Part & part
A generic phrase referring to a loan, part of which is interest only (i.e. the capital never declines) and the other part being repaid as under capital & interest arrangement. The capital remaining at the end of the mortgage term would normally be expected to be repaid from a proceeds of a life policy or investment. See also part endowment.

Part endowment
A mortgage that is partly on an endowment basis, and the balance of the loan is most commonly arranged on a capital and interest basis.

Pay rate
See initial rate.

Payment method
Means by which the mortgage capital is repaid. E.g. endowment plan, tax-free cash sum from pension.

Payment protection insurance
See ASU accident, sickness and unemployment insurance.

Payment schedule
Schedule of monthly payments.

Pension
Annuity payable on a regular basis (normally to a retired person).

Pension mortgage
An interest-only mortgage where the capital is intended to be repaid from the tax-free cash sum that can be received from the pension fund at maturity.

Period
A length of time for which a loan may run.

Personal equity plan
An investment in shares, unit trusts or investment trusts where all the proceeds are currently free of income and capital gains tax. Depending on the lender, you can use PEP's to repay an interest only mortgage. The Government announced in 1997 their intention to launch Individual Saving Accounts (ISA's) from April 1999 to build upon the experience of PEP's and TESSA's. Existing PEP's were allowed to continue after April 1999 but you were not allowed to put any more money into them.

Personal lines
See general insurance.

Personal pension
Established under the Social Security Act 1986, personal pensions allow individuals to make their own provision for an income in retirement. Tax relief is allowable on the contributions at the investor's highest marginal tax rate. Investments grow virtually free of all taxes to create a fund to be used at retirement to purchase an annuity. Up to 25% of the fund may be taken, as tax-free cash and the balance normally used to purchase an annuity.
However for clients with a more adventurous attitude to risk, since 6th April 2006, it is possible to defer annuity purchase indefinitely.

Portable
This describes a mortgage that can be transferred from one property to another.

Postcode
An alphanumeric code defined by the post office, which can identify properties to a location. Since their introduction postcodes have been used for a number of other purposes including assessing premiums for household insurance.

Postcode area
The first one or two letters of the postcode stand for an area. E.g. B for Birmingham, TW for Twickenham.

Premium
Amount payable. See term assurance.

Previous lender's reference
A letter referring to the conduct of the loan account.

Principal
The original amount of the loan.

Product
The mortgage product offered by a lender.

Professional
Person(s) who is a member of a recognised profession, such as a doctor or solicitor. The definition of a professional can vary substantially from lender to lender with occupations such as banker being accepted as a profession by some but rejected by others. Many professions are disqualified from practicing if they become bankrupt.

Profit cost
A part of a solicitor's bill, which covers his or her own time and profit.

Profit
Gross profit - profit of a company before allowing for the expenses of running the business. This is not a reliable measure of a company's ability to provide income, as not all of the gross profit will be available to the owners for distribution.
Net profit - the income of a company or self employed business after making full allowance for the expenses of running the business (and, in the case of a limited company, corporation tax.) This should be the amount available to the owner(s) of the business for their own benefit and consequently is the figure that can be used to calculate their ability to service a mortgage.

Profit related pay
PRP - Introduced under the Finance Act No 2 1987, PRP schemes are sponsored by employers and allow employees to receive some of their pay (the lower of 20% of their pay or £4,000) tax free provided that payments are linked to the profitability of the employer. Rules governing PRP schemes are defined when the scheme was set up and individual scheme rules should be available to employees.

Purchase
Acquisition of a property.

Purpose built flat
Flat designed and built as such; a self-contained residential unit contained within a larger structure containing several self contained units or flats all sharing a common entrance.