Glossary of Property Terms

Annual percentage rate

(APR) the total cost of a loan, including all costs, interest charges and arrangement fees shown as a percentage rate and easily comparable with mortgage interest rates.

Basic variable mortgage rate

Mortgage lender's standard rate of interest which may be increased or decreased periodically by the lender depending on prevailing economic conditions.

Bridging loan

A temporary loan providing financial cover which allows a purchaser to complete on the purchase of a new property before selling the previous property.

Building survey/full structural survey

A full inspection of the property, conducted by a chartered surveyor, who then prepares a details report including any property defects. Suitable for any house, particularly older properties and those which have been poorly maintained. Also for properties which have been extensively altered or extended, or any property you may wish to alter or extend.

Buy to let mortgage

A type of mortgage specifically designed for people buying a property with the intention of letting it out.

Capital

The amount of the loan on which interest is calculated.

Capped mortgage

Normally agreed for a fixed period of time, many lenders provide mortgages with an upper limit on the interest rate. Thus if the standard interest rate is lower than the upper limit you will be charged the lower rate, but if the standard variable rate is higher you will be charged at the agreed rate.

Chain

The situation that occurs when a buyer is reliant upon completion of the sale of his existing property, in order to complete on the purchase of his new property.

Completion

The point at which all transactions concerning the property’s sale are concluded and legal transfer of ownership passes to the buyer.

Contract

A legal contractual agreement between the seller and buyer of a property which binds both parties to complete the transaction.

Conveyancer

A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.

Conveyancing

Traditional term for the legal work involved in the purchase and sale of a property.

Deeds

Legal title documents proving ownership. The deeds will be held by the mortgage lender.

Deposit

A sum of money (usually 10%) paid by the buyer on exchange of contracts.

Draft Contract

Preliminary, unconfirmed version of the contract.

Early redemption charge (ERC)

A charge made by the lender if the borrower terminates a mortgage in advance of the terms of the particular mortgage. Normally occurs when the borrower has benefited from reduced payments or cash back in the early period of a mortgage.

Endowment mortgage

Interest-only repayments combined with monthly premiums into an endowment policy designed to pay off the loan at the end of the term.

Energy Reports

Equity

The difference between the value of a property and the amount of mortgage owed.

Exchange of contracts

The point at which signed contracts are physically exchanged, legally committing the buyer and seller to the purchase and sale of a property at the agreed price.

Failed valuation survey

When the lender turns down your mortgage application after the surveyor’s valuation report indicates the property is not worth the sum sought.

Fixed rate mortgage

A mortgage in which the interest rate is set for an agreed period of time.

Fixtures & fittings

All non-structural items included in the purchase of a property.

Flexible mortgage

An arrangement whereby you can increase or decrease your mortgage repayments.

Freehold

Ground rent

The annual charge levied by the freeholder to the leaseholder.

Homebuyer's survey and valuation

This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.

Home Information packs

HMO

Homes of Multiple Occupancy.

IFA

Independent Financial Advisor.

Inventory

A list which describes the condition of furnishings and contents of a leased property at the commencement of the tenancy in order that any dilapidation during the tenancy can be identified.

Land registry fee

Paid to the Land Registry to register ownership of a property.

Lease

A legal document by which the freehold (or leasehold) owner of a property lets the premises or a part of it to another party for a specified length of time, after the expiry of which ownership may revert to the freeholder or superior leaseholder.

Leasehold

Denotes that the ownership of the property is by way of a lease.

Listed building

One officially listed as being of special architectural or historic interest, which cannot be demolished or altered without (local) government consent.

Local authority search

Procedure whereby a buyer's solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area.

Maintenance/service charge

The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.

Maisonette

A property arranged over more than one floor (ie: a portion of the house).

Mortgage

An amount of money advanced by a lender such as a bank or building society on the security of a property and repayable over a long period.

Mortgage deed

A legal document relating to the mortgage lenders interest in the property and containing the terms of the mortgage.

Mortgage rate

The standard variable interest rate quoted by all mortgage lenders which normally varies with the Bank of England base rate. All discounted rates are based on this mortgage rate.

Mortgage term

The period of time over which (repayment mortgage) or at the end of which (endowment mortgage) the loan is to be repaid.

Negative equity

When the value of the property falls to less than the outstanding mortgage.

Payment break

An option on flexible mortgages that allows you to stop making mortgage payments for up to 6 months.

Peppercorn ground rent

A nominal periodic rent usually paid annually.

Preliminary enquiries

The initial enquiries about a property put forward to a seller which the seller must answer before the exchange of contracts.

Purchaser

A person who is buying a property.

Redemption

When a mortgage is fully repaid.

Re-mortgage

Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to draw down any equity gained by a rise in value.

Repossession

When the mortgage lender takes possession of your property due to non-payment of the mortgage.

Retention

Holding back part of a mortgage loan until repairs or specified works to the property are satisfactorily completed.

Search

A request or enquiry for information concerning the property held by a local authority or by the land registry.

Sole agent

When a seller chooses only one estate agent to sell their home.

Stamp duty

A tax paid by purchasers of properties with a value in excess of £125,000, of between 1% and 4% depending on value.

Studio Flat

A flat consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.

Subject to Contract

Words to indicate that an agreement is not yet legally binding.

Surveyor

Professionally-qualified expert who carries out the survey.

Survey race

When two parties have made an offer on the same house. The vendor will sell to the first party to get their survey booked.

Tenancy agreement

A legal agreement designed to protect the rights of the tenant and landlord and setting out all the terms and conditions of the rental arrangements.

Tenure

Conditions on which a property is held (ie: length of lease).

Terraced house

A property which forms part of a connected row of houses.

Title deeds

Documents showing the legal ownership of a property.

Transfer deeds

The land registry document that transfers legal ownership from seller to buyer.

Under offer

The status of a property for sale, when a seller has accepted an offer from a purchaser but prior to exchange of contracts.

Valuation

A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.

Variable base Rate

The basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up or down.

Vendor

The legal name for a person selling a property.

Yield

Income from a property calculated as a percentage of it's value.