Mortgage Jargon A-Z Glossary | Let’s face it, the mortgage process can feel overwhelming, especially when you’re confronted with dozens of terms that sound like a foreign language. If you’re a first-time buyer, you might even be asking yourself, “Can I get a mortgage if I don’t understand all this jargon?” It’s completely normal to feel uncertain. But don’t worry, you don’t need to be an expert to make sense of it.
We deal with mortgages every day, and we’ve put together this simple A-to-Z guide to explain key mortgage terms in plain English. By understanding the basics, you’ll feel more confident when completing paperwork and making major decisions about your home loan. (And once you master these terms, you can also explore our guide on How Can I Get a Mortgage? for answers to that big question.)
Once you understand the basics, you can explore our other guide, ‘How Can I Get A Mortgage?‘ to find answers to your initial question.
A
Additional borrowing:
Borrowing extra funds on top of your existing mortgage, thereby increasing your total loan amount. People often take on additional borrowing for home improvements, a deposit for a buy-to-let property, or an extravagant purchase (e.g., a wedding or a new car).
Annual Percentage Rate of Charge (APRC):
An estimated yearly percentage that reflects the total cost of your mortgage, including interest and fees, over the full loan term. The APRC makes it easier to compare different mortgage deals at a glance, since it projects the overall cost if you keep the mortgage for the entire term.
B
Bankruptcy search:
A background check performed by your solicitor or conveyancer (on behalf of the lender) to ensure that the buyer or seller has not been declared bankrupt. This search helps protect all parties by revealing any past or present bankruptcy issues before the mortgage proceeds.
Balance sheet:
A financial statement showing a company’s assets, liabilities, and equity at a specific point in time. It provides a snapshot of the business’s assets and liabilities. If you’re self-employed, a lender might review your business’s balance sheet to assess its financial health when considering your mortgage application.
Base rate:
The benchmark interest rate set by the Bank of England. The base rate influences how banks set their own interest rates for mortgages, loans, and savings. When the base rate goes up or down, variable mortgage rates and tracker mortgages will typically move up or down as well, affecting how much interest you pay.
Booking fee:
An upfront fee that some lenders charge to reserve a specific mortgage deal (often a special fixed or tracker rate). Paying a booking fee secures the interest rate for you (usually upon application approval), so it isn’t offered to someone else. Not all mortgages have a booking fee, and some lenders only charge it once the mortgage is confirmed.
C
Capital repayment:
The portion of your monthly mortgage payment that goes toward repaying the original amount you borrowed (the principal). In a repayment mortgage, each monthly payment includes both principal repayment and interest. Over time, capital repayments reduce your outstanding loan balance, eventually bringing it to zero by the end of the term.
Completion:
The final stage of a property sale. On completion day, the buyer’s solicitor transfers the purchase money to the seller’s solicitor, the legal documents are finalised, and ownership of the property officially passes to the buyer. Once the completion is complete, you can collect the keys to your new home and move in. Congratulations!
Completion fee:
A fee charged by the lender to cover the cost of transferring the mortgage funds to your solicitor (or to you) at the start of the mortgage. It’s a bank transfer/administration fee for releasing the funds. Some lenders call this a “telegraphic transfer fee” or include it in their product fees.
Consent to let (CTL):
Permission from your lender to rent out your home even though you have a residential mortgage on it. For example, if you need to work abroad for a year and want to let out your house temporarily, you must obtain your lender’s consent to let. This allows you to legally rent out your property on a short-term basis without switching to a buy-to-let mortgage (though conditions will apply and your lender’s approval is required).
Contract:
A formal written agreement between the buyer and the seller that outlines all terms and conditions of the property sale. It includes details such as the purchase price, property boundaries, and any sale conditions. Importantly, even after both parties sign the contract, it is not legally binding until the exchange of contracts (when each party’s signed contract is exchanged). Until the exchange, either party could change their mind without incurring significant penalties.
Conveyancer:
A licensed property lawyer or conveyancing solicitor who handles all the legal aspects of buying or selling a home on your behalf. Your conveyancer’s duties include performing local searches, preparing and reviewing contracts, advising on any legal issues, coordinating the exchange of contracts, requesting mortgage funds from the lender, and registering the change of ownership with the Land Registry. In short, they make sure the property’s legal title transfers to you correctly and that all the legal boxes are ticked at completion.
D
Decision in Principle (DIP):
Also known as an Agreement in Principle, this is a certificate or statement from a lender indicating how much they may be willing to lend you, in principle. A DIP is based on basic financial information (your income, expenses, and a soft credit check) and is not a guaranteed offer, but it shows estate agents and sellers that you’re a serious buyer. Having a DIP in hand can put you in a stronger position when making an offer on a property.
Deposit:
The upfront amount you put toward the property’s cost reduces the amount you need to borrow. It’s usually expressed as a percentage of the purchase price. For example, a 10% deposit on a £200,000 home is £20,000. The higher your deposit, the lower your Loan-to-Value ratio, which can help you access better mortgage rates.
Drawn down:
The moment your mortgage funds are released by the lender to your solicitor, usually on the day of completion. Once the funds have been drawn down and sent to the seller’s side, your mortgage officially starts, meaning you now owe the money, and interest (and repayments) will begin accruing from that day.
E
Early Repayment Charge (ERC):
A penalty fee you might have to pay if you overpay too much on your mortgage, or clear the loan entirely, before a set period ends. Mortgages with special low rates (e.g., a 5-year fixed rate) often include an ERC if you exit the deal early. The ERC compensates the lender for the interest they would have earned. Always check how long any ERC applies. Once you’re past that period (or on a standard variable rate), you can usually repay without penalties.
Estimated property value:
The approximate value of the property you want to buy (or remortgage). This could be the agreed purchase price or an estimate of the property’s open-market value. Lenders will often require a valuation to confirm this figure. Tip: It’s wise to research recent sale prices of similar homes in the area to gauge a realistic estimated value.
Exchange of contracts:
A critical stage in the home-buying process where the transaction becomes legally binding. During the exchange, the buyer’s and seller’s solicitors exchange signed copies of the contract, and the buyer typically pays a deposit (usually 5-10% of the purchase price) at this time. After exchanging contracts, both parties are committed to complete the sale; backing out could result in financial loss (for example, the buyer would lose their deposit if they pulled out after exchange).
Exit fee:
A fee that some lenders charge when you pay off your mortgage in full (either at the very end of the mortgage or when you remortgage to a new lender). Not all lenders have an exit fee (sometimes called a redemption administration fee), but if it applies, you’ll see it in your original mortgage offer documents. It’s usually a relatively small administrative charge.
F
Fee saver:
A feature of certain mortgages is that the lender waives certain standard fees. For example, a “fee saver” deal might come with no arrangement fee, no valuation fee, and no completion fee, saving you money on upfront costs. These deals can be attractive if you want to minimise the cash you need to pay at the application stage, but sometimes fee-saver products have slightly higher interest rates (so it’s a trade-off to consider).
Financial crime:
An umbrella term for illegal activities involving money or finance. This includes activities such as money laundering, terrorist financing, bribery and corruption, tax evasion, fraud, and violations of financial sanctions. When you apply for a mortgage, the lender will have processes to detect and prevent financial crime (for example, identity checks and transaction monitoring) to ensure no loan funds are used for illicit purposes.
First legal charge (England, Wales, NI):
The primary legal claim a lender has on a property is when you take out a mortgage. Having a first legal charge means your mortgage lender is first in line to recover money from the sale of the property if you don’t repay the loan. In practical terms, when you have a mortgage, the lender’s charge is registered on the title so if you sell, that debt must be paid off before any proceeds go to you.
First-ranking standard security (Scotland):
The Scottish equivalent of a first legal charge. It’s a legal agreement (under Scottish law) that gives the lender rights over the property, recorded in the Land Register of Scotland. If the borrower fails to meet their mortgage obligations, the first-ranking standard security allows the lender to take possession of the property and sell it to recover the debt. It’s essentially what makes the mortgage a “secured” loan in Scotland.
Fixed-rate mortgage:
A mortgage with an interest rate that stays the same for a set period of time (e.g., 2, 5, or 10 years), no matter what happens to market interest rates. Because the rate is fixed, your monthly payments remain constant during that period. Fixed-rate mortgages provide stability and make budgeting easier, since you know exactly what you’ll pay each month. After the fixed period ends, the loan usually moves to a variable rate (often the lender’s SVR) unless you arrange a new deal.
Fixed until:
The date when your current fixed interest rate period expires. For instance, if your mortgage is “fixed until 30/09/2027,” that means your rate will change on 1st October 2027 (typically to a variable rate unless you switch to a new deal). It’s a good idea to diary this date and start looking for a new mortgage deal a few months before the fixed rate ends.
Full reinstatement value:
For insurance purposes, the full cost to rebuild your property from scratch. This figure is used for building insurance. It’s the amount it would cost to completely reconstruct your home if it were destroyed (for example, by a fire or other disaster). It includes materials and labour at current prices. The full reinstatement value (also called the rebuild cost) is not the same as the market value of the property, and it’s usually determined by a surveyor or stated on your mortgage valuation report.
H
HM Land Registry:
The official government body in England and Wales that records property ownership and title information. Whenever a property is bought or sold, the Land Registry updates its records to reflect the new owner and any legal charges (like mortgages) on the property. A property’s Land Registry entry will show details such as the owner’s name, the date they bought it, whether it’s freehold or leasehold, and any restrictions or charges. (Scotland and Northern Ireland have their own land registries: Registers of Scotland and Land Registry NI, respectively.)
I
Illustrative:
In mortgage documents or examples, “illustrative” means an example scenario provided for explanation. For instance, an illustrative repayment figure in a brochure is to show you how a typical mortgage might work. It’s not a guaranteed or exact number; it’s there to help you understand, assuming certain interest rates or conditions.
Interest calculated daily:
Interest on your mortgage is calculated on your balance each day (rather than monthly or annually). Daily interest calculation is beneficial to borrowers because any extra payments you make will reduce your balance immediately, and you’ll accrue slightly less interest from that day forward. Most modern mortgages calculate interest daily, which means you’ll often save interest compared to a yearly calculation, especially if you make overpayments.
Interest-only mortgage:
A type of mortgage where your monthly payments cover only the interest on the loan, and you’re not paying back the principal during the term. As a result, the monthly payments are lower than those of an equivalent repayment mortgage. However, at the end of the mortgage term, you still owe the full original amount you borrowed. You’ll need a plan for repaying the loan (e.g., through savings, investments, or by selling the property), as the lender expects the principal to be repaid at that time.
Interest rate type:
This refers to whether your mortgage’s interest rate is fixed or variable. If it’s fixed, your rate (and payments) won’t change during the fixed period. If it’s variable, your rate can fluctuate. Common variable types include tracker rates (which move in line with the Bank of England base rate) and standard variable rates (which the lender can change at their discretion). Always check what type of rate you’re signing up for, as it affects how your payments might change.
L
Legal charge (England, Wales, NI):
A legal document that secures the mortgage lender’s interest in your property. When you take out a mortgage, you agree to a legal charge being registered at the Land Registry. This means if you fail to repay the loan, the lender has the right to repossess the property. The legal charge remains until the mortgage is fully paid off, after which it’s removed (and you then own the property free and clear of the lender’s interest).
Letter of consent:
A document that some people living in a property may need to sign when they’re not going to be named on the mortgage. It typically applies to adults (17 or older) who live on the property, such as a partner, relative, or lodger who is not a borrower. By signing a letter of consent (sometimes called a deed of postponement or waiver), they agree that the mortgage lender’s rights come first. In other words, they consent to the property being used as security and agree to vacate if the lender must repossess the home. This prevents a scenario in which an occupier could claim a right to remain that could interfere with the lender’s ability to recover its funds.
Loan to Value (LTV):
The ratio of the loan amount to the property value, expressed as a percentage. For example, if you buy a £300,000 home with a £240,000 mortgage, your LTV is 80% (since £240k is 80% of £300k). A lower LTV (meaning you have a larger deposit) generally gets you access to better interest rates, because the lender’s risk is lower. Many residential mortgages require a deposit of at least 5-10%, corresponding to an LTV of up to 90%.
Local searches:
Checks conducted by your solicitor with the local authorities to uncover any issues or plans that might affect the property. Local searches typically cover topics such as planning permissions, building regulations approvals, whether the council maintains the road serving the house, planned infrastructure projects (new roads, rail lines), and restrictions such as conservation area status. These searches make sure you won’t face any surprises, such as an unexpected new housing development next door or liability for maintaining a shared driveway.
LPA (Law of Property Act 1925):
A foundational piece of property law in England and Wales. In a mortgage context, “LPA” often appears in terms such as “LPA receiver.” For instance, if a landlord defaults on a mortgage, the lender might appoint an LPA receiver under the Law of Property Act to collect rent or sell the property. LPA is an abbreviation for this important law, which still governs many aspects of property and mortgages today.
Lump sum payment:
A one-off extra payment you make toward your mortgage principal. Lump sum payments instantly reduce your outstanding balance. For example, if you get a work bonus or inheritance, you might put £5,000 as a lump sum against your mortgage. Doing this can shorten the remaining term of your mortgage and reduce the total interest you’ll pay as long as your mortgage allows overpayments (always check if there are limits or early repayment charges).
M
Maximum LTV:
The highest loan-to-value ratio a lender is willing to accept for a given mortgage product or borrower profile. It depends on the lender’s criteria and the type of loan. For instance, a lender might set a maximum LTV of 85% for first-time buyers on a certain deal, meaning you’d need at least a 15% deposit. The maximum LTV can also vary with property type (new-builds often have lower max LTVs) or your credit history.
Monthly payment:
The amount you pay your lender each month toward your mortgage. For a repayment mortgage, this monthly payment consists of two parts: a portion that pays the interest due for the month and a portion that pays down some of the principal (the original amount borrowed). If you have an interest-only mortgage, your monthly payment only covers the interest, so the amount you owe doesn’t drop over time. Always ensure you can afford the monthly payment before taking out a mortgage, and remember that it may change with a variable-rate loan.
Mortgage debt:
The outstanding amount of money you owe on your mortgage at any given time. Right after you take out a mortgage, your mortgage debt is the full loan amount. As you make repayments (on a repayment mortgage), your mortgage debt gradually decreases because you’re paying off the principal. If you only pay interest (interest-only mortgage), your mortgage debt stays the same until you pay off a chunk of the principal.
Mortgage deed:
The legal document (or set of documents) that you sign to formally agree to the mortgage terms and give the lender security over your property. By signing the mortgage deed, you’re acknowledging the loan and the conditions (interest rate, repayment obligations, etc.), and you’re creating a legal charge against your home in favour of the lender. After signing, this deed is usually sent to the Land Registry (or Registers of Scotland) to register the lender’s interest. The mortgage deed makes the whole arrangement official and enforceable.
Mortgage illustration:
A detailed document provided by the lender or broker that outlines all the key facts and figures about a proposed mortgage. It will show the interest rate, the length of the deal, all fees payable, your monthly payments, and the total cost if you keep the mortgage for the full term. This was formerly called a Key Facts Illustration (KFI) and is now often provided as an ESIS (European Standardised Information Sheet). The key is that all lenders use a standard format, making it easy to compare mortgage offers. Always read your mortgage illustration carefully; it’s basically a preview of the contract you’d be entering.
Mortgage term:
The length of time you agree to pay off your mortgage. A typical mortgage term is 25 years, but it can be shorter or longer. (Some first-time buyers now take 30-35 year terms to make monthly payments more affordable, while others may choose 15-20 year terms to become mortgage-free sooner.) By the end of the term, if it’s a repayment mortgage and you’ve made all payments, you should have repaid both the original amount and all interest. If your term is interest-only, you’d still owe the original amount at the end and will need a strategy to pay it off then.
Mortgage offer:
The formal approval document from your lender confirming their agreement to lend you a specific amount under certain terms. Once you have a mortgage offer, it means all checks (credit, income, property valuation, etc.) are complete, and the lender is ready to proceed. The offer will specify the interest rate, any special conditions, and the offer’s validity period (typically 3 to 6 months). You usually need to sign to accept the offer, and your solicitor will then work with the lender to draw down the funds upon completion of the purchase.
N
Negative equity:
A situation where the value of your home falls below the amount you owe on your mortgage. For example, if you bought a house for £200,000 with a £180,000 mortgage, but later the property’s value drops to £170,000, you’d be in negative equity because your outstanding loan might still be around £175,000, which is more than the home is worth. In a negative-equity situation, selling the property would not generate enough proceeds to fully pay off the mortgage (you’d still owe the lender money). This typically becomes an issue if house prices decline or if you borrowed at a very high LTV and haven’t paid much off yet.
No onward chain:
Also known as “no chain” or “chain-free”, this term indicates that the seller isn’t waiting to buy another property with the proceeds of this sale. In other words, the seller has either already moved out (perhaps they’re selling a second home or a rental, or they’re moving in with family) or they will move into temporary accommodation. For buyers, a no-chain sale is attractive because it usually means fewer delays and complications, you only have to synchronise with the seller, not a whole string of other linked transactions.
New-build property:
A property that is brand new or very recently built, often one that has never been lived in. Typically, this term covers:
- Recently constructed homes (typically built within the past 24 months) are often sold directly by the developer.
- Homes yet to be occupied for the first time (even if finished more than 24 months ago).
- Newly converted properties (e.g., a large house converted into apartments) that haven’t been occupied in their current form.
New-build properties may come with warranties such as the NHBC 10-year guarantee, and lenders sometimes have special criteria or slightly different maximum LTVs for new-builds.
O
Outstanding balance:
The remaining amount you owe on your mortgage at a given time. You can usually see this on your annual mortgage statement or online account. For example, if you initially borrowed £200,000 and have paid it down to £150,000, that £150k is your outstanding balance. This balance will gradually decrease with each monthly repayment (for a repayment mortgage). If you make extra payments, the outstanding balance will drop faster.
Overpayment:
Any extra payment you make toward your mortgage, on top of your normal monthly payments. Overpayments can be one-off lump sums (like paying an extra £1,000 once) or regular overpayments (say, £100 extra every month). Overpaying can save you significant interest and shorten your mortgage term by reducing the outstanding balance faster. Just be mindful of your lender’s rules: many allow up to 10% of the balance per year in overpayments without penalty during a fixed rate period, but it’s important to check your mortgage’s overpayment limit to avoid an ERC (Early Repayment Charge).
P
Payment day:
The calendar day of the month when your mortgage payment is collected. For example, you might choose the 1st, 15th, or 28th of each month as your payment day. If the payment date falls on a weekend or bank holiday, the direct debit is usually processed on the next working day. Choosing a convenient payment day (like right after your payday) can help make budgeting easier.
Personal data:
Any information that can be used to identify you as an individual. This includes basics such as your name, date of birth, and address, as well as details such as your National Insurance number or bank details. Mortgage lenders collect substantial personal data during applications (for credit checks, fraud prevention, etc.) and are required to protect it under data protection laws (e.g., GDPR). If a lender or broker requests personal data, it should be for a legitimate purpose related to your application, and they should handle it securely.
PHTSA:
Stands for the Private Housing (Tenancies) (Scotland) Act 2016. This piece of legislation introduced the Private Residential Tenancy in Scotland, replacing older tenancy types for private lets. You might encounter “PHTSA” if you’re dealing with buy-to-let mortgages or rental property rules in Scotland, as it sets out rights and obligations for landlords and tenants in Scottish private rentals.
Porting:
The process of transferring your existing mortgage to a new property when you move home. Not all mortgages are portable, but if yours is, you can move house without paying off your current mortgage; instead, you carry it over to the new property (often keeping the same rate and terms). In practice, you’ll still have to go through some application process (the lender will check the new property’s value and your circumstances again), and if you need to borrow more or less, the lender might adjust your deal or split it into multiple parts. Porting can help you avoid paying Early Repayment Charges if you move during a fixed-rate deal.
Product period:
The length of your initial mortgage term. For instance, if you have a 2-year fixed rate, the product period is 2 years. During this period, the special terms (like the interest rate and any incentives) apply. After the product period ends, the mortgage usually switches to the lender’s standard variable rate (SVR), unless you take action to remortgage or switch to a new deal. It’s common to start shopping for a new rate as you approach the end of your product period to avoid potentially higher SVR payments.
Property chain:
A sequence of linked house purchases that rely on each other to happen. For example, imagine you’re selling your flat to buy a house, and the people buying your flat are also selling their old house to someone else, which creates a chain of transactions. If one link in the chain breaks (someone’s sale falls through), it can affect everyone else. Being a first-time buyer is advantageous because you’re chain-free at the bottom; you don’t have to sell a property to buy, which can make your position more attractive to sellers. Likewise, if the house you’re buying is being sold by someone who isn’t buying another (say it’s an investor or someone moving in with family), there’s no onward chain above you. The shorter (or non-existent) the chain, the simpler and faster a transaction can typically be.
R
Remortgage:
Switching your existing mortgage to a new deal or lender without moving home. Homeowners remortgage for various reasons: to get a lower interest rate (saving money on monthly payments), to switch from an interest-only to a repayment loan (or vice versa), or to borrow more (for home improvements, for instance, by releasing some equity). The remortgage process typically involves a new application, valuation, and legal work, but many lenders offer free valuations and legal packages for standard remortgages to streamline the process. You can remortgage with your current lender (often called a product transfer or switch) or go to a different lender, whichever offers the best deal.
Residential mortgage:
A mortgage for a home you intend to live in as your main residence. This is opposed to a buy-to-let mortgage (for a property you rent out) or a commercial mortgage (for business properties). Residential mortgages come with consumer protections and are regulated by the Financial Conduct Authority (in the UK), whereas pure business loans might not be. If you plan to rent out a home with a residential mortgage, you must obtain Consent to Let (or switch to a buy-to-let mortgage), as standard residential loans are based on owner-occupancy.
Right of withdrawal:
The legal right to cancel an agreement within a specific cooling-off period. For mortgages, there isn’t a general right to withdraw once the mortgage is completed (since it’s a secured loan), but during the application process, you can back out before you draw down funds. In other contexts, like insurance or certain financial products, you often have 14 days (for insurance) or even up to 30 days (for some investments) to change your mind. Always check the terms when signing; they will state whether a right of withdrawal or cancellation exists and how long the window is. Essentially, this right is about being able to say “I’ve changed my mind” shortly after agreeing, and walk away without penalty (or minimal penalty).
S
Securitisation:
A complex financial process in which a lender bundles a portfolio of loans (such as mortgages) and sells it to investors as tradable securities (bonds). The idea is that the lender receives a large upfront payment from investors, which it can use to originate additional loans. In contrast, investors receive mortgage payments (principal and interest) as returns. If your mortgage is securitised, you might notice the legal owner of the loan changes (to a trust or special entity), but you, as a borrower, typically see no change; you still deal with the same lender or servicer, and your terms remain the same. Securitisation is just something happening behind the scenes in the finance world.
Security document:
The paperwork that establishes the lender’s security interest in your property. When you get a mortgage, you sign a security document (such as a mortgage deed or charge) that is then used to register the lender’s right over your home. This document authorises the lender to repossess the property if you fail to repay the mortgage. In England, Wales, and Northern Ireland, it’s often called a Mortgage Deed; in Scotland, it’s a Standard Security. Regardless of the name, its role is to secure the debt against the property.
Security (for a loan):
An asset that a lender holds an interest in as a guarantee for a loan. In the context of mortgages, the property serves as collateral for the loan. That’s why a mortgage is a type of secured loan. If you don’t keep up your repayments, the lender can ultimately take possession of the security (your house) to recover the money. This contrasts with unsecured loans (such as personal loans or credit cards), which have no collateral, which is why mortgage rates are usually lower than credit card rates (the house reduces the lender’s risk).
Soft credit check:
A credit inquiry that does not affect your credit score and isn’t visible to other lenders reviewing your report. A soft check might be done when you get a mortgage quotation or Decision in Principle, or even when you check your own credit score. It’s used for pre-approval or eligibility checks. In contrast, a hard credit check (which happens during a formal mortgage application) does leave a footprint that other lenders can see, and too many hard checks in a short period can slightly hurt your score. The good news: shopping around for mortgages typically involves soft checks initially, so you can explore options without worry.
Solicitor:
A qualified legal professional who can provide advice and services in many areas of law, including property transactions. When buying or selling a house, a solicitor often acts as your conveyancer, performing the same role described under Conveyancer above and handling contracts, searches, and all the legal paperwork. All solicitors are regulated and insured, giving you protection if something goes wrong. You might choose a solicitor (rather than a non-solicitor conveyancer) if your case is complex or if you want someone who can handle additional legal issues that might arise during the process.
Stamp Duty Land Tax (SDLT):
A tax on property purchases in England and Northern Ireland. If you buy a property over a certain price threshold, you’ll owe stamp duty. The rate you pay depends on the price and the property type, and also your situation (for example, first-time buyers often get a discount or exemption up to a certain amount; if you’re buying an additional property, you pay a surcharge).
- In Wales, the equivalent tax is Land Transaction Tax (LTT).
- In Scotland, it’s Land and Buildings Transaction Tax (LBTT).
Each of these has its own rates and bands. These taxes only apply to amounts above their starting thresholds. For example, if the threshold is £250,000 and you buy at £300,000, you pay tax on the £50,000 above the threshold, not the full £300k. Stamp duty rules can change with government policy, so it’s wise to check the latest rates or use an online calculator when you’re budgeting for a home purchase.
Standard conditions:
Standard default terms that apply to all mortgages of a certain type unless specifically varied. In Scotland, for instance, the Conveyancing and Feudal Reform (Scotland) Act 1970 includes a set of Standard Conditions (in Schedule 3) that apply to all standard securities (mortgages) by default. These cover things like the borrower’s duty to insure the property, or what happens if you fall into arrears. Lenders may add to or modify these in the mortgage contract, but they provide a baseline of rights and responsibilities.
Standard valuation:
A basic survey of the property is conducted on behalf of the lender to confirm the property’s market value and suitability for the mortgage. This valuation is primarily for the lender’s benefit; it helps them ensure they’re not lending more than the property is worth (since the property is their security). A standard valuation report is typically brief, highlighting the value and any major issues that could affect it, but it won’t detail minor defects or provide advice to the buyer. (If you, as a buyer, want a more in-depth inspection, you’d commission a Homebuyer Report or Building Survey separately.)
Standard Variable Rate (SVR):
The default interest rate your lender will charge after any introductory deal period ends. Each lender sets its own SVR and can change it at its discretion (often in line with, or in response to, Bank of England base rate moves, though not always exactly). SVRs tend to be higher than special rates, and they have no fixed term; you stay on the SVR until you remortgage or negotiate a new deal. For example, a lender’s SVR might be 5.5%, so if your 2% fixed deal ends, you jump to 5.5% SVR (which is why most borrowers try to remortgage to a new fixed or tracker rate before that happens).
Switching:
Moving to a new mortgage deal with the same lender. This is different from remortgaging. Externally switching (also called a product transfer) means you’re staying with your current lender but changing your rate/product. Many people do this when their fixed or tracker deal is about to finish. The advantage is typically less paperwork and no legal process, since it’s an internal switch. Your lender may offer you a selection of retention deals. If you do nothing when your current deal ends, you’ll usually be automatically switched to the SVR (which, as mentioned, is often higher), so it’s wise to consider switching or remortgaging when the time comes.
T
Tariff of charges:
A document listing all the fees a lender might charge in connection with your mortgage. For example, it will show if there’s an exit fee, how much a duplicate statement costs, any fees for additional services like switching deals, or charges for late payments. Lenders provide a tariff of charges so you can see potential costs throughout the life of the mortgage. If you’re ever unsure what a fee on your statement is for, the tariff should have an explanation.
Tax authorities:
Government bodies are responsible for collecting taxes and enforcing tax laws. In the UK, this mainly refers to HMRC (Her Majesty’s Revenue & Customs). If you have financial accounts or assets abroad, this may also involve foreign tax authorities. In mortgage terms, lenders may reference tax authorities to ensure compliance (for example, they may ask whether you’re a tax resident in another country due to regulations such as FATCA). It’s basically a formal way of saying “tax office, whether UK or overseas.”
Tax information:
Documentation or details about your tax status that you might need to provide. This could include your tax residency (which countries you’re obliged to pay tax in), your Tax Identification Number (like a National Insurance number or a U.S. Social Security Number), and whether you’re up to date on taxes. Lenders collect certain tax information to comply with applicable laws (including anti-money-laundering and tax-compliance checks for expats or foreign nationals applying for a mortgage).
Term:
In the context of mortgages, “term” refers to the duration of the loan, the period over which the loan is repaid. (See Mortgage term above.) For example, a 30-year term means you have 30 years to pay off the loan. If you overpay and clear it in 25, that’s fine (there’s no penalty once you’re beyond any deal period). If you need longer, you’d need to arrange an extension or remortgage (not all lenders agree to extend terms, especially if it goes beyond retirement age).
Title search:
An examination of public records and legal documents to confirm the property’s legal ownership and find out if there are any claims, liens, or issues. This is done by your conveyancer/solicitor. The title search will verify that the seller owns the property and has the right to sell it, and will uncover rights of way, covenants (rules imposed by former owners), and any disputes affecting the property. In short, it ensures you’re getting a clean title (or informs you of any complications before you buy). In the UK, much of the title information is centralised at the Land Registry, which simplifies the process.
Tracker mortgage:
A type of variable-rate mortgage that tracks a specific interest rate (usually the Bank of England Base Rate) by a fixed difference. For example, a tracker might be Base Rate + 1%. If the base rate is 0.5%, you pay 1.5%. If the base rate rises to 1%, your rate rises to 2%. Tracker mortgages track the linked rate, so your payments may fluctuate. They often have a set term (e.g., a 2-year tracker), after which you revert to SVR if you haven’t switched. Trackers sometimes have no early-repayment charges, giving flexibility to exit if rates change significantly, but always read the fine print.
Transfer deed:
The legal document that transfers ownership of the property from the seller to the buyer. In England and Wales, this is often the TR1 form submitted to HM Land Registry. It’s prepared by the buyer’s solicitor and signed by the seller (and often the buyer), usually immediately after completion. The transfer deed contains details of the property and the parties, and once the Land Registry processes it, you’ll be registered as the new owner. It’s essentially the final step in sealing the deal that says “John Doe now owns 123 Main Street.
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Underwriting:
The decision-making process a lender uses to assess your mortgage application. During underwriting, a lender (or its underwriter team) will verify your income, check your credit report, look at the property details from the valuation, and review all other documents you provided (like bank statements, ID, etc.). They’re basically asking, “Is this loan an acceptable risk?” and if so, under what conditions. The underwriter might approve the loan as is, request additional information, or impose conditions (such as paying off a credit card balance or requiring a larger deposit). When underwriting is complete, you’ll get a final decision, hopefully an approval and then a formal mortgage offer.
Why Understanding Mortgage Jargon Matters: Knowing these terms will help anyone planning to buy a property or remortgage an existing one. When you’re familiar with the lingo, you can navigate the mortgage process more smoothly and make informed decisions with confidence. However, if there’s anything you’re unsure about, it’s always wise to speak to your lender or a qualified mortgage adviser for clarification. They can explain how these concepts apply to your situation in detail.
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