CeMAP Module 3 (ASEW) key terms

The structured process of checking whether a client can sustain mortgage payments from verified income after essential spending, existing debts and stressed interest-rate rises, as required under MCOB responsible lending rules.

A documented record of the client's circumstances, objectives, needs and attitude to risk, gathered before advice is given and used as the evidential basis for every subsequent recommendation.

A written explanation given to the client setting out the recommended mortgage or protection product, why it meets their recorded needs, and the reasons any alternative was rejected.

The client's stated willingness to accept uncertainty over payment changes, product features or investment-linked outcomes, recorded so the adviser can match product risk to the client's tolerance.

Re-running affordability calculations at a higher notional interest rate or with income shocks, to confirm the client could still pay if rates rose or circumstances worsened.

The regulatory duty on lenders and advisers to lend only where the mortgage is affordable and sustainable, evidenced through documented income and expenditure checks rather than automated approval alone.

The FCA's Mortgage Conduct of Business sourcebook, setting rules on advising, selling, disclosing and administering regulated mortgage contracts, including affordability, disclosure and arrears handling.

The FCA principle that firms must deliver six defined fair outcomes for consumers, embedded in culture, product design, advice quality and complaints handling rather than treated as a one-off project.

The FCA standard requiring firms to act in good faith, avoid foreseeable harm and support customers' financial objectives, with outcomes monitored across products, price, consumer understanding and support.

A customer whose circumstances, such as health, bereavement, low literacy or financial pressure, reduce their ability to make informed decisions, requiring tailored communication and extra support.

A standardised document showing the loan amount, term, initial and reversion rates, monthly payments, total payable and any early repayment charges, allowing clients to compare products consistently.

The pre-sale provision of key information about a mortgage or insurance product, including its features, risks, costs and cancellation rights, so the client can make an informed decision.

A mortgage where the interest rate, and therefore the monthly payment, stays constant for a set period before reverting to the lender's variable rate or requiring remortgage.

A variable-rate mortgage that follows a specified reference rate, usually the Bank of England base rate, plus or minus a fixed margin, so payments move automatically with that rate.

A lender's default variable rate, not tied to a specific index, which borrowers usually move onto when a deal period ends and which is typically higher than initial deal rates.

The rate a mortgage transfers to once an initial discounted, fixed or tracker period ends, usually the lender's SVR, and a key figure in the mortgage illustration.

A fee charged by a lender if the borrower repays all or part of the loan above an allowed limit during a deal period, commonly a percentage of the amount repaid.

A mortgage where each monthly payment covers both interest and a portion of the capital, so the balance reduces to zero at the end of the agreed term if payments are maintained.

A mortgage where monthly payments cover interest only, leaving the original capital to be repaid at the end of the term from a specified repayment vehicle or other source.

The documented plan or asset, such as savings, investments, pensions or property sale, intended to repay the capital of an interest-only mortgage at maturity, reviewed periodically for adequacy.

The mortgage amount expressed as a percentage of the property's value, used to price products because higher LTVs represent greater lender risk and usually attract higher rates.

The lender's assessment of the property's market value, often a basic inspection for lending purposes, which may differ from the price paid or from a full structural survey.

The legal process of transferring ownership of a property, covering title checks, searches, contract exchange and completion, usually handled by a solicitor or licensed conveyancer.

The official land registry record identifying the registered owner, the property description, and any charges, easements or restrictions affecting the property, checked before lending or purchase.

The registered security interest a lender holds over a mortgaged property, allowing it to take possession and sell to recover the debt if the borrower defaults.

A tax payable on property purchases in England and Northern Ireland, charged on a banded scale, with surcharges for additional homes and reliefs for certain buyers.

A mortgage secured on a property intended to be let to tenants, usually interest-only, assessed on rental coverage and landlord experience rather than the borrower's earned income alone.

The ratio of expected annual rental income to mortgage interest cost, used by lenders to test whether a buy-to-let loan is sustainable if rates rise or voids occur.

A way for older homeowners to unlock property value without moving, typically through a lifetime mortgage or home reversion plan, with interest rolled up and repaid on death or sale.

A long-term loan secured on the home, usually available from age 55, where interest is added to the balance and repaid from the property sale, often with a no-negative-equity guarantee.

A promise that the amount owed on an equity release plan will never exceed the sale proceeds of the property, provided the plan meets the scheme's conditions.

A scheme where the buyer purchases a share of a property and pays rent on the remainder, with the option to buy further shares later through a process called staircasing.

The process by which a shared ownership buyer increases their share of the property over time, reducing the rent paid on the landlord's retained portion.

The controls firms use to detect and prevent the proceeds of crime entering the financial system, including customer due diligence, ongoing monitoring and suspicious activity reporting.

The checks a firm performs to verify a client's identity and address, understand the purpose of the relationship and confirm source of funds before acting on a mortgage transaction.

Additional, more detailed checks applied to higher-risk situations such as politically exposed persons, complex ownership structures or high-value transactions, including evidence of source of wealth.

A confidential report made to the authorities, usually through the National Crime Agency, when a firm knows or suspects money laundering or terrorist financing, with tipping off prohibited.

Disclosing to a client or third party that a suspicious activity report has been made or that an investigation may follow, which is a criminal offence in most circumstances.

The regulated process for acknowledging, investigating and resolving client complaints within set time limits, with referral rights to the Financial Ombudsman Service if unresolved.

The independent dispute-resolution body that can award redress against firms for complaints not resolved internally, applying what it considers fair and reasonable in the circumstances.

The legal framework governing how personal data is collected, used, stored and shared, giving clients rights over their information and requiring firms to keep it secure and lawful.

An insurance product designed to cover loan repayments during illness, unemployment or accident, historically sold alongside mortgages and subject to major mis-selling redress.

A protection policy paying a regular income, typically a percentage of earnings, if the policyholder cannot work through illness or injury, helping maintain mortgage payments.

A life insurance policy paying a lump sum if the insured dies within a specified term, often arranged alongside a mortgage to clear the balance for dependants.

Replacing an existing mortgage on the same property with a new loan from the same or a different lender, often to secure a better rate, release equity or change the repayment structure.

The regulated handling of a borrower who has fallen behind with payments, requiring fair treatment, early contact, forbearance options and clear communication before possession proceedings.

The lender's legal recovery of a mortgaged property after default, culminating in sale to repay the debt, subject to court process and regulatory requirements to treat borrowers fairly.