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Debt is an obligation that requires one party, the debtor, to pay money or other agreed-upon value to another party, the creditor. Debt is a deferred payment, or series of payments, which differentiates it from an immediate purchase. The debt may be owed by sovereign state or country, local government, company, or an individual. Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest. loans, bonds, notes, and mortgages are all types of debt. In financial accounting, debt is a type of financial transaction, as distinct from equity.
In finance, a loan is the lending of money by one or more individuals, organizations, or other entities to other individuals, organizations etc. The recipient incurs a debt and is usually liable to pay interest on that debt until it is repaid as well as to repay the principal amount borrowed.
Fixed income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule. For example, the borrower may have to pay interest at a fixed rate once a year and repay the principal amount on maturity. Fixed-income securities can be contrasted with equity securities – often referred to as stocks and shares – that create no obligation to pay dividends or any other form of income.
A reverse mortgage is a mortgage loan, usually secured by a residential property, that enables the borrower to access the unencumbered value of the property. The loans are typically promoted to older homeowners and typically do not require monthly mortgage payments. Borrowers are still responsible for property taxes and homeowner's insurance. Reverse mortgages allow elders to access the home equity they have built up in their homes now, and defer payment of the loan until they die, sell, or move out of the home. Because there are no required mortgage payments on a reverse mortgage, the interest is added to the loan balance each month. The rising loan balance can eventually grow to exceed the value of the home, particularly in times of declining home values or if the borrower continues to live in the home for many years. However, the borrower is generally not required to repay any additional loan balance in excess of the value of the home.
Jobseeker's Allowance (JSA) is an unemployment benefit paid by the Government of the United Kingdom to people who are unemployed and actively seeking work. It is part of the social security benefits system and is intended to cover living expenses while the claimant is out of work.
The debt-snowball method is a "do it yourself" debt-reduction strategy, whereby one who owes on more than one account pays off the accounts starting with the smallest balances first, while paying the minimum payment on larger debts. Once the smallest debt is paid off, one proceeds to the next larger debt, and so forth, proceeding to the largest ones last. This method is sometimes contrasted with the debt stacking method, also called the debt avalanche method, where one pays off accounts on the highest interest rate first.
This article gives descriptions of mortgage terminology in the United Kingdom which can often be unclear to borrowers.
Payment protection insurance (PPI), also known as credit insurance, credit protection insurance, or loan repayment insurance, is an insurance product that enables consumers to ensure repayment of credit if the borrower dies, becomes ill or disabled, loses a job, or faces other circumstances that may prevent them from earning income to service the debt. It is not to be confused with income protection insurance, which is not specific to a debt but covers any income. PPI was widely sold by banks and other credit providers as an add-on to the loan or overdraft product.
Equity release is a means of retaining use of a house or other object which has capital value, while also obtaining a lump sum or a steady stream of income, using the value of the house.
Income Support is an income-related benefit in the United Kingdom for some people who are on a low income, but have a reason for not actively seeking work. Claimants of Income Support may be entitled to certain other benefits, for example, Housing Benefit, Council Tax Reduction, Child Benefit, Carer's Allowance, Child Tax Credit and help with health costs. A person with capital over £16,000 cannot get Income Support, and savings over £6,000 affect how much Income Support can be received. Claimants must be between 16 and Pension Credit age, work fewer than 16 hours a week, and have a reason why they are not actively seeking work.
A mortgage loan or simply mortgage is a loan used either by purchasers of real property to raise funds to buy real estate, or alternatively by existing property owners to raise funds for any purpose while putting a lien on the property being mortgaged. The loan is "secured" on the borrower's property through a process known as mortgage origination. This means that a legal mechanism is put into place which allows the lender to take possession and sell the secured property to pay off the loan in the event the borrower defaults on the loan or otherwise fails to abide by its terms. The word mortgage is derived from a Law French term used in Britain in the Middle Ages meaning "death pledge" and refers to the pledge ending (dying) when either the obligation is fulfilled or the property is taken through foreclosure. A mortgage can also be described as "a borrower giving consideration in the form of a collateral for a benefit (loan)".
Social security, in Australia, refers to a system of social welfare payments provided by Australian Government to eligible Australian citizens, permanent residents, and limited international visitors. These payments are almost always administered by Centrelink, a program of Services Australia. In Australia, most payments are means tested.
Pension Credit is the principal element of the UK welfare system for people of pension age. It is intended to supplement the UK State Pension, or to replace it. It was introduced in the UK in 2003 by Gordon Brown, then Chancellor of the Exchequer. It has been subject to a number of changes over its existence, but has the core aim of lifting retired people of limited means out of poverty.
Universal Credit is a United Kingdom social security payment. It is replacing and combining six benefits for working-age people who have a low household income: income-based Employment and Support Allowance, income-based Jobseeker's Allowance, and Income Support; Child Tax Credit and Working Tax Credit; and Housing Benefit. Contributions-based Jobseekers Allowance, Contributions-based Employment and Support Allowance have been replaced with "New style" versions, and are not affected by Universal Credit.
Securitization is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations and selling their related cash flows to third party investors as securities, which may be described as bonds, pass-through securities, or collateralized debt obligations (CDOs). Investors are repaid from the principal and interest cash flows collected from the underlying debt and redistributed through the capital structure of the new financing. Securities backed by mortgage receivables are called mortgage-backed securities (MBS), while those backed by other types of receivables are asset-backed securities (ABS).
Taxation in Gibraltar is determined by the law of Gibraltar which is based on English law, but is separate from the UK legal system. Non-resident businesses do not pay income tax unless the source of this income is Gibraltar proper. There is no tax on capital income.
Carer's Allowance is a non-contributory benefit in the United Kingdom payable to people who care for a disabled person for at least 35 hours a week. It was first established as Invalid Care Allowance in 1976, and married women were not eligible. This policy was held to be unlawful sexual discrimination by the European Court in 1986 in the case of Jackie Drake. See Carers rights movement In May 2020 around 1.1 million people in England were entitled to Carer’s Allowance, of which 780,000 people were being paid it, according to the National Audit Office.
Funeral payments are a social security payment in the United Kingdom that are part of the Social Fund. They are to help with the costs of a funeral. To be eligible for a funeral payment you or your partner must be in receipt of one of the following income related benefits:
Social Security Scotland is an executive agency of the Scottish Government with responsibility for social security provision.
Funeral Support Payment is a benefit delivered by Social Security Scotland. The benefit is aimed at reducing funeral poverty in Scotland by providing people who receive certain benefits or tax credits with a payment that can be used to help pay funeral costs, burial or cremation costs, travel costs, and medical costs.
References
- 1 2 3 4 5 6 7 "Support for Mortgage Interest (SMI)". GOV.UK. 2016-03-09. Retrieved 2016-04-05.
- ↑ "Support for mortgage interest under Universal Credit". Entitledto. Retrieved 2016-04-06.
- ↑ Rupert Jones (9 December 2017). "Low-income households at risk as mortgage support benefit is axed". The Guardian. Retrieved 24 February 2018.
- 1 2 3 "Support for Mortgage Interest". The Advice Money Service.