A Comprehensive Mortgage Glossary in the Bristol Area: Understanding Abbreviations in the Mortgage World.
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Annual Percentage Rate of Charge (APRC)
This figure shows the annual cost of the mortgage, including fees, over the full term of the mortgages (i.e. 25 years), expressed as a percentage per year.
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Arrangement Fee
This is a fee sometimes imposed by the lender for borrowing from them.
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Arrears
This is where you have missed one or more mortgage payments.
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Base rate/Bank of England Base Rate
This is the interest rate that the Bank of England will charge commercial banks for lending.
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Booking Fee
Some lenders may charge you a non-refundable fee upfront for securing a deal with them, meaning that you will not get your money back even if the case does not proceed.
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Completion
This is when the sale completes, and you finally own your new home.
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Conveyancer / Solicitor
This is a specialist lawyer in the legal aspects of buying and selling a property. You should instruct a conveyancer to provide advice and carry out all legal requirements relating to the purchase (and sale if applicable), to include carrying out searches and checks on the property, liaising with other parties, drafting documentation and legally transferring the ownership of the land.
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Conveyancing
This is the branch of law concerned with the legal process of transferring a property or land between owners.
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Defaulting
This is failure to fulfil a legal obligation, especially to repay a mortgage.
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Deposit
This is a lump sum of money you will be required to pay towards the purchase of the property.
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Early Repayment Charge (EPC)
This is a penalty which you may incur from the lender if you plan to pay your mortgage back early.
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Equity
This is how much of your house you own i.e. the difference between the value of your home and the mortgage you have on it. The equity in your existing home can be used as your deposit if you are buying a new home.
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Exchange
This is when contracts are exchanged between you and the buyer and therefore you are legally bound to buy your new home.
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Freehold
The freeholder of a property owns it outright, including the land it’s built on.
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Guarantor
A guarantor is someone who legally guarantees to pay your mortgage if you are unable to.
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Interest
This is the amount of interest you will be charged for the new mortgage.
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Leasehold
This means that you only own the property for a fixed period as specified in the legal agreement you have with the landlord/freeholder. Ownership of the property returns to the landlord when the lease comes to an end.
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Loan to Value (LTV)
This is the ratio of the loan in relation to the value of the property. As an example, if you were purchasing a £200,000 property with a 10% deposit, you will require a 90% LTV.
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Mortgage Deed
A legally binding document which formally secures the mortgage loan against your property.
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Mortgage Term
The length of time over which you agree to repay your mortgage, such as 25 years.
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Mortgagee
The mortgage lender.
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Mortgagor
The mortgage borrower.
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Negative Equity
When the value of your house falls to a figure which is lower than your outstanding mortgage amount.
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Porting
This is where you take your existing mortgage deal and transfer it to your new property, with all other terms remaining the same.
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Redemption
Where the full outstanding balance of the mortgage is repaid.
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Remortgage
This is the process of switching your current mortgage for a new deal on your existing home.
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Repossession
This is where the lender evicts you from your home and sells the house in order to recoup any losses they may have incurred due to your failure to make your mortgage payments.
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Stamp Duty Land Tax (SDLT)
This is a form of tax levied on the purchaser of a property in respect of a land transaction, and payable to H M Revenue and Customs.
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Valuation / Survey
The lender will require a surveyor’s valuation in order to provide them with an independent assessment of the value of your property, before they will lend against the property. There are different types of valuation as detailed below, and the costs can vary greatly:
- Basic Valuation – This is a straightforward valuation with little detail, but will let the lender know what the property is worth and satisfy them that the lending is suitable against the value of the property.
- Home Buyers Report – This is a detailed report about your new property, highlighting if the surveyor has found any issues with the property which may create future costs or problems.
- Buildings Report –This is an in-depth survey with a comprehensive inspection of the property carried out, and is generally appropriate for older or unusual properties, or where the purchaser is intending to carry out significant works.