Here is our mortgage market jargon buster, to help make things as clear and understandable as possible.
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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.
This is the rate of interest set by the Bank of England.
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.
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.
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.
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.
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.
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.
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.
This is the period of time over which your mortgage runs. The longer the period, the more interest you are charged.
The formal contract between the lender and the borrower, outlining the legal obligations of both parties.
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.
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.
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.
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.
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.