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Providing expert mortgage advice for over 27 years.
Providing expert mortgage advice for over 27 years.
This detailed mortgage terminology glossary explains the key concepts you may encounter when researching and applying for a mortgage.
If you can’t find what you’re looking for here, contact our experts who will be happy to provide more information.
The total annual cost of the mortgage, expressed as a percentage of the total amount borrowed.
A quick way for lenders to estimate your property’s value based on recent local sales, without needing to send a surveyor.
The UK’s core interest rate set by the Bank of England, which lenders often use to determine their own Standard Variable Rate (SVR).
Cover that protects the property itself, with the insured amount potentially differing from the purchase price.
Buying a property as an investment, with income from tenant rent and potential capital growth.
A mortgage specifically for the purchase of a property that will be rented out to tenants, rather than owner-occupied.
A capital and interest mortgage involves making monthly payments over a set number of years to cover both the borrowed amount (capital) and the interest charged. If you make all your payments on time, you will have fully paid off your mortgage by the end of the term.
A mortgage where your interest rate can’t exceed a specified maximum, usually for the initial years.
A cash amount paid by a lender to incentivize you to take out a mortgage with them.
The final stage when the property’s sale price reaches the seller’s account, completing the purchase.
Compulsory insurances that some lenders require, such as their own buildings insurance.
Buy-to-let mortgages for borrowers who didn’t intend to invest, have no other BTL properties, and are just remortgaging. These are regulated for greater consumer protection.
Cover for the personal belongings inside your home, separate from the buildings insurance.
The legal process of transferring property ownership from seller to buyer.
A local authority charge based on your property’s value, usually paid by tenants in rented accommodation.
A court ruling against you for defaulting on debt, which can negatively impact your credit record.
Where lenders check your credit history when assessing your mortgage application.
Insurance policies that pay out a lump sum if you are diagnosed with a specified critical illness, such as cancer, heart attack or stroke.
A bank account with a cheque book and/or debit card, typically paying little interest.
Using a mortgage to pay off other debts like credit cards or loans, in order to simplify repayments and potentially reduce the overall interest cost.
The legal documents proving property ownership, which the lender records their mortgage on.
The initial lump sum you contribute towards the property’s purchase price, typically 5-10%.
Saving which earns regular, usually variable interest based on the amount invested.
A mortgage with an interest rate below the lender’s standard variable rate, at least initially.
Mortgages completed remotely, not face-to-face.
Spreading investment risk across different asset types like shares, deposits and property.
Fees charged if you repay your mortgage early, which can make switching lenders costly.
A lender’s term for your working arrangements, with self-employed seen as higher risk.
A mortgage funded by an insurance-based savings plan to repay the loan at the end.
When the property purchase becomes legally binding for both parties.
A service that carries out orders without providing any advice.
Someone purchasing their first residential property. First-time buyers may be eligible for special mortgage products and stamp duty discounts to help them get on the property ladder.
A mortgage with a set interest rate, usually for an initial period of 2-5 years.
Allows overpayments, payment holidays and reborrowing, useful for irregular incomes.
Specialist mortgages for graduates, often requiring no deposit.
Before tax or deductions.
An investment strategy focused on maximizing capital value rather than income.
An insurance premium you may pay if borrowing a high percentage of the property’s value.
Cover for the physical property itself (buildings insurance) as well as the contents inside (contents insurance). Lenders often require borrowers to have building insurance.
Someone who is moving to a new residential property, either upsizing, downsizing or relocating. This is distinct from a first-time buyer or remortgage customer.
A lender’s estimate of your monthly payments and setup costs for a particular mortgage.
Specialist mortgages for those with credit problems that disqualify them from mainstream lenders.
Insurance policies that pay out if you are unable to work due to illness or injury, helping to replace lost income.
Advice covering the whole market, with a fee-only option to eliminate conflicts of interest.
The premium paid to a lender for use of their money.
You only pay the interest each month, with the full loan amount repaid at the end.
A mortgage funded by contributions to a tax-free Individual Savings Account.
A property agent who helps landlords find tenants and manage the rental process.
A policy that pays out a lump sum to your beneficiaries in the event of your death, helping to provide financial protection for your family.
The percentage of the property’s value that your mortgage covers.
An examination of local planning records that could affect the property’s future value.
The interest rate banks lend to each other, sometimes used to set tracker mortgage rates.
The wholesale markets where banks and lenders borrow money, especially for fixed-rate mortgages.
A firm or individual authorized to provide advice on regulated mortgage contracts.
Using a lower rate mortgage to consolidate other debts and reduce monthly costs.
The full length of your mortgage, typically 5-30 years, by which time you’re expected to have repaid it.
Checking the current mortgage rates available from different lenders, often done when considering remortgaging or a new mortgage application. This allows you to compare the interest rates and find the most competitive deal.
After tax or deductions have been deducted.
A property that has been newly constructed, rather than an existing home. New build mortgages often have unique features to accommodate the purchase of a brand new property.
A mortgage where your income is not disclosed.
Links your savings to your mortgage, reducing interest without losing access to your money.
Making mortgage payments higher than the minimum required, to pay off the loan faster.
A short break from regular mortgage repayments, sometimes offered with flexible mortgages.
A mortgage where the capital repayment is funded by a personal pension.
In the context of insurance, a premium is the regular sum you pay to keep your cover in force.
The amount paid by a lender to a mortgage adviser for providing customer applications.
The process of switching your existing mortgage to a new lender or product, without moving home. This allows you to potentially access better interest rates or borrow additional funds.
You pay off both the interest and part of the loan capital each month.
The means used to repay a mortgage’s capital, such as an endowment or ISA.
An examination of local planning records that could affect the property’s future value.
A loan that is secured against your property, which the lender can repossess if you default.
For self-employed people, where you declare your income without needing to provide proof.
A part-buy, part-rent scheme that allows you to purchase a share of a property, typically between 25-75%, and pay rent on the remaining portion.
A lender’s main interest rate, which mortgages often revert to after a special offer period.
A lender’s assessment of the borrower’s creditworthiness and employment situation, which can impact the mortgage products they can access.
The tax paid on residential property purchases, with the amount depending on factors like first-time buyer status and whether it’s a main residence or investment.
Cashing in an unwanted endowment policy, which often produces a poor return.
An expert inspection of the property to identify any structural issues or problems.
A qualified professional who inspects properties and produces survey reports.
A legal contract between a landlord and tenant, setting out the terms of occupancy.
A legal requirement for landlords to protect their tenant’s deposit.
The legal documents proving property ownership, usually kept by the mortgage lender.
A mortgage where the interest rate ‘tracks’ movements in another rate, usually the Bank of England Base Rate.
Making mortgage payments that are less than the minimum required amount. This is generally not recommended as it can lead to the loan term being extended and increased interest costs.
An assessment of a property’s current market value, carried out by a surveyor for the lender.
A mortgage where the interest rate can go up or down, usually in line with the lender’s SVR.
The seller of a property.
