Glossary

Our Home buying, Selling and Mortgage Glossary – a guide to terms and phrases

A
Additional Security Fee
This is an up-front, one-off fee paid to the lender to protect them against a borrower defaulting on a loan. It is usually charged on mortgages that exceed 75% of the property value. It is also known as MIG, Indemnity Guarantee Premium or Mortgage Indemnity Premium.

APR
APR stands for the Annual Percentage Rate of charge and is the real cost of a loan. The APR includes important factors such as the interest rate you must pay; how you 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. On the whole, the lower the APR the better the deal for you.

 
B
Bridging Loan
This is a temporary loan to help tide you over when having to buy your new home before selling your current property.

Broker
An intermediary who will offer advice and provide you with details about a range of mortgages from different providers.

Buildings Insurance
Insurance to cover any structural damage to your property.

 
C
Chain
A chain occurs when the seller needs the sale of their property to occur before they can complete their purchase of another property. The same situation may exist for other people in the chain and as a result, the whole chain can collapse if one sale link breaks down.

Charge
This is the right of a creditor, usually the mortgage lender, to receive payment to cover the loan debt if the property is sold.

Completion
The last stage in the purchase or sale or a property. The point when sale documentation is finalised between the buyer‘s and the seller’s solicitor and ownership legally passes to the buyer.

Contents Insurance
Insurance to cover any loss or damage to possessions inside a home.

Contracts
The legal documents needed to transfer the ownership of property.

Conveyancing
The legal work involved in buying and selling a property.

D
Deposit
Part of the purchase price paid when contracts are exchanged. It is usually 10% of the purchase price.

Disbursements
Expenses paid by the solicitor on behalf of the purchaser. These include fees to the HM Land Registry.

Discounted Rate
A reduced mortgage interest rate which is subtracted from the Standard Variable rate.

 
E
Endowment Mortgage
Type of mortgage where monthly premium payments are made into an endowment life policy and lenders only ask you to pay back the interest each month. The loan is paid off in one lump sum at the end of the loan period.

Excess
The initial sum you have to pay on an insurance claim. The higher the excess figure you are prepared to agree to, the lower your insurance premiums are likely to be.

Exchange of Contracts
The point at which buyer and seller are legally bound to the sale and purchase of the property.

 
F
Fixtures
Fixtures and fittings are items – like radiators, light fittings etc – which are considered to be part of the property. Usually, if something is screwed in, nailed down or plumbed in it will be regarded as a fixture and left in the property.

Freehold
Absolute outright ownership of property and land.

H
Home Information Packs (HIPs)
A Home Information Pack (HIP) provided information about a property the requirement for which was abolished from the 25th May 2010. The only element remaining is an EPC (Energy performance ceritificate) which was introduced under European Law and all properties must have one for either rental or sale.

 
L
Land Registry
This is the Government department responsible for keeping a register of title to freehold and leasehold land in England and Wales. A solicitor will register the buyer as the new owner of the property.

Leasehold
Leasehold give you the right to possession, but not ownership, of a property for an agreed number of years. This is done by the freeholder (otherwise known as the landlord/lessor) granting a lease, and the person it is granted to is called the lessee, leaseholder or tenant.  

Lender's Arrangement Fees
A fee passed on to the buyer by the lender for arranging a loan.

Lender's legal fees
These are the fees incurred by the lender when arranging a mortgage. These costs are usually passed on to the buyer.

Lender's Valuation
A valuation of the proposed property carried out by the lender before they agree to make a mortgage loan. This is only for valuation purpose and a separate full structural survey may be needed by the buyer.

Life Assurance
An insurance policy which pays out a fixed lump sum on the death of an individual.

Loan-to-Value (LTV)
This is the ratio between the size of your loan and the value of the property you are buying. So for example, if the property is valued at £200,000 and the mortgage is £160,000, the LTV is 80%.

Local Search
This is a check carried out by the solicitor to find out if there are any local authority records of importance about the building itself and the surrounding area, such as plans that will affect the property.


M
Mortgage Indemnity Guarantee (MIG)
(see Additional Security Fee)

Mortgage
This is a long term loan to finance the buying of a property.

Mortgagee
The lender of a mortgage.

Mortgagor
The home buyer who takes out a mortgage.

Mortgage Deed
The legal charge of the lender until the loan has been re-paid in full.

Mortgage Term
Period of time over which mortgage is to be repaid. The usual term is 25 years.

 
P
Pension Mortgage
With a pension mortgage an interest only loan is taken out and on retirement a lump sum from a pension scheme is used to repay the mortgage.

Premium
A term for the cost of an insurance policy, sometimes paid in instalments.

R
Redemption
When a mortgage if fully repaid. If a mortgage is repaid early then mortgage lenders may make an early repayment charge to compensate for the loss of interest they would have earned.

Repayment Mortgage
A basic mortgage where the capital and interest on the loan are paid off in monthly instalments.

 
S
Sole Agent
When a seller uses just one estate agent to sell their property

Solicitor
A solicitor acts on behalf of a buyer or seller in the purchase or sale of a property. The solicitor will check the legal position of the property and oversee the exchange of contracts between the two parties.

Stamp Duty
Stamp Duty Land Tax (SDLT) is a Government tax payable when property or land is bought or transferred. For more information click here .

Survey
It is common – and makes sense - to have a survey done when you are buying a property. A survey will tell you the condition of the property so that you know exactly what you are buying.

There are two main types of survey: A Homebuyer Survey and Valuation (HSV), which is also known as a Homebuyer’s Report, and a Building Survey.

The Homebuyer Survey or Homebuyer’s Report is most suitable for conventional properties built within the last 150 years, which are in reasonable condition. It doesn’t detail every aspect of the property, and only focuses on urgent matters needing attention. It’s not usually suitable for properties in need of renovation, or if you’re planning major alterations.

A Building Survey is a comprehensive inspection of a property reported in a style to suit the property and your specific requirements. It’s suitable for all properties and especially older properties, listed buildings, unusually built properties or properties you plan to renovate.  The survey will examine all accessible parts of the property – and you can ask to have specific areas included. A Building Survey doesn’t include a valuation, but your surveyor can provide
this separately if you need one.

For more information about surveys click here.

Surveyor
The person who carries out a survey of the property.

T
Term
The length of time for which a mortgage is taken out.


Title
The legal right to ownership of a property.

Title Deeds
The document which shows the ownership of a property.


V
Valuation Survey
A survey carried out by the lender to simply ensure that the property's value is not less than the proposed loan. The lender will arrange the survey and charge the buyer.