These are questions raised by the buyer’s solicitor/conveyancer, often relating to matters shown on a survey or relating to the title on your property.
Also referred to as the mortgage loan.
Agreement in Principle
Prior to finding a property to purchase a purchaser can 'pre-qualify' their borrowing ability prior to a full mortgage application. Vendors will view any purchasers who have an agreement in principle as being in a stronger position to move quickly.
APR (Annual Percentage Rate)
This rate assumes certain fees and likely costs on a mortgage and includes these costs with the interest rate of the mortgage product. It is intended to help you compare products offered by different lenders.
This fee is sometimes charged to secure a special deal – for example a fixed, discounted, tracker or capped-rate mortgage.
Mortgage payments which have not been paid and have become overdue.
This is to transfer the ownership of an insurance policy or a lease.
The sale of a property to the highest bidder with a legally binding contract on the drop of a hammer.
Bank of England Base Rate
The Bank of England 'repurchase' or 'repo' rate which is the main factor influencing interest rates charged by lenders.
Basic Mortgage Valuation
A basic mortgage valuation is the minimum valuation required by a lender and helps them decide if the property is suitable to secure the loan and if it is worth the amount they are going to lend you. It is only a limited inspection of the property and does not cover everything about the property's condition or look for hidden problems. You should not rely on it when deciding whether or not to buy the property. You might prefer a more comprehensive survey (see 'Homebuyer survey' & 'Detailed building survey' for details).
Basic Variable Rate
This is the standard rate of interest that is charged by a mortgage lender which may be increased or decreased periodically by the lender depending on prevailing economic conditions.
A strategy to sell your house in a short 4-6 week marketing period with 2 open house events. Buyers make their best offer by sealed bids, which are opened after the marketing period.
These govern how much you can borrow and are usually worked out as a multiple of your salary. The multiples used will vary from lender to lender, although typically they will be 3 times the larger salary plus 1 times the second, or 2.75 times your joint income, whichever is the highest.
This is a temporary loan providing financial cover which will allow a buyer to complete on the purchase of a new property before selling their previous property.
Insurance which provides cover if the structure of your home is damaged.
This is a type of mortgage specifically designed for investors buying property with the intention of letting it out, usually as an investment.
The amount you owe excluding costs and interest outstanding.
With this sort of mortgage, the interest rate you pay goes up and down in line with the standard variable rate. However, you will not pay more than the capped rate for the capped-rate term. So if the standard variable rate is higher than the capped rate, you pay the capped rate. If the standard variable rate falls below the capped rate, you pay the standard variable.
An incentive given by some mortgage lenders when a sum is paid to the purchaser upon completion of the mortgage.
When selling a property, the situation often occurs when a buyer is reliant on the sale of their own home in order to purchase a new property.
CML (Council of Mortgage Lenders)
A trade association for UK mortgage lenders.
A form of freehold which combines the freehold ownership of a unit in a development with membership of a commonhold association. The association (and consequently the unit holders) will own and be responsible for the management and upkeep of the common parts of the development.
This is the final stage of the home-buying process when the property is legally transferred to you.
Conditions of Sale
These details determine the rights and duties of the buyer and seller. These could be imposed by the Law Society or specifically devised by your solicitors.
Cover for all your personal belongings.
An agreement which is legally binding between the seller of a property and a buyer. This binds both parties to complete the transaction at an agreed time.
When two parties have made an offer on the same property, two contracts can be sent out (although this is not common). The vendor will sell to whoever exchanges contracts first.
Refer to 'Conveyancing'
Usually carried out on your behalf by a solicitor or licensed conveyancer. It establishes the legal boundaries of the property, any local planning applications or developments that may affect the future value and checks that the seller is the rightful owner.
The local Council identifies several categories or bands based on property value for the purposes of establishing the amount payable in rates per year.
Some properties have rules and regulations that govern what can and can’t be done and would be lodged with the title deeds or lease.
When a payment is made the balance is reduced immediately and interest is calculated on the new lower balance from the next day.
Legal title documents that prove ownership of a property. Often these deeds will be held by the mortgage lender if a mortgage is lodged against the property.
On exchange of contracts a sum of money is paid by the buyer to the solicitors which is usually between 5% and 10% of the overall property value.
A term used to describe a property that stands alone and is separated from all other properties.
Detailed Building Survey
The most comprehensive type of property survey carried out by a professional surveyor that should give the buyer an indication of any structural problems or repairs required.
Either a newly built residence or a refurbished and modernised older property.
Any damage or disrepair to a property
These are various fees that your solicitor pays on your behalf to carry out your legal work. These can include Land Registry fee, search fees and stamp duty. They are added to your solicitor’s final bill.
The term used to pay off (discharge) a mortgage.
An unconfirmed and preliminary version of the contract, which is passed between solicitors to finalise.
Early Redemption Charge
This is an extra amount charged on some mortgages if you repay all of your loan before a specified date or period of time.
A mortgage where the interest only is paid to the lender which often requires a separate insurance policy with the aim to pay off the mortgage at the end of the agreed term.
The difference between the amount of money you owe on your mortgage and the value of your home.
Work that must be done on the property before the mortgage loan can be issued.
The fixed sum paid by the claimant on an insurance claim by the policy holder.
Exchange of Contracts
The point at which signed contracts are physically exchanged and legally commits the buyer to buy and the seller to sell a property at an agreed price.
Failed Valuation Survey
Sometimes, following a survey, the valuation report may indicate that the property is not worth the sum that is sought. At this point, the mortgage lender may turn down an application by the purchaser.
With a fixed-rate mortgage the interest rate you pay is fixed for a set period from the start of your mortgage. Whatever happens to other interest rates in that time, the rate you pay will not alter during the fixed-rate period.
Fixtures and Fittings
Items that are included in the purchase of a property but do not form part of the structure.
A mortgage where you can make extra payments or regular overpayments to repay your mortgage early and save interest charges or take a payment holiday/underpay when you need a little extra cash.
The description of ownership of a property, which means it belongs to the owner without limitation of time.
This is an extra loan that provides additional funds for home improvements or for other purposes, and is secured against the property.
Occurs when a seller accepts a higher offer from a third party on a property that exceeds the initial asking price. This can only occur when a sale has been agreed prior to legal exchange of contracts.
This is when a buyer decides to make the seller a lower offer just before contracts are due to be exchanged.
An annual charge that is made by the freeholder to the leaseholder, payable every year.
A third party who undertakes to ensure mortgage payments are maintained, and will also promise to pay the borrower's debt if the borrower defaults.
Higher Lending Charge
A one-off fee charged by most lenders where the loan is above a specified percentage of the value of the property.
Home Information Pack (HIP)
A collection of documents that are available to all potential buyers of properties with three or more bedrooms, which explain who owns the property, boundaries and any possible issues such as new roads / building works taking place in the area. A drainage search will identify the routes of drains to and from the property. In addition an Energy Performance Certificate is included (EPC), which will give information as to how energy efficient the property is along with recommendations to improve the efficiency.
Home Information Packs have been suspended since 21 May 2010. Energy Performance Certificates are still required.
Homebuyer Survey and Valuation Report
As well as a basic mortgage valuation, this is a survey of the condition of the property. It covers all parts of the property that are easily accessible. This report will not cover areas that the surveyor did not have access to, for example, underneath carpets, but will give you their general opinion about the property, detail any future problems they can foresee and tell you if they think any areas need further investigation.
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.
Initial Disclosure Document (IDD)
When you first contact a lender or intermediary about your mortgage needs, they should give you their IDD. This document sets out essential information about the level and scope of mortgage service they provide.
Initial Interest Payment
Each monthly mortgage payment includes interest for that calendar month but your first payment also includes initial interest from the date of completion of your mortgage.
The charges that are made on a loan by a bank or building society which are calculated as a percentage of the amount that has been borrowed or is outstanding.
You only pay the interest on your loan for the whole mortgage term. You can arrange to repay the capital at the end of the mortgage term in a number of ways, for example, investing in an Individual Savings Account (ISA), through an endowment policy, or through a personal pension plan. Whichever method you choose, you will be responsible for making sure you can repay the amount you have borrowed at the end of the mortgage term.
A descriptive list of condition and furnishings and contents of any given property (normally associated with lettings).
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).
Key Facts Illustration (KFI)
The Key Facts Illustration is a summary of the key information relating to the mortgage you wish to apply for and how it relates to you as an individual.
The Land Registry is a Government Department which, on behalf of the Crown, guarantees title to registered estates and interests in land. Established in 1862, The Land Registry currently has 24 regional offices in England and Wales, each providing land registration services for different counties and unitary authorities.
Land Registry Fee
The payment to the Land Registry which is required to register legal 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 the ownership of a property by way of its tenure with a given timescale for that ownership. This can be a varying term but commonly 99 years, 125 years or 999 years.
The amount of money that needs to be paid to a conveyancer for their fees which will often include a breakdown of all other fees they will have incurred on your behalf.
A building which is considered to be of special architectural or historic interest which cannot be altered or demolished without the consent of the local government.
Loan to Value (LTV)
The size of the loan as a percentage of the value of the property or the purchase price of the property.
Local Authority Search
Enquiries raised by the buyer’s conveyancer to the local authority regarding any outstanding enforcement or future development issues within the immediate area surrounding that property, ie. road alteration scheme, proposed new development.
The costs that are incurred by a freeholder for repairing and maintaining internal and external communal parts of a building which is passed to the leaseholder.
A property that is arranged over more than one floor, but forming part of a shared property.
The sum of money which is advanced by a lender that is secured against a property.
The legal documentation relating to the mortgage lender’s interest in the property and containing all terms and conditions of the mortgage.
Mortgage Payment Protection (MPP)
Insurance that pays your monthly mortgage, normally for a specific period, if you are unable to work because of redundancy, sickness or accidents.
This is the rate of interest paid to the mortgage lender dependent upon what mortgage option has been chosen.
The period of time over which (in the case of a repayment mortgage) or at the end of which (in case of an endowment mortgage), the loan is to be repaid.
The lender of a mortgage (i.e., bank or building society).
Occurring when the value of a property falls below the outstanding mortgage.
NHBC Certificate (National House Building Council Certificate)
This is a type of building guarantee available on some newly built properties designed to cover defects within a specified time after the building is completed. Typically this can be for 10 years.
An amount that a buyer offers to pay for a property.
Offer of a Loan
The formal document approving a mortgage that a buyer has requested which details all terms and conditions that will apply.
OIEO = Offers in Excess of the price listed
OIRO = Offers in region of
OITRO = Offers in the region of
Open Market Valuation
The price that a property will achieve on the open market.
The costs that can be incurred if a borrower repays all or part of a mortgage prior to the end of an agreed period or switches between lenders.
Peppercorn Ground Rent
A very nominal periodic rent usually paid per annum.
Pied à terre
A property kept for temporary, secondary or occasional occupation.
Initial enquiries raised about a property that is being sold by the conveyancer which the seller must answer before exchange of contracts.
The monthly amount payable for an insurance policy.
The sum of the loan on which interest is calculated.
The disposal of a property by an executor of a will following the death of the owner.
Public Liability Insurance
Insurance which covers injury or death to anyone on or around your property.
Anyone who is buying a property.
Occurs when a mortgage is fully repaid.
Your lender will want to take up references from your employer, to confirm information given by you on your application form.
A fee charged by lenders for the work involved in releasing their charge on your property, when you fully repay your loan.
The re-financing of a property either by switching lenders, or by taking out a second mortgage to draw on the equity that may have been gained by the rise in capital value of the property.
A mortgage is made up of two parts, the 'capital' which is the amount of money you have borrowed, and the interest you pay on the capital. The mortgage payment covers the interest due for the month plus repayment of part of the capital. At the end of the mortgage term, you will have repaid the full amount that you have borrowed, as long as you've made all the monthly repayments.
This occurs when the mortgage lender takes possession of the property due to the non payment of the agreed mortgage.
This is where a mortgage lender retains part of a loan until repairs or specified works to the property have been satisfactorily completed.
Sale by Tender
A process by which a property is placed on the market inviting sealed bids to be submitted to the estate agent by a given date and time for the seller's consideration. Sale by Tender sales are subject to the buyer paying an introduction fee rather than the seller paying a commission fee to the agent.
This is a request or enquiry relating to information about a property that is held by the local authority or the Land Registry.
The property which the lender can sell to repay the loan if the borrower does not keep up the mortgage payments.
A property which is joined to one other house.
The costs that are incurred by a freeholder for repairing and maintaining internal and external communal parts of a building, which is passed to the leaseholder.
This is a single estate agent entrusted with the sale of a property; usually for an agreed term.
A legal expert who handles all the documentation of a sale or purchase of a property.
The tax paid by the buyer for a property where the purchase price exceeds £125,000. The rates of duty paid currently range from 1% to 4% of the purchase price depending upon the total value of the property bought. Some areas may be exempt from this charge depending on local conditions.
Standard Variable Rate (SVR)
The standard variable rate is the normal interest rate lenders charge. This rate can change from time to time.
The most comprehensive type of property survey carried out by a professional surveyor that should give the buyer an indication of any structural problems or repairs required.
A property that consists of one main room or open-plan living area which incorporates both sleeping and cooking facilities, generally with a separate bathroom or shower room.
Subject to Contract (STC)
The term used to confirm that a transaction is not legally binding.
A professionally qualified expert who carries out an instructed survey.
Tenancy in Common
The form of ownership by two or more parties where, if one should die, their share of the property forms part of the estate and does not automatically pass to the other party.
The conditions on which a property is held (i.e., freehold or leasehold).
A property which forms part of a row of adjoining houses.
The documents showing any legal ownership of the said property.
With a tracker variable rate (TVR) mortgage you benefit by paying an interest rate that follows an independent interest rate (e.g. The Bank of England rate) throughout the tracker period. You usually pay a set amount above or below the TVR for a set period from the start of your mortgage. The rate you pay will change if the independent rate changes but you will not pay more than the set amount above or below the TVR during the TVR period.
A legal document that transfers the ownership of a property from the seller to the buyer.
The status of a property that is for sale when the seller has accepted an offer from a proposed purchaser but no exchange of contracts has taken place.
A basic survey for a property to estimate its value, normally for mortgage purposes. Mortgage lenders will insist on this as a minimum requirement before agreeing to lend against a property.
Variable Base Rate
The basic rate of interest charged on a mortgage. This may change with market conditions, so your monthly payments can go up or down.
The legal name for a person who is selling a property.