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Mortgage jargon buster

If you’re in the process of applying for your first mortgage, chances are you’ve come across a few unfamiliar terms.

Here is our mortgage market jargon buster, to help make things as clear and understandable as possible.

A | B | C |D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z



This is the mortgage loan itself.


Annual Percentage Rate. This is the overall cost of a mortgage, including the interest and fees - assuming you will be paying off the mortgage over the whole term.

Approved in principle

Some lenders might give you a certificate showing the amount they are most likely to lend you, accompanied by the words "Approved in principle". Although this is not a guarantee of any kind, it can be helpful when registering with estate agents.


If you default on your contract and miss a month’s payment, you will go into arrears.


Base rate

This is the rate of interest set by the Bank of England.

Buildings insurance

When you take out a mortgage, you will need to take out insurance to cover any damage to the home.


This is a way of purchasing property, with the sole purpose of letting it out to tenants. This type of mortgage may be slightly more expensive than a residential mortgage.



This refers to the money you borrow from a lender to buy a property.

Capped rate

The capped rate is the mortgage interest rate charged by your lender; it will never exceed the upper "capped" limit, regardless of any increases to the Bank of England base rate.

Cashback mortgage

This happens when the lender gives you cash on completion, which you can use in any way you choose. People often use this money for renovations or décor.


This is a County Court Judgement, which could be made against you for non-payment of debt, making it more difficult to secure a mortgage.


This is the actual moment when you become the legal owner of the property.


This is simply the legal process of buying and selling property and is normally done by a solicitor or specialist licensed conveyancer.



When you miss one or more mortgage payments and go into arrears, it is known as "defaulting".


The amount you put down yourself towards the cost of the property. The minimum deposit is normally 5%, but you save an enormous amount if you can put down a deposit of 40%.



In mortgage terms, your equity is the amount you have left after subtracting the outstanding amount on your mortgage from the actual current value of your property.

Equity release scheme

This is a scheme which allows older homeowners to release the cash that is tied up in their property. The minimum age limit to do this is usually between 55 and 65 years old, but it will depend on the mortgage provider.


Fixed-rate mortgage

This mortgage option occurs when the mortgage interest rate remains the same for the initial period of the deal - usually two to five years - during which time your interest rates and payments will be prevented from rising.

Flexible mortgage

A flexible mortgage deal is often slightly more expensive than a conventional one, but the benefit is that you can pay more, pay less or even take a "payment holiday" from your mortgage. In this way you can pay off your mortgage sooner and save on interest.


This means you own both the property and the land it is situated on.


Ground rent

A yearly fee that leaseholders pay to the freeholder who owns the land that the leasehold property is on.


This is a third party – normally a parent – who agrees to honour the monthly mortgage repayment if you are unable to.


Higher lending charge (HLC)

This is sometimes charged by the lender, when the buyer is borrowing more than 75% of the property’s value.



A mortgage broker or adviser who can arrange a mortgage on your behalf.



This is when you own the property or building, but not the land it stands on. Flats are usually owned on this basis.

Loan-to-value (LTV)

The size of your mortgage as a percentage of the property’s value. The cheapest deals are currently available if you are borrowing 60% or less.


Mortgage payment protection insurance (MPPI)

This is a form of special insurance that covers your mortgage for a specific time frame if you are unable to work due to accident, sickness or unemployment.

Mortgage term

This is the period of time over which your mortgage runs. The longer the period, the more interest you are charged.

Mortgage deed

The formal contract between the lender and the borrower, outlining the legal obligations of both parties.


Negative equity

This is when the value of your home falls to below the amount remaining on your mortgage.



A portable mortgage will allow you to transfer your borrowing from one property to another if you move, without paying any extra fees.

Prudential Regulation Authority (PRA)

The PRA is part of the Bank of England, and is responsible for the prudential regulation and supervision of banks, building societies, credit unions, insurers and major investment firms.


Rebuild cost

The cost of rebuilding your home if it is destroyed, for instance, in a fire.


A re-mortgage occurs when you change your mortgage without selling or moving.  This is normally done to change to a different type of mortgage or to release equity.

Repayment vehicle

This is an investment or bank account that you pay money into each month, in order to save the money needed to pay off the mortgage at the end of the term.


Stamp duty

This is the government tax on buying properties that cost more than £125,000.

Standard variable rate (SVR)

SVR is a type of mortgage interest rate that you are most likely to go onto after your initial “tie-in” period. Your interest rate will move to the lender's SVR, which could be higher or lower than your initial rate.

Subject to survey and contract

This wording is included in any agreement before the exchange of contracts and allows the seller or buyer to withdraw from the property sale.


This type of mortgage is geared towards people who have had credit problems; typically, they are harder to secure.


Tie-in period

This is the period during which you are "locked in" to your mortgage deal with your lender. During this period you would pay an early repayment charge to move your mortgage elsewhere.

Tracker rate mortgage

This type of rate is usually defined as a percentage amount above, below or equal to the Bank of England's base rate. Because the Bank of England can change rates at any time, your monthly payment can vary as your interest rate "tracks" this base rate.



Lenders require you to carry out a basic inspection or "valuation" of the property to verify that it is worth the amount you want to borrow.

Contact our mortgages team

Phone us: +44 (0) 20 7759 7519

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Regent Square
Doncaster Road
Kenilworth 7708 +27 (0) 21 657 2120


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United Kingdom


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77/91 New Oxford Street
WC1A 1DG +44 (0) 20 7759 7514


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South Croydon
CR2 6PU +44 (0) 20 7759 7581



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South Yarra
VIC 3141 +613 (0) 8651 4500

Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services License issued by ASIC to deal in foreign exchange (1st Contact Group - AFS License number 335 126).

Our United Kingdom business, Sable Private Wealth Management Ltd, is authorised and regulated by the Financial Conduct Authority. Our Companies House registration number is 222501. Our authorisation can be checked on the FCA register here: Our South African business, Sable Private Wealth (Pty) Ltd, is an authorised FSP, regulated by the Financial Services Conduct Authority under licence number 48122.

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