Valuation

This basic survey is carried out by the mortgage lender and assesses whether the property is good security for the proposed mortgage loan. The buyer usually pays for this and receives a copy. Some lenders do not charge. This survey is suitable for a new house, but for any other property it is recommended you commission your own survey, such as the Homebuyer's survey & valuation

Homebuyer's Survey and Valuation

This survey is more detailed than a basic Valuation and includes significant matters such as subsidence or settlement and urgent repairs for which the client should obtain quotations prior to exchange of contracts. This is usually recommended for conventional, unmodified properties and generally those built after 1960's.

Building Survey

Also known as a Full Structural survey - recommended for older buildings built before 1960 and unusual properties such as those with a thatched roof or timber frame, and should reveal most defects. Each visible element of the property is inspected and any necessary repairs and costs are identified.

Full Structural survey

An extensive property survey - known as a Building Survey – this is recommended for older buildings built before 1960, and should reveal most defects. Each visible element of the property is inspected and any necessary repairs and costs are identified.

Conveyancing

The legal work involved in the transfer of ownership of a property or land, usually carried out by a solicitor or licensed conveyancer.

Freehold

If you buy the freehold of a property you own it and the land it stands on.

Leasehold

This gives you the right of possession of a property, but not the ownership for an agreed period of time. Many flats in the UK are leasehold.

Stamp Duty

This tax imposes a percentage charge on the price of a property over £175,000 : up to £250,000 - 1%, up to £500,000 - 3%, £500,000 + - 4%.  You pay the tax at the given percentage rate on the whole price of the property, not just the amount over the limit.  So a house bought for £275,000 would incur a Stamp Duty charge of 3% of the full amount, therefore £8250.

Search

This is usually carried out by the solicitor as part of the conveyancing process on your proposed property. The search checks for any plans with the Local authorities which might affect the property, such as: new roads, proposed building developments or public rights of way. Most searches take around a fortnight, but they can take up to six weeks. It is usually possible if you need to act quickly to pay extra for a faster 'personal search'.

Exchange

The signed contracts from the buyer and seller are exchanged and a completion date set. The buyer pays the deposit on the property. The exchange makes a binding contract.

Property Chain

This is when a number of property transactions are dependent on others - when a seller needs the sale of their house before they can complete the purchase of another property. The chain can break if one buyer is unable to sell their home and a link breaks. A first-time buyer has no chain which is an attractive prospect for a seller.

HIPS

See Home Information Packs

Home Information Packs (HIPS)

Home Information Packs, including Energy Performance Certificates, are being introduced on a phased basis from 1st August 2007. Initially only sellers of properties with four or more bedrooms in England and Wales are required to order a HIP pack although three bedroom houses are included after September 10th. The house can be placed on the market before receiving the HIP documents, as long as the seller can prove the HIPs have been ordered and will arrive within 28 days. HIPs are intended to improve the house buying and selling process. The packs are paid for by the property vendor and contain information and documents about the property, including a rating of the home's energy efficiency. They are likely to increase the cost of selling a house by around £300 to £600. more on HIPs

Joint Tenancy

This is the owning of land or property by two or more people. The joint tenants both pay the mortgage and get an equal share when the property is sold. If one of the joint tenants dies, the ownership of the property passes to the survivor/s, in contrast to property held by 'tenants in common'.

Tenants in Common

This is where two or more people own a property, but if one of the owners dies their share of the property passes to their next of kin not the other owner/s, unless there is a will stipulating otherwise. The terms are defined by the percentage of the property that each person owns.

Key Worker Living Programme

A government-led initiative helping key workers - including such professions as: nurses, teachers, firefighters, police officers, social workers, prison staff, probations staff, to buy a home, upgrade to a larger family property or rent a home at an affordable price. The scheme offers eligible key workers interest-free loans of up to £50,000. The Housing Corporation gets back paid when you sell the property, and if you cease your job as a key worker you'll be required to pay the money back within two years. This programme is mainly aimed at first- time buyers.

Land Registry

The government body responsible for maintaining and updating the register of all properties in England and Wales – records and transfers land ownership. Since February 2005 for just a £2 fee online you can discover : who owns a specific property, how much it cost them, the name of their mortgage provider and the length of any lease on it.

NHBC Warranty

if you are buying a new house you should receive a NHBC (The National House Building Council) warranty. Providing the builder is registered and the property meets standards the NHBC will issue a Buildmark Warranty. This offers insurance protection against any structural or building faults for 10 years.

Title Deeds

The legal documents for a property that detail the owner, any restrictions on the use and rights of way.

FSA

The Financial Conduct Authority (FCA) is an independent non-governmental body that regulates the UK financial services industry, including: mortgage lending, mortgage advice and general insurance advice. If the required standards are not met, then the FCA can take action against firms.

Offset mortgages

A mortgage where the interest that would be due on money held in a linked savings account, is offset against the interest payable on a mortgage.

Current account mortgages

This is a fully Flexible mortgage combined with a current account. Money in the current account is automatically set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are reduced

Self Certification mortgage

This mortgage allows borrowers to certify their own earnings without having to supply documentation, such as wage slips. This option often suits the self-employed, seasonal wage earners, or anyone with irregular earnings such as, a contract worker or commission-based employee, or those in salaried employment with a supplementary source of income, an unsalaried company director, or varying other circumstances. A specialist mortgage lender can often be more flexible than the high street lenders with Self cert mortgages.

Poor credit mortgages

A mortgage for people who have been turned down for a mortgage before or who have a poor credit history - CCJ's, mortgage arrears, repossession, Discharged Bankruptcy.  Generally the maximum loan to value is around 70% and the rates are usually higher.

Shared ownership mortgages

This government scheme enables you to buy property jointly with a Housing Association, a housing society or a non-profit making housing company, who will pay between 25 and 75 per cent of the cost. This scheme was developed to help those who could not afford to buy a home outright, and allows you to buy a share of the property and pay a rent on the remaining share. Up to four people can become joint owners, but all joint applicants must individually and jointly meet the eligibility criteria. The share you purchase is funded by a mortgage. It is possible to buy further shares and eventually own the property.

Cashback mortgages

The borrower receives a cash lump sum on completion, or after the first monthly payment. It can be a fixed amount or a percentage of the mortgage. This can help with the extra expenses of buying a house, such as: surveys, solicitor’s fees and removal costs, and is popular with first-time buyers.

Buy to Let

Buying a property with the intention of letting it out to tenants for rent. more on Buy to Let

Commercial Mortgage

A mortgage on a non residential building occupied by a business.

Second Mortgage

This additional mortgage on a mortgaged property is also known as a secured loan. The first mortgage takes legal priority, so the second mortgage is considered more of a risk for the lender, so the rates are likely to be higher.

There are many types of mortgage ranging from fixed rate to discounted rate.

Mortgage

A loan to buy a house, where the property is the security for paying back the loan. The lender has the authority to sell the property if repayments are not maintained. Mortgage repayments are usually made monthly over a long period, usually 25 years. There are many different mortgage options : repayment, flexible, tracker, capped, discount, self certification.

Remortgage

The arranging of a new mortgage for your property without moving. The reasons for remortgaging are usually to get a better mortgage rate or to release equity for improvements.

First time buyers

Borrowers who are purchasing a property for the first time, they are sometimes offered special offers – discounts, cash back and fixed rates. Mortgage lenders are most competitive with first time borrowers as they hope to interest them in subsequent mortgages.

Valuation

This basic survey is carried out by the mortgage lender and assesses whether the property is good security for the proposed mortgage loan. The buyer usually pays for this and receives a copy. Some lenders do not charge. This survey is suitable for a new house, but for any other property it is recommended you commission your own survey, such as the Homebuyer's survey & valuation

LTV

Loan-to-value ratio – this is the difference between the loan amount and the house's market value. A loan of £80,000 on a £100,000 home gives a loan-to-value ratio of 80%. The bigger the difference is between the loan and the value of the house, then the smaller the LTV. This difference is known as the equity.

Mortgage-in-principle

Lenders can agree to a mortgage in principle even before you find the right property. This is subject to further conditions being met, such as, credit checks and a property valuation.

Mortgage Offer

The document issued by the mortgage lender to the borrower following approval, setting out the conditions and terms.

Overpayment

This is when you pay more than the required monthly repayment to your mortgage lender. A flexible mortgage allows overpayment and underpayment. As long as there is no early repayment charge you should be able to overpay as much as you can afford and cut down your mortgage term and interest paid.

Portable Mortgage

This is where a borrower can transfer their existing mortgage to a new property without incurring the penalty of early redemption fees. Most mortgages are now portable mortgages, meaning that if you decide to move you take your mortgage on the same terms and conditions to your new property. Mortgage portability can be advantageous, if for example you have secured a good fixed rate, a capped, cash back or discounted product originally and the market has since changed, leaving no comparable deals.

Early Repayment Charge

Some mortgage contracts contain a penalty charge if you repay the mortgage early, such as during the period of a fixed or discounted rate - also known as Early Redemption Fee

Higher Lending Charge

Formerly known as a Mortgage Indemnity Guarantee, this is the sum required by the lender when the amount borrowed exceeds a given percentage of the value of the property. The charge is used to buy an insurance policy against you defaulting on the mortgage loan.

APR

The Annual Percentage Rate is the total amount of interest that will be paid over the whole term of a loan. The rate quoted on loans and credit cards may only be the monthly or annual rate of interest you pay. Lenders are required by law to inform you of the APR before you sign an agreement.

Completion

The date that the seller receives the money from the sale of the property and legal ownership passes to the buyer

Negative Equity

This is where the amount of money owed on the property exceeds the property's market value. So, if you sold your house you would not get enough money to pay off your mortgage loan.