Find your new home

A

Annual Percentage Rate (APR) The genuine cost of borrowing - for your mortgage, this will include any arrangement fees, interest, redemption fees and other charges.

Applicant
A term used by estate agents to describe the potential purchaser/tenant of a property.

Arrangement fee
A fee that is charged by your mortgage lender that covers the administration costs of arranging a mortgage.

Assured Shorthold Tenancy (AST)
A common tenancy agreement where the rent is under £100,000 per year, the tenant is an individual rather than a company and the contract is for six months or more.

Auction
A means of selling a property to the highest bidder.

B

Base rate
The lowest rate of interest a bank will charge when lending money. This is used to determine interest rates on mortgages.

Break clause
A clause in a tenancy agreement that gives either the landlord or the tenant the right to end a tenancy agreement before the end of the contracted period. This is usually only possible in specific circumstances.

Bridging loan
A temporary loan from a mortgage lender, which allows a buyer to purchase a property before their own property has been sold.

Buy to let mortgage
A mortgage specifically designed for those buying a property that they intend to let out.

C

Capital
The sum of money that is put into the purchase of a property, or that is used for the deposit.

Capped rate mortgage
A mortgage with a fixed maximum rate of interest for a specific period of time.

Commission
A payment made to an agent for their work in selling a property.

Common areas
Areas within the grounds of a property that are shared by more than one tenant or owner.

Completion
The finalising of the sale of a property, when all monies have been transferred and the purchaser can gain access to the property.

Contract
A legally binding document signed by the vendor and purchaser, that sets out the terms of the property transfer.

Conveyancing
The legal process during which a property is transferred from a vendor to a purchaser.

Credit check
An investigation into the credit history of a mortgage applicant, which highlights any areas of financial concern.

Credit history
A history of the debts that an individual has held, including any information about late payments, bankruptcy and County Court Judgements (CCJs).

D

Deed
A legal document that provides details of the ownership of a property.

Deposit
A sum of money that the purchaser or tenant of a property must provide before the contract is made. For buyers, this is normally 5-10% of the sale price, for tenants it is normally four to six weeks rent.

Dilapidations
Any damage or disrepair to a rented property, with the cost normally recovered from the deposit.

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

Discounted rate mortgage
A mortgage whose interest rate is lower than that of the standard variable rate, normally for a set period.

E

Early repayment charge/fee
A fee that is charged should a mortgage be repaid before the mortgage term has ended.

Endowment mortgage
An interest-only mortgage, which is combined with the payment of monthly premiums into an endowment policy that is designed to pay off the mortgage completely at the end of the term.

Energy performance certificate (EPC)
A legal requirement, an EPC shows how energy-efficient a property is, using a scale from A-G.

Equity
The difference in value between the value of a property, and the value of the mortgage that still needs to be repaid.

Exchange of contracts
The point when contracts are exchanged between the vendor and the buyer, meaning that both parties commit to completing the transaction.

F

Fixed rate mortgage
A mortgage whose interest rate remains fixed for a set period of time.

Fixtures and fittings
Items that are not part of the structure itself (e.g. carpets, kitchen appliances, or curtains) that are included in the sale of a property.

Flexible mortgage
An arrangement whereby the value of your mortgage can be increased or decreased.

Freehold
When a property owner also owns the land on which the property has been built.

G

Gazumping
When a vendor accepts an offer from an applicant, but subsequently decides to accept a higher offer from another.

Gazundering
When a purchaser makes an offer which is accepted, but then lowers his or her offer immediately prior to the exchange of contracts.

Ground rent
The annual sum that is paid by a leaseholder to the owner of freehold land.

Guarantor
A person who has agreed to guarantee a borrower's mortgage, who will be liable for the repayment should the borrower default.

H

Higher lending charge
A one-off fee that is paid to the lender upfront - normally when the mortgage is 75% or more of the property's value - to avoid the risk of the lender defaulting on the loan.

Home Buyers Survey and Valuation Report
A survey on a property that is carried out by a chartered surveyor, which is not as detailed as a full structural survey.

Houses in Multiple Occupancy (HMO)
A building that consists of three or more floors and that is inhabited by more than three people, living as multiple households and sharing common areas such as kitchens, bathrooms or toilets.

I

IFA
Independent financial advisor.

Instruction
A contractual agreement whereby an agent is instructed to find a buyer on behalf of the vendor of a property.

Interest-only mortgage
A mortgage with cheaper monthly repayments than other mortgage types, because only the interest is being paid back. At the end of the term, you will still be required to find the funds needed to repay the capital.

Inventory
A list that comprises the contents of a leased property, and the condition in which they were found at the start of the tenancy. At the end of a tenancy, the property is checked against this original list, and any dilapidations taken from the deposit.

Joint agency
The appointment of two agents, both of whom are instructed to try to sell a property. The commission is normally shared between the two agencies.

J

Joint income
The total annual gross income of both borrowers taking out a joint mortgage.

Joint tenants
Two or more individuals who share the ownership of a property. When one joint tenant dies, his or her share is transferred to the survivor.

L

Land registration
The process by which you register your land with the Land Registry, giving you the title to the land.

Land Registry
A Government department that records land ownership details, and any changes that have been made.

Land Registry fee
A fee charged by a solicitor to arrange the registering of land with the Land Registry.

Landlord
The owner of a rented property.

Lease
A legal document that entitles a tenant to rent a property from a landlord for a specific period of time, at a certain rate and with certain conditions.

Leasehold
A fixed period of time during which a property is owned, but ground rent must be paid to the owner of the freehold.

Lender
The company providing a mortgage, normally a bank, building society or specialist lender.

Lessee
The person who holds a lease - the tenant.

Lessor
The person who grants a lease - the landlord.

Listed property
A property listed as having special architectural or historical interest. Alterations to these properties are generally not possible.

Loan to value ratio (LTV)
The percentage of the value of a property that a lender is willing to lend, which can be anything up to 100%.

Long let
The letting of a property for six months or more.

M

Maintenance charge/Service charge
A charge made by a landlord and paid by a tenant, to cover the costs of maintaining the property.

Mortgage
A long term loan made by a lender, secured against the property, that allows a purchaser to purchase a property.

Mortgage Payment Protection (MPP)
An insurance policy that covers your monthly mortgage payments, should you be unable to work due to redundancy, illness or disability.

Mortgage broker
A company that advises purchasers on the mortgages that are available to them, and that processes the mortgage application in return for a fee.

Mortgage rate
The rate of interest that is paid on a mortgage.

Mortgage term
The time period over which the repayments of a mortgage are spread.

Mortgage indemnity guarantee (MIG)
An insurance policy that is taken out by a lender (and paid for by the borrower) that covers the lender in case of default. The MIG is normally taken out on mortgages with a LTV of 90% or more.

Mortgage offer
The acceptance of a mortgage application by a lender, and the terms and conditions under which the agreement can be fulfilled.

N

National Approved Letting Scheme (NALS)
An accreditation scheme for letting agents and management agents, the members of which aim to meet certain standards of customer service to give peace of mind to tenants and landlords.

Negative equity
Negative equity occurs when the value of the property becomes lower than the value of the outstanding mortgage, meaning that an mortgage holder's debt will continue if they sell the property.

O

Offer
The value of the sum of money offered by a purchaser or tenant in order to pay for a property.

Open market value
The value that should be placed on a property, assuming that there is a willing seller and a willing buyer.

Outline planning permission
Planning permission that has been granted, but is subject to certain constraints, for example on design or the siting of planned buildings.

P

Payment holiday
An option available with certain mortgages, which allows you to take a break from making repayments for up to six months.

Peppercorn rent
A very small amount of ground rent, generally paid annually.

Premium
The monthly payment required for an insurance policy.

Probate
The process by which the validity of a will is proved, meaning that assets can then be distributed.

Property Misdescriptions Act 1991
A legal act that safeguards against misleading descriptions from agents when describing properties that are on their books for sale or for rent.

Purchaser
An individual, couple or family who is buying a property.

Purpose built flats
Properties that have been designed and built to incorporate a number of individual flats, as opposed to existing large properties that have been redeveloped in order to convert them into flats.

R

Redemption penalty
A penalty charge issued by a lender when a mortgage is paid off in full.

Remortgage
The process by which a property is refinanced, either by switching a mortgage to a different lender, or by taking out a second mortgage on a property.

Renewal of contracts
The opportunity to renew a contract that has recently expired, or that is about to expire.

Repayment mortgage
A type of mortgage where the monthly payments that are made pay off both the interest charged on the mortgage and the capital that has been borrowed.

Repossession
A legal process where a property is taken over by a mortgage lender due to non-payment of the mortgage.

Reserve price
When a property is sold at auction, the reserve price is the minimum price that a vendor is willing to accept for the sale of their property.

Restricted covenant
A legal document that restricts the use of land for future owners, for example, a restriction on keeping animals on the land.

Retention
A withholding of part of the agreed loan amount by the lender until it has been agreed that specified work to the property has been completed.

S

Search
Searches are carried out to determine the information that is held by the Land Registry or local authority on a particular property.

Self-certification
A type of mortgage for an applicant who cannot provide proof of affordability through fully audited accounts or payslips, but can provide other evidence. Generally, rates of interest are higher for these mortgages.

Service charge
See maintenance charge.

Short let
The lease of a property for a period generally less than six months. Often, in a short let, bills are included in the monthly rental price.

Shared equity
A scheme whereby part of a property is purchased by the borrower, and the remaining part by a third party such as a housing association. This is different to shared ownership, where the borrower must pay rent to the third party.

Sitting tenant
A tenant who has legal rights to a property and may not be removed from this property, and who does not have a lease. Properties with sitting tenants can fetch far lower asking prices.

Sole agent
A single agent who is instructed to sell or lease a property.

Stamp duty
A tax that is paid to the Government by the purchaser of any house, flat, buildings or land in the UK. Current rates of stamp duty vary depending on the price paid for the property, and are as follows:

- Property value up to £125,000 - no stamp duty
- Property value £125,001 to £250,000 - 2%
- Property value £250,001 to £925,000 - 5%
- Property value £925.001 to £1.5 million - 10%
- Property value over £1.5 million - 12%

Standard variable rate (SVR)
The standard rate of interest that is set by mortgage lenders, and they are able to increase or decrease this depending on the economic climate.

Structural survey
A detailed survey of the interior and exterior of a property, undertaken by a qualified surveyor and designed to report on the structural condition of the property.

Subject to contract
A provisional agreement that is made before contracts have been exchanged, meaning that either the purchaser or the vendor may still decide not to proceed.

Sub-prime mortgage
Mortgages designed for those with poor or no credit history.

Surveyor
A professional whose role is to judge the value of property or a piece of land.

T

Tenancy
The occupation of a property by an individual, group or family who are renting the property.

Tenant
The individual, group or family who is responsible for renting the use of a property for a specified period of time.

Tenure
A term that defines whether a property is leasehold or freehold.

The Property Ombudsman (TPO)
An independent arbitration service that is completely free to use, which ensures that vendors, purchasers, landlords and tenants all receive a high level of customer service.

Title deeds
Legal documentation that proves the ownership of a property, as well as any liabilities and rights that are attached to this property.

Title search
Carried out by a solicitor or conveyancer, a title search checks for any historical issues that may affect ownership, such as unpaid claims, liens, restrictions or other issues.

Tracker mortgage
A type of mortgage where the interest charge tracks another rate - generally the Bank of England base rate.

Transfer deed
Legal documentation that transfers the ownership of a property or piece of land from its legal owner to another party.

U

Under offer
A phrase that shows that an offer has been made and accepted on a property, subject to contract.

Unencumbered
A property that exists without any loans being secured on it.

Underpinning
The strengthening of a building's existing foundations, often due to subsidence. This may affect a purchaser's ability to get a mortgage and/or insurance.

V

Vacant possession
A term that denotes that any previous occupants of a property must move out before you move in.

Variable base rate
The basic rate of interest that is charged on a mortgage, which could go up or down depending on general economic conditions.

Vendor
The individual, family, group or company who is selling a property or plot of land.

Y

Yield
The income generated by a property, which is calculated as a proportion of its value.