| If you don't understand some of the
terms that are used in the property industry, take a look at our
comprehensive glossary of terms.
A
Additional Security Fee
An up-front, one-off fee paid to the lender to protect them
against the borrower defaulting on the loan. Usually charged on
mortgages over 75% of the house value. Also known as MIG,
Indemnity Guarantee Premium and Mortgage Indemnity Premium.
Agents
(See Estate Agents)
APR
Annual Percentage Rate. The true cost of a loan.
Auctions
Property sale. If you win the bid, you are legally bound to buy
the house.
B
Banks
A place to go for Mortgages & Loans.
Bridging Loan
An expensive temporary loan to tide you over when having to buy
your new house before selling your old home.
Broker
An intermediary who will give advice and offer a range of
mortgages.
Building Society
Another place to go for Mortgages & Loans
Buildings Insurance
Insurance to cover any structural damage to your house.
C
Capital
The sum borrowed in a mortgage.
Chain
This occurs when the seller needs the sale of their house to occur
before they can complete the purchase of another property. The
same situation may exist for others in the chain. As a result, the
whole chain can collapse if one link breaks.
Charge
The term used for the security that the lender relies on when
granting a mortgage.
Completion
The point when contracts have been exchanged and ownership legally
passes to the buyer.
Contents Insurance
Insurance to cover any loss or damage to your possessions.
Contracts
The legal documents needed to transfer the ownership of property.
Conveyancing
Legal work involved in buying and selling a house.
D
Direct Lenders
A new form of mortgage lender who deals solely over the telephone.
Disbursements
Expenses paid by the solicitor on behalf of the purchaser.
Discounted Rate
A reduced mortgage interest rate which is subtracted from the
Standard Variable rate.
E
Endowment Mortgage
Type of mortgage where monthly payments are made into a endowment
(life assurance) policy. The loan is paid off in one lump sum at
the end of the loan period.
Estate Agent
Property agents who link up buyers and sellers. Estate Agents
advertise houses & arrange viewings.
Excess
The initial sum you have to pay on an insurance claim.
Exchange of Contracts
The point at which buyer and seller are legally bound to the sale
and purchase of the property.
F
Freehold
Absolute ownership of property and land.
G
Gazumping
A common practice whereby the seller, having already accepted an
offer from Party A, accepts a higher offer from Party B.
I
Indemnity Guarantee Premium
See Additional Security Fee.
J
Joint Agents
When the seller commissions two independent Estate Agents to sell
their house
L
Land Registry
Carried out by the Solicitor to register buyer as the new owner of
the house.
Lease
Document in which the owner of a freehold property lets out their
premises to a named party at a certain price and for a specified
time.
Leasehold
The ownership of a lease.
Lender's Arrangement Fees
Charge passed on to the buyer by lender for arranging a loan.
Lender's Legal Fees
The fees incurred by the lender when arranging a mortgage. These
costs are passed on to the buyer.
Lender's Valuation
A valuation of the proposed property carried out by the lender
before agreeing to give out a mortgage. This is only a
valuation survey. A separate full structural survey is needed by
the buyer.
Life Assurance
An insurance policy which pays out a fixed lump sum on death of an
individual. Life Assurance helps protect from financial
difficulties.
Loan-to-Value
A percentage expressing size of mortgage:value of house. For
example, House Value=£100,000, Mortgage Size=£90,000. Loan-to-Value=90%.
Local Authority Search
A search carried out by the Solicitor to find out if there are any
Local Authority Notices, with respect to the building itself (e.g.
has it been condemned?), and the surrounding area (e.g. have plans
gone through to build a motorway next to the house?).
M
MIG
Mortgage Indemnity Guarantee. See Additional Security Fee
MIRAS
Mortgage Interest Relief At Source.
This used to be tax relief deducted from interest payments on the
first £30,000 of your mortgage. The Government has since phased
this out as of April 2000.
Mortgage
A long term loan to fund the buying of a property.
Mortgagee
The lender of a mortgage.
Mortgagor
The house buyer who takes out a mortgage.
Mortgage Indemnity Premium
See Additional Security Fee.
Mortgage Term
Period over which mortgage is to be repaid.
N
Negative Equity
When the value of your house falls to less than your mortgage.
Over 1.5 million home owners have experienced this during the
recent recession.
P
Pension Mortgage
Monthly repayments made up of a) Interest on loan and b)
contribution to a personal pension scheme. The loan on the house
is paid off in one lump sum at the end of the loan period.
Premium
The monthly amount payable to an insurance policy.
Principle
The sum of the loan on which interest is calculated.
Public Liability Insurance
Insurance which covers injury or death to anyone on or around your
property.
R
Redemption
When a mortgage if fully repaid.
Relocation Agents
Specialists in finding houses, raising finances, organising
surveys and completing negotiations.
Repayment Mortgage
A basic mortgage capital and interest on the loan are paid off in
monthly installments.
Repossession
When the mortgage lender takes away your home because you have
fallen too far behind on your mortgage repayments.
S
Sole Agent
When a seller chooses only one Estate Agent to sell their home.
Solicitor
Legal Professional who acts on behalf of the buyer in the purchase
of a house. The solicitor will check the legal position of the
house, carry out a Local Authority Search, Land Registry and
oversee the exchange of contracts between the two parties.
Stamp Duty
A government tax where the higher the property value, the greater
the percentage you pay.
- £0 - £60,000. No duty levied.
- £60,001 - £250,000. 1%
- £250,001 - £500,000. 3%
- Over £500,001. 4%
Structural Survey
A report constructed by the surveyor detailing firstly, whether
the house is structurally sound and secondly, listing the major/minor
defects, (including the necessary work which needs to be done).
Surveyor
The person who carries out a structural survey of the property,
examining the structure and general state of the house.
T
Tax Relief
See MIRAS
Term
The period in which a mortgage is taken out.
Title
The legal right to ownership of a property.
Title Deeds
The document which shows the ownership of a property.
V
Valuation Survey
A survey carried out by the lender to ensure that the house's
value is not less than the proposed loan. Often the lender will
arrange the survey and bill the buyer.
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