Glossary
A | B | C | D | E | F | G | I | J | L | M | P | R | S | T | V
A
Additional Security Fee
Also known as Indemnity Guarantee Premium or Mortgage Indemnity Premium. This is a one-off fee paid to
the lender to protect them against the borrower defaulting on the loan. It is usually charged on mortgages
over 75% of the house value.
Advocate
Legal Professional who acts on behalf of the buyer in the purchase of a property. The advocate will check the
legal position of the house, carry out a local authority search, land registry and oversee the exchange of
contracts between the two parties.
APR
Annual Percentage Rate. The true cost of a loan.
Auctions
If you bid on a property at auction you are legally bound to buy the house. We would always advice you to
have a survey carried out before the auction.
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B
Bridging Loan
A loan that enables you to buy your new house before selling your old one.
Broker
An intermediary who can give you advice regarding your new mortgage.
Building Society
Another place to go for Mortgages & Loans.
Building Insurance
Insurance to cover any structural damage to your property.
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C
Capital
The sum borrowed for a mortgage.
Chain
This occurs when the seller needs the sale of their house to occur before they can complete the purchase
of another property. The same situation may exist for others in the chain.
Charge
The term used for the security that the lender relies on when granting a mortgage.
Completion
The point where contracts are exchanged and the buyer becomes the legal owner.
Contents Insurance
Insurance to cover any loss or damage to the contents of your home.
Contract Race
When two parties have made an offer on the same house. The vendor will sell to the first party to exchange
contracts.
Contracts
The legal documents needed to transfer the ownership of property.
Conveyancing
Legal work involved in buying and selling a house.
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D
Direct Lenders
A mortgage lender who deals solely over the telephone.
Disbursements
Expenses paid by the advocate on behalf of the purchaser.
Discounted Rate
A reduced mortgage interest rate which is subtracted from the Standard Variable rate.
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E
Endowment Mortgage
A mortgage where monthly payments are paid into an endowment policy. The loan is paid off in one lump
sum at the end of the loan period.
Estate Agents
Property agents who link up buyers and sellers. Estate Agents advertise houses & arrange viewings.
Excess
The initial sum you have to pay on an insurance claim.
Exchange of Contracts
The point at which buyer and seller are legally bound to the sale and purchase of the property. Insurance
to cover any structural damage to your property.
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F
Failed Valuation Survey
When the lender turns down your mortgage application after reading the surveyor's valuation report.
Freehold
Absolute ownership of property and land.
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G
Gazumping
This occurs when the seller, having already accepted an offer, accepts a higher offer from another party.
Gazundering
When the buyer threatens to pull out just before contracts are about to be exchanged, unless the seller
reduces the price.
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I
Indemnity Guarantee Premium
See additional security fee.
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J
Joint Agents
When the seller commissions two independent Estate Agents to sell their property. See additional security
fee.
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L
Land Registry
The advocate registers the buyer as the new owner of the property.
Lease
Document in which the owner of a freehold property lets out their premises to a named party at a certain
price and for a specified time.
Leasehold
The ownership of a lease.
Lender's Arrangement Fees
Charge passed on to the buyer by lender for arranging a loan.
Lender's Legal Fees
The fees incurred by the lender when arranging a mortgage. These costs are passed on to the buyer.
Lender's Valuation
A valuation of the proposed property carried out by the lender before agreeing to give out a mortgage.
Life Assurance
An insurance policy that pays out a fixed lump sum on death of an individual. Life Assurance helps
protect from financial difficulties.
Loan-to-Value
A percentage that expresses size of mortgage to value of house. For example, House Value=£100,000,
Mortgage Size=£90,000. Loan-to-Value=90%.
Local Authority Search
The advocate carries out a search to find out if there are any Local Authority Notices, with respect to the
building itself.
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M
Mortgage
A long term loan to fund the buying of a property.
Mortgagee
The lender of a mortgage.
Mortgagor
The property buyer who takes out a mortgage.
Mortgage Term
Period over which a mortgage is to be repaid.
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N
Negative Equity
When the value of your house falls to less than your mortgage.
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P
Pension Mortgage
Monthly repayments made up of the Interest on the loan and contributions to a personal pension
scheme. The loan on the property is paid off in one lump sum at the end of the period.
Premium
The monthly amount payable on an insurance policy.
Principle
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.
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R
Redemption
When a mortgage if fully repaid.
Relocation Agents
Specialists in finding houses, raising finances, organizing surveys and completing negotiations.
Repayment Mortgage
A basic mortgage, where capital and interest on the loan are paid off in monthly instalments.
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S
Sole Agent
When only one Estate Agent is commissioned to sell your home.
Structural Survey
A report constructed by a surveyor to ascertain whether the house is structurally sound.
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T
Term
The period in which a mortgage is taken out.
Title
The legal right to ownership of a property.
Title Deeds
The document which shows the ownership of a property.
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V
Valuation Survey
A survey carried out by the lender to ensure that the house's value is not less than the proposed loan. Often
the lender will arrange the survey and bill the buyer. This is not a structural survey.
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