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Debt consolidation glossary

62 terms, each defined in plain English in under 60 words. Jump to a letter or search.

A
Affordability assessment
The check a lender makes to decide whether you can afford the new monthly payment alongside your mortgage, bills and living costs. It looks at income, regular outgoings and existing credit, and for consolidation usually treats the debts being repaid as cleared. Lenders are required by the FCA to carry one out on every regulated mortgage or secured loan. Read more about how much you can borrow
Amortisation
The way a repayment loan is paid off over its term through fixed monthly payments that cover both interest and capital. Early payments are mostly interest; later ones are mostly capital. Because of this, extending the term lowers the monthly payment but increases the total interest paid, which matters when consolidating debt over many years.
APR
Annual percentage rate. A standard figure that expresses the yearly cost of borrowing, including the interest rate and most compulsory charges, so that different loans can be compared on the same basis. It is used for unsecured credit such as personal loans and credit cards. For mortgages and secured loans the equivalent figure is the APRC.
APRC
Annual percentage rate of charge. The comparison figure lenders must show for mortgages and secured loans. It assumes you keep the loan for the full term, includes fees and any reversion rate after an initial deal, and is often higher than the headline rate. It is useful for comparing offers but not a prediction of what you will pay. Read more about the secured loan APRC
Arrangement fee
A fee charged by a lender for setting up a mortgage or secured loan, sometimes called a product or completion fee. It can be a flat amount or a percentage of the loan, and is often added to the balance rather than paid up front, which means interest is charged on it for the whole term.
Arrears
Payments that are overdue on a mortgage, loan or other credit agreement. Arrears are reported to the credit reference agencies and, on secured borrowing, can lead to charges and ultimately repossession if they continue. Recent mortgage arrears are the hardest issue for a secured loan lender to lend around, so bringing accounts up to date matters. Read more about secured loans with mortgage arrears
B
Bankruptcy
A formal insolvency process in which your assets, which can include your home, are used to repay creditors and most remaining debts are cleared, usually after a year. It stays on your credit file for six years from the date of the order. Some specialist lenders consider discharged bankrupts for secured loans after a period of clean conduct.
Broker fee
The fee a mortgage or secured loan broker charges for arranging your borrowing, on top of any commission received from the lender. On secured loans it is commonly a percentage of the amount borrowed, often added to the loan, and must be disclosed before you commit. Some brokers charge nothing to the customer and rely on lender commission alone. Read more about secured loan broker fees
Buy to let
A property bought to rent out rather than live in, financed with a buy to let mortgage. Some second charge lenders will lend against a buy to let property, assessing the rental income and the equity rather than your personal affordability alone, which can be a way for a landlord to consolidate debt without touching their own home. Read more about secured loans on buy to let property
C
Capital raising
Borrowing against the equity in your home to release a lump sum for a purpose other than buying the property, for example debt consolidation, home improvements or a family loan. It can be done through a remortgage for more than you owe or through a separate secured loan. Lenders ask what the money is for and may restrict some purposes.
CCJ (county court judgment)
A court order in England, Wales and Northern Ireland confirming that you owe a creditor money and have not paid. It stays on your credit file for six years unless settled within one month. A satisfied CCJ, meaning it has been paid, is treated more favourably by lenders, and many specialist secured loan lenders consider applicants with one. Read more about secured loans with a CCJ
Combined LTV
Your existing mortgage plus a new secured loan, expressed as a percentage of your home's value. Second charge lenders set their maximum at this combined figure rather than on the new loan alone. A home worth £300,000 with a £180,000 mortgage and a £45,000 secured loan has a combined LTV of 75%. Lower combined LTV usually means a better rate. Read more about maximum LTV for a secured loan
Consumer Duty
A set of FCA rules requiring financial firms to deliver good outcomes for retail customers. For mortgages and secured loans it means products must offer fair value, communications must be understandable, and firms must support customers properly, including when things go wrong. It applies to lenders, brokers and introducers involved in arranging your borrowing.
Credit file
The record of your borrowing and repayment history held by the three UK credit reference agencies, Experian, Equifax and TransUnion. It lists your accounts, payment conduct, searches, defaults, CCJs and insolvencies, most for six years. Lenders read the file itself rather than a single score, so checking it for errors before applying is worthwhile.
Credit score
A number each credit reference agency calculates from your credit file to summarise how reliable a borrower you appear. Every agency and lender uses a different scale, so there is no single official score. Lenders use their own scoring on your full file, which is why a secured loan can be considered even with a low published score. Read more about credit scores and secured loans
D
Debt consolidation
Taking out one new loan to repay several existing debts, so that you have a single monthly payment, usually at a lower rate and often over a longer term. For homeowners the two main routes are a secured loan or a remortgage. It can reduce monthly outgoings but can increase the total interest paid if the term is much longer. Read more about debt consolidation for homeowners
Debt management plan (DMP)
An informal arrangement in which you repay unsecured creditors at a rate you can afford, usually set up free of charge by a charity such as StepChange. Creditors often freeze interest but are not obliged to. It is not legally binding, creates no new debt, and stays on your credit file for six years from each default. Read more about consolidation vs a DMP
Debt relief order (DRO)
A formal insolvency option for people with low income, little spare money and few assets, which clears qualifying debts after a twelve month period if circumstances do not improve. Homeowners cannot normally get one, because owning property takes you over the asset limit. It stays on your credit file for six years from the start date.
Debt to income ratio
Your total monthly debt payments, or sometimes your total debt, divided by your income and expressed as a percentage. Lenders use it as one measure of how stretched you are. Consolidation can lower the monthly version of the ratio because the new payment is usually smaller than the payments it replaces, which is why it can improve affordability.
Deed of postponement
A legal document in which the holder of one charge on a property agrees to rank behind another. It is needed when a homeowner with a secured loan remortgages with a new first lender, so that the second charge lender confirms it will stay in second place behind the new mortgage. Some lenders charge a fee for it. Read more about remortgaging with a secured loan in place
Default
A marker placed on your credit file when a lender decides you have broken a credit agreement, typically after three to six missed payments. The account is closed and the full balance becomes due. A default stays on file for six years from its date. Settled defaults, and older ones, are widely considered by specialist secured loan lenders. Read more about secured loans with defaults
Desktop valuation
A valuation of your home carried out from data such as recent sales, the Land Registry and online property records, without a surveyor visiting. Many secured loan lenders use one, sometimes alongside an automated valuation model, for lower loan to value cases, which cuts cost and speeds completion. A physical valuation is used where the risk is higher.
E
Early repayment charge (ERC)
A fee a lender charges if you repay a mortgage or loan, or overpay beyond an allowance, before an agreed date, commonly during a fixed rate period. It is usually a percentage of the amount repaid. On a mortgage it applies to the whole balance, which is why homeowners mid deal often choose a secured loan rather than a remortgage. Read more about remortgaging with an early repayment charge
Equity
The part of your home you own outright: its current market value minus everything secured on it, including your mortgage and any existing secured loan. Equity is what a lender lends against when you consolidate debt, so the more you have, the more you can usually borrow and the better the rate you are likely to be offered. Read more about how much equity you need
F
FCA (Financial Conduct Authority)
The UK regulator for financial services firms, including mortgage lenders, secured loan lenders, brokers and introducers. Firms must be authorised or registered with the FCA to arrange or provide regulated mortgages and secured loans, and its rules cover affordability, advice, fees and fair treatment. You can check any firm on the FCA register at fca.org.uk.
First charge
The legal charge that ranks first against a property, almost always the main mortgage. If the home is sold or repossessed, the first charge lender is repaid before anyone else. A remortgage replaces the first charge; a secured loan sits behind it as a second charge and is repaid only after the first lender has been.
Fixed rate
An interest rate that stays the same for an agreed period, typically two to five years on a mortgage and often the full term on a secured loan. Your payment does not change during that period, which makes budgeting easier. Leaving a fixed rate early on a mortgage usually triggers an early repayment charge. Read more about secured loans while on a fixed rate
FLA (Finance and Leasing Association)
The trade body for many UK second charge mortgage lenders and other consumer finance providers. It publishes monthly figures on new second charge lending, sets a lending code for members, and is the source of the market data quoted on this site, such as the number and value of new agreements in the year to June 2026.
Further advance
Additional borrowing from your existing mortgage lender, added to your mortgage as a separate part, usually at the lender's current rates rather than your original deal rate. Availability depends on the lender's criteria and your affordability, and lenders can decline. It is mentioned here for context; Equiclear introduces homeowners to brokers for secured loans and remortgages. Read more about what to do if your lender declines further borrowing
H
Homeowner loan
Another name for a secured loan or second charge mortgage: a loan available only to people who own their home, secured by a charge on the property behind the existing mortgage. Amounts commonly run from £10,000 to £500,000 over three to 25 years. Because it is secured, the home may be repossessed if payments are not kept up. Read more about homeowner loans
I
Introducer
A firm that puts customers in touch with a broker or lender but does not give advice or arrange the loan itself. Equiclear is an introducer: it explains the options and passes your details, with your permission, to an FCA authorised broker who advises you. Introducers are typically paid a fee by the broker when a loan completes. Read more about Equiclear
IVA (individual voluntary arrangement)
A formal, legally binding agreement in England, Wales and Northern Ireland to repay part of your unsecured debts over a set period, usually five or six years, with the remainder released at the end. It is set up by an insolvency practitioner, stays on your credit file for six years, and can require homeowners to release equity near the end. Read more about consolidation vs an IVA
L
Land Registry
The government body that records who owns property in England and Wales, and what charges are secured on it. A mortgage or secured loan is registered there as a legal charge, in the order in which it ranks. Anyone can check the register for a small fee. Scotland and Northern Ireland have their own equivalent registers.
Leasehold
Owning a property for a fixed number of years under a lease from the freeholder, common for flats. Lenders check the years remaining, and many want around 70 to 85 years left at the end of the loan term. Short leases, high ground rents or service charge disputes can limit which secured loan lenders will consider the property. Read more about secured loans on leasehold flats
Loan to value (LTV)
The amount borrowed against a property as a percentage of its value. A £180,000 mortgage on a £300,000 home is 60% LTV. Lower LTV means less risk for the lender and usually a better rate. For a secured loan, lenders look at the combined LTV of the mortgage and the new loan together, commonly capped between 75% and 85%. Read more about maximum LTV for a secured loan
M
MCOB
The Mortgages and Home Finance: Conduct of Business sourcebook, the part of the FCA handbook that sets the rules for regulated mortgages and secured loans. It covers advice, affordability, disclosure documents, the reflection period, early repayment charges and how lenders must treat customers in arrears. Second charge loans have been covered by MCOB since 2016.
Minimum payment
The smallest amount a credit card provider will accept each month, typically a small percentage of the balance plus interest. Paying only the minimum keeps the account in order but clears the debt very slowly and at high cost, because most of each payment goes on interest. This is the main reason card debt is often consolidated. Read more about clearing credit cards through a remortgage
N
Negative equity
When the total secured on a property is more than it is worth, so that selling it would not repay the lenders in full. It usually follows a fall in property values after borrowing at high loan to value. A homeowner in negative equity cannot normally get a secured loan or remortgage, because there is nothing to lend against.
O
Overpayment
Paying more than the required monthly amount on a mortgage or loan, either as a lump sum or by increasing the regular payment. Overpayments reduce the balance faster and cut the total interest paid. Most secured loans allow them, sometimes within a yearly limit before an early repayment charge applies, so check the terms before overpaying. Read more about paying off a secured loan early
P
Procuration fee
The commission a lender pays a broker for introducing a completed mortgage or secured loan, usually a percentage of the amount borrowed. It is paid by the lender rather than by you, but the broker must disclose it, and it is separate from any broker fee you are charged directly. Knowing both figures shows the full cost of the advice.
Product transfer
Switching to a new rate with your existing mortgage lender when your current deal ends, without changing lender or borrowing more. It is usually quicker than a remortgage and needs little or no new underwriting. It does not release money for debt consolidation on its own, but it can be combined with a separate secured loan. Read more about keeping your mortgage and clearing debts
R
Reflection period
A period of at least seven days after a lender issues a binding mortgage or secured loan offer, during which you can consider it and the lender cannot withdraw it. You can accept sooner if you choose. It exists under MCOB rules so that borrowers are not rushed into a decision that puts their home at risk.
Remortgage
Replacing your existing mortgage with a new one, either with a different lender or your current one, usually to get a better rate, change the term or borrow more. A remortgage to pay off debt increases the mortgage and releases the extra to clear other borrowing. Leaving a deal early can trigger an early repayment charge. Read more about remortgaging to pay off debt
Repossession
The legal process by which a lender takes possession of a property and sells it to recover what is owed, after payments have been missed and a court has granted an order. It is the ultimate risk of any borrowing secured on your home, including a secured loan. Lenders must treat it as a last resort and consider alternatives first. Read more about missing a secured loan payment
Representative APR
The APR or APRC that a lender must show in advertising, which at least 51% of customers responding to the advert are expected to receive. The rest may be offered a higher rate depending on their circumstances, credit history and loan to value. It is a guide to the lender's pricing, not a promise of the rate you will get. Read more about how secured loan rates work
Reversion rate
The interest rate a mortgage or secured loan moves to when an initial fixed or discounted period ends, usually the lender's standard variable rate or a tracker. It is typically higher than the initial rate, and the APRC assumes you stay on it for the rest of the term. Many borrowers remortgage or switch product before it applies.
S
Second charge mortgage
The formal name for a secured loan or homeowner loan: a loan secured by a legal charge on your home that ranks behind your existing mortgage. Your mortgage is unchanged; the new lender is repaid second if the property is sold. It is FCA regulated like a first mortgage, and the home may be repossessed if payments are missed. Read more about second charge mortgages
Secured debt
Borrowing that is tied to an asset the lender can take if you do not repay, most commonly a mortgage or secured loan on your home, or finance secured on a car. Secured debt usually carries a lower rate than unsecured debt because the lender's risk is lower, but the consequences of missing payments are more serious.
Secured loan
A loan for homeowners secured by a charge on the property, ranking behind the existing mortgage, which is why it is also called a homeowner loan or second charge mortgage. Amounts commonly run from £10,000 to £500,000 over three to 25 years, and adverse credit is widely considered. The home may be repossessed if payments are not kept up. Read more about secured loans
Settlement figure
The exact amount needed to repay a loan or credit agreement in full on a given date, including any interest to that date and any early repayment charge. When you consolidate, the new lender usually asks for settlement figures for each debt being cleared and pays them directly from the loan on completion, so the figures must be current.
Shared ownership
A scheme in which you buy a share of a property, commonly between 25% and 75%, and pay rent on the rest to a housing association. Because you only own part of the home, the equity available to borrow against is limited, and only some secured loan lenders will consider shared ownership properties, usually with the housing association's consent. Read more about secured loans on shared ownership homes
Standard variable rate (SVR)
The default interest rate a lender charges once an initial mortgage deal ends. The lender sets it and can change it at any time, and it is usually well above the rates on new deals. Borrowers on an SVR have no early repayment charge to pay, which makes remortgaging to consolidate debt more straightforward.
Stress test
Part of the affordability assessment in which a lender checks whether you could still afford the payments if interest rates rose, typically by adding a margin to the rate you are offered. It applies to variable rate and shorter fixed rate borrowing. The stress test is one reason a lender may offer less than you asked for.
T
Term
The length of time over which a loan is repaid. Secured loans commonly run from three to 25 years, and remortgages up to 35 or 40. A longer term lowers the monthly payment but increases the total interest paid, the central trade off in debt consolidation, which is why advisers show the total cost as well as the monthly figure. Read more about the effect of a longer term
Third charge
A loan secured on a property that already has a mortgage and a second charge on it, ranking third for repayment if the home is sold. Only a small number of specialist lenders offer third charge loans, at lower loan to value and higher rates than a second charge, because the lender is last in the queue. Read more about third charge loans
U
Unsecured debt
Borrowing that is not tied to an asset, such as credit cards, store cards, personal loans, overdrafts and catalogue accounts. The lender cannot take your home if you do not pay, but can pursue you through the courts. Unsecured debt usually carries a higher rate than secured debt and is the type most often consolidated. Read more about what counts as unsecured debt
V
Valuation
An assessment of what your home is worth, carried out for the lender to work out the loan to value. It may be a desktop valuation from property data, a drive past, or a full inspection by a surveyor, depending on the lender and loan size. The valuation figure, not the price you paid, sets how much you can borrow.
Variable rate
An interest rate that can go up or down during the loan, either at the lender's discretion, as with a standard variable rate, or in line with the Bank of England base rate, as with a tracker. Payments change when the rate does. Some secured loans are variable for the whole term, so budget for a rise.

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