Jargon Buster


Administration/Application Fee

This is a charge levied by the lender to cover the costs of processing a mortgage application. If an application is not completed, the fee may not be refunded.

Annual Percentage Rate

(APR) 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.


The person or party applying for a property to buy.

Appraised Value

The value of a property, as estimated by a surveyor.


The increase in the value of a property as a result of changes in market conditions.

Arrangement Fees

Charged to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed or capped rates.


Any form of property owned by a person, including currency, stocks and enforceable claims against others.


The transfer of ownership of an insurance policy or lease.


The sale of a property to the highest bidder.

Basic Variable Mortgage Rate

Mortgage lender’s standard rate of interest which may be increased or decreased periodically by the lender depending on prevailing economic conditions.

Bridging Loan

A temporary loan providing financial cover which allows a purchaser to complete on the purchase of a new property before selling the previous property.

Building Survey (formerly Full Structural Survey)

A full inspection of the property, conducted by a chartered surveyor, who then writes a detailed report including any property defects. Suitable for any house, particularly older properties and those which have been poorly maintained. Also for properties which have been extensively altered or extended, or any property you may wish to alter or extend.

Buildings Insurance

An insurance policy that pays the cost of repair or rebuilding in the event your property is damaged or destroyed. Most mortgage lenders will require buildings insurance to be taken out as a condition of their loan.

Buy to Let Mortgage

A type of mortgage specifically designed for people buying a property with the intention of letting it out.


The amount of the loan on which interest is calculated.

Capped Mortgage

Normally agreed for a fixed period of time, many lenders provide mortgages with an upper limit on the interest rate. Thus if the standard interest rate is lower than the upper limit you will be charged the lower rate, but if the standard variable rate is higher you will be charged at the agreed rate.
An early repayment charge may be applied.


The situation that occurs when a buyer is reliant upon completion of the sale of his existing property, in order to complete on the purchase of his new property.


The estate agent’s fee for selling the property.

Common Areas

Areas of land or buildings, such as gardens, hallways, recreational facilities and parking areas, where more than one resident shares access.

Comparative Search

A search that looks at the actual sale values of similar properties in the same area as your property. This search is normally carried out by a surveyor and should give an indicative sale price for a property.


The point at which all transactions concerning the property’s sale are concluded and legal transfer of ownership passes to the buyer.

Conditions of Sale

The details which determine the rights and duties of the buyer and seller. These may be national, statutory, or the Law Society’s conditions.

Contents Insurance

Insurance to cover loss or damage to your possessions within the property.


A legal agreement between the seller and buyer of a property which binds both parties to complete the transaction.

Contract Race

When two parties have made an offer on the same house. The vendor will sell to the first party to exchange contracts, i.e.: it’s a race!

Converted Flat

A flat or apartment that has been created by the subdivision of a larger property.


A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.


Traditional term for the legal work involved in the purchase and sale of a property.

Conveyancing Fee

The charge made by a solicitor or conveyancer for undertaking the legal process necessary for the transfer of ownership of a property.

Council of Mortgage Lenders (CML)

The Council of Mortgage Lenders devised the Mortgage Code to ensure lenders treat customers fairly.


Rules and regulations governing the property, contained in its title deeds or lease.

Credit Check

The procedure by which a check is made on the credit history of an applicant, usually conducted by one of the large dedicated credit rating agencies. The check will reveal history of credit card repayments, outstanding debts, arrears and County Court Judgments.

Credit History

A history of an individual’s open and fully repaid debts. Checking a credit history helps a lender to assess the likelihood that a prospective borrower will maintain their mortgage repayments.


Legal title documents proving ownership. The deeds will be held by the mortgage lender.

Deeds Release or Discharge Fee

The fee charged by lenders at the end of a mortgage term to cover the administrative costs of transferring the property ownership documents to the borrower.


A situation in which prices are falling (the opposite situation to inflation).


A sum of money (usually at least 10%) paid by the buyer on exchange of contracts.


The decline or reduction in the value of a property caused by changes in market conditions (the opposite of appreciation).


Term used to describe a property that stands alone and is separated from all others.


A newly built residence or an older property which has been refurbished and modernised.


Any disrepair or damage to a rented property.


Fees paid by the buyer’s solicitor on the buyer’s behalf such as stamp duty, land registry and search fees.


Paying off a mortgage.

Discount Mortgage

Mortgages charged at a rate discounted from the published bank standard variable rate for a set period of time. The rates are variable and are subject to go up or down in line with any changes to the Bank of England base rate.

Down Valuation

When the lender restricts the amount you can borrow after the surveyor’s valuation report indicates the property is not worth the sum sought.

Draft Contract

Preliminary, unconfirmed version of the contract.

Early Repayment Charge (ERC)

A charge made by the lender if the borrower terminates a mortgage in advance of the terms of the particular mortgage. Normally occurs when the borrower has benefited from reduced payments or cash back in the early period of a mortgage.

Endowment Mortgage

Interest-only repayments combined with monthly premiums into an endowment policy designed to pay off the loan at the end of the term.

Energy Performance Certificate (EPC)

An EPC measures the energy efficiency of a property using a scale of A-G. It is a legal requirement to have a valid EPC commissioned before a property can be marketed.


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


The initial sum you have to pay on an insurance claim.

Exchange of Contracts

The point at which signed contracts are physically exchanged, legally committing the buyer and seller to the purchase and sale of a property at the agreed price.

Failed Valuation Survey

When the lender turns down your mortgage application after the surveyor’s valuation report indicates the property is not worth the sum sought.

Financial Conduct Authority (FCA)

An independent body that regulates the financial services industry in the UK.

Fixed Rate Mortgage

A mortgage in which the interest rate is set for an agreed period of time.
An early repayment charge may be applied.

Fixtures & Fittings

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

Flexible Mortgage

An arrangement whereby you can increase or decrease your mortgage repayments.

Flying Freehold

A flying freehold exists when one part of a property extends over, or under, a neighbouring property.


Technical word for the ownership of the property, meaning that it belongs to the owner without limitation of time.


This is when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but have not yet exchanged contracts.


When a buyer offers the seller a lower offer just before contracts are about to be exchanged.

Ground Rent

The annual charge levied by the freeholder to the leaseholder.


The lender may sometimes require a borrower to appoint a guarantor. This is someone who promises to pay the borrowers debt if the borrower defaults.

Higher Lending Charge

An up-front, one off fee paid to the lender to protect them against the borrower defaulting on the loan.
Usually, charged on mortgages over 75% of the house value.

Homebuyer’s Survey and Valuation (House/Flat Buyer’s Report)

This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.

Household Insurance

An insurance policy that protects against loss or damage to the property caused by fire, some natural causes and acts of vandalism. Also see Buildings insurance and Contents insurance.

Houses in Multiple Occupancy (HMO)

A building of three floors or more which is to be occupied by three or more people and where these people live as more than one household and share facilities such as bathrooms, toilets or cooking facilities.


Independent Financial Advisor.

Individual Savings Account (ISA) Mortgage

An interest only mortgage linked to an Individual Savings Account fund, which is designed to pay off the loan at the end of the period.


The general rise in prices over time.

Interest Charges (Mortgage)

The charges that banks make on a loan, calculated as a percentage of the amount borrowed.

Interest-Only Mortgage

There are 2 types of mortgage, interest-only or capital repayment. Interest-only mortgage payments stay the same throughout the mortgage term providing that the mortgage rate is fixed for the whole term, otherwise the payments will vary as with any other mortgage. Interest and a premium to an investment vehicle are paid monthly. At the end of the term, the proceeds from the investment vehicle are intended to repay the mortgage. The amount will depend on the performance of the investment vehicle. These mortgages are now only offered with very strict criteria and aren’t available to everyone. With an interest-only mortgage you only pay the interest charged on your loan, so you’re not actually reducing the loan itself. You’ll need to have a feasible repayment strategy in place to repay your loan at the end of the term – for example investments and/or savings plans. Lenders will want to see proof of these.


A list which describes the condition of furnishings and contents of a leased property at the commencement of the tenancy in order that any dilapidation during the tenancy can be identified.

Joint Income

The total gross income of the two borrowers in a joint mortgage.

Joint Tenants

A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner’s will.

Land Registration

The process of registering the legal title of an area of land with the Land Registry, typically handled by a solicitor.

Land Registry Fee

Paid to the Land Registry to register ownership of a property.


A legal document by which the freehold (or leasehold) owner of a property lets the premises or a part of it to another party for a specified length of time, after the expiry of which ownership may revert to the freeholder or superior leaseholder.


Denotes that the ownership of the property is by way of a lease.

Legal Charge

A mortgage on the property.


The party, typically a bank, building society or mortgage company, offering the loan.

Lender’s Arrangement Fees

Charge passed on to the buyer by the lender for arranging a loan.

Lender’s Legal Fees

The fees incurred by the lender when arranging a mortgage. These costs are passed on to the buyer.

Listed Building

One officially listed as being of special architectural or historic interest, which cannot be demolished or altered without (local) government consent.

Loan to Value (LTV)

The size of the mortgage as a percentage of the property’s value.

Local Authority Search

Procedure whereby a buyer’s solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area.

Maintenance Charge (or Service Charge)

The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.


A property arranged over more than one floor (ie: a portion of the house).


An amount of money advanced by a lender such as a bank or building society on the security of a property and repayable over a long period.

Mortgage Broker

Someone who advises buyers on the types of loans available and helps to process any subsequent application.

Mortgage Deed

A legal document relating to the mortgage lenders interest in the property and containing the terms of the mortgage.

Mortgage Payment Protection (MPP)

This is an insurance designed to pay your monthly mortgage for a limited period, usually a year if you are unable to work through illness, disability or redundancy.

Mortgage Rate

The standard variable interest rate quoted by all mortgage lenders which normally varies with the Bank of England base rate.
All discounted rates are based on this mortgage rate.

Mortgage Term

The length of time over which the mortgage is to be repaid.

Mortgage Type

This may be a fixed, variable, capped, discount, tracker or another type of mortgage.


The lender of a mortgage (ie: bank or building society).

Negative Equity

When the value of the property falls to less than the outstanding mortgage.

NHBC Scheme (National House Building Council)

A type of building guarantee available on some newly built homes under which defects occurring within a specified time after construction are remedied.


A sum of money that the buyer offers to pay for a property.

Offer of a Loan

A formal document approving the mortgage you have requested and detailing the terms and conditions that will apply.

Office Copy Entry

An official document from the Land Registry confirming ownership of and borrowings against a property.


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

Open Market Value

The price a property would achieve when there is a willing buyer and willing seller.

Payment Break/Holiday

An option on flexible mortgages that allows you to stop making mortgage payments for up to 6 months.


A specified charge that is levied by the lender under certain circumstances, usually for full or part repayment within a specific period linked to a discount, tracker, fixed or other product type.

Peppercorn Ground Rent

A nominal periodic rent usually paid annually.

Pied a Terre

A property kept for temporary secondary or occasional occupation.

Preliminary Enquiries

The initial enquiries about a property put forward to a seller which the seller must answer before the exchange of contracts.


The monthly amount payable for an insurance policy.

Premium Lease

Lump sum paid up front as rental for a property.


The sum of the loan on which interest is calculated.

Public Liability Insurance

Public liability insurance is designed to compensate an insured in respect of claims for legal liability from members of the public or companies who may suffer due to their negligence or that of their employees.


A person who is buying a property.


When a mortgage is fully repaid.


Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to draw down any equity gained by a rise in value.

Repayment Mortgage

A mortgage repaid by way of monthly repayments of capital combined with interest. This means that each month you’re paying off a small part of your mortgage.


When the mortgage lender takes possession of your property due to non-payment of the mortgage.


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


A request or enquiry for information concerning the property held by a local authority or by the land registry.


A property which is joined to one other house.

Service Charge

See Maintenance Charge.

Share of Freehold

Where the freehold on which the property stands is owned by a limited company and the shareholders of that limited company are the owners of the property.

Sole Agent

When a seller chooses only one estate agent to sell their home.

Sole Occupancy

A property that is occupied (lived in) only by the mortgage applicant(s) and their direct family.


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

Stamp Duty

A tax paid by purchasers of properties. View the current rates.

Standard Variable Rate

Mortgage lender’s standard rate of interest, which may be increased or decreased periodically by the lender depending on prevailing economic conditions.

Structural Survey

See Building Survey.

Studio Flat

A flat consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.

Subject to Contract (STC)

Words to indicate that an agreement is not yet legally binding.


Professionally-qualified expert who carries out the survey.


A temporary possession of a property by a tenant.

Tenancy Agreement

A legal agreement designed to protect the rights of the tenant and landlord and setting out all the terms and conditions of the rental arrangements.


A person who has temporary possession of a property.

Tenants in Common

A form of ownership by two or more people in which if one of them dies, their share of the property forms part of their estate and does not automatically pass to the other(s).


Conditions on which a property is held (ie: length of lease).

Terraced House

A property which forms part of a connected row of houses.

Title Deeds

Documents showing the legal ownership of a property.

Title Insurance

An insurance policy which a buyer can take out to allow a sale to complete where there is a potential problem with the documentation in proving legal ownership of some part of the land they are buying.

Title Search

An investigation carried out by a conveyancer or solicitor into the history of ownership of a property. The search will check for liens, unpaid claims, restrictions or any other problems that may affect ownership.

Tracker Mortgage

A type of mortgage whereby any changes in the rate of interest charged follow exactly (‘track’) another, specified, interest rate or index. Typically a tracker mortgage will track the Bank of England base rate.

Transfer Deeds

The land registry document that transfers legal ownership from seller to buyer.

Under Offer

The status of a property for sale, when a seller has accepted an offer from a purchaser but prior to exchange of contracts.


A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.


The price of a property under normal conditions, i.e. when the buyer is not forced to buy and the seller not forced to sell.

Variable Base Rate

The basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up or down.


The legal name for a person selling a property.


An empty area or space.


Income from a property calculated as a percentage of it’s value.

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