House buying terminology in the UK: A glossary

 

 

The process of buying a home, particularly when it’s your first, introduces you not only to the property market, but also to a whole world of new terminology. The sheer volume of jargon can, on occasion, be overwhelming. To help, we’ve compiled a list of house buying terminology, UK. This glossary covers everything you might encounter during the house buying process. 

 

A

Advance – Another way to refer to your mortgage loan

APR – This abbreviation stands for Annual Percentage Rate. It combines your mortgage loan, interest charges, arrangement fees and associated costs to give you a total cost. This is then shown as a percentage rate so that you can compare it with other lender’s rates. 

 

B

Building Insurance – Insurance cover that would pay out to rebuild your property in the event of a disaster (fire, earthquake etc). This normally has to be completed by the point that you exchange contracts. 

Buy-to-let – The process of buying a property for the purpose of letting it out. There are specific mortgages for this type of purchase, called “buy to let mortgages”. 

 

C

Chain – Where people are selling their home at the same time. For example, you’re selling a home and buying from another person who in turn is also selling and buying. It creates a chain of purchase where you’re all affected by each other’s timescales. It’s not applicable to first time buyers of new build properties. 

Completion Date – The date where you legally own your new home. In the new build process, this could differ from your handover date, so be careful not to confuse the two. 

Contract – A legally binding document outlining the terms of your property sale, between you (the buyer) and the seller. It is drafted by a solicitor, or a specific type of property solicitor called a conveyancer. 

Conveyancing – All the legal processes involved in the buying and selling of property. 

 

D

Decision in Principle – A written indication of how much your mortgage lender may be willing to give you for your mortgage. This allows you to understand what price range you may be able to purchase within. It’s sometimes referred to as an agreement in principle.

Deeds – The legal document that defines the boundary of your property and the type of ownership. 

Deposit – A sum of money paid by a buyer to secure their property and mortgage.

 

E

Early Repayment Charge – If you decide to pay your mortgage off earlier than you agreed in your mortgage terms, you may be asked to pay an Early Repayment Charge. These vary between lenders and will be set out in the terms of your mortgage. 

Energy Performance Certificate – A document provided to you by the seller when you purchase a property. It outlines how energy efficient your home is. 

Equity – The difference between the value of your property and the amount you owe on your mortgage. 

Equity Loan – An equity loan is where you are provided a loan of money against a proportion of equity in your home. For first time buyers, the Help to Buy Government scheme is a type of equity loan. 

Estate Agents – A person or business that arranges the buying and selling of property.

 

F

Fixed Interest Rate – A fixed interest rate for a loan, such as your mortgage. These can be fixed for up to 5 years, meaning you know exactly what your monthly payment will be for the agreed period of time. 

Fixtures and Fittings – Often referred to in the contract, this term covers parts of a property which are non structural, such as flooring, curtains and fittings within bathrooms and kitchens. 

 

H

Handover date – The date you receive the keys to your new home, to move in.

Help to buy loan – Help to Buy is a government equity loan available to first time buyers. By putting down a specific % of a property’s value, you can then get an interest free loan from the government which will then allow you to access a mortgage. 

 

I

Interest only mortgage – A mortgage where you only repay the interest each month and don’t pay towards the capital (the actual amount of money you borrowed).

 

J

Joint Mortgage – A mortgage which you apply for and are granted in equal part with someone else, eg a partner or friend. 

 

M

Maintenance Charge – Also sometimes known as a service charge, this is more common in the purchase of apartments. It is a monthly, quarterly, or annual charge that covers the upkeep of communal areas like stairwells or gardens. 

Mortgage – An agreement between a buyer and a lender (usually a bank or building society) which allows the buyer to purchase property. The property can be seized by the lender if the buyer doesn’t keep up with the agreed monthly payments. 

Mortgage Deed – The legally binding part of a mortgage which makes the property seizable until the loan is repaid in full.  

Mortgage Offer – The confirmation that your mortgage has been checked and approved. It’s the final stage in the mortgage process which now allows you to move to completion. 

 

R

Repayment Mortgage – This makes up the majority of most modern mortgages. Each month you pay a fixed fee, which pays off some of the capital (the actual amount of money you borrowed) and some of the interest, each month. 

 

S

Stamp Duty – This is a government tax you have to pay when you purchase a property. The amount is paid upon completion and amounts is charged as a percentage of the property value. The higher the value of property you purchase, the higher the percentage you’ll pay in Stamp Duty. 

 

V

Variable Interest Rate -  A rate of interest which changes over time, in line with general interest rates. 

We hope you found our glossary of house buying terminology in the UK helpful. If you’re currently in the market for a new build apartment, we have developments in London, York and Manchester which are setting a new benchmark in considered, premium living: special neighbourhoods, curated to encourage you to truly live well.