Jargon Buster
OUR jargon buster helps you understand the terms you may encounter when buying or selling a property.
Arrangement Fee
Also known as PRODUCT FEE. Charged by lenders to arrange a loan.
Annual Percentage Rate (APR)
The overall cost of a loan, including interest charges, fees and other costs; useful when comparing different loan offers.
Bridging Loan
A temporary loan to help you buy a new home before your current one has been sold.
Building Survey
Also known as FULL STRUCTURAL SURVEY. A detailed report by a surveyor on a property's construction and defects.
Capped Mortgage
A mortgage with an upper limit on the interest rate; if the standard variable rate is higher than the upper limit, you will be charged at the agreed rate.
Completion
When all transactions for the property sale have been concluded and legal transfer of ownership passes to the buyer; known as DATE OF ENTRY in Scotland.
Conveyancing
All the legal work involved in buying and selling a home, carried out by a legally qualified solicitor or CONVEYANCER.
Covenant
Rules and conditions governing the property, set down in the title deeds, which the buyer and future owners must abide by.
Deeds
Or TITLE DEEDS. Legal documents that show who owns a property.
Disbursments
The costs paid by a buyer during a purchase, usually through a solicitor, such as stamp duty, land registry and search fees.
Early Repayment Charge or Early Redemption Charge
This is charged on some mortgages if you pay off the loan early.
Equity
The difference between the value of a home and the amount of mortgage or loans secured on it. NEGATIVE EQUITY is when the outstanding mortgage is more than the value of the property.
Exchange of Contracts
When legal representatives of the buyer and seller exchange signed contracts confirming the intention to transfer ownership of the property. Usually, the buyer pays a deposit at this time and the date of completion is agreed.
Fixed Rate Mortgage
A mortgage for which the interest rate is set for an agreed period of time.
Freehold
Absolute and unlimited ownership of the property and the land it is on.
Gazumping
When a seller pulls out of an agreed sale before legally binding contracts are exchanged in favour of a higher offer.
Gazundering
When the buyer offers the seller a lower offer than the agreed price just before contracts are about to be exchanged.
Home Information Packs
A compulsory collection of documents, drawn up or commissioned by the seller, about a property for sale, including information on its energy efficiency, boundaries and local searches.
Homebuyer's Survey or Report
An intermediate-level report on the condition of a property, not as detailed as a structural survey.
Interest Only Mortgage
You make monthly payments off the interest of the mortgage plus you pay monthly into a long-term investment plan such as an endowment policy or life assurance savings scheme with the aim of receiving a lump sum that will pay off the mortgage at the end of the mortgage term.
Leasehold
You own the property you buy but not the land it is built on so ground rent is paid to the landlord.
Loan to Value
The size of the mortgage expressed as a percentage of the property's value, so if the mortgage is for £80,000 on a home valued at £100,000, the LTV is 80%.
Mortgage Term
The period of time over which, or at the end of which, the loan is to be repaid, usually 25 years.
National House Building Council Scheme
A 10-year warranty scheme for new properties to ensure any major defects are put right.
Redemption
When a mortgage is fully repaid.
Remortgage
Taking a new mortgage to pay off the old mortgage on your home, usually to save or raise money.
Repayment Mortgage
You pay monthly amounts off the interest and some of the capital borrowed so the loan is all paid off by the end of the mortgage term.
Stamp Duty Land Tax
Tax paid to the government when you buy a property, at the rate of 1% of the purchase price for homes over £125,000 to £250,000 (or from over £150,000 in designated disadvantaged areas); 3% of the price if the home is from over £250,00 to £500,000; and 4% for homes costing more than £500,000.
Subject to Contract
An agreement that is not yet legally binding.
Tracker Mortgage
The mortgage interest rate is set at a constant level above or below the Bank of England's base rate and goes up or down in line with any changes to the base rate throughout the tracking period, usually five years.