessment to find its solution.

Although there is no "one size fits all' answer to the commercial finance, yet with the expertise by a professional, a viable solution is always possible at Rainbow Finance and many satisfied clients can vouch for this fact.

Project Financing
Over the last two decades project finance, a new contracting technology for allocating the risks and rewards of large-scale projects has become a highly visible force in the field of finance.

How do the governance mechanisms in such projects work and what are the challenges posed by such works? These are the major questions we address while processing project financing cases

Self Certification - A mortgage loan where the borrower makes a statement of his or her income and the lender makes fewer checks than normal on the accuracy of this statement.

Self employed - Working on one's own account. For mortgage purposes this will include partners in unlimited liability businesses and professional practices

First Time Buyer - A person wishing to purchase a property for the first time. Some lenders offer preferential lending terms to first time buyers. A borrower who has owned a property before but has sold this prior to buying again may be offered first time buyer terms by some lenders. However, this will vary on a lender to lender basis

Fixed Rates - A loan where the initial payments are based on a certain interest rate for a stated period and the rate payable will not change during that period regardless of changes in the lender's standard variable rate.

Tracker Mortgage
The interest rate tracks whatever rate is set by the Bank of England with a constant differential. The result on your monthly mortgage interest payments is that they go up when the base rate goes up and go down when the base rate goes down

Discounted rate - the mortgage interest rate is lower than the current normal standard variable rate for a certain period, usually shown as a fixed percentage reduction to the lender's normal variable rate e.g. 2.00% discount for 2 years.

Flexible Mortgages
Flexible mortgages are offered by some lenders. A flexible mortgage allows you to make overpayments in order to repay the mortgage early or save for a special event.

Second Mortgage - A further loan on a property which ranks after the first charge mortgage.

Re-mortgage - Arranging a loan on a property in which the borrower already resides. Normally this involves redeeming an existing loan on the property.

Right to buy - Option for council tenants to purchase the property in which they reside, often at a a considerable discount.

Overseas Mortgages
The possibility of buying a dream home abroad used to be for the rich and famous, nowadays the possibility is open to many more people who are either retiring or increasingly, for younger people who have broader horizons who are looking for an improved quality of life.

Bridging Finance

(A) If you have a temporary cash flow problem because you are attempting to buy a property, or a business, you may need a bridging loan. Perhaps you are ready to buy a new home or commercial premises but the sale of your current property may not have cleared.

(B) A Business-Bridging loan is a short term mortgage which is secured by your property. The bridging loan may have a higher interest rate than your conventional mortgage, but you can gain the loan quickly to bridge the time between your purchase and your sale. A business-bridging loan is best for the person that is fairly certain of their business situation and ability to repay in a few months.

Speed is the most crucial factor in all types of Bridging Loans.

A bridging loan can be used for a variety of purposes, the following list provides just a few examples:

• To enable the purchase of one property before completion on the sale of another.
• To fund the purchase of a property abroad. We are happy to provide funding for the purchase of properties abroad, be they for owner occupation or holiday/investment purposes.
• Temporary funding for the purchase of a 'defective' property, pending completion of repairs and draw down of a long-term mortgage.
• To fund the urgent purchase of a property, pending arrangement of a long term mortgage. This of course can apply to an investment property when there is insufficient time to arrange a buy to let mortgage to complete the purchase.
• To capital raise for any purpose, pending a sale of the security property.

(E) You may have found your dream home but have not yet managed to sell your existing property. Without the proceeds from the sale of your current property, how can you afford to buy the new one?

(F) Bridging Finance enables you to purchase a new property whilst you await the sale of your existing property. In this way, a lender is able to help you buy the property you want, when you want it.

Islamic Sharia Compliant Mortgages
It is against Islamic law to pay or receive interest. This has been a huge problem for Muslims living in Britain. When it came to home buying, it was only the very rich who could afford to buy a home outright. Fortunately, many banks and building societies are starting to recognize this as a problem and are offering an alternative.

There are two options available to you that correspond with Muslim law
The Murabaha (Deferred sale finance) Mortgage
The Ijara (lease to own) Mortgage
The Murabaha Mortgage:

This is only really an option for individuals/families who have a fair amount of capital behind them, because it is a condition of this Mortgage package that you are expected to pay (circa.) 20% of your home’s value, on the day of purchase. However, from that day the house will be registered as your own. You may pay off any debt that is outstanding on your home at any point. This package offers a fixed repayment period that is agreed between you and your lender,

So how does the Murabaha Mortgage work?; When you find the house that you wish to buy, you arrange a sale price with the vendor as normal, however the bank pays the purchase price, then immediately sells the house to you at a higher price (the higher price is determined by the original price of the property, and the repayment period that you will have agreed with the lender), minus the percentage you pay as deposit.

The Ijara Mortgage:
This is a slightly more popular choice of mortgage, as you do not need a large amount of capital behind you to set up this mortgage, it is also slightly more flexible than its counterpart. An extra benefit to this type of mortgage is that it can even be taken out to replace an existing interest mortgage. The amount you pay each month is usually fixed yearly. The outstanding balance can be paid off at any time (usually) without incurring any penalties.

So how does the Ijara Mortgage work?; As with the Murabaha mortgage, you find a property that you wish to buy, and agree a purchase price with the vendor, the difference is that; your lender will then purchase, and gain ownership of the property. You will enter into a lease agreement with the lender. Each month you will be expected to pay rent to your lender and a contribution towards the purchase of your property.

We have access to all Islamic complaint mortgages available in the UK . If you have any further queries or for more information, fill out or an enquiry form and speak to one of our advisors."