Mortgage Terms - B

BACKUP CONTRACT: It is a contract through which the purchase and sale of a particular property becomes effective when another contract for the same property fails.

BAIT AND SWITCH: It is a kind of illegal advertisement of low interest loans by the lenders to lure the customers. Later they reveal that the stock is limited and offers a substitute loan with higher rate.

BALLOON MORTGAGE: It is a short term fixed rate loan which includes low monthly payments for a shorter period of time, say 5 to 7 years. After the loan term, one has to pay the balance in lump sum amount.

BASE RATE TRACKER MORTGAGE: It is a form of variable mortgage, the interest rate of which depends upon the Bank of England's Base Rate. Thus, the rate of this loan rises and falls periodically.

BINDER: It is a legal contract between an insurance buyer and his agent to provide temporary insurance coverage to the former until the policy is delivered.

BI-WEEKLY MORTGAGE: It is a type of mortgage in which the payments are made twice a month rather than paying on a monthly basis. As the borrower makes the payments faster, it helps him to save his interest payments.

BLENDED PAYMENT: It is a loan payment that includes principal and interest. Here the loan payment remains same with the principal increasing over time and the interest decreasing.

BLENDED RATE MORTGAGE: It is the mortgage that combines the amount of an existing mortgage with the extra money taken by the borrower for the second mortgage. The interest rate charged on the amount borrowed is a blend of the interest rate on the first loan and the rate on the extra amount taken as the second loan.

BOOK VALUE: It is the left over assets which a company will have if it decides to move out of the business.

BUDGET MORTGAGE: It is a mortgage in which the borrower makes the monthly payments for insurance premiums, property tax besides paying for the principal and interest.

BUY DOWN MORTGAGE: It is a mortgage in which the interest rate is reduced to an extent so that that in the initial period the borrower has to make less monthly payments.

BUY- TO- LET- MORTGAGE: It is a kind of loan taken by the borrower to purchase a property which will be rented out to tenants.

BREACH OF CONTRACT: It is a violation of the terms of a legal contract.

BRIDGE LOAN: It is a loan that bridges the gap between purchasing a new home and the sale of the borrower's current home. It is a loan which the buyer takes on his current residence to finance his new residence.