Welcome to the Black Brick property glossary! Whether you’re a first-time buyer or an experienced homeowner, our A to Z jargon buster will help you navigate the complexities of the property market. Here are the terms you’re likely to encounter:
Affordability Assessment: A formula used by lenders to determine how much you can afford to repay each month based on your income and financial commitments. This assessment influences the amount they’re willing to lend you.
Agreement in Principle: A preliminary indication from a lender stating the maximum amount they might lend you based on your current financial situation. It serves as proof to sellers and agents that you’re a serious buyer.
APRC (Annual Percentage Rate of Charge): The annual interest rate you’ll be charged on your mortgage.
Arrears: If you fall behind on mortgage payments, you’re said to be “in arrears”. It’s crucial to discuss the situation with your lender and work out a repayment plan.
Base Rate: Set by the Bank of England, the base rate serves as a benchmark for borrowing costs. Lower base rates generally result in lower mortgage interest rates.
Capital and Interest Payment: With a repayment mortgage, your monthly payments cover the interest accrued during the previous month and reduce the total loan amount.
CHAPS (Clearing House Automatic Payment System): The method used to transfer money between your lender and the property seller when buying a property. CHAPS payments may incur a fee.
Completion: The day you become the official owner of the property and pay the outstanding balance after exchanging contracts.
Conveyancing: The legal process of buying and selling property, typically handled by a solicitor who creates the contract to transfer ownership.
Conveyancing Fees: The legal fees associated with the transfer of property ownership.
Cost of Credit: The overall difference between the amount borrowed and the total amount repaid, including interest and other charges.
Buy-to-Let: A mortgage for purchasing a property to rent out to tenants.
Deposit: The upfront money you contribute toward the property’s total purchase price. Usually a minimum of five percent, a larger deposit can result in lower interest rates.
Early Repayment Charge: If you pay off your mortgage early, you might be charged a penalty fee, which is specified in your mortgage terms.
Equity: The cash value of your ownership in the property, excluding the bank’s stake. It’s calculated by deducting the property’s current value from your outstanding mortgage amount.
Equity Release: A financial product that allows homeowners to release cash tied up in their property without selling it.
Exchange of Contracts: The stage when you sign a legally binding contract to purchase the property after obtaining a mortgage and conducting surveys.
Exit Fee: A one-off fee payable when switching mortgage lenders, remortgaging, or fully repaying your mortgage.
Fixed Rate Mortgage: A mortgage with a set interest rate for a fixed period, providing stability but possibly at a slightly higher rate than variable rate mortgages.
Fixtures and Fittings: Fixtures are permanent items in the property, while fittings can be removed. Both are included in the sale but may be negotiable.
Freehold: When you buy both the property and the land it stands on, as opposed to leasehold.
Gazumping and Gazundering: Gazumping occurs when a seller accepts a higher offer after agreeing to sell to someone else. Gazundering is when a buyer lowers their offer just before the sale is completed.
Ground Rent: An annual payment made by leaseholders to the freeholder for occupying the land the property sits on.
Guarantor: A person who agrees to cover mortgage repayments if the property’s owner cannot make the payments, often a parent or guardian for first-time buyers.
Joint Mortgage: A mortgage taken out with another person, and if one person dies, the other inherits full ownership regardless of a will.
Leasehold: When you own the building but lease the land it stands on for a specific period. Most flats are leasehold, and extending the lease can be expensive.
Lease Extension: The process of increasing the lease term for a leasehold property.
LTV (Loan to Value): The comparison between the size of your deposit and the amount you are borrowing, expressed as a percentage.
Maturity Date: The date by which you must repay your mortgage or remortgage it.
Mortgage Arrears: When a borrower falls behind on mortgage payments, resulting in debt owed to the lender.
Mortgage Broker: An advisor who helps you choose and apply for a mortgage. Independent brokers search the entire market, while tied brokers work with specific lenders.
Mortgage Calculator: A tool to estimate your borrowing capacity and monthly repayments based on your income.
Mortgage Illustration: A document that outlines the key details of your chosen mortgage, including term, amount, interest rate, and fees.
Mortgage Offer: A formal guarantee from the lender to lend you money, usually for a set period, along with the mortgage terms and conditions.
Mortgage Term: The length of time over which you will repay your mortgage.
Negative Equity: When your property’s value is lower than the outstanding mortgage amount.
Negative Equity Protection: An insurance policy protecting against the risk of negative equity.
Overpayment: Paying more than the required monthly mortgage amount, which can shorten the mortgage term and reduce interest costs.
Portability: Some mortgages can be transferred to a new property when you move house.
Payment Holiday: Arranging a temporary break in your monthly mortgage repayments, usually available with flexible mortgages.
Product Fee: The fee paid to set up a mortgage, sometimes called an arrangement fee.
Property Valuation: An assessment conducted by a professional valuer to determine the market value of a property.
Rebuild Costs: The estimated cost to rebuild your home from scratch, excluding the value of the land, used when taking out building insurance.
Remortgage: Transferring your mortgage to a new lender, often to get a better deal or borrow more money.
Shared Ownership: A scheme allowing buyers to purchase a share of the property and pay rent on the remaining portion.
Stamp Duty: The tax paid to the government when buying a property, depending on the property’s cost and location.
Standard Variable Rate: The default rate charged by your lender if you don’t remortgage or choose a new deal after your current one ends.
Survey: A property inspection conducted by a qualified surveyor to identify any issues before purchase.
Surveyor’s Report: A detailed report provided by a qualified surveyor after inspecting the property.
Title Deeds: The legal documents that prove property ownership.
Tracker Mortgage: A mortgage with an interest rate that follows changes in the Bank of England base rate.
Valuation: An assessment by the lender to verify the property’s value before purchase.
Variable Rate Mortgage: A mortgage with an interest rate that can fluctuate with changes in the lender’s standard variable rate.
We would be delighted to hear from you to discuss your own property requirements. For a non-obligatory consultation, please contact us.