Jargon Buster

Agreement in Principle (AIP)
Also known as a Mortgage in Principle (MIP) or Decision in Principle (DIP), an Agreement in Principle gives you an idea of how much you may be able to borrow when purchasing or remortgaging a property. It’s a document you can show to estate agents or sellers to demonstrate your financial readiness to buy.

APRC (Annual Percentage Rate of Charge)
The APRC represents the total cost of a loan expressed as an annual percentage. It helps you compare the true cost of different mortgage offers.

Arrangement Fee
A fee charged by the lender to cover the cost of setting up and reserving your mortgage funds. This can be paid upfront or added to your mortgage balance.

Arrears
If you miss your mortgage payments, your account is said to be “in arrears”.

Assignment
The transfer of ownership of an insurance policy or lease from one person to another.

Balance Outstanding
The total amount of your loan still owed at a given time.

Bank of England Base Rate
The benchmark interest rate set by the Bank of England. Many tracker and standard variable rate mortgages follow this rate.

Broker / Intermediary
An independent adviser who helps you find and arrange suitable mortgage products and other financial services.

Buildings Insurance
Insurance that covers the cost of rebuilding a property if it’s damaged or destroyed — for example, by fire, flood, or storm.

Building Regulations
Legal standards ensuring the safety, energy efficiency, and performance of new buildings or alterations.

Capital and Interest Payment
A monthly payment that covers both the interest due and a portion of the amount borrowed, gradually reducing your debt.

Cashback Mortgage
A mortgage where you receive a lump sum or a percentage of your mortgage amount in cash upon completion.

CHAPS Fee
A fee for sending mortgage funds electronically to your solicitor or directly to you.

Charge
A legal claim over a property, usually referring to a mortgage or other secured debt.

Completion (Date of Entry in Scotland)
The final stage of the purchase process, when ownership transfers from seller to buyer.

Conclusion of Missives (Scotland)
The point when all contract terms have been agreed and the sale becomes legally binding.

Contents Insurance
Covers your belongings and household items against theft or damage.

Contract
A legal document outlining the terms under which ownership of a property transfers.

Covenant
A condition in the Title Deeds or lease requiring or restricting specific actions by the property owner.

Conveyancer
A licensed professional who manages the legal transfer of property ownership.

Conveyancing
The process of legally transferring ownership of property, usually managed by a solicitor or conveyancer.

Credit Scoring
A system used by lenders to assess your financial profile and determine your mortgage eligibility.

Debt Consolidation
Combining multiple debts (loans, credit cards, etc.) into a single loan, often to simplify repayments.

Decision in Principle (DIP)
Another term for Agreement in Principle (AIP), indicating how much you might be able to borrow.

Deeds
Legal documents confirming ownership of a property and any associated land.

Deposit
The upfront amount you contribute toward the property purchase price. The required deposit varies by lender and product.

Direct Debit
An instruction allowing automatic regular payments from your bank account.

Disbursements
The additional legal costs and fees involved in buying or remortgaging a property.

Discharge
The act of paying off your mortgage in full.

Discount Mortgage
A mortgage offering a discounted interest rate for an initial period, typically two or three years.

Early Repayment Charge (ERC)
A fee charged if you repay your mortgage early, usually during a fixed or special rate period.

Easement
A legal right allowing access or use of another person’s land, such as a shared driveway.

Equity
The difference between your property’s market value and the amount still owed on your mortgage.

Exchange of Contracts
The point when both parties sign and exchange contracts, making the sale legally binding. A completion date is agreed and a deposit is paid.

Exit Fee
A charge from your lender when you fully repay your mortgage or switch to another lender.

Financial Conduct Authority (FCA)
The UK’s regulatory body overseeing all mortgage lenders and advisers.

Fixed Rate Mortgage
A mortgage with an interest rate that remains unchanged for a set period, regardless of base rate movements.

Fixtures and Fittings
Items included in a property sale, such as carpets, lights, or appliances.

Flexible Mortgage
A mortgage allowing overpayments, underpayments, or payment holidays.

Freehold
Ownership of both the property and the land it stands on.

Full Structural Survey
A detailed inspection assessing the overall structural condition of the property.

Further Advance
An additional loan from your current lender secured against your property.

Gazumping
When a seller accepts a higher offer from another buyer after previously agreeing a lower one.

Gazundering
When a buyer lowers their offer just before contracts are exchanged.

Gifted Deposit
When some or all of your deposit is provided as a gift, often by a family member.

Ground Rent
A regular fee paid by leaseholders to the freeholder.

Guarantor
A person, often a parent, who agrees to cover your mortgage payments if you’re unable to.

Help to Buy
Government-backed schemes designed to assist first-time buyers in purchasing a property.

Higher Lending Charge (HLC)
A fee sometimes charged when borrowing more than 75% of a property’s value.

Homebuyer’s Report
A mid-level survey assessing the general condition of the property, often arranged by the lender.

Home Contents Insurance
Covers your household possessions against damage or theft.

IDD / Initial Disclosure Document
A document outlining the services, fees, and charges of lenders and brokers for comparison.

Interest-Only Mortgage
You pay only the interest each month, not the capital. A separate investment plan is required to repay the balance at the end of the term.

Joint Applicants / Joint Mortgage
A mortgage held by two or more people who share ownership equally. If one dies, ownership passes automatically to the survivor(s).

Joint Tenants
A type of ownership where the property automatically passes to the other owner(s) upon death.

Key Facts Illustration (KFI) / ESIS
A standardised document that outlines the main costs and features of a mortgage to help you compare products.

Land Registry
The official body that records property ownership details in England and Wales.

Land Registry Fee
A fee for registering your property or mortgage with the Land Registry.

Leasehold
Ownership of a property for a fixed term, but not the land it stands on. Common for flats.

Life Insurance
Pays off all or part of your mortgage in the event of your death.

Local Authority Search
A check for any nearby planning or environmental issues that could affect the property.

Loan to Value (LTV)
The ratio between your loan amount and property value, shown as a percentage.

Maturity Date
The date when your mortgage term ends or must be repaid.

Monthly Interest / Repayment
Your regular mortgage payment, covering interest or both interest and capital.

Mortgage Deed
A legal document confirming the lender’s claim on the property.

Mortgage Illustration
Details key features, costs, and payments before you apply.

Mortgage Offer
A formal offer from your lender confirming your approved mortgage terms.

Mortgage Term
The total period over which the mortgage is repaid.

Negative Equity
When your home’s market value is less than your outstanding mortgage balance.

NHBC
National House Building Council — provides a 10-year structural warranty for new-build homes.

Overpayment
Paying more than your agreed monthly amount to reduce interest and shorten your mortgage term.

Payment Holiday
A temporary break from mortgage payments during which interest still accrues.

Planning Permission
Approval from your local authority for new construction, extensions, or change of use.

Portability
The ability to move your existing mortgage to a new property when you relocate.

Premium
The amount paid for an insurance policy, monthly or annually.

Product Fee
A setup charge for a specific mortgage product.

Product Transfer
Switching to a new mortgage deal with the same lender when your current one ends.

Rebuild Costs
The estimated cost of rebuilding your home, used for insurance purposes.

Remortgage
Replacing your current mortgage with a new one, either with the same or a different lender.

Repayment Mortgage
A mortgage where monthly payments cover both interest and capital, repaying the loan by the end of the term.

Retention
When a lender withholds part of the loan until certain repairs or conditions are met.

Solicitor / Conveyancer
A legal professional handling all the documentation for property sales and purchases.

Stamp Duty
A tax paid when buying property, with rates depending on the purchase price and buyer status.

Standard Variable Rate (SVR)
A lender’s default interest rate after your initial mortgage deal ends.

Subject to Contract
Indicates an agreement is not yet legally binding.

Survey / Surveyor
A professional inspection assessing the property’s condition.

Tenancy in Common
A type of ownership where each party’s share is passed on through their will rather than automatically to the other owner(s).

Tenants
People living in a property they do not own.

Title / Title Deeds
The legal record of property ownership.

Total Amount Payable
The full cost of your mortgage including all repayments and interest.

Tracker Rate Mortgage
A mortgage linked to the Bank of England base rate, usually a set percentage above it.

Transfer of Equity / Transfer Deeds
The legal process of adding or removing someone from the property title or mortgage.

Valuation / Valuation Fee
An assessment to confirm your property’s market value, required by lenders.

Variable Rate
An interest rate that can increase or decrease at your lender’s discretion.

Vendor
The seller of the property or land.