Glossary

A

Advice

A recommendation about the most suitable mortgage for you made by an adviser who is regulated by the Financial Conduct Authority.

Annual Percentage Rate of Charge (APRC)

The total cost of a loan, including all costs, interest charges and arrangement fees, shown as a percentage rate and easily comparable with mortgage interest rates.

Approved in Principle / Agreement in Principle

A certificate some lenders will give you showing the amount they will probably be prepared to lend you. This is not a guarantee but it helps give the vendor confidence that you have done as much up front research as possible prior to making any offers. We refer to this as your 'PropertyPal Mortgage Promise.

B

Base Rate

The interest rate set by the Bank of England for lending to other banks and is used as the benchmark for interest rates generally.

Buildings Insurance

Insurance against the cost of repair or rebuilding a property from scratch following structural damage, for example by flood, fire or storm.

Buy-To-Let

Referring to the purchase of a property specifically with the intention to let it out. A buy to let mortgage is a mortgage specifically designed for this purpose.

C

Chain

A number of linked property sales where exchange of contracts must take place simultaneously

Completion Date

Completion of the legal transaction with all monies and documents having been distributed. This is also when the seller's solicitor will instruct the estate agent to release the keys.

Contents Insurance

Insurance against accidental damage or theft of all moveable contents, including furniture, appliances and soft furnishings.

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.

Conveyancing

The legal work involved in buying and selling properties.

Council Tax

Levied by local councils to cover the cost of local amenities and services.

Co-Ownership

With Co-Ownership you buy a share of your home (between 50% and 90% of the home's value) and pay rent on the remaining share. You'll need to take out a mortgage to pay for your share of the home's purchase price. You can possibly buy more shares in your home any time after you become the owner. This is known as staircasing.

Credit Rating

An estimate of the ability of a person to fulfil their financial commitments, based on previous dealings.

D

Deeds

Legal documents assigning ownership of a property and/or land.

Deposit

Sum of money that represents the personal capital that the buyer is putting toward the purchase of the property.

Disbursements

Fees, such as Stamp Duty, Land Registry and search fees on top of conveyancing which you normally pay via your solicitor.

Discounted Variable Rate Mortgage

Features a set percentage discount below your lender's Standard Variable Rate for a predetermined length of time. Your monthly payments can still go up and down with this type of rate.

E

Early Repayment Charge

It's important to remember that if you repay your mortgage early it can mean you end up paying an additional payment depending on the type of mortgage you have.

Equity

The difference between the value of a property and the amount of mortgage owed.

Exchange of Contracts

The point at which the sale becomes legally binding from which neither party can withdraw without financial penalties.

F

Financial Conduct Authority

A body that regulates the Financial Services industry in the UK.

Fixed Rate Mortgage

A fixed interest rate is applied to your mortgage for a predetermined time.

Fixtures and Fittings

All non-structural items included in the purchase of a property.

Freehold

Ownership of the property and land upon which the property is situated.

Further Advance

Further Advance is a loan in which the borrower increases the amount of their mortgage secured on their home. This additional borrowing can be for several reasons such as home improvements and debt consolidation.

G

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.

Guarantor

When you become a mortgage guarantor you take on responsibility for someone else's mortgage. Your role is to give the lender confidence that any money they lend will be repaid in full and on time. This means committing to cover repayments if the original borrower is unable to.

H

Help to Buy

This is a government scheme first announced in the March 2013 Budget. It is designed to help anyone struggling to save a deposit for their first home or move up the property ladder as they have limited equity. In 2015 the Government's Help to Buy ISA scheme was launched to provide new buyers with the opportunity to save up to £200 a month, with the Government topping up their contributions by 25 per cent, up to a maximum of £3,000.

Homebuyers 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.

I

Insurance

Taking out a mortgage is a big step which could leave you in a significant amount of debt for many years. Arranging the right insurance products could help to give you peace of mind and protect a property that could be the most important purchase you'll ever make.

Interest Only Mortgage

You pay the interest on your mortgage to the lender each month until the end of the mortgage term. The capital borrowed does not reduce and it is your responsibility as a borrower to ensure that you have a method or means of repaying the capital at the end of the term.

J

Joint Mortgage

A mortgage where there is more than one individual named responsible for the mortgage.

K

Key Facts Illustration (KFI)

This will be provided when a firm recommends a mortgage to you. This is one of the most important documents you will receive and will be contained in your mortgage offer. It is tailored for you, based on a particular mortgage and the level of borrowing you need. The Key Facts Illustration document makes it easy for you to compare the total cost of mortgages side by side because the documents contain the same information, usually presented in the same way.

L

Land Registry

Land Registry is a record of land, houses and properties registered in England, Wales and Northern Ireland. Land and Property Services are responsible for keeping the Land Registry for Northern Ireland.

Landlords Insurance

This is an insurance policy that covers a property owner from financial losses connected with rental properties. The policy covers the building, with the option of insuring any contents that belong to the landlord that are inside.

Leasehold

Leasehold means that you just have a lease from the freeholder (sometimes called the landlord) to use the home for a number of years. The leases are usually long term - often 90 years or 120 years but as high as 999 years - but can be short, such as 40 years.

Lender's Arrangement Fee

This fee may be charged by the lender to cover their administration costs in setting up your mortgage.

Lender's Standard Variable Rate

The normal interest rate charged by the lender on mortgages without discounts or deals.

Let to buy

Referring to the intention of letting out your current residential property and simultaneously purchasing a new property to live in yourself.

Loan to Value (LTV)

This is a term used by lenders to express the ratio of the mortgage amount against the value of the property.

M

Maintenance Charge

A charge made towards the upkeep of a leasehold property.

Mortgage Offer

A formal written offer made by a bank or building society to lend an approved amount to purchase a property.

Mortgage Term

This is the period of time over which your mortgage is proposed to run. Remember the longer your mortgage runs, the more interest you are charged overall so care needs to be taken to ensure that the term chosen is suitable.

N

Negative Equity

When the value of a property is less than the outstanding sum owed on a mortgage.

O

Offer

A bid made by a prospective buyer, this is not legally binding.

Ombudsman

Independent professional bodies who investigate complaints on behalf of customers against estate agents, solicitors and insurance companies.

P

PropertyPal Mortgage Promise

The PropertyPal Mortgage Promise is recognised throughout the country by all estate agents as it demonstrates you have done your research upfront with professional advisers and you are already pre-approved for a mortgage. You can produce this document whenever you are asked to illustrate your intent as a purchaser, as there is a very good chance your mortgage will go ahead.

R

Repayment Mortgage

Your monthly repayment includes part interest and part capital repayment. So long as you meet all of the payments required by the lender on time, your mortgage will gradually reduce until it is repaid in full at the end of the mortgage term.

Repossession

When loans are in default the mortgage lender can repossess the property and sell it so they can repay the debt.

Retention

Holding back part of a mortgage loan until repairs to the property are satisfactorily completed.

Remortgage

Remortgaging is the replacement of an existing mortgage with a new one. You may do this to save money by achieving a more competitive rate or release equity from your property.

S

Sale Agreed

A verbal agreement from the seller.

Solicitor

Legal expert handling all documentation for the sale and purchase of a property.

Stamp Duty

A tax paid to the Government by the buyer upon completion.

Subject to Contract

Words used to indicate that an agreement is not yet Legally Binding.

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 structural detail).

T

Tracker Rate Mortgage

A mortgage with an interest rate linked to a particular base rate, often the Bank of England base rate. Your rate will therefore go up and down in line with this rate.

Transfer Deeds

The Land Registry document that transfers legal ownership from seller to buyer.

U

Under Offer

When the seller has accepted an offer on the property but contracts have not yet been exchanged.

V

Variable Interest Rate

Rate of interest payment that fluctuates over time in line with general interest rates.

Vendor

The legal name sometimes used to describe the seller of the property.

Valuation Fee

Normally charged by the lender to carry out a basic inspection of the property. The resulting valuation report is solely for the lender's benefit and is used to assess the suitability of the property to act as security for the mortgage.