Buying your first house is daunting enough without having to decode property lingo. FTB’s home buying glossary is here to make the process a whole lot easier to understand >>
Agreement in Principle
The initial document your lender will give you outlining the amount you are likely to be lent. An agreement in principle is not a guarantee of getting a mortgage.
APR stands for annual percentage rate. It is the interest rate you’d pay over a year. It takes into account not just the interest on your loan but also any other additional charges.
This is a term used to describe payments that haven’t been made on time.
The interest rate set by the Bank of England. Lenders use the Bank of England base rate to set their own charges.
A broker is someone who gives you advice on your mortgage. Some are independent, while others work for lenders.
A survey carried out by a qualified surveyor to spot any structural problems or faults in the home you are buying.
Something of value that is offered as a guarantee against a loan. With mortgages, your home is collateral.
The finalisation of the sale. Completion day is when all money is transferred and you become the legal owner of your new home.
The legal process of transferring ownership of a property.
These are additional charges incurred during the home buying process such as stamp duty and Land Registry charges. You must give the money to your conveyancer or solicitor who will then pay the charges on your behalf.
Early Repayment Charge
This is an amount of money you have to pay a lender if you decide to move mortgage providers or if you pay off your mortgage quicker than expected.
The difference between the value of the property and the value of the mortgage you have secured.
Exchange of Contracts
This is when you exchange contracts with the seller. When this has happened, both sides are legally bound to complete the transaction.
A freehold is when you fully own a property and the land it stands on.
When a seller accepts an offer and then later on rejects it in favour of a higher offer from another bidder.
A person, usually a parent, who guarantees that you can pay your mortgage repayments. You often need a guarantor if you are struggling to get a mortgage based on your own income. If for some reason you cannot pay your mortgage, your guarantor has to pay it for you.
Higher Lending Charge
If you take out a large mortgage on a property, some lenders charge you an extra fee. This is because the more money you borrow the more of a risk the lender is taking.
Land Registry Fees
This is a fee you have to pay in order to register your ownership of the property with the Land Registry.
A type of contract where you buy the right to occupy the property for a fixed period of time. You usually have to pay annual ground rent each year.
This stands for loan to value – the ratio between the amount of money you have taken out as a loan and the valuation price of the property.
In order to reduce your mortgage, you can make a lump-sum reduction. This is where you pay more than you owe each month in mortgage repayments.
Paying off your mortgage in full is known as redemption.
The amount you have to pay back each month to your mortgage provider.
Stamp duty is a shortened name for stamp duty land tax. This is an amount of money that the government tax you when you purchase a new property. Your solicitor or conveyancer will organise the payment for you.
The legal documents that outline your rights and liabilities in relation to your new property. The title deeds also act as proof of ownership.