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- Learn the lingo of the property game
Acceptance - When a mortgage agreement is accepted by both the borrower and lender.
Added To Loan - The capital requirements and costs borrowers face when arranging a mortgage. Often these costs are added to the mortgage amount being borrowed hence the term.
Additional Security Fee - A ‘mortgage indemnity policy’ which is required when the mortgage exceeds a certain percentage of the value of the property i.e. where the Loan To Value (LTV) equates to either, or more than, 75%.
Adjustment Date – This is the date which marks changes in the given interest rate on adjustable rate mortgages.
Administration Fee – A non-refundable fee, which will not be paid back if the mortgage doesn’t go through, opted by lenders seeking to cover the costs of their administrative duties and sourcing funds.
Advance - This is another term used to describe a mortgage or a loan.
Adverse Credit – Term used to describe a borrower with historically poor credit rating. Adverse credit could be the cause and effect of previous mortgage or loan arrears.
Affordability - This is the ability to repay a mortgage and is based on factors such as monthly income and existing financial commitments.
Agricultural Restriction - This a freehold covenant that restricts the occupancy of a property to those engaged in agriculture.
Applicant – The person or organisation applying for the loan.
Application – The mortgage application, in which the prospective borrower applies for a monetary loan in the form of a mortgage from a prospective lender, whereby they submit information regarding their income, savings, assets, debts etc. The application comes with an incurred application fee, which does not necessarily guarantee approval of the loan.
Application Fee - A fee charged by a mortgage lender to the borrower for applying for a loan although this fee does not guarantee that a loan will be approved. .
APR (Annual Percentage Rate) - This equates to the full amount of interest to be paid over the duration of a loan. It can be used to compare different credit and loan offers. The APR includes important factors such as:
• the interest rate that has to be paid;
• how to repay the loan; the length of the loan agreement (or term); frequency and timing of installment payments; and amount of each payment; and
• certain fees associated with the loan.
Approval – Acceptance of the borrower’s mortgage application, by the lender who is willing to underwrite the monetary loan. Approval shows that the lender fulfills the qualification requirements.
Appreciation – When market fluctuations lead an increase in the value of property; this could be due to inflation or other micro and macro economic circumstances.
Arrangement Fee – The fees charged by some, but not all, lenders for providing the mortgage. This expense covers administration costs and primarily the reserving of funds for both fixed rate and/or discounted rate mortgages.
Arrears - Arrears occur when mortgage payments are made at an incorrect value, or later than the arranged date. Failure to pay the mortgage and the arrears can lead to a property being repossessed.
Assignment – The documents which manifest the transfer of rights of ownership from one person to another. These documents can be an endowment policy to the building society, for example, in connection with a mortgage. The document can also act as the lease on a property.
Assisted Purchase Scheme – These offer buyers an affordable way to purchase a property as the seller retains some ownership and can even help with the mortgage. The buyer is then offered future opportunities to purchase the house outright if they wish.
ASU – Insurance set out to cover the borrower’s mortgage in case of: accident, sickness and involuntary unemployment.
Auction – This is a process of a private owner publicly selling a property to the highest bidder. From there the purchaser must sign a legally binding contract, whilst ensuring all valuations, searches and other necessary checks have taken place prior to the sale of the property.
Authority to Inspect the Register – An official document of notification from the owner of the property, the registered proprietor of land, allowing another party, such as the purchaser’s solicitor, to be given information from the proprietorship register at the H.M. Land Registry.
Balance – The remaining amount to be paid on the original set loan.
Bank of England Base Rate – Also known as the official UK bank rate, this is the interest rate that the Bank of England charges Banks for secured overnight lending.
Banker’s Draft – A cash payment, which presents all the fundamental appearances of a cheque, used to acts as a method of payments of funds.
Bankruptcy – Tactical move made by individuals, and usually borrowers, to relieve themselves of their debts and liabilities.
Beneficial Owner - The title given to an individual with the right to live in a property of which full ownership rights may not belong to them.
Borrower (or Mortgagor) – Borrows money from the lender (or mortgagee) usually over a long-term time period (25-30 years), in order to purchase a property. The borrower pays back the lender in monthly installments either as an interest-only mortgage or as a repayment mortgage. The lender has the right to sell the property to pay off the loan if the borrower fails to pay.
Bridging Loan - A short term loan, used to ‘bridge’ a period where a longer term mortgage is unavailable, typically for properties that need renovation, are purchased quickly such as repossessions or when a new home is bought prior to selling the existing one.
Broker - A financial adviser who assists in arranging mortgage funding and other financial products. Brokers usually charge a fee or receive a commission for their services.
BSA – Building Societies Association, a trade association representing the interests of member societies.
Building Society - An organisation of mutual founding, owned by its members, savers and borrowers, which specialises in lending money to individual borrowers looking to purchase, or remortgage property.
Buy To Let – Properties purchased by investors with the intention of letting the property out to tenants.
Buyer Incentives - many new properties and those purchased in part exchange by the property developers offer buyer incentives. Incentives can include: assisted purchase schemes, part exchange of the existing home, free legal fees, stamp duty paid, help with the cost of moving, or free goods - such as carpets or kitchens.
Capped Rate – This is a rate of interest charges, on a mortgage, whereby the lender gives a guarantee that the rate will not exceed above a certain and specific amount for a set period of time.
Cashback Mortgage - A mortgage that offers the borrower a lump sum of cash when they move into their new property, often used to aid with the costs of the house buying process.
Capped Rate Mortgage - A mortgage set to a fixed period of time, yet will suffer fluctuations in the variable rate. The interest rate is set to a capped maximum level, however.
Chain Free Property - A property that is sold by a vendor that does not need to buy another property prior to sale. Typically these are properties sold by corporate entities such as repossessions from mortgage lenders or part exchanged properties from builders and developers. They also include probate sales and people moving out of the property market, e.g. emigration or moving into care.
CCJ (County Court Judgment) – Where a borrower is taken to the County Court for not paying off debts, with a decision reached there and then. When the borrower pays off the debt, then the CCJ is satisfied, leaving a note in the records.
Charge – Any right or interest, especially a mortgage, to which a freehold or leasehold property may be held. In other terms, it is the right of the mortgage lender to receive cash payment to cover the debt if the property is sold.
Charge Certificate – Certificate issued by the Land Registry to the mortgagee of a property with registered title. If there is no mortgage on the property, the Land Registry issues a Land Certificate to the registered proprietor.
Commercial Mortgage - A mortgage acquired on property used for business purposes.
Contents Insurance - Insurance that protects the contents of the property. It covers items such as furniture; carpets; curtains; electrical goods; and many policies also cover personal possessions, which may be removed from the home. Certain items, such as expensive computers, may need additional insurance.
Conveyancing - The legal process where the work involves the transfer of ownership of freehold or leasehold property, usually undertaken by a solicitor or a licensed conveyencer.
Council of Mortgage Lenders (CML) - The departure of building societies, which represents 98% of UK residents, from the "mutual club" and the increasing role of banks and other specialist lenders in providing home loans led to the formation of the CML. The CML promotes good lending practices.
Covenant – A promise made in a deed which acts as a restriction or condition affecting the property which must be observed or performed.
Credit Scoring – A way that lenders assess the suitability of your application based on your loan information and information that they already hold regarding your previous credit / borrowing history.
Debt Consolidation – Acts as a vehicle for paying off high interest debts for borrowers. These debts could be accrued through credit cards and personal loans. By incorporating the debts into one larger debt, the borrower can benefit from a lower monthly fee, as well as lower interest rates.
Deeds – see Title Deeds
Deferred Interest Mortgage - A mortgage which initially offers lower interest rates, although the overall fee paid back is higher as mortgage interest rates increase significantly in the latter stages of the loan period.
Deposit - The sum of money put down as the first installment, by a borrower, in a series of payments. This money goes towards the purchase of the property.
Discounted Rate Mortgage - A mortgage set with the principle that the interest rate is lower than the lender’s Standard Variable Rate (SVR).
Disbursements – The legal costs of the process undertaken by the solicitor or conveyancer, which will then be put onto the bill. These expenses usually include such things as: land registry fees, faxes and searches etc.
Discount Rate – An interest rate which is set below the standard variable rate for a specific period of time. This is used by lenders as a tactic to attract potential borrowers.
Early Repayment Charge – Also known as ‘Early Redemption Charge’, this is a fee charged by the mortgage lender on certain types of loans, if the borrower pays off part, or all of the mortgage before the agreed date. The charge is only applied if the loan is redeemed or part-redeemed within the specified early repayment charge period.
Endowment – A life insurance policy, acts as a main alternative to a repayment mortgage. The policy produces a lump sum to pay off an interest only mortgage.
EPC (Energy Performance Certificate) – makes up part of the Home Information Pack (HIP).
Equity (or Share) – An owner’s equity (or share) in a property is the difference between the market price of a property and the liability attached to the property (i.e. the mortgage).
Equity Release – When a borrower either takes out a new mortgage, or increases the value on an existing mortgage, to use the loan on house improvements, or a holiday, etc.
Exchange of Contracts – This is the point at which the buyer and seller sign, and swap contracts, which legally binds them to complete the transaction.
First Time Buyer - Mortgage borrowers who have climbed the property ladder for the first time.
Fixed Rate Mortgage - A mortgage set with a fixed interest rate for a set period of time.
Flexible Mortgage - A mortgage comprised of flexibility in terms of how the loan is paid back. A combined mortgage and a current account that allows the borrowers to vary their monthly payments whether it be over or underpaying, or by taking a payment holiday.
Freehold - Ownership of land and or the property that stands on it, where both belong to the owner indefinitely – see also Leasehold.
Gazumping – When the seller of the asset (property) accepts an offer, however, the seller later accepts an offer of larger quantity from a different prospective buyer.
Gazundering – The opposite to Gazumping. This is where a potential buyer retracts their initial bid, transferring it for one of a lower value.
Ground Rent – The rent paid by the leaseholder to the freeholder.
Guarantor – A third party who stands liable to cover repayment of a mortgage if the borrower is unable to do so. This is usually a parent or close family relative.
Home Information Packs - A set of documents which clarify further details on a property. The Home Information Pack (HIP) consists of home information pack index, an energy performance certificate, a sale statement, a standard searches and evidence of title
Home Buyer’s Report – A property survey report which provides more information than a mortgage valuation. The document is multi-paged, and gives further information to the house buyer, however, it offers less information than a full structural survey report.
Homeowner’s Mortgage Support – A government scheme that helps people who are having difficulties meeting their mortgage repayments and are in danger of being repossessed, but are likely to get their finances back on track in the near future. For more information go to www.direct.gov.uk.
Incentive – an attractive add-on for buyers usually paid for by the seller to help buyers pay for their home – see also Buyer’s Incentives
Income Multiples - Used as a guide to show how much a lender will be prepared to advance finance on a mortgage, by multiplying the lender’s income by a set figure.
Interest-only mortgage - A mortgage that you only pay the monthly interest charge and no capital repayment. Typically an interest-only mortgage is combined with an investment plan to repay the capital at the maturity of the mortgage.
Interest Rate - This is the rate set by the mortgage lender on the mortgage. Rates will vary depending on the type of mortgage offered.
Investor – someone who puts money to use, by purchase or expenditure, in something offering potential profitable returns, as interest, income, or appreciation in value. Property investors will buy a property with the aim of it accumulating money in the long-term. A Buy-to-Let investor (or Landlord) might also invest their capital by purchasing a property and then renting it out to tenants in return for a monthly payment.
Key Facts Illustration – the document produced by the broker or mortgage lender that details the amount of borrowing requested, the monthly repayment amounts, fees and charges, and any additional features of the mortgage product.
Land Registry - The government department responsible for publicly recording interests in land in England and Wales.
Landlord - A person or organization that owns and leases flats or houses to others.
Legal Fees - The legal process where the work involves the transfer of ownership of freehold or leasehold property, usually undertaken by a solicitor or a licensed conveyencer – see also Conveyancing.
Leasehold - The leasehold is a legal document which proves an individual have right of possession for a property, for a set period of time – see also Freehold.
Lender (or Mortgagee) - A mortgage lender is an investor, such as a Bank or Building Society, that lends money secured by a mortgage on property. Typically, the purpose of the loan is for the borrower (mortgagor) ultimately to purchase the property concerned in full. The borrower pays back the lender in monthly installments either as an interest-only mortgage or as a repayment mortgage. The lender has the right to sell the property to pay off the loan if the borrower fails to pay.
Loan to Value (LTV) - The Loan to Value ratio is the ratio of debt (loan) to the value of the property. For example; a mortgage offering a 70% LTV on a property worth £100,000 would mean you could borrow £30,000 – requiring a deposit of £30,000.
Lock Changes – The process of changing the locks when moving into a new property in order to ensure that the property remains secure for the new owner.
Mortgage - A loan which you use to buy a property and the property is used as security for the loan. Failure to repay a mortgage can result in the property being repossessed.
Mortgage Arrears - Arrears occur when mortgage payments are made later than the arranged date. Failure to pay the mortgage and the arrears can lead to a property being repossessed
Mortgage Rescue Scheme - A government scheme run by the local housing authority, which may help if a person is facing repossession. A person eligible for the scheme could get financial help to stay in their home. Applications for help from the scheme should be made to the local council. For more information visit www.direct.gov.uk
Mortgagee (or Lender) – See Lender
Mortgagor (or Borrower) – See Borrower
movewithus – one of the UK’s leading property specialists, founded in 1997 and based in St Ives, Cambridgeshire. Aims to provide property sale and management solutions to all areas of the residential property industry.
Must-Sell Property - These properties are realistically priced by the seller in order to secure a swift and efficient sale. Typically these properties include corporate sales such as repossessions, part exchanged properties or probate sales.
Negative Equity - When the value of a property is less than the value of the mortgage outstanding on the property.
New-Build - A house or flat that has been built from scratch by a developer to be sold on.
Offer – When a prospective buyer makes an offer of a price they are willing to pay on a property; usually to an estate agent and under the asking price
Ombudsman – An independent professional body that deals with complaints by consumers made about particular organisations, such as estate agents.
OMV or Open Market Value - The best value a property might achieve if there is a willing buyer and seller.
Origination Fee – An upfront fee charged by some lenders, usually expressed as a percentage of the loan amount.
Part-Exchange (Property) – A way of buying a new property in which a buyer gives their old property as part of the payment, usually to the developer from whom the buyer might be purchasing a new-build property.
Probate - A term commonly used when talking about the right to deal with a deceased person's affairs. Properties being sold by the trustees of a person’s estate are often referred to as probate properties.
Property Chain – When a number of property transactions are dependant on others. Before completing the purchase of a house, a vendor will need to sell their property (unless they are a First Time Buyer or renting). The property chain can break if one buyer cannot sell their home and, therefore, breaks a link.
Public Notice - A public notice period is the name given to the time that elapses between an offer being made on a property and the point at which the contracts are exchanged.
Purchase Agreement - A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.
Redemption – When a mortgage has been fully paid off.
Registered Land - Land, including any property on it, with its title registered at the Land Registry and where legal ownership is guaranteed.
Rent - A fixed amount of money paid regularly by a tenant to the owner of a property for the uninterrupted use of it for an agreed period of time.
Rental Yield - The amount of money a landlord receives in rent over the course of a year, expressed as a percentage of the amount of money invested in the property.
Rent-Loss Insurance - Insurance that protects a landlord against loss of rent or rental value, resulting in the tenant being excused from paying rent.
Renovation - The process of repairing and/or improving a property.
Repayment Mortgage – Where both the interest payable on the mortgage and the repayment is made monthly. The mortagagor (or borrower) is therefore paying towards ownership of the property, with a view to owning the property outright once the repayment mortgage has been paid off in full (usually after 25 or 30 years).
Remortgage – Where a borrower arranges a new mortgage for their property without moving. Often taken out by a homeowner to get a better mortgage rate, or to release equity for improvements on the house.
Repossession - When the mortgage lender takes possession of a property because of non-payment of a mortgage.
Retention – Money withheld from a seller by the lender until repairs or improvements have been completed satisfactorily.
Sealed bid - Where interested parties send a letter detailing the amount they are willing to pay for a property (to buy or rent) - the highest bidder usually secures the property.
Searches – Information requests about a particular property, usually made to a local authority of the Land Registry, to find out if there are any unwanted effects on a property – either now of planned for the future, e.g. the effects of a nearby landfill site.
Secured Loan – Similar to a mortgage, this is a loan that uses the property as security. Like a mortgage, failure to repay a secured loan could result in the property being repossessed.
Shared Equity Scheme (or Shared Ownership) - where buyers can part-own their property with the seller in a scheme, so they don’t have to obtain a mortgage for the total value of the property. Buyers have the opportunity to purchase the remaining share from the seller at a later date.
Support for Mortgage Interest (SMI) - A government scheme that enable some people to gain help with mortgage interest payments as part of their benefits for example: Income Support, income-based Jobseeker’s Allowance, income-related Employment and Support Allowance, Pension Credit.
Sole Agent - where a seller gives the right to only one Estate Agent (or authority) to sell or let their property.
Stamp Duty – this is a UK government tax paid by the purchaser of a property, the value of which depends on the value of the property being bought.
Standard Variable Rate - A variable interest rate that usually moves in line with the Bank of England Base Rate.
Subject To Contract – where a provisional agreement for buying a property has been reached, but will not be legally binding until after the exchange of contracts.
Survey – An inspection of the property by an independent building surveyor to help ascertain the value of the property. The surveyor will put together a report on the structural soundness of the property, which also lists the property’s defects. Usually includes a drawing or map that shows the precise legal boundaries of a property.
Tenant – a person entitled to occupy a property under the terms and conditions of a tenancy agreement.
Tenants in Common – where two or more people hold property as co-owners.
Tenure – the rights and liabilities attached to the property according to whether it is freehold or leasehold.
Title - the legal right to ownership of a property.
Title Deeds – the document that shows ownership of a property
Tracker Mortgage – a mortgage where the interest rate follows or ‘tracks’ the Bank of England Base Rate.
Transfer Deed - a document from the Land Registry that shows the transfers in legal ownership of a property from a seller to a buyer.
Under Offer (or Subject to Contract) - where a property has had an offer accepted by the seller, but contracts have not been exchanged.
Vacant Possession - The previous occupants must vacate the property before you move in, including any tenants.
Valuation – An estimate by an estate agent or surveyor as to the value of a property in the current market. A lender will often instruct a valuation to be carried out to ensure that the house’s value is not less than the proposed loan.
Variable Rate Mortgage – A mortgage, whereby the interest rate is adjusted over a period of time, in accordance with an index of figures.
Vendor - the person who owns and is selling a property.
Void – when a property lies empty in between periods of tenant occupation.
White-hot (1) – extremely hot
