Annual Percentage Rate - APR
This can help compare the cost of other mortgage deals. It is the total cost of the loan including all fees etc. and is shown as a percentage rate per year. All lenders must quote an APR in addition to the actual rate of interest applied annually to your mortgage.

Arrangement Fees
These are the fees charged by some lenders to arrange your mortgage. They are usually applied to special mortgages where there is a fixed rate or capped rate. This is to cover the administration involved in setting up the loan.

 

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. They set interest rates that Banks and Building Societies use to set their Standard Variable Rate for mortgages.

Bond
This is required by many letting agencies before a tenant can move into a property. It is a fixed sum which is held by the letting company until the tenant vacates the property. It is returned to the tenant subject to the property being in acceptable condition under the terms of the Tenancy Agreement. If there are any repairs required or items to replace this will be deducted from the bond amount. These are also known as Dilapidations.

Bridging Loan
This is a temporary loan that enables you to complete the purchase of a new home if you have to do this before completing the sale of your existing house. They are not long-term loans and interest rates can be higher than average mortgage rates.

Buildings Insurance
In order to take out a mortgage you must have buildings insurance either with your lender or another insurance company. It protects your property against hazards such as fire, flood and subsidence.

Buildings Survey
Also known as a Structural Survey. This is a full inspection of the property which you wish to buy and will give you comprehensive details of the condition of the property including any structural repairs required, defects or work that is required in the near future. It is conducted by a chartered surveyor and this type of survey is important if you are considering buying an older house or one that has been extensively altered or undergone renovation work.

Buy to Let Mortgage
This is a specialised mortgage available from some lenders that allows you to buy additional investment property to let to tenants. These types of mortgages have become increasingly popular in recent years due to the increase in property prices and rental incomes available.

Capped Rate Mortgage
This is a mortgage where the interest rate is capped i.e. there is a guarantee that it won't go above a certain level. This means that you can benefit from any interest rate reductions but also have the assurance that the interest rate won't go above the cap and the monthly mortgage payments you can afford.

Cash Back
Certain mortgage products offer a cash back lump sum. It is often put in place if you switch mortgage to another lender. These are generally variable rate mortgages where the benefit of lower payments given in discounted rate mortgages are converted into a single lump sum. When you take out the mortgage may be restrictions on how long you have to stay with your lender or redemption fees to move to another lender in the short term.

CAT standard mortgages
The Government has laid down CAT standards that stands for
· fair Charges
· easy Access
· decent Terms
It is to help people identify mortgages that 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. It just means that they have taken the guidelines into consideration.

Chain
In England and Wales buying property can take a long time and it is further compounded by chains that build up. Essentially, if you aren't a first time or cash buyer you will be dependent on the sale of your property to buy your next property. This can get complex if there are many people in the chain in the same situation. This means you must all complete on the same day to make the purchase of each of the properties viable. The government is looking to make changes to the law to make house buying easier and avoid the problems of chains in the future.

Completion
This is the point where the contracts have been exchanged and the legal ownership of the property is transferred to the buyer on the receipt of the monies required to purchase the vendors property.

Completion Statement
A statement prepared by the buyer or his solicitor detailing exactly how much the buyer should pay, including the sale price, deposit, and other costs.

Conditions of Sale
These are details drawn up by the conveyancing solicitor, which establish the rights and duties of the buyer and the vendor. These may be national, statutory, or reside under the Law Society's conditions.

Contents Insurance
These are not mandatory but provide protection for items in your home, including furniture and personal possessions, in case they're stolen, lost or damaged.

Contract
This is the legal and binding agreement containing all the essential details of the sale. The contract commits both buyer and vendor to the transaction and sale of the property.

Conveyancer
This is usually a solicitor or a licensed conveyancer who is a specialist dealing with all legal aspects of buying and selling a property.

Conveyancing
This is the term used for all the legal work involved in the transfer from one person to another of the legal ownership of property or land. It deals with obtaining the title deeds from the vendor, negotiating and agreeing the contract for buying your home as well as the Mortgage Deed, which legally charges the property as security for the loan.

Council of Mortgage Lenders - CML
The CML is the trade association for mortgage lenders in the UK, and its members undertake around 98% of UK residential mortgage lending. They devised the Mortgage Code and they exist to provide a service to mortgage lending institutions. They help to establish and maintain a favourable operating environment in the residential mortgage and related housing markets in the UK.

Covenant
These are rules and regulations that are attached to a property that are contained in the deeds or lease. They may restrict certain activities or businesses to exist on the property. Many are based from years ago when the land may have been used for other purposes. Your solicitor should highlight any potential problems. However, it is important to study covenants carefully before making an offer to purchase property.

Credit Check
This is an enquiry made on your credit history if you are applying for a mortgage it will result in a credit score being assigned to assess your suitability for a loan.

Credit Scoring
When applying for a mortgage your lender may run a credit check on your credit history. The result that is returned from the credit reference agency will give you a score that gives an indication of the risk the lender may by undertaking by agreeing to supply you with a mortgage.

 

Daily Interest
This is a recent addition to the types of mortgages you can now take out. 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 and it can save you interest charges over the term of your mortgage.

Deeds
Also known as Title Deeds. They are the legal title documents that prove ownership of a property. They are transferred to the new owner on the sale of a property and are held by the mortgage lender.

Deposit
This is the sum of money (usually 10%) that is paid to the vendor on exchange of contracts on a property.

Dilapidations
These are the damages that must be repaired on a rented property.

Disbursements
These are the fees paid by the solicitor on the buyer's behalf, such as stamp duty, land registry and search fees, also known as Legal Fees.

Discharge Fee
You have to pay this to some lenders for releasing their hold over a property once you've paid off your loan. It often applies if you pay off your mortgage early before the standard term has run but not always.

Discounted Rate
This is a guaranteed reduction on the lender's variable rate. It is usually only available for an agreed period of time such as two to five years after which the interest rate reverts to the lender's variable rate.

Draft Contract
This is the preliminary, unconfirmed version of the contract that is drawn up when the sale is first agreed. It will set out the conditions of sale and will need to be confirmed by the vendor's solicitor.

Early Redemption Fee
If you wish to pay off your mortgage in the early years you will be charged to cover administration costs and cover any losses incurred by your lender. The redemption period varies depending on the terms of your mortgage.

Easement
This is a right given to the owner of one property over an adjoining property, such as a right of way. This should be carefully considered by your solicitor during the purchase of a property.

Equity
This is the difference between the amount you owe on your mortgage and the current value of your property. For example if your house was valued at £80,000 and you have a £60,000 mortgage, your equity would be £20,000.

Exchange of Contracts
This is when the sale contracts that have agreed between a buyer's conveyancer and a vendor's conveyancer are exchanged. Once you have exchanged contracts you are both legally bound to the transaction.

Financial Services Authority - FSA
The Financial Services Authority is an independent body that regulates the financial services industry in the UK.

First Charge
Most mortgage lenders lending money will 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 Mortgage
This is a mortgage where the interest rate is fixed for an agreed amount of time, usually between two and ten years. It is unaffected by the lenders variable rates and means that during the agreed term you will know exactly how much your monthly mortgage payments will be. At the end of the arranged period you can take a out another fixed rate mortgage or transfer to a variable rate.

Fixtures and Fittings
These are the items that are to be included in the sale of the house and will be detailed in the contracts.

Freehold
The term used to indicate ownership of a property and more importantly land on which it stands. This means that once you have purchased the property you are the absolute owner of the property and the land it's on.

Further Advance
This is a secured loan to release equity in your house for any purpose. Usually used to make home improvements such as extensions or loft conversions. The loan is added to your main mortgage and your payments recalculated.

Gazumping
This occurs when another potential buyer puts in a higher offer for the property after your offer on the same property has been accepted. This can happen as there is no obligation for the vendor to sell their property to you until contracts have been exchanged.

Gazundering
This is when a buyer lowers their offer after a sale has been agreed. This is usually just before the contracts are due to be exchanged, making it difficult for the vendor to pull out.

Gross
A term used in connection with a sum of money from which tax has not been deducted e.g. mortgage interest before tax relief is deducted.

Ground Rent
Ground rent is a fee you have to pay to the freeholder as a condition of your leasehold.

High Percentage Loan Fee
This is a fee charged by your lender when you borrow more than 75% of the valuation or purchase price of your new property. The fee is used to buy a Mortgage Indemnity Guarantee (MIG)

Homebuyers Survey & Valuation
A property survey that includes a valuation and should reveal any major faults in the property. It is not as detailed as a Structural or Building Survey but will give your mortgage lender a valuation of the property you intend to purchase and outline any major structural repairs that may be required.

Income Multiplier
This is the way lenders work out how much you can borrow for your mortgage. It varies from lender to lender depending on the type of mortgage you require but works by multiplying and individual or combined gross annual salary. For example some lenders with lend you 3 times your individual salary or 2.5 times combined salaries if buying jointly. Personal circumstances are also taken into consideration such as deposit amount available.

Independent Financial Advisor - IFA
IFAs can give you help and advice on a range of financial products and services. They are regulated by the Financial Service Authority to ensure that they give you impartial and relevant advice.

Independent Savings Account - ISA
These are tax efficient shelter for investments in stocks and shares, life assurance and cash. They can be used as a way of repaying an interest-only mortgage. Some mortgages may be linked to an ISA.

Interest Only Mortgage
This is an arrangement with the lender where you are only paying off the interest on the loan over an agreed period of time. None of your capital debt is being repaid directly. This capital amount has to be repaid at the end of the mortgage terms. There are a range of investment products such as endowments and ISAs that you can pay into on a monthly basis. This should grow enough to give you a lump sum pay off the capital at the end of the mortgage term so the house becomes yours.

Inventory
This is the list that describes the fixtures, fittings and other items in a rental property. It is given to the tenant at the beginning of the rental period so that any Dilapidations can be highlighted at the end of the tenancy.

Land Registry
The official body responsible for recording the ownership of land.

Land Registry Fee
These are the fees paid by a solicitor on the buyer's behalf to register ownership of property with the Land Registry. This ensures that once you have purchased the property you are the legal owner of the land (if freehold).

Lease
A document which grants possession of a property for a fixed period of time and sets out the obligations of both parties, landlord and tenant, such as payment of rent, repairs and insurance. This may also be outlined in the tenancy agreement.

Leasehold
This means you own a property for a set number of years. When the lease expires, the property returns to the freeholder. Flats are commonly sold as leasehold or your house may be built on leasehold land.

Legal Fees
These are all the fees that will be charged by your solicitor or conveyancer in relation to the purchase or sale of your property. They will include professional fees as well as any search and mortgage fees.

Level Term Assurance
This term is used within life assurance policies that will repay your mortgage if you die during the term of the loan. The amount that will be paid is set as the balance of your mortgage at the start of the loan and doesn't change during the term of the mortgage.

Life Assurance
A form of insurance to insure you or your partner's life. Life assurance policies can run parallel with a mortgage, so it will be repaid if you die before the end of the term.

Loan To Value - LTV
The Loan to Value refers to the size of the mortgage compared to the value of your house (or purchase price) you are considering buying. For example an £80,000 mortgage on a house worth £100,000 would have an LTV of 80%.

Local Authority Search
Your conveyancer or solicitor will carry this out when you are buying a property. It gives details of issues in the local area that 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. It should also include any proposed developments in the local area that may affect the property.

Maintenance Charge
This is the charge (usually levied in flats) to cover the cost of repairing and maintaining the external or internal parts of communal part of a building.

Maximum Premium Advance - MAP
This is also known as Mortgage Risk Fee. This is a charge which some mortgage lenders impose when the LTV is greater than 90% i.e. you are borrowing more than 90% of the value of the property. The premium is usually charged on the amount of the loan above 75% of the LTV. Different rates apply to different lenders

Mortgage Deed
A legal document establishing a mortgage on a property. It contains the terms of the mortgage and the interest the mortgage lender has in the property.

Mortgage Indemnity Guarantee - MIG
This is an insurance policy which some lenders require you to take out before they will grant you a mortgage. It protects your lender if you default on your mortgage and your lender has to repossess the property and sell it for less than the outstanding loan. The insurance policy will not protect you if your property is taken into possession and sold for less than the amount you owe.

Mortgage Indemnity Premium
This is an insurance policy that protects the lender if you default on your mortgage payments. You pay this premium but it benefits the lender.

Mortgage Payment Protection
This is an insurance policy which Covers all or part of your monthly mortgage payment, plus an extra amount to cover mortgage related expenses, for up to a stated period of time should you lose your income due to accident, sickness or unemployment.

Mortgage Term
This is the period of time that your mortgage runs. At the end of this term you will own the property in the case of a repayment mortgage or you have to repay the capital in full if you have an interest only mortgage. It is usually 25 years but it can be longer or shorter depending on your requirements.

Mortgagee
A building society or bank that lends money against the security of the property purchased, i.e. the lender.

Mortgagor
A person who borrows money, to buy a property i.e. the borrower.

National House Building Council - NHBC
On newly built houses you can obtain this guarantee from the NHBC via the house builder. It guarantees the house against any defects which may occur in a given time period. This varies from builder to builder.

Negative Equity
This is when the amount you owe on your mortgage is greater than the value of your property. It particularly becomes a problem if you want to move house. This has not been common in recent years, as property prices have continued to rise. However, if there is a drop in house prices some people may experience negative equity.

NET
A term used in connection with a sum of money from which tax has been deducted e.g. mortgage interest after any tax relief has been deducted.

Offer
This is the sum of money that a buyer offers to buy a property for. The offer can be accepted or declined by the vendor.

Offer of Advance
Once your mortgage application has been assessed, your lender will send you an Offer of Advance which will show how much they are prepared to lend and on what terms. A copy of this document will also be sent to your solicitor.

Offer of Loan
This is a formal document approving the mortgage you have requested and detailing the terms and conditions that will apply.

Offsetting
Offsetting is offered by some lenders and gives you the ability to reduce the amount of interest you pay on your debt by not receiving interest on any savings you may have with them.

Overpayments
This is when the terms of your mortgage allow you to pay more than your normal monthly payment, so you can pay off your mortgage earlier if you want and save on interest charges.

Payment Holiday
Also known as a payment break. This is available on some flexible mortgages that allows you to stop making payments to your mortgage for a short period of time, usually around 6 months.

Penalties
These are any types of charges that may be imposed by the lender if you decide you want to switch mortgages or repay your loan early. It will depend on the type of mortgage you have with your lender.

Pension Plan Mortgage
This is a type of interest only mortgage where the loan is designed to be repaid by a lump sum from a pension plan when you retire.

Peppercorn Rent
This is a nominal rent that is charged on leasehold properties. It should be noted in the conditions of sale but it is rarely collected.

Premium
The amount you pay on a regular basis, usually for an insurance policy.

Premium Lease
This is the upfront fee charged by the letting company as rental payment for a property.

Purchaser
The person buying the property.

Redemption Fees
See Repayment Fees

Re-mortgaging
This when you move to one mortgage lender to another without moving property.

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 lender, these are also known as Penalties or Redemption Fees.

Repayment Mortgage
This is where you repay the sum you borrow over an agreed time period. Each month you are pay off both the interest on the loan and the capital you have borrowed. At the end of the agreed term you will have paid off your mortgage and the house will be yours. You usually pay off interest in the early years and then gradually more of the capital debt in later years.

Repo Rate
See Bank of England Base Rate

Repossession
Your property will be repossessed if you are unable to keep up the mortgage payments on your property. Most lenders will work with you to avoid this happening if at all possible.

Reservation Fee
If you wish to take out a special offer mortgage (fixed, capped or discounted rates), a reservation fee may be charged to cover any extra administration involved and the special arrangements required to secure the funds. This is also know nas an Arrangement Fee.

Reserve Facility
This is an option available on some flexible mortgages that allows you to release equity in your property. As an amount is agreed when you take out the mortgage no further approval is required by the lender and you can take out and repay the amount to suit you.

Retention
If the results of a survey indicate that some building work is required before the lender will release the mortgage the lender will retain the mortgage until this has been satisfactorily completed.

Scale Fee
Some solicitors or conveyancers charge a scale fee. This is a fee based on the price being paid for a property or the amount being borrowed, rather than the amount of legal work being carried out.

Sealing Fee
Sometimes known as a Vacation Fee this is the charge levied by the lender for the administration work involved closing your mortgage account.

Sole Agent
This is when a single agent is instructed to undertake a sale or let.

Stamp Duty
This is a charge levied by the government if you wish to own your own home. You currently have to pay Stamp Duty if you are moving home and your new home costs more than £60,000. The amount is calculated on the whole purchase price and rises as the price of your home increases. Your solicitor will let you know the stamp duty that will be due on the purchase of your new home and will arrange for this to be paid.

Standard Variable Rate
This is the standard variable mortgage interest rate that is offered by all lenders. It is usually the rate that you will revert to after a fixed, capped or discount period ends. The rate will usually change in line with the Bank of England Base Rate but is not linked to it.

Structural Survey
See Building Survey.

Subject to Contract
This is when an offer for a property has been accepted and it is sold subject to contract, i.e. contracts have not been exchanged and there is not yet a legally binding obligation to buy or sell the property.

Surveyor
This is a qualified professional who undertakes valuations, homebuyer and structural or building surveys on the property you wish to purchase on behalf of both you and the lender.

Tenancy
This is the temporary possession of a property by an individual or individuals, it is governed by the tenancy agreement or lease.

Tenancy Agreement
This is a legal document outlines the terms and conditions of the tenancy and is used to protect the rights of both the tenant and the landlord.

Tenants in Common
This is when more than one person buys a property. You become tenants in common and it ensures that if one of you dies their share of the property forms part of their estate and does not automatically pass onto the other party.

Title Deeds
See Deeds

Total Amount Payable
The Consumer Credit Act requires the lender to show the "total amount payable" on quotations on mortgages. The "total amount payable" is the total of the mortgage repayments, or in the case of an interest only mortgage, the interest payable over the term plus the final capital payment. It included any fees, valuation fees and an estimate of any likely legal coast and life assurance premiums linked to the mortgage.

Tracker Rate Mortgage
A Tracker Mortgage is a variable rate mortgage where the interest rate is linked directly to the Bank of England Base Rate. So whenever the Bank of England Base Rate changes, the rate on the tracker mortgage is guaranteed to change by the same amount within a certain number of days depending on your mortgage agreement.

Transfer Deeds
These are the deeds that transfer the property into your name when you purchase a property. They are issued by the Land Registry.

Transfer Document
This is the final document transferring the property from the vendor to the buyer.

Under Offer
When the vendor has accepted an offer to buy the property from a prospective purchaser it is said to be "under offer"

Underpayments
With some flexible mortgages you can under pay up to the limit of an 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
This where ownership of land is established by a bundle of deeds but is not registered on the registered land system with the Land Registry.

Vacation Fee
See Sealing Fee

Valuation
This is an independent assessment of the value of the property you wish to purchase by an approved surveyor. It is paid for by you and is a very basic survey. This valuation is then used by your lender to decide how much they are prepared to lend you. In addition to the valuation you can also take out a Homebuyers Survey or a more detailed Building or Structural survey.

Variable Base Rate
See Standard Variable Rate.

Vendor
The person who is selling their property.

Yield
This is the income from a rental property calculated as a percentage of its value.