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We understand that the world of finance may be a little bewildering. This Glossary is designed to help you by clarifying terms which you may find in our application form and legal documentation.

Buying into a partnership or extending/refurbishing your existing surgery is a significant undertaking, therefore we strongly recommend that you discuss mortgage options with your accountant, solicitor and/or financial advisor to ensure you fully understand the implications of the option you choose.

A

Acceptance

A form enclosed with the loan offer which is issued once a loan application has been approved. The acceptance form needs to be signed and dated by all of the applicants to accept the terms and conditions of the loan offer. Once we have received the acceptance fees we will instruct our legal team and, if applicable, a valuer.

All Risks Insurance

All Risks is the insurance term used where cover is not restricted to specific events like fire, storm, theft or flood etc. The cover is loss, damage or destruction by a cause not excluded in the specific policy wording. The exlcusions depend partly on the type of property being insured but latent effects and frost are typical exclusions on an all risks policy.

Amortised Repayments

Repayments of capital and interest which will fully repay the outstanding loan over the agreed term. The loan payment consists of a portion which is used to pay the interest on the loan, with the remainder of the payment being applied to the capital. The interest portion will decrease as the loan balance decreases, and the amount applied to capital increases so that the loan is paid off (amortised) in the specific time (loan term). Providing the interest rate does not change the total amount of the repayment will be the same throughout the loan term.

Assignment

An Assignment of a life policy will usually be required for loans to sole practitioners or a husband and wife partnership. Once assigned any proceeds that become payable from the policy will be applied in reduction or repayment of the loan as opposed to being paid to the policy owner. In order to assign the life policy to the lender, The General Practice Finance Corporation, the policy owner will need to sign a deed of Assignment and forward us the original life policy document. We will then advise the Insurance Company of the Assignment. In the event of the loan being repaid early or by some other means, the life policy will be reassigned to the policy owner and the life policy document returned to them.

C

Certificate of Practical Completion (CPC)

Under a building contract, a certificate is issued by the architect, surveyor or supervising officer stating that the works have become substantially completed and the building is ready for occupation. There would often be a mutually agreed snagging list of outstanding items that need to be addressed. The certificate will:

• release an agreed percentage of any retention money
• begin the defects liability period
• transfer responsibility for insurance from the contractor to the owner

Collateral Security

Additional security which we may occasionally require in addition to a charge on the surgery premises. Collateral Security will usually consist of an Assignment of a life policy.

Completion

The day on which the loan legally completes. The legal documents relating to the loan will be dated with this date and repayment of the loan will begin.

Composite Rate

A fixed interest rate which is calculated when a borrower wishes to adjust the terms applied to an existing fixed rate loan. The composite fixed interest rate ensures that the present value of the mortgage remains the same before and after the alterations.

Credit Searches

Searches which are made against individuals on their private addresses using a credit reference agency. This will confirm the names held on the electoral register and credit history details.

D

Deed of Legal Charge

The legal document which charges the surgery premises to the mortgagee, The General Practice Finance Corporation as security for the loan. The Legal Charge will need to be signed by the Doctor(s) taking out the loan and, if different, the Doctor(s) who own the surgery premises.

Deed of Priority

A legal document which will be needed if the surgery premises being charged to us for the loan are already charged to another lender. The purpose of the Deed of Priority is to regulate priority between the existing lender and us so that in the unlikely event of default under either legal charge and repossession of the surgery premises it is clear which of the two loans will be repaid first out of the sale proceeds. The Deed of Priority will need to be signed by us, the existing lender, the Doctor(s) taking out the loan and, if different, the Doctor(s) taking out the loan and, if difference, the property owners.

Disbursements

Costs which are payable in connection with the purchase of property, such as Land Registry Fees, Stamp Duty and search fees.

E

Early Repayment

Early repayment means repayment of all or any part of the Loan prior to the end of the loan term. An early repayment fee may be payable on fixed rate loans depending upon the prevailing interest rates at the time of repayment.

Evidence of expenditure

Original architect’s certificates/invoices as documentary evidence of project expenditure incurred.

F

Fixed Interest Rate

The interest rate will be fixed at a margin above the gross redemption yield on an appropriate government stock. The rate will remain fixed for the term of the loan and, should you wish to repay the loan prior to the end of the term, you should be aware there may be an early repayment fee.

G

Guarantor

A person who enters into a secondary agreement to become liable for the debt of the borrower(s) if the borrower(s) defaults.

I

Instalments

Where a loan is required for extending or refurbishing the practice premises, money can be released in instalments on production of original appropriate architects’ certificates or other acceptable evidence of expenditure to assist with partnership cashflow.

Improvement Grants

If the practice has been granted an Improvement Grant in respect of refurbishment or extension at the surgery, we will require a copy of the offer.

Interest only

Only interest is payable during the term of the loan with the capital being fully repaid at the end of the agreed loan term. We require written confirmation from the applicant of how they intend to repay their loan at the end of the term.

J

JCT

This type of contract would be effected when building work is taking place. JCT 98 is an abbreviation of Joint Contracts Tribunal Standard Form of Building Contract 1998 Edition. This is a revision of a standard form of contract used in the construction industry since 1963 at which time it was called the RIBA (Royal Institute of British Architects) contract conditions. The cover, which would be effected by the contractor, can briefly be summed as “An indemnity to an employer (principal) in respect of certain losses, which are caused by or arise from, collapse, subsidence, vibration, weakening of or removal of support”. It does not cover negligence by the contractor errors or omissions in design, fire or other perils to the property of the employer.

L

Lenders reference

A reference from an existing lender including recent payment history, amount outstanding and current repayments

Loan offer

A legal document offering to advance the loan amount, and detailing the terms and conditions, which is issued to the applicant(s) once a loan application has been approved.

Loan to value

The relationship between the loan outstanding and the value of the property charged as security, e.g. loan £700,000 and value of security £1m = LTV of 70%. Loans will normally be limited to 95% of the surgery valuation for Group practices and up to 80% for sole practitioners and husband and wife partnerships.

M

Money Laundering Regulations

As a Financial Services provider, we are required to verify the identity and address of all applicants.

Mortgagees Questionnaire

A questionnaire completed by an existing lender which details payment history, amount outstanding and current repayments. This will be required where the mortgagee, The General Practice Finance Corporation Limited and another lender will both have an interest in the property upon which our loan will be secured.

P

Personal Wealth Statement

A condition of some loan offers, a Personal Wealth Statement is a breakdown of all assets and liabilities in respect of the applicant(s), together with confirmation of any other business interests they have and all income received. A Personal Wealth Statement must be prepared and/or verified by the applicant(s) accountant.

Project Costs

The total amount required to complete the project including construction costs, professional fees, fixtures & fittings, roll up of interest and other associated costs.

Project Plans

Comprehensive plans are required for extensions or refurbishments in order for the valuer to provide an after-works valuation.

Property Insurance Questionnaire

A questionnaire included with most loan offers requesting basic information regarding any existing buildings insurance policy.

S

Security

We will require a Legal Charge over the freehold or long leasehold (with at least 35 years unexpired on the head lease at the end of the mortgage term) practice premises where at least 60% of the property is occupied for surgery use. Any mandatory life assurance will be charged as collateral security.

Surgery Value

An opinion of the best price at which the sale of an interest in property would have been completed unconditionally for cash consideration on the date of valuation, assuming:

• A willing seller
• That, prior to the date of valuation, there has been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of the price and terms and for the completion of the sale.
• That the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation.
• That both parties to the transaction had acted knowledgeably, prudently and without compulsion.
• That account is taken of the cost or notional rent available in respect of the premises and on the assumption that both a full patient list and rent reimbursement will be maintained.

T

Term Assurance

Life insurance which will provide a lump sum payment in the event of death. This is essential for sole practitioners and husband and wife practices and, in these circumstances, the policy will be assigned to The General Practice Finance Corporation Limited. In all other instances where we will not insist on an appropriate Term Insurance policy being effected we would recommend that all applicants review their current life cover arrangements, in conjunction with their mortgage(s).

Title

The majority of Titles are now registered at the Land Registry under a reference number unique to that particular property; this is known as the Title Number. The Title to the property will be set out in the Registers filed under the Title Number and will show any rights or benefits the property may benefit from as well as any restrictions or encumbrances it is subject to, such as charges in favour of other lenders. It will also include a plan outlining the boundaries of the property and show who is the legal owner(s). If the surgery premises are not registered then the Title will be incorporated in the historic deeds and documents of the property, which will have accumulated over the years from each time the property has been sold. In either case, the Title will need to be examined by our legal department who will raise enquires and requisitions with your solicitors. In addition, the legal department will need to raise some standard conveyancing searches against the property.

V

Variable Interest Rate

Our standard variable rate is regularly reviewed. Subject to our receiving at least 28 days notice of repayment, there is no Early Repayment Fee. If you wish to switch from a variable rate to a fixed rate, please contact us as this can usually be arranged.