HPP jargon buster

Account balance
This is the amount of money in an account. This could be either a credit balance (money you own) on a savings account/current account, or a debit balance (outstanding finance) for a finance agreement.

Acquisition Payments
An acquisition payment is made as part of your Home Purchase Plan which, over time, increases your share of the property. This can be made as part of your monthly HPP payment.

Al Rayan Bank Variable Rental Rate
Bank of England Base Rate together with our margin. For further information click here.

Arrears
When someone is in 'arrears' they have missed payments that they should have made towards their home finance product.

Assets
Assets are things that a person or company owns, such as a house or money.

Balance
The balance is the sum of money outstanding on your home finance product.

Bank charge
This could be a fee you have to pay your bank for things such as an unpaid instalment like a Direct Debit, cheque or standing order or requesting a copy of a statement

Budget
A budget is a financial plan drawn up for an individual or family to work out how much money is coming in and going out each month. A budget would usually cover a period of one month, although it can be longer. 

Buy-to-Let Purchase Plan
Buy-to-let Purchase Plans are designed to fund the purchase of a house that will then be rented out.

Change of parties
This is a request to change the name of the parties (people) named on your home finance product. This may be requested as a result of a change in personal circumstances.

Credit history
A record of the credit an individual has had in the past or the payment history of any credit taken.

Credit reference agency
This is a firm that collects and holds information about an individual's credit history.

Current account
This is a bank account which allows a customer to deposit money and withdraw money by cash, cheque, standing order or Direct Debit. 

Deposit
A payment made into an account or an amount of money that is paid on an item to demonstrate the intention to fully purchase the item at a later date (for example, the deposit on a house).

Diminishing Co-ownership Agreement
"The agreement that details how ownership of the property passes from the bank to you, over the term of the HPP. Otherwise known as a diminishing Musharakah agreement"

Equity
Usually applied to home ownership, equity illustrates the difference between the current value (or market value) of the property and the amount of the home finance that is still outstanding.

Financial Conduct Authority (FCA)
This is one of two regulators responsible for regulating financial services in the UK (see also Prudential Regulation Authority (PRA)).

Financial planning
This is the process of setting financial goals or targets and producing a plan, such as a budget to achieve it.

Fixed rental rate
A rental rate agreed for a fixed rental rate period which will be used to calculate the rent. For further information click here.

Fixed rental rate period
A period during which it has been agreed between you and Al Rayan Bank that a fixed rental rate will apply in calculating the rent

Freehold
This is when you own the property and the land it stands on.

Gross
The full amount of money earned or paid before any deductions such as tax.

Guarantor
A person who provides a guarantee of your obligations under the HPP Agreements.

Initial rental rate
The rental rate applicable from the start of the payment term until the end of the first rent period.

Land registry fee
When buying a house, you need to register your new ownership of the property with the Land Registry. To do this they will charge a fee, which you’ll pay through your solicitor or licensed conveyancer.

Leasehold
There are situations where you own a property but not the land it stands on. This is known as leasehold.  

Legal fees
A fee you pay to a solicitor for their services. 

Finance-to-Value (FTV)
This is the ratio between the size of the home finance arrangement you have and the current value of the property. For instance, if your home finance arrangement is £70,000 on a property valued at £100,000, the FTV is 70%

Negative equity
When the amount outstanding on your home finance product is more than the value of your home.

Net
The amount of money earned or paid after any deductions such as tax.

Offer letter
The offer letter setting out the terms of the agreement between you and us in relation to the Property.  
The offer letter sets out the full terms and conditions of your Home Purchase Plan.

Outstanding balance
The amount left on your home finance product.

Property value
This is how much the property you wish to buy has been valued at.

Prudential Regulation Authority (PRA)
This is one of two regulators responsible for regulating financial services in the UK and works alongside the Financial Conduct Authority (FCA) (see also Financial Conduct Authority (FCA)).

Sharia
The rules, principles and parameters of Islamic law as interpreted by our Sharia Supervisory Committee.

Term
The term is the period over which a home finance arrangement is scheduled to be paid or an investment runs for. 

Title deed
This is the legal document that details who owns the property.