APR (annual percentage rate)
This is the total cost of a loan, including all costs, interest charges and arrangement fees. Companies will then show this as a percentage rate.
This is a fee charged by a mortgage lender or mortgage broker to arrange a loan. These generally apply to loans where a special interest rate applies.
These are questions that are raised by the buyer’s solicitor/conveyancer, and they will often relate to matters shown on a survey or to the title on your property.
The sale of a property to the highest bidder with a legally binding contract on the drop of a hammer.
Buildings & Contents Insurance
This Insurance covers damage to or loss of your home and its contents as an example in the event of a fire.
There are a few different types of survey that can be carried out on a property that you are to purchase, these will normally conducted by a chartered surveyor.
This is a temporary loan that will provide financial cover whilst a buyer is completing on the purchase of a new property before selling their previous property.
Buy To Let
Mortgage Generally used by investors who are purchasing a property with the intention of letting it out.
Basic Variable Rate
A standard rate of interest that is charged by a mortgage lender and this may be increased or decreased periodically by the lender depending on predominant economic conditions.
A mortgage where there is an upper limit on the interest rate but with no lower limit. This rate may vary in accordance with the lender’s interest rate charges.
When selling a property, a situation can often occur when a purchaser is reliant on the completion of their home in order to complete the purchase of a new property.
The point at which all transactions concerning the property sale are conducted and legal transfer of ownership passes to the buyer. Invariably, this is also the day of moving.
The conveyancer is generally a qualified solicitor or a licensed conveyancer who will deal with all the legal aspects of buying or selling a property.
This is when there are two parties that have made an offer on the same property. Two contracts can (although not commonly) be distributed. The vendor will sell to whoever exchanges contracts first. This is unusual but it can happen.
Some properties have rules and regulations that govern what can and can’t be done and would be lodged with the title deeds or lease of the property.
Insurance that provides cover for the loss or damage to possessions inside of the property.
This is the legal work involved in the sale and purchase of a property.
The contract is an agreement that is legally binding between the buyer and seller of a property. It binds both parties to complete the transaction at any agreed time.
Conditions of Sale
These details determine the right and duties of the buyer and seller. They can be imposed by the law society or specifically devised by your solicitors.
Legal Title documents that will prove ownership of the property. Normally the Deeds will be held by the mortgage lender when there is a mortgage lodged against the property.
When you exchange contracts a sum of money will be paid by the purchaser to the solicitors than will normally be between 5% and 10% of the overall property value.
This is a term that is used to describe a property that stands alone with no adjoining properties.
Either a newly built residence or a refurbished and modernised older property.
Any damage or disrepair to a property.
Fees that are paid by the buyer’s solicitor on the buyer’s behalf such as land registry, stamp duty and search fees.
An unconfirmed and preliminary version of the contract.
This is a type of mortgage where the interest only is paid to the mortgage lender which often requires a separate insurance policy with the aim to pay off the mortgage at the end of the agreed term.
Early Redemption Charge
When a borrower terminates their mortgage prior to the terms that have initially been agreed by the lender, an early redemption charge can be payable. This will mainly occur when a borrower has had the benefit of a reduced payment or has had cash back in the initial period of a mortgage.
Exchange of Contracts
This is the point at which signed contracts are physically exchanged, legally.
Equity is the difference between the value of a property and the amount of mortgage that is still owed or other charge against the property.
Failed valuation survey
Sometimes, following a survey you will receive the valuation report and it may indicate that the property is not worth the sum that is the vendor is asking. At this point, the mortgage lender may turn down an application by the purchaser.
Fixed Rate Mortgage
This is a mortgage where an interest rate is set for a brief period of time at a fixed rate.
Fixtures and fittings
Fixtures and fittings are Items that have been agreed to be included in the purchase of a property but do not form part of the structure.
A mortgage where the lender will permit increased or decreased payments during a specified term.
Where part of a freehold property is over (or under) another freehold property.
Freehold is the description that is given to the type of ownership for a property; meaning that it belongs to the owner without any type of time limitation.
Purchasers generally misunderstand this term. Gazumping only occurs when a seller accepts a higher offer from a third party on a property that exceeds the initial asking price. This can only occur when a sale has been agreed prior to legal exchange of contracts.
Ground Rent is an annual charge that is made by the freeholder to the lease holder payable every year.
A third party who undertakes to ensure that all mortgage payments are maintained, and who will also promise to pay the borrowers debt if the borrower defaults on their mortgage. Homebuyer’s survey and valuation report This survey is not as detailed as a structural survey but is still carried out by a chartered surveyor. Although not as detailed they will still confirm their findings in report format for you confirming the properties condition and their belief as to the value.
Interest only mortgage
Interest only mortgage is where the monthly payments to the lender only cover interest on the outstanding loan. The lender will normally request that you have a savings plan that designed to pay the outstanding amount of the loan at the end of the mortgage term (see endowment mortgage). If you choose an interest only mortgage, you are responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the agreed term.
The charges that are made on your loan by the bank or building society. They are calculated as a percentage of the amount that has been borrowed and or is still outstanding.
Land Registry fee
The land registry fee is a payment to the Land Registry that will register legal ownership of a property.
The payment to your conveyancer for their services and for any costs that they have incurred on your behalf.
Leasehold is the type of ownership of a property by way of it’s tenure with a given timescale for that ownership. The length of term can vary from 99 years to 125 years or 999 years.
A listed building is generally considered to be of special architectural or historic interest. It can not be altered or demolished without the consent of the local government.
Local Authority Search
These are the enquiries that are raised by the purchaser’s conveyancer. They are sent to the local authority regarding any outstanding enforcement or future development issues within the immediate area surrounding that property. i.e. road alteration scheme or where there may be new development that are underway or may be in the future.
Loan to Value
This is the amount of mortgage expressed as a percentage of the property’s total value.
The costs that are incurred by a freeholder for repairing and maintaining internal and external communal parts of a building which is passed to the leaseholder.
A property that is over more than one floor, but forming part of a shared property.
The sum of money that is given by a lender to the borrower that is secured against the property.
The mortgage deed is the legal document that relates to the mortgage lender’s interest in the property and it contains all of the terms and conditions of the mortgage.
This is the formal document that is given by the mortgage company approving the mortgage amount that a buyer has requested which details all terms and conditions that will apply.
This is the rate of interest that is to be paid to the mortgage lender. Negative Equity
Negative Equity may occur when the value of a property falls below the outstanding mortgage amount.
An amount that a buyer is willing to pay for a property that is passed onto the vendor.
Peppercorn Ground Rent
A very nominal periodic rent usually paid per annum and possibly in the region of a couple of pounds. Penalties – The costs that can be incurred if a borrower repays all or part of a mortgage prior to the end of the agreed period or when the borrower switches between lenders.
These are the Initial enquiries that are raised about the property that is being sold by the legal conveyancer for the purchaser. The seller must answer before exchange of contracts can take place.
Probate is the disposal of a property by an executor of a will following the death of the owner.
Anyone who is buying a property.
Your monthly payments which may cover both interest and capital so that the amount that is outstanding will gradually decrease until the mortgage is fully repaid at the end of the agreed term.
A re-mortgage is the re-financing of a property. It can be done by either switching lenders or by taking a second mortgage to draw on the equity that has been gained by the rise in capital value of the property over the previous years of ownership.
This occurs when the mortgage lender takes possession of the property due to the non payment of the agreed mortgage.
A mortgage lender may retain part of a loan until repairs or specified works to the property have been satisfactorily competed.
A request or enquiry relating to information about the property that is held by the local authority or the land registry department.
A property which is only joined to one other house.
Where a single estate agent is instructed to sell a property for an agreed term.
This is the tax that is paid by the purchaser on a property where the purchase price exceeds £125,000. The rates can vary dependant of the purchase price of the home, it can be anywhere from 1% to 4%. Some areas may be exempt from this charge depending on local conditions.
This is where a property has an open space that is used as a bedroom and open plan living area all in one.
Subject to Contract
The term used to confirm that a transaction is not legally binding.
A professionally qualified expert who carries out any instructed survey.
A property that forms part of a row of adjoining houses.
The conditions on which a property is held (i.e. freehold or leasehold).
These are the documents showing the legal ownership of a property.
A legal document that transfers the ownership of a property from the seller to the buyer.
This is when a seller has accepted an offer from a purchaser but no exchange of contract has yet taken place.
A basic survey for a property to estimate its value. This is normally for mortgage purposes. Any of the mortgage lenders will insist that you have this as a minimum requirement before agreeing to lend any money against the property.
The name of a person who is selling a property.