Jargon Buster
Mortgage jargon, explained simply
Search or browse A–Z. If you can't find a term, just ask — we're always happy to explain.
A
- Additional Property Surcharge
- An extra Stamp Duty charge (currently 5 percentage points on top of the standard rates) applied when you buy a residential property that isn't replacing your main home — for example, a buy-to-let or second home.
- Agreement in Principle (AIP)
- Sometimes called a Decision in Principle or Mortgage in Principle. A statement from a lender saying how much they'd be likely to lend you, based on a quick credit check and some basic details. It's not a guaranteed offer, but it shows sellers and estate agents you're a serious buyer.
- Annual Percentage Rate of Charge (APRC)
- The overall cost of a mortgage each year, shown as a percentage — including the interest rate plus most fees. Useful for comparing the true cost of different deals, not just the headline rate.
- Arrangement Fee
- Also called a product fee. A charge from the lender for setting up a particular mortgage deal, usually a few hundred to a couple of thousand pounds. It can often be added to the loan rather than paid upfront.
B
- Bridging Loan
- A short-term loan used to 'bridge' a gap — for example, buying a new home before your current one has sold. Higher cost than a standard mortgage and meant to be repaid quickly.
- Broker Fee
- The fee a mortgage broker charges for their advice and for arranging your mortgage. Always agreed with you upfront before any work begins.
- Buildings Insurance
- Insurance that covers the physical structure of your home against damage from things like fire, flood and storms. Most lenders require it to be in place from the day you exchange contracts.
- Buy-to-Let Mortgage
- A mortgage for a property you intend to rent out rather than live in. Lenders typically assess these based on the rental income the property could achieve, not just your personal income.
C
- Completion
- The day your mortgage funds are released and the property legally becomes yours (or, on a remortgage, the day your new deal officially starts). Keys are handed over on completion day.
- Conveyancing
- The legal process of transferring ownership of a property from seller to buyer, usually handled by a solicitor or licensed conveyancer.
- Credit Score
- A number that reflects how you've managed credit in the past — loans, credit cards, bills and so on. Lenders use it, alongside their own criteria, to help decide whether to lend to you and on what terms.
D
- Debt-to-Income Ratio (DTI)
- The proportion of your monthly income that goes towards paying existing debts. Lenders look at this alongside your income to work out how much more you can comfortably borrow.
- Deposit
- The amount you put towards a property upfront, with the mortgage covering the rest. Usually expressed as a percentage of the property's value — a 10% deposit on a £300,000 home would be £30,000.
E
- Early Repayment Charge
- A fee some lenders charge if you repay your mortgage — in full or in part — before your current deal ends, most commonly during a fixed or tracker rate period.
- Equity
- The part of your property you actually own outright — its value minus whatever you still owe on the mortgage. Equity grows as you pay off your mortgage and if your property's value increases.
- Exchange of Contracts
- The point at which buyer and seller sign and swap contracts, making the sale legally binding. A completion date is set, and pulling out after this point can be costly.
F
- Family Income Benefit
- A type of life insurance that pays your family a regular income, rather than a lump sum, if you die during the policy term — designed to replace your earnings and keep bills covered.
- First-Time Buyer
- Someone buying a residential property who has never owned one before, anywhere in the world. First-time buyers can access certain schemes and Stamp Duty relief not available to home movers.
- Fixed-Rate Mortgage
- A mortgage where the interest rate is locked for a set period — commonly 2, 3 or 5 years — so your monthly payments stay the same regardless of what happens to interest rates generally.
- Freehold
- Owning a property and the land it stands on outright, with no time limit. Most houses are freehold, while flats are usually leasehold.
G
- Gifted Deposit
- Money put towards your deposit by a family member (or occasionally a close friend) as a genuine gift rather than a loan. Lenders usually need a signed letter confirming it doesn't need to be repaid.
- Guarantor Mortgage
- A mortgage where a family member agrees to cover the repayments if you can't, or offers savings or property as security — often used to help first-time buyers borrow more or with a smaller deposit.
H
- Hard Credit Search
- A credit check that leaves a visible mark on your credit file and can affect your credit score, typically carried out when you submit a full mortgage application rather than at the Agreement in Principle stage.
- Help to Buy
- A government equity loan scheme that helped first-time buyers purchase new-build homes with a smaller deposit. The scheme closed to new applications in 2023, though existing Help to Buy loans are still being repaid by many homeowners.
I
- Income Multiple
- A rough way lenders estimate how much you could borrow — typically around 4 to 5 times your annual income, though this varies by lender and depends on your wider circumstances.
- Interest-Only Mortgage
- A mortgage where your monthly payments only cover the interest, not the loan itself, meaning the balance doesn't reduce over time. You'll need a separate, credible plan to repay the full loan at the end of the term.
L
- Leasehold
- Owning a property for a fixed number of years under a lease from the freeholder, who owns the land. Common with flats. Ground rent and service charges often apply.
- Loan to Value (LTV)
- The size of your mortgage compared to the value of the property, shown as a percentage. A £240,000 mortgage on a £300,000 home is 80% LTV. Lower LTV usually means access to better rates.
M
- Mortgage in Principle
- Another name for an Agreement in Principle — see that entry for details.
N
- Negative Equity
- When your outstanding mortgage balance is higher than your property's current value — usually caused by falling house prices. It can make it harder to remortgage or sell.
O
- Offset Mortgage
- A mortgage linked to a savings account, where your savings balance is 'offset' against your mortgage debt so you only pay interest on the difference.
P
- Porting a Mortgage
- Taking your existing mortgage deal with you when you move house, rather than starting a new deal from scratch — useful if you'd otherwise face an early repayment charge.
R
- Remortgage
- Switching your mortgage to a new deal, either with your current lender or a different one — most commonly done when a fixed or tracker rate is coming to an end.
- Repayment Mortgage
- A mortgage where your monthly payments cover both the interest and a portion of the loan itself, so the balance gradually reduces to zero by the end of the term. The most common type of residential mortgage.
S
- Second Charge Mortgage
- An additional loan secured against your home, sitting 'behind' your main mortgage. If the property were sold, your main mortgage lender would be repaid first.
- Shared Ownership
- A scheme where you buy a share of a property (commonly 25–75%) and pay rent on the remaining share, usually to a housing association. You can often buy further shares over time.
- Soft Credit Search
- A credit check that doesn't leave a visible mark on your credit file and has no effect on your credit score. Most lenders now use these for Agreement in Principle checks.
- Standard Variable Rate (SVR)
- A lender's default interest rate, which you're moved onto automatically once your initial deal (fixed, tracker etc.) ends — usually significantly more expensive than staying on a proper deal, which is why we get in touch before yours ends.
- Stress Test
- A check lenders carry out to see whether you could still afford your mortgage if interest rates rose. For buy-to-let, this usually means checking the rental income comfortably covers the payments at a higher notional rate.
- Survey
- An inspection of a property's condition, ranging from a basic Condition Report to a detailed Building Survey. Different from a mortgage valuation, which is for the lender's benefit, not yours.
T
- Tracker Mortgage
- A mortgage with a variable interest rate that moves in line with a specific external rate — usually the Bank of England base rate — plus a set percentage on top.
U
- Underwriting
- The process where a lender's underwriter checks your full application in detail — income, credit history, the property itself and more — before deciding whether to formally offer you a mortgage.
V
- Valuation
- An assessment the lender arranges to confirm a property is worth what you're paying for it, protecting their interest in the loan. It's for the lender's benefit and isn't a substitute for your own survey.
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