Advance
The mortgage loan.

APR
Annual Percentage Rate. This is meant to be a way of comparing the cost of credit. It takes into account most of the up-front and ongoing costs involved in taking out a mortgage. You cannot always rely on it because lenders work it out in different ways.

Arrangement Fee
A fee you pay to the lender in return for a mortgage deal. This deal could be fixed, discounted or cashback. The fees can also be known as the: application fee, booking fee, completion fee, drawdown fee or reservation fee.

ASU Insurance
This covers Accident, Sickness and Unemployment. It pays you a monthly amount if you cannot work for an extended period due to an accident, sickness or involuntary unemployment.

Bonuses
These are payments that a Life Assurance company adds to 'with profits' endowment policies. Bonuses are usually made at the end of the year, and there may be a final (terminal) bonus when the endowment comes to the end of its term. This normally coincides with when you have to repay the mortgage. Bonuses aren't guaranteed and the amount awarded can change each year. However, once a bonus is made by the Life Company, they can't take it away.

Buildings Insurance
This covers the cost of rebuilding or repairing the structure of the property. Lenders insist you have sufficient buildings insurance before giving you a mortgage. With leasehold properties, it is the freeholder’s responsibility to arrange buildings insurance, although the freeholder will usually pass on the charges to the leaseholder.

Buildings and Contents Insurance
This is a combined insurance, which may be cheaper than one policy for buildings insurance and another separate policy for contents insurance.

Bridging Loan
This is a temporary loan that enables you to complete the purchase of a new home if you have to do this before completing the sale of your existing house.

Capital and Interest
Your monthly payments are partly to pay the interest on the amount you borrowed and partly to repay the outstanding mortgage. Also known as a repayment mortgage.

Capped Rate
An interest rate charged for a set period of months or years which can go up and down with the variable rate, but there is a maximum (capped) interest rate which it cannot go above.

Cashback
A payment you receive from the lender when you take out a mortgage. It may be a fixed amount, or a percentage of the amount of the mortgage.

CCJ
County Court Judgement. A decision reached in the County Court, which can be for the non-payment of debts. If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this.

Completion
When the sale and purchase of the property are finalised, and you become the owner of the house, flat or business.

Conclusion of Missives
The point at which buyer and seller are legally bound to the transaction

Contents Insurance
Insurance cover for your possessions. This may include cover against loss or damage of an item away from the home.

Contracts
The legal documents under which you and the person selling the property agree to buy and sell the property.

Conveyancing
The legal process involved in buying and selling property.

Credit Search
A check the lender makes with a specialist company to find out whether you have any County Court Judgements or a record of not paying loans, credit-card bills and so on.

Critical Illness
Insurance that generally pays out a lump sum if you are diagnosed with a life-threatening illness or disease.

Deposit
The amount of money you put towards buying a property.

Disbursements
A solicitor's expenses - for example, for Stamp Duty, HM Land Registry fees, searches, faxes and so on.

Discounted Rate
A guaranteed reduction in the standard variable mortgage rate. This often lasts for an agreed period.

Early Redemption Charges
A fee charged by the lender if you pay off all, or part, of your mortgage before an agreed date or, if you move the loan to another lender. These charges usually apply on fixed, discounted, or cashback mortgages.

Endowment
A Life Assurance policy that is designed to produce a lump sum to pay off an interest-only mortgage. There are different types of endowments, for example, 'with-profits', 'unit-linked' and 'unitised with-profits'.

Equity
The amount of value in a property that isn't covered by a mortgage - simply deduct the amount of the mortgage from the valuation of the property to calculate the ‘equity’.

Estate Agency Fees
The amount the Estate Agent charges the person selling the property. This is usually worked out as a percentage of the sale price, and may be negotiable. On a 2% fee, the Estate Agent selling the property for £200,000, would receive £4,000.

Exchange of Contracts
The point where you and the person selling the property sign and swap identical Contracts that show the price and what fixtures and fittings are being sold, as well as a date when everything will be finalised. When you exchange Contracts the deal becomes legally binding, and if you or the seller pull out before Completion, you or they will have to pay compensation to the other side.
 
Fixed Rate
The interest charged on the mortgage is for a set amount for an agreed period of months or years.

Fixtures
Any item that is attached to a property, and so is legally part of the property.

Flexible Mortgage
A type of mortgage where you can make extra payments, as well as underpayments, without paying a charge or penalty.

Freehold
This is when you own the property and the land it is on.

’ Gazumping ’
This is when the person selling the property accepts an offer from a potential buyer, and then accepts a new, higher offer from another buyer before exchange of contracts.

’Gazundering’
This is when the person selling the property accepts an offer, and then the buyer puts in a new, lower offer just before exchange of contracts.

HM Land Registry
The official organisation that keeps records of properties in England and Wales. Transfer of ownership has to be registered with the HM Land Registry.

Homebuyer's Report
This is when a professional Surveyor checks the structural state of a property. This is more detailed than a valuation but less detailed than the Structural Survey. The report is optional and you pay the bill; but, this report should pick up possible problems and may give you the chance to negotiate a lower price. And you have more grounds to sue or get compensation from a Surveyor for a poor report than you would from a simple valuation.

Income Multipliers or Multiples
The size of mortgage that lenders offer will often be worked out by multiplying your income each year by a set figure. If you are the only person taking out the mortgage, the usual maximum income multiple is4 times your yearly income. So, someone earning £25,000 could borrow up to 4 times this amount, ie., £100,000. If you are taking out a mortgage with another person, the multipliers might be 4 times the main income plus 1 times the second income. Or it could be 2.75 times the two incomes added together. Lenders may consider including all or part of any regular bonuses or commission you receive as your income.

Interest-only
Your monthly payments to your lender are simply made up of interest. You do not pay off any of the mortgage during the term of the mortgage. You pay off the mortgage finally using the proceeds of a separate investment plan for example, an endowment, personal pension or PEP and so on.

Leasehold
This is when you own the property for a set number of years, after which it goes back to the freeholder. Most flats in England are leasehold, and although most lenders will lend on leasehold properties, they will demand that there is a certain number of years left on the lease before making a loan (this could be 60 years, but will depend on the lender).

Licensed Conveyancer
An alternative to solicitors, these people specialise in the legal side of buying and selling property.

LTV
Loan to Value. This is the size of the mortgage as a percentage of the value of the property or the price you are paying for the property. A £45,000 mortgage on a house valued at £200,000 would mean an LTV of 50%.

MGI
Mortgage Guarantee Insurance. This is insurance that covers the lender in case your property is repossessed and the lender cannot get its money back. (The lender may add the MGI, which usually applies on high LTV mortgages, to the mortgage.) This is also known as MIG (Mortgage Indemnity Guarantee).

Mortgage
A loan to buy a home where you put up the property as security against you paying back the loan.

Negative Equity
This is where the money you owe on the mortgage is greater than the value of the property. For example, if you had a £100,000 mortgage on a property valued at £90,000, you would have £10,000 negative equity.

Non-status
This means the lender does not need employment or income references from you. This type of loan is often offered to self-employed people.

Possession
The lenders' term for repossessing your property.

Purchaser
The buyer of the property.

Remittance Fee
A charge made by the lender for sending the mortgage funds to your solicitor when the purchase is just about to be completed.

Remortgage
A new mortgage although you are not moving home.

Repayment
Your monthly payments are partly to pay the interest on the amount you borrowed and partly to repay the outstanding mortgage. Also known as a capital and interest mortgage.

Sealing Fee
A charge made by lenders when you repay the mortgage.

Searches
Checks carried out during the conveyancing. These checks are made with Local Authorities and other official organisations to check Planning proposals and other matters that may affect the value of the property, and if it can be sold in the future.

Self-certified
You confirm how much you earn, and the lender does not need any references.

Solicitor
The person who deals with the conveyancing.

Stamp Duty
A tax you pay on properties that cost over £125,000.

This is charged as follows:
Property value £125k - 250k stamp duty = 1%
Property value £250k - 500k stamp duty = 3%
Property value £500k+ stamp duty = 4%

So a property costing £100,000 would have Stamp Duty of £nil, but a property costing £150,000 would have Stamp Duty o £1,500.

Structural Survey
This is the most wide-ranging check of the outside and inside of a property. This is carried out by a professional Surveyor, and it should pick up all but the most hidden faults. The structural survey is optional and you must pay the bill, but it provides the greatest protection for the potential buyer in terms of the information it provides. It also gives you cover against negligence by the Surveyor.

SVR
Standard variable rate. The interest rate the lender charges goes up and down, with your interest payments changing accordingly.

Tie-in Period
As a condition of a special mortgage deal (discount or fixed rate, for example), you may have to agree to stay with the lender for a period of months or years after the deal has ended. If you move your mortgage elsewhere during this period, you may have to pay an early redemption charge.

Term
The period of years over which you take the mortgage and when you have to repay it. Most new mortgages are taken on a 25-year term.

Title Deeds
Documents to show proof of who owns the freehold and/or leasehold property.

Total Amount Payable (TAP)
The total cost of repaying a mortgage over the loan period, including the initial amount borrowed and interest.

Transfer Deed
A document that, once you sign it, actually transfers the ownership of the property to you.

Valuation
A simple check of the property in order to find out how much it is worth and whether it is suitable to lend a mortgage on. This is carried out by a professional Surveyor for the lender. You usually pay the bill and will usually get a copy of the report.

Variable Rate
The interest rate the lender charges goes up and down, with your interest payments changing accordingly.

Vendor
The person selling the property.