The Jargon

There may be terms with which you may be unfamiliar.  We have listed the most common to help keep you fully informed.

Annual Percentage Rate (APR)
The APR is a compound interest rate figure used to compare different mortgages. Defined by law, it includes repayments on the loan plus any mortgage related fees such as booking, arrangement or basic valuation fees.  The APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations.

| Applicant
The person or party applying for a property to buy.

| Appraised Value
The value of a property, as estimated by a surveyor.

| Appreciation 
The increase in the value of a property as a result of changes in market conditions.

| Arrangement fee
A fee sometimes payable to lenders for arranging your loan.

| Adverse Credit
A term used to refer to people with a poor credit history.  This may include but is not limited to, things such as County Court Judgements (CCJ’s), bankruptcy, mortgage arrears, Individual Voluntary Agreements (IVA’s) and credit card or other borrowing arrears or defaults.

| Assured Shorthold Tenancy (AST)
It gives the landlord the right to claim their property back after a specific period of time.

| Bank Automated Clearing System (BACS)
A type of fund transfer that is normally electronically done, it is normally free of charge.

| Building Survey (formerly full structural survey)
A full inspection of the property, conducted by a chartered surveyor, who will write a detailed report setting out the soundness of a property and any property defects.  Suitable for any house, particularly older properties and those that have been poorly maintained, as well as properties that have been extensively altered or extended, or any property due to be altered or extended.

| Building Insurance
An insurance policy that pays the cost of repair or rebuilding in the event your property is damaged or destroyed.  Most mortgage lenders will require buildings insurance to be taken out as a condition of their loan.

| Bridging Loan
A temporary loan given to help buy a new property before the existing one has sold.

| Break Clause/Release Clause
 A clause in a tenancy agreement that provides both tenant and landlord the opportunity to terminate the tenancy agreement early during the fixed-term (e.g. the tenant can terminate a 12 month tenancy 6 months into the term).

| Buy-to-let mortgage 
A type of mortgage specifically designed for people buying a property with the intention of letting it out.

| Capital Appreciation 
Growth or gain in the value of a property or asset over time.

| Capital Gains Tax 
A tax on profits above a fixed level made from the sale of financial assets such as a house, flat or shares.

| County Court Judgement (CCJ)
 You can get a CCJ if you default on a payment of debt.  If you do get a judgement against you may have difficulty in getting credit in the future.

| Chain
 A number of property sales where exchange of contracts must take place at the same time, because they’re linked together.

| Completion Date
The completion of the legal transaction, with the money and documents all distributed, and keys are released.

| Contract
The formal agreement between buyer and seller, prepared by the solicitor or conveyancer, detailing the terms and conditions of the sale.

| Conveyancing
The legal work behind buying and selling properties.

| Deeds
Also known as Title Deeds. They are the legal title documents that prove ownership of a property. They are transferred to the new owner on the sale of a property and are held by the mortgage lender.

| Deposit
The sum of money that is paid to the vendor on exchange of contracts on a property.

| Disbursements
The fees paid by the solicitor on the buyer’s behalf, such as stamp duty, land registry and search fees, also known as Legal Fees.

| Discharge fee
You have to pay this to some lenders for releasing their hold over a property once you’ve paid off your loan.  It often applies if you pay off your mortgage early before the standard term has run but not always.

| Discounted rate
This is a guaranteed reduction on the lender’s variable rate.  It is usually only available for an agreed period of time, such as two to five years after which the interest rate reverts to the lender’s variable rate.

| Draft contract
The preliminary, unconfirmed version of the contract that is drawn up when the sale is first agreed.  It will set out the conditions of sale and will need to be confirmed by the vendor’s solicitor.

| Draft Transfer
A legal document issued by the vendor’s solicitor to the purchaser’s solicitor setting out the terms and conditions of sale.

| Early Repayment Charge (ERC)
A charge levied by the lender as a penalty if a mortgage is paid off within a specified period.

| 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 Performance Certificate (EPC)
 An EPC measures the energy efficiency of a property using a scale of A-G.  It is a legal requirement to have a valid EPC commissioned before a property can be marketed.

| Equity
The amount of money either put into buying a property or the deposit placed on a property which exceeds the amount of any money borrowed against the property.  Also known as capital.

| Excess
The initial sum paid on an insurance claim.

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

| Financial Services Authority (FSA)
An independent body that regulates the financial services industry in the UK.

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

| Fixtures and fittings
All non-structural items included in the purchase of a property.

| Flexible mortgage
An arrangement whereby you can increase or decrease your mortgage.

| Flying freehold
A flying freehold exists when one part of a property extends over, or under, a neighbouring property.

| Freehold
Where the owner of the property also owns the land on which it is built.

| Gazumping
When a seller accepts a higher offer from a third party on a property that they have already agreed to sell to someone else, prior to exchange of contracts.

| Gazundering
When a buyer reduces their agreed offer prior to exchange of contracts.

| Ground Rent
The annual charge levied by the freeholder to the leaseholder.

| Home Buyers Report
The home buyer’s report comments on the structural condition of most parts of the property that are readily accessible, but does not involve in-depth investigation or the testing of water, drainage or heating systems.

| Home Buyers Survey & Valuation
A property survey that includes a valuation and should reveal any major faults in the property.  It is not as detailed as a Structural or Building Survey but will give your mortgage lender a valuation of the property you intend to purchase and outline any major structural repairs that may be required.

| Inflation
The general rise in prices over time.

| Indemnity 
A policy or cover to protect against mortgage payment defaulting (Mortgage Indemnity Guarantee) or covering a defect within a property (House Indemnity Insurance).

| Interest Charges
The charges that banks make on a loan, calculated as a percentage of the amount borrowed.

| Interest-Only Mortgage
A type of mortgage in which the borrower only repays the interest on the loan for the duration of its term, and repays the full loan amount at the end of the mortgage period.

| Introducer Fee
A commission that is paid by the lender to intermediaries for introducing business to them.

| Inventory 
An inventory is a list of all the contents of a property, as well as the condition of a property and the structural fixtures, generally used for AST rental properties.

| Joint Income
The total gross income of the two borrowers in a joint mortgage.

| Land Certificate
Land document issued by the Land Registry to the owner of registered land as proof of ownership.  It includes a copy of the register and the plan showing the extent of the land.

| Land Compensation
Concerns the assessment of compensation where land, or some other interest in land, is being acquired, either compulsorily, or by agreement, by an authority possessing compulsory purchase powers.

| Land Registry
The official body responsible for recording the ownership of land.

| Land Registry Fee
Fees paid by a solicitor on the buyer’s behalf to register ownership of property with the Land Registry. This ensures that once you have purchased the property you are the legal owner of the land (if freehold).

| Leasehold
This means you own a property for a set number of years.  When the lease expires, the property returns to the freeholder. Flats are commonly sold as leasehold or your house may be built on leasehold land.

| Land Search
A formal application for an inspection of the Land Registry register.  A certificate is issued showing the current situation of the land in question.

| Legal Fees
Fees that will be charged by your solicitor or conveyancer in relation to the purchase or sale of your property.  They will include professional fees as well as any search and mortgage fees.

| Local Authority Search 
A number of different searches to find out if there are any Local Authority Notices with respect to the building that you intend on buying and the surrounding area.

| Maintenance Charge (or service charge)
The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.

| Maisonette
A self-contained apartment (usually on two floors) in a larger house with its own entrance from the outside.

| 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 of time.

| Mortgage Deed 
A document that details the conditions of a mortgage secured on a property.

| National House-Building Council (NHBC) scheme
A type of building guarantee available on some newly built homes under which defects, occurring within a specified time after construction, are remedied.

| Negative Equity 
When the value of the property is less than the outstanding sum owed on a mortgage.

| Offer
A sum of money that the buyer offers to pay for a property.

| Offer of a Loan
A formal document approving the mortgage you have requested and detailing the Terms and Conditions that will apply.

| Office Copy Entry
An official document from the Land Registry confirming ownership of and borrowings against a property.

| Peppercorn Ground Rent
A nominal periodic rent, usually paid annually.

| Preliminary enquiries
A set of questions that are raised by solicitors on the sale/purchase of a property.  They can be completed in advance of an agreed sale (along with a fixtures and fittings form) to avoid any delays once a property is under offer.

| Re-Mortgage
Refinancing a property by either switching a mortgage from one lender to another, or by taking out a second mortgage, to take advantage of any equity gained by a rise in value.

| Redemption
When a mortgage is fully repaid.

| Referencing
A process of checks carried out on behalf of a landlord to ensure potential tenants are who they say they are and are able to commit to the letting requirements in place.

| Repayment Mortgage
A mortgage in which monthly charges are used to repay the interest and reduce the outstanding capital.

| Repossession
When the mortgage lender takes possession of a property due to non-payment of the mortgage.

| Retention
The ability of a lender to hold back (retain) part of a mortgage until certain conditions are met.

| Right to Rent
Recent government legislation that make it a legal duty to check that any prospective tenants are living in the UK legally and have the right to rent.

| Search
A request or enquiry for information concerning the property held by a local authority or by the Land Registry.

| Semi-Detached
A property which is joined to one other house.

| Service Charge
Service charges are paid by the owner, and cover the cost of providing various services (i.e. maintenance and repair of the building and common parts, provision of heating, lighting and security).

| Share of Freehold
Where the freehold on which the property stands is owned by a limited company and the shareholders of that limited company are the owners of the property.

| Sole Agent
When a seller chooses only one estate agent to sell their property.

| Shared Ownership
Usually provided by housing associations, this scheme allows first-time buyers the chance to purchase a share of property between 25% and 95%, and then pay rent on the remaining share.  More shares can be purchased, if offered, till full ownership is gained.

| Stamp Duty
A government tax paid by the buyer on completion of the sale.

| St Albans City & District Council (SADC)
Website:  https://www.stalbans.gov.uk

| Tenure
This relates to whether a property is freehold or leasehold, it denotes the type of ownership of a property has.

| Title Deeds
Documents showing the legal ownership of a property.

| Title Insurance
An insurance policy which a buyer can take out to allow a sale to complete where there is a potential problem with the documentation in proving legal ownership of some part of the land they are buying.

| Title Search
An investigation carried out by a conveyancer or solicitor into the history of ownership of a property.  The search will check for liens, unpaid claims, restrictions or any other problems that may affect ownership.

| Transfer Deed
A document from the Land Registry 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 buyer, prior to exchange of contracts.

| Vacant Possession
This is when the property is vacant.  The previous occupants of the property must vacate the property before you move in.

| Vendor
The seller of the property.

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

 

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