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Welcome to the Finance glossary, we have made this glossary to make you more comfortable in finding and understanding the finance terms. This is brought to you by the loan uk .
Use the A-Z alphabetical list to find definitions of key finance terms.Our aim is to provide the mostcomprehensive glossary of UK financial terms on the internet
Finance Terminology - B
Bailiff
A court official, who may repossess goods or property belonging to any person or business which fails to maintain their credit payments, and who does not come to any agreement to pay with their creditors.
Bankruptcy
The process of declaring an individual bankrupt. Bankruptcy remains on your credit rating for seven years and limits a person's ability to borrow.
Bankruptcy: Discharge
A debtor is discharged from bankruptcy after a period of approximately three years and his debt is treated as paid, however credit referencing agencies normally identify former bankrupts for up to 15 years after their discharge.
Base Rate
The minimum lending rate was abolished in 1981, and so the banks introduced the base rate, used to refer to the mortgage lender's standard variable rate.
Basic Annual Income
The annual income earned that is guaranteed regardless of the individual's or his or her company's performance. This is important when establishing a borrower's ability to pay, especially for sales people, or other employees where a significant part of their salary package is made up of commissions, bonuses or share options.
Basis Point
A basis point is 1/100th of 1%. For example the difference between a loan at 9.00% and a mortgage at 9.12% is 12 basis points.
Before-Tax Income
An individual's total (gross) income before taxes are deducted.
Benefit Period
Time frame in which the interest rate of a mortgage is discounted. (See fixed or capped).
Biweekly Loan
A loan that requires payment every two weeks, therefore reducing the term and cost.
Black Listed
Colloquial term for someone with a poor credit score, originating from Gentlemen's clubs, which used to "black ball" people they did not want as members. Technically, there is no such thing as being "blacklisted", although some people clearly have better credit scores than others. Simply being declined for a credit application does not mean that someone is blacklisted, it just means that they do not meet the criteria for that particular institution at that time.
Booking Fee
A fee charged by a lender to secure mortgage funds, payable at the time the loan application is submitted and normally applies only to special offer loans, such as fixed or capped rates. See fee, arrangement fee, fees added to loan, conveyancing fee and valuation fee.
Breach Of Contract
Failure to fulfil the term and conditions of a contract.
Breach Of Covenant
Failure to obey a legal agreement.
Bridging Loan
Short term loan used as coverage when buying a new property before selling an existing one.
Broker
A third party individual who attempts to find the best available financial or other package. Brokers could be affiliated with a larger network in finance, or they may be independent.
Broker Fee
A fee charged by an intermediary to the applicant for negotiating a loan. If a loan has not completed within 6 months of the date of introduction to a lender, the maximum fee that a broker may retain is £300, under the Consumer Credit Act.
Brokerage
Term used to describe the act of a broker.
BSA
Trade organisation for building societies - the Building Societies Association.
Building Society
Building societies are mutual organisations owned by their members and regulated by the Buildings Societies Act. The Building Societies Commission lays down restrictions on their lending criteria, so they are less able to help with certain categories of loans.
Buildings Insurance
An essential insurance policy which covers the structure of the building. Where the property is leasehold the buildings insurance will normally be arranged by the freeholder and the cost charged on to the leaseholder within the service charges payable. See uninsurable, contents insurance.
Buy To Let Mortgage
A mortgage for a property which the owner intends to let out to students or other tenants. See commercial mortgages.
B Share
B shares receive shares as a from of income, instead of dividends and are therefore attractive to investors who have to pay a high rate of income tax.
Balance sheet
The balance sheet forms part of a company's annual report and accounts. It is a summary of the company's assets, liabilities and shareholders funds.
Bank base rate
The bank base rate is set by the Bank of England and determines the cost of borrowing money. This base rate is used by commercial banks as a reference point when setting their own base rates. An increase in the base rate will increase the rates for mortgages and loans. However, savers will receive higher interest rates on their savings.
Bargain
Term used for a share transaction.
Basis point
A hundredth of one per cent (0.01 per cent).
Bear market
This is when there is a widespread decline in security prices. Bears believe that share prices will fall. They sell securities which they do not at present own, in the hope that they can buy them at a lower price later once the price has fallen
Beta
This is a measure of market risk. It determines how volatile a share price is (ie how much a share tends to rise and fall over a period). The beta measures the distance between the high points and the low points, so the higher a share's beta, the more volatile it is. If you're investing for the long term, volatility doesn't matter much. However, if you're a short-term speculator, a highly volatile share can offer big rewards but also big potential losses if your timing is off.
Bid/Offer spread
The offer price is what you pay if you want to buy an investment and the bid price is what you get when you want to sell. The difference between the offer price and the bid price is known as the spread. The size of the spread depends on the sales, management and marketing costs of the investment, and the amount of profit margin built in by the market maker.
Big Bang
The deregulation of the London Stock Market that took place in October 1986, when the London Stock Exchange went fully electronic.
Blue chip
Large and creditworthy company.
Bond
A bond is a long term debt. This a loan to a company or government in return for a fixed level of income (coupon) and a guaranteed return of the investment at the end of the bond's life (known as 'the maturity date'). There is a range of different bond types available, offering different dates to maturity. The advantage of bonds over shares is that bondholders are ahead of shareholders in receiving payment if the underlying company goes bust. Although the maturity price ( redemption price) and income level is fixed, the market prices of bonds can rise and fall just like shares. Prices of the bond are determined greatly by interest rates and inflation forecasts. For example if inflation is likely to increase, the fixed income will be worth much less as time goes by therefore, the price paid for the bonds in the open market will be less to compensate for this. Overall, the long-term return on bonds is lower than that achieved by shares but, bonds are useful for boosting income in retirement.
Bonus issue
A free issue of extra shares to shareholders by a company. This is often done when the share price has risen so high that they become too expensive to buy for the smaller investors.This is also known as a 'scrip' or 'capitalisation' issue.
Book value
This is an accounting term. The book value of a company is determined by adding up all of the company's assets and then deducting all of its debt and liabilities. The Book value of a company's assets or securites may have little relationship to the market value of the company.
Bridging loan
A short term loan to provide temporary financing until more permanent financing is arranged. It is often used by purchasers of a property who need funds for a limited period of time e.g. until they sell their existing home.
Broker
Short for stockbroker, but can refer to any intermediary selling financial products.
Bull market
Widespread rise in security prices. A 'bull' investor believes that share prices will rise. They buy securities in the hope that they will be able to sell them at a profit later once the price has risen
Buy-back
A company may buy back its own shares in order to reduce the overall number of shares available on the market.This will usually have the effect of increasing the share price.
Buy-out
This is when a company's management team buys all the company's shares and thereby takes complete control of the company. This is called a management buy-out (MBO).There are several variants of a MBO.
Leverage buyout -These occur where the purchase price is beyond the financial resources of the managers and the bulk of the acquistion is financed by loan capital provided by other investors.
Employee buyout - Similar to the above but all employees are offered a stake in the new business.
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