• Mortgage glossary

    Mortgage Glossary

    Common mortgage terms with explanations

Mortgage Glossary.

We've included descriptions of some common mortgage terms below.

A one-off fee that’s charged when you apply for a mortgage.

The Annual Percentage Rate of Change (APRC) shows, as a percentage, the annual cost of a mortgage over its lifetime. It incorporates all relevant charges (including fees) that relate to the mortgage borrowing.

Outstanding payments on the mortgage account including missed or underpaid payments.

The interest rate set by the Bank of England (BoE).

A mortgage broker acts as an intermediary between mortgage customers and Lenders.

A mortgage used to buy a property for renting to a third party.

Money from the Lender which is used to purchase or remortgage a property.

Regular payments of both interest and capital over a fixed term. This should ensure the full balance is repaid over this term.

The final stage of the conveyancing process after exchange of contracts.

Conveyancing is the legal process necessary wherever property or land is bought or sold.

An interest rate that’s lower than the Standard Variable Rate (SVR), but will rise or fall in line with it.

An early repayment charge may be incurred if you repay certain types of mortgage products within the initial early repayment period.

The current market value of your property taking into account your outstanding mortgage balance held against that property.

The process where parties legally agree to the sale and purchase of a property, and set a completion date.

Someone who is buying a property for the first time.

A Fixed rate mortgage means that the interest rate is set for an agreed period of time (typically between two and ten years). During this term the rate won't change.

This is when you own the property and the land it’s on.

This is someone who makes an official agreement to be responsible for money that someone else owes.

A report on the condition of the property. This survey will highlight any problems that are visible to the surveyor.

Personalised product information which helps customers compare different mortgage products.

Payments charged by Lenders on top of the mortgage amount loaned. Interest may calculated on a daily or annual basis.

Regular payments made towards the interest on the mortgage and not the capital. The full mortgage balance will still be outstanding at the end of the mortgage loan period.

An adviser or broker who finds you a suitable mortgage and helps you make your application.

A mortgage taken out with another person.

This means you own the property but not the land it’s on. Flats are commonly sold as Leasehold.

Fees associated with the legal tasks that must be completed out when buying a house.

LTV refers to the size of your mortgage in relation to the value of the property and is expressed as a percentage. Different mortgage products can have different maximum LTVs, meaning the minimum deposit or equity required can vary.

A request to the Local Authority for information impacting on the property being purchased. Local searches include information relating to planning matters and the maintenance of roads near the property.

A mortgage professional who finds a suitable mortgage and helps you with the mortgage application.

When the market value of a home is less than the outstanding mortgage balance.

A property that was first occupied less than six months ago.

A 10-year guarantee for newly built property provided by the National House Building Council.

A home that doesn't have brick or stone walls or doesn't have a roof made of tile or slate.

Any additional payment made to your mortgage account. Overpayments can reduce your balance more quickly so that you pay your mortgage off earlier.

This means you can transfer your current mortgage to another property.

A fee charged for providing a mortgage product.

Moving on to a new mortgage product with your current lender.

A Fixed Rate Mortgage means that the interest rate is set for an agreed period of time (typically between two and ten years). During this term the rate won't change.

This is the act of paying off your mortgage in full.

Checks mad by the Lender which include confirming your income with your employer and contacting credit reference agencies.

This is the process of changing from one mortgage to another. The mortgage may be moved from one provider to another while remaining in the same property.

A tax that you may need to pay if you buy a property. It’s charged on the purchase price at different percentage rates between pre-defined thresholds.

This is a mortgage rate. The interest rate may change from time to time which may result in changes to your monthly payments.

Completion funds can be sent by telegraphic transfer, a fee may be charged for this service.

The length of time you wish to repay your mortgage over.

With a Tracker mortgage the interest rate charged will be set at a fixed percentage relating the the Bank Base Rate(BBR). If the BBR changes, the interest rate for a tracker mortgage will also change in accordance with the mortgage terms and conditions.

When a person is added or removed from the property ownership.

A standard valuation will be needed on the property you’re purchasing to help the Lender understand the current market value of the property.

How much a property is worth in the current housing market.

A tax that you may need to pay if you buy a property. It’s charged on the purchase price at different percentage rates between pre-defined thresholds.

A Variable Rate Mortgage tracks another rate and any changes made to that rate.


Changes in the exchange rate may increase the sterling equivalent of your debt

The FCA does not regulate estate agents and surveyors

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