Glossary

Advance Mortgage Loan
APR Stands for 'Annual Percentage Rate' which helps you compare the cost of different mortgage deals. It takes into account the amount of interest you will pay, the length of the term of the mortgage, and certain other charges such as any arrangement fee.
Arrangement fee Lenders sometimes charge a fee to cover the work involved in setting up your mortgage or for certain mortgage rates.
Balance outstanding The amount of loan owed at a particular time.
Bank of England base rate This is also known as the Bank of England's repo rate. This is announced from time to time by the Bank of England's Monetary Policy Committee.
Bridging loan A temporary loan advanced to help buy a new property before the existing one has been sold.
Buildings survey This is a technical report following an inspection of the property. It will give you a comprehensive account of the condition of the property, describing any structural or other defects.
Capital and interest mortgage Also known as a repayment mortgage. Your monthly payments gradually pay off the money (capital) you've borrowed, and also cover interest on the amount outstanding.
Capped rate Your interest rate won't go above a certain level - the 'cap' - during the capped rate period. This means that you can enjoy any rate reductions, yet have the comfort of knowing that your rate won't go above the cap.
Cashback Certain mortgage products offer cashback, which means you get a cash lump sum when you enter into the mortgage to spend on anything you want.
CAT standard mortgages The Government has laid down CAT standards - fair Charges, easy Access and decent Terms - to help people identify mortgages which meet minimum standards. If a mortgage is described as meeting the CAT standards it doesn't mean that it is 'Government approved' or necessarily right for you.
Chain A number of linked property sales where exchange of contracts must take place simultaneously.
Charge A mortgage deed which lenders (building societies, banks etc) require borrowers to sign. It is registered against the property until the loan is repaid and the charge is removed.
Charge certificate An official document issued by the Land Registry to the owner of a registered charge as proof of ownership. It includes a copy of the register and the original charge.
Chief rent An annual charge on freehold property found in certain parts of Britain. The chief rent is payable by the freeholder in perpetuity although the amount cannot be increased.
Completion The date when the purchaser and vendor complete the sale of land or property. The purchaser pays the balance of the purchase price and the vendor gives possession to the purchaser.
Contract A formal agreement between the buyer and the seller, usually prepared by a solicitor or licensed conveyancer, detailing the terms and conditions of the sale.
Conveyance A deed which transfers freehold land which is unregistered.
Conveyancing The legal work involved in buying and selling properties.
Covenant A condition, contained within the Title Deeds or lease, that the buyer must comply with, which is usually applied to all future owners of the property. A restrictive covenant is one that prohibits the owner from doing something.
Daily interest With this method of calculating mortgage interest, it is charged on the amount of mortgage outstanding from day to day. This means lenders take into account any changes in the amount you owe on a day-to-day basis.
Deeds Legal documents assigning ownership of a property and/or land.
Deposit The money you pay on exchange of contracts as part of your initial contribution to the purchase of your home.
Disbursements The fees paid by your solicitor, such as Stamp Duty, Land Registry and search fees on top of conveyancing.
Discharge fee You have to pay this to some lenders for releasing their hold over a property once you've paid off your loan.
Discounted rate This means interest is charged at the variable base rate that applies to the mortgage, less a discount for a set period. The rate, and your monthly payment, will vary - up or down - whenever the variable base rate changes, but will remain below the variable base rate during the discounted rate period.
Draft contract Unconfirmed version of the contract.
Early redemption charge A charge made by the lender if the borrower terminates a mortgage in advance of the terms of the particular mortgage. Normally occurs when the borrower has benefited from reduced payments or cash back in the early period of a mortgage.
Engrossment When the draft deeds to a property are approved they are engrossed for the vendor and purchaser to sign.
Equity The difference between the amount you owe on your mortgage and the current value of your property.
Exchange of contracts The point at which the sale becomes legally binding from which neither party can withdraw without financial penalties
First charge Most mortgage lenders lending money to enable someone to buy their home would require a first charge. This means the lender has first call on any funds available from the sale of the property to clear the outstanding mortgage debt.
Fixed rate A rate of interest guaranteed not to change over a fixed period of time.
Fixtures and fittings All non-structural items included in the purchase of a property.
Freehold A freehold interest in property means absolute ownership, although technically all land is held from the Crown.
Full structural survey A full structural survey looks at all the main features of the property, including walls, roof, foundations, plumbing, joinery, electrical wiring, drains, and garden.
Further advance When you borrow extra funds against the value of your home. The loan is added to your main mortgage and your payments recalculated.
Gazumping The practice by a seller accepting a higher price than that previously agreed with someone else.
Gazundering The practice by a buyer lowering his offer just before exchange of contracts.
Ground rent The annual fee which a leaseholder pays to a freeholder.
Guarantor Someone who guarantees to repay your mortgage if you can't borrow enough to buy the home you want. Parents, for instance, may act as guarantors for their children when they buy their first home.
Home buyers report The homebuyer's report comments on the structural condition of most parts of the property that are readily accessible, but does not involve in-depth investigation or the testing of water, drainage or heating systems.
Income multiplier The way lenders work out how much you can borrow, usually by multiplying your gross annual salary. We usually lend up to 3.25 times salary or 2.5 times combined salaries if buying jointly. We take into account your personal circumstances when deciding how much you can borrow. Get an instant quote using our mortgage calculator.
Instruction When a seller instructs an estate agent to market a property.
Interest-only mortgage You only pay interest to your lender throughout the mortgage term and your mortgage balance doesn't reduce. At the same time, you put money into a separate investment which should grow and pay off the mortgage as scheduled. You must make sure you keep premiums up to date on any mortgage investment products.
ISA Individual Savings Account. A tax efficient shelter for investments in stocks and shares, life assurance and cash. Can be used as a way of repaying an interest-only mortgage.
Joint agency Where two estate agents work together to market a property.
Land certificate Land document issued by the Land Registry to the owner of registered land as proof of ownership. It includes a copy of the register and the plan showing the extent of the land.
Land registry The Land Registry is a Government agency responsible for the registration of title to land. Registration enables the sale of land and property to take place without the laborious and expensive exercise of checking through title deeds.
Land registry fee Your conveyancer pays this on your behalf to register your details in the Land Registry records once you've bought a property or changed your mortgage lender.
Land search A formal application for an inspection of the Land Registry register. A certificate is issued showing the current situation of the land in question.
Leasehold To be given ownership of a property but not the land it is built on. This normally requires payment of ground rent to the landlord. A leasehold is normally offered for either 999 years, 99 years or shorter terms.
Life assurance A form of insurance by which someone's life is insured. Life assurance policies can run parallel with a repayment mortgage, so the mortgage will be repaid if you die before the end of the term.
Local authority search Part of the conveyancing process when you buy a property, carried out by your conveyancer. It gives details of any matters which, from the local council's point of view, affect the property. It reveals any proposed changes to the local area, such as road improvements, and details any planning permission given for the property.
Local search A questionnaire sent to a local Authority by a purchaser's solicitor to verify whether a property is affected by planning proposals, tree preservation orders, etc.
LTV Loan to value is the proportion of the value or price of the property (whichever is the lower), that you borrow on a mortgage. For example, a £63,000 mortgage on a house valued at £70,000 would mean a LTV of 90%.
Maintenance charge A charge made towards the upkeep of a leasehold property.
MIG

Mortgage Indemnity Guarantee - required by lenders if your loan is for more than a required percentage of the value of the house. Although the borrower pays the premium, the policy protects the lender not the borrower. May also be known as High Percentage Loan Fee.
Mortgage deed A legal document relating to the mortgage lenders interest in the property.
Mortgage indemnity In cases where applicants require a mortgage which exceeds the lender's normal limits they may require the applicant to take out a mortgage indemnity policy with an insurance company for the difference.
Mortgage offer A formal offer of mortgage issued by a building society, bank or other lender once the usual formalities such as references and valuation have been carried out.
Mortgage term The length of time over which you agree to pay back your mortgage - usually 25 years, but it can be longer or shorter.
Mortgagee The person or institution to whom the property is mortgaged.
Mortgagor The person who takes out the mortgage.
Multi-agency The selection of two or more estate agents to act on the seller's behalf, usually incurring a higher fee than if the sale is completed by a sole agency. 
Negative equity The shortfall between the value of a property and the outstanding sum owed on a mortgage.
Offer A bid made by a prospective buyer, this is not legally binding.
Office copies entries A Land Registry term for copies of registers and plans, they are officially marked "office copy" and are legally recognised.
Ombudsman Independent professional bodies who investigate complaints on behalf of customers against estate agents, solicitors and insurance companies.
Overpayments When you're allowed to pay more than your normal monthly payment, so you can pay off your mortgage earlier if you want and save on interest charges.
Part-possession The term used when a property is being sold, where a tenant has legal right of occupation.
Payment holiday You can stop making mortgage payments altogether for a limited period agreed with the lender.
Penalties Costs that may be incurred if the borrower repays the loan too early or switches between lenders.
Pension mortgage An interest-only mortgage where you use a personal pension plan to not only provide for your retirement, but also to repay your mortgage on maturity.
Pre-contract enquiries These are enquiries made by the purchaser's solicitor to the vendor's solicitor requiring information relating to the property being purchased prior to exchange of contracts.
Premium Amount you pay on a regular basis, usually for an insurance policy.
Private treaty The way in which most house sales are completed in England and Wales.
Private treaty A phrase used to describe the method of sale of property when it is offered other than by auction or tender.
Quotations Quotations from different mortgage lenders and insurance companies.
Remortgaging When you arrange a new mortgage on your home, with a different lender and use the new mortgage to pay off the old one.
Rent charge A small charge reserved to a previous owner of land that is paid to him or his successors annually out of freehold land. It is not a rent.
Repayment fees With some mortgages you have to pay a repayment fee if certain things happen. For example, if you pay off some or all of your mortgage, or you transfer to a different mortgage product.
Repayment mortgage Monthly interest combined with payment towards the original sum borrowed.
Repo rate See the Bank of England base rate.
Repossession When loans are in default the mortgage lender can repossess the property and sell it so they can repay their debt.
Reserve price Properties for sale by auction are normally offered subject to a 'reserve'in which case the property is withdrawn if the highest bid does not reach the reserve price.
Retention Holding back part of a mortgage loan until repairs to the property are satisfactorily completed.
Sealing fee A fee charged by the lender for sealing your deeds.
Searches Checks of local council records for planning applications and restrictions, etc.
Sole agency The choice of a single estate agent to act on the seller's behalf, incurring a lower fee than multi-agency.
Stamp duty A Government tax on the sale of land and property which is related to the sale price. At the present time the tax is 1% up to £250,000 3% from £250,000 to £500,000 and 4% over £500,000. Properties with a sale price of less than £60,000 are exempt.
Structural survey A specialist report from a structural engineer on the condition of a property.
Subject to contract When an offer is made to purchase a property 'subject to contract' it means that all the dealings are subject to the actual exchange of the contract itself. Nothing is binding on either the vendor or purchaser until the contracts are exchanged.
Sum assured The amount paid out on the death of a policy holder.
Survey An inspection made by a qualified surveyor. There are three main types of survey. Valuation report (for mortgage purposes), Homebuyers report (also comments on general condition) and Full Structural survey (examines every structural detail).
Tenancy in common When property is held jointly between two people and each of them own an individaul share which can be passed on under a will.
Tenants People living in a property owned by someone else.
Tender The process whereby the seller asks for written offers on a property usually with a set closing date.
Tenure A collective term relating to the nature of the vendor's title to a property i.e. freehold, leasehold or crownhold.
Title The ultimate record of ownership of a property, the evidence of which is found in the title deeds.
Tracker rate Tracker rates vary in line with changes to the Bank of England base rate.
Transfer The legal transfer of ownership on completion of the sale of registered land or property.
Transfer deeds The Land Registry document that transfers legal ownership from seller to buyer. 
Under offer When the seller has accepted an offer on the property but contracts have not yet been exchanged.
Underpayments You can under pay up to any previous over payments. You can pay less than your normal monthly mortgage payments for a limited period, but you have to build up a fund of overpayments first.
Unregistered land Land which is not registered with the Land Registry. Proof of ownership is by production of the Deeds.
Vacant possession A well used estate agency phrase which means that the property being offered will be vacant upon completion of the sale. The property is therefore offered free from any such encumbrances as a sitting tenant or service tenancy.
Valuation Arranged by your lender to find out if the property is worth the amount you've agreed to pay, and therefore suitable to lend a mortgage on.
Variable base rate The variable base rate is the basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up or down.
Vendor The legal name sometimes used to describe the seller of the property.
Verbal offer Offer from prospective purchaser, not legally binding on either party.

 

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