We understand that people can have difficulties when getting their head around the terminology that is associated with getting a mortgage. We have compiled a comprehensive list of common jargon often encountered during the application process in plain, simple English for your reference.
Charged in some cases by the financial institution when an offer of a mortgage is accepted.
The amount of the mortgage.
This is the term given to a standard principle and interest monthly repayment home loan.
The abbreviation for annual percentage rate. It represents an interest rate calculation to reflect the total cost of credit over the whole term of the mortgage.
This usually refers to the mortgage lenders standard variable interest rate.
The amount borrowed from the lender
Title deeds of the property the mortgage is taken out on given as security against the repayment of the mortgage
The legal work involved in transferring ownership of the property between the buyer and the seller
Documents proving the legal entitlement of the owner to the property
A payment made by the buyer when contracts on the property are exchanged.
The costs borne by the solicitor in carrying out all work related to the sale and purchase of a property.
A mortgage whereby interest is paid monthly to a financial institution while the capital element is repaid via an insurance company through an endowment policy
The difference between the market value of the property and any loans secured against it
A lender with first legal charge has first entitlement to any funds when a property is sold as repayment of the loan they provided
Fixed Interest Mortgage
Loan repayments are based on a set rate of interest for an agreed period.
Ownership of a property and the land it is situated on.
Where the seller cancels an arrangement to sell a property to a buyer in favour of a higher offer.
An insurance policy bond taken out by a mortgage provider as additional security to cover large loan amounts.
Land registry fee
A fee paid to register the ownership of a property. This usually included in the legal costs charged by a solicitor.
A form of property ownership whereby the property is leased by the owner for an agreed number of years.
An individual to whom a lease is given
An individual who offers and grants a property for lease.
Loan to value (LTV)
Borrowings expressed as a percentage of the asking price of the property
A loan raised against the title deeds of a property
Mortgage Indemnity Bond
Should a property be repossessed and sold on this protects the lender against the possibility that the equity raised from the sales does not cover the outstanding mortgage.
Life insurance that covers all borrowing in the event of the death of the mortgage holder.
This is the result of a fall in property prices subsequent to the purchase of a property with a mortgage. The property’s market value in this instance is less than the value of the mortgage.
An interest-only loan where the principal will be repaid though the cash received at the end of the pension fund
The total amount of borrowings that interest is paid on.
Payment of a mortgage in full at the end of the mortgage term, or earlier if the mortgage holder is moving to another property
A legal process carried out to ensure that the seller of the property has the right to do so and that they are the sole owners of the property, and also to establish if any planning applications or other legal issues affect it
A comprehensive physical inspection of a property to ensure it is structurally sound and highlight any visible and potential weaknesses.
A government tax on the purchase of property, primarily second hand property unless a new property exceeds 125 sq. meters. Rates vary depending on the price of the house and the circumstances of the buyer.
The agreed period of time over which a mortgage is repaid. In some instances this can be adjusted during the life of the mortgage.
The right to ownership of a property.
Additional borrowings secured against the property above the existing loans against it.
A deed that transfers legal ownership of the property
An inspection of the property for the mortgage provider to assess whether its market value adequately secures the loan they are advancing
The seller of the property