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GLOSSARY


A

Annual percentage rate

(APR) the total cost of a loan, including all costs, interest charges and arrangement fees shown as a percentage rate and easily comparable with mortgage interest rates.

Arrangement fees

A charge to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed, capped, or discount rates and cash back mortgages.

Assignment

The transfer of ownership of an insurance policy or lease.

B

Basic variable mortgage rate

Mortgage lender's standard rate of interest which may be increased or decreased periodically by the lender depending on prevailing economic conditions.

Bridging loan

A temporary loan providing financial cover which allows a purchaser to complete on the purchase of a new property before selling the previous property.


Brown Belt

A name given to land where you can build houses or any other building for that matter. You will still need to planning permission from the local authority.

Building survey (formerly full structural survey)

A full inspection of the property, conducted by a chartered surveyor, who then writes a detailed report including any property defects. Suitable for any house, particularly older properties and those which have been poorly maintained. Also for properties which have been extensively altered or extended, or any property you may wish to alter or extend.

Buy to let mortgage

A type of mortgage specifically designed for people buying a property with the intention of letting it out.

C

Capital

The amount of the loan on which interest is calculated.

Capped mortgage

Normally agreed for a fixed period of time, many lenders provide mortgages with an upper limit on the interest rate. Thus if the standard interest rate is lower than the upper limit you will be charged the lower rate, but if the standard variable rate is higher you will be charged at the agreed rate.

Chain
The situation that occurs when a buyer is reliant upon completion of the sale of his existing property, in order to complete on the purchase of his new property.


CML

The Council of Mortgage Lenders, is the trade association for the UK mortgage lending industry.


Completion

The point at which all transactions concerning the property’s sale are concluded and legal transfer of ownership passes to the buyer.


Contents insurance

Insurance to cover loss or damage to your possessions within the property.

Contract

A legal agreement between the seller and buyer of a property which binds both parties to complete the transaction.

Conveyancer

A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.

Conveyancing

Traditional term for the legal work involved in the purchase and sale of a property.

Corgi
Council of Registered Gas installers


Covenants

Rules and regulations governing the property, contained in its title deeds or lease

D

Deeds

Legal title documents proving ownership. The deeds will be held by the mortgage lender.

Deposit

A sum of money (usually 10%) paid by the buyer on exchange of contracts.

Detached

Term used to describe a property that stands alone and is separated from all others.

Development

A newly built residence or an older property which has been refurbished and modernized.

Dilapidations

Any disrepair or damage to a rented property.

Disbursements

Fees paid by the buyer's solicitor on the buyer’s behalf such as stamp duty, land registry and search fees.

Discharge

Paying off a mortgage.

Draft Contract

Preliminary, unconfirmed version of the contract

E

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.

EPC
'Energy Performance Certificate' is required before a property can be let. This is the responsibility of the Landlord. 

Equity

The difference between the value of a property and the amount of mortgage owed.

Excess

The initial sum you have to pay on an insurance claim.

F

Fixtures & fittings

All non-structural items included in the purchase of a property.

Flying freehold

A flying freehold occurs when part of a freehold property overhangs part of a different freehold property or land and is usually formed when a property is split into two or more freeholds.

Freehold

Technical word for the ownership of the property, meaning that it belongs to the owner without limitation of time

G

Gazumping

This is when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but have not yet exchanged contracts.

Gazundering

When a buyer offers the seller a lower offer just before contracts are about to be exchanged.


Green Belt

A name given to a piece of land, where any kind of building can not be errected. Green Belt land is mainly used for agriculture needs.

Ground rent

The annual charge levied by the freeholder to the leaseholder.

Guarantor


Is the person who will take full resposibilty for the tenant, who can not provide references or has no credit history.

H

Home Information Packs (HIPS)

A Home Information Pack contains a number of documents that provide buyers with clear information about the property they are proposing to purchase. The introduction of Home Information Packs is being phased in commencing 1st August 2007 with properties that have four or more bedrooms. It is intended that eventually all properties placed on the market will have a Home Information Pack that includes energy performance certificates and recommendations, evidence of title, local land charges register, local enquiries, drainage and water enquiries, required leasehold information and required commonhold information.

Packs may also include home condition reports, evidence of building repair and maintenance carried out after a home condition report, warranties, policies and guarantees for design defect, property completion or any conversion, information on design and building standards, additional search documents relating to or referred to in a local land charges register, local enquiries search or drainage and water search which would be of interest to the buyer. 

Homebuyer's survey and valuation (house/flat buyer's report)

This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.

I

IFA

Independent Financial Advisor.

Individual savings account (ISA) mortgage

An interest only mortgage linked to an Individual Savings Account fund, which is designed to pay off the loan at the end of the period.

Interest charges (mortgage)

The charges that are made on a loan, calculated as a percentage of the amount borrowed.

Inventory

A list which describes the condition of furnishings and contents of a leased property at the commencement of the tenancy in order that any dilapidation during the tenancy can be identified.

J

Joint tenants

A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner's will.

L

Land registry fee

Paid to the Land Registry to register ownership of a property.

Lease

A legal document by which the freehold (or leasehold) owner of a property lets the premises or a part of it to another party for a specified length of time, after the expiry of which ownership may revert to the freeholder or superior leaseholder.

Leasehold

Denotes that the ownership of the property is by way of a lease.

Listed building

One officially listed as being of special architectural or historic interest, which cannot be demolished or altered without (local) government consent.

Loan to value (LTV)

The size of the mortgage as a percentage of the property’s value.

Local authority search

Procedure whereby a buyer's solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area.

M

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 property arranged over more than one floor (ie: a portion of the house).

Mortgage deed

A legal document relating to the mortgage lenders interest in the property and containing the terms of the mortgage.

Mortgage payment protection (MPP)

This is an insurance designed to pay your monthly mortgage for a limited period usually a year if you are unable to work through illness, disability or redundancy.

Mortgage rate

The standard variable interest rate quoted by all mortgage lenders which normally varies with the Bank of England base rate. All discounted rates are based on this mortgage rate.

Mortgage term

The period of time over which (repayment mortgage) or at the end of which (endowment mortgage) the loan is to be repaid.

Mortgagee

The lender of a mortgage (ie: bank or building society).

N

Negative equity

When the value of the property falls to less than the outstanding mortgage.

NHBC scheme (National House-Building Council)

A type of building guarantee available on some newly built homes under which defects occurring within a specified time after construction are remedied.

O

Offer of a loan

A formal document approving the mortgage you have requested and detailing the terms and conditions that will apply.

Open market value

The price a property would achieve when there is a willing buyer and willing seller.

P

Payment break

An option on flexible mortgages that allows you to stop making mortgage payments for up to 6 months.

Premium

The monthly amount payable for an insurance policy.

Premium lease

Lump sum paid up front as rental for a property.

Principal

The sum of the loan on which interest is calculated.

Public liability insurance

Insurance which covers injury or death to anyone on or around your property.

R

Re-mortgage

Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to draw down any equity gained by a rise in value.

Repayment

When a mortgage is fully repaid.

Repayment mortgage

A mortgage repaid by way of monthly repayments of capital combined with interest.

Repossession

When the mortgage lender takes possession of your property due to non-payment of the mortgage.

S

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

See Maintenance Charge.

Sole agent

When a seller chooses only one estate agent to sell their home.

Solicitor

Legal expert handling all documentation for the sale or purchase of a property.

Stamp duty

A tax paid by purchasers of properties with a value in excess of £125,000, of between 1% and 4% depending on value.

Structural survey

See Building survey.

Studio Flat

A flat consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.

Subject to Contract

Words to indicate that an agreement is not yet legally binding.

Surveyor

Professionally-qualified expert who carries out the survey.

T

Tenancy

A temporary possession of a property by a tenant.

Tenancy agreement

A legal agreement designed to protect the rights of the tenant and landlord and setting out all the terms and conditions of the rental arrangements.

Tenant

A person who has temporary possession of a property.

Tenants in common

A form of ownership by two or more people in which if one of them dies their share of the property forms part of their estate and does not automatically pass to the other(s).

Tenure

Conditions on which a property is held (ie: length of lease).

Terraced house

A property which forms part of a connected row of houses.

Title deeds

Documents showing the legal ownership of a property.

Transfer deeds

The land registry document that transfers legal ownership from seller to buyer.

U

Under offer

The status of a property for sale, when a seller has accepted an offer from a purchaser but prior to exchange of contracts.

V

Valuation

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

Variable base Rate

The basic rate of interest charged on a mortgage. This may change in reaction to market conditions, so your monthly payments can go up or down.

Vendor

The legal name for a person selling a property

Y

Yield

Income from a property calculated as a percentage of its value.

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