Annual percentage rate - (APR) all lenders must provide this figure as it indicates the cost of borrowing. It allows for any fees that apply and how often the interest is calculated i.e. daily, monthly annually etc. The APR normally varies from the actual interest rate, for example a lender may offer a mortgage rate of 6.60% but the loan has an APR of 6.8%.

Adverse credit - This is a term used for a borrower who has had previous credit problems such as arrears or a default on a mortgage or loan. County court judgement(s) or bankruptcy may be the result of credit problems. Some specialist lenders are prepared to consider cases where a mortgage is not offered by mainstream mortgage lenders due to previous credit history.

Arrangement fee or Administration fee - Some lenders charge an arrangement fee and depending on the lender this may be paid in advance and is generally not refundable if the loan application does not proceed. One reason for this is to stop multiple applications being made to several lenders at the same time or where an arrangement fee is paid to secure a fixed rate and an alternative lender introduces a lower fixed rate the following week. The arrangement fee is therefore partially regarded as a commitment to proceed with the loan and some lenders will refund the arrangement fee on completion of the loan.

If you are arranging your loan through a mortgage broker, there may also be an arrangement fee payable to the broker. This fee varies with each broker depending on their specific fee structure. Some brokers do not charge any fees as they rely on procuration fees that may be payable from the lender and commission from any insurance products taken out with the loan i.e. commission generated from life assurance, ASU and buildings and contents plans. If you are arranging your loan through a mortgage broker, there may also be an arrangement fee payable to the broker. This fee varies with each broker depending on their specific fee structure. Some brokers do not charge any fees as they rely on procuration fees that may be payable from the lender and commission from any insurance products taken out with the loan i.e. commission generated from life assurance, ASU and buildings and contents plans. Generally your fee to the mortgage broker is to offer independent mortgage advice i.e the broker should find the best mortgage with any lender depending on your particular circumstances that suits your circumstances and guidance throughout the mortgage process.

Accident, Sickness and Unemployment Insurance (ASU) - This is an insurance policy that is taken out by the borrower(s) and provides a monthly income in the event of an ASU/Redundancy which may then be used to service the monthly mortgage and associated bills i.e insurances. As with most insurances the terms of the policy differ depending on the plan offered by the insurers. For example most policies have a period before payments commence and this could be 30,60 or 90 days. The terms of these policies and cost vary considerably from company to company. Depending on your circumstances the plan may be effected on one or all borrowers covering the full or half the mortgage amount each. Generally this type of is paid for on a monthly basis or however it may be paid for with a lump sum for a period of years. The benefit will normally only be payable for a period of time i.e 6,12 or 24 months or until the borrower returns to work. Some lenders make it compulsory to purchase an ASU policy when taking a specific mortgage, therefore it is important to establish the cost and that the policy is required if you wish to take out a mortgage with compulsory ASU.

Disclaimer: Information is for guidance purposes only. If you are in any doubt as to the suitability of the contracts offered please consult an independent financial adviser. PIA do not regulate mortgage protection and not all forms of critical illness insurance and income protection products.