Welcome to our Glossary of Terms

This just means the mortgage on your home/property. It's called a first charge as you own the property and the bank have the first charge against it, so if you ever have to sell, they get their money first, and you get what's left.   

This is an additional mortgage on your home/property. It means if you have to sell, the first charge is paid from the proceeds, then the second charge, then you get what's left. Usually people look at a second charge option if they have a large penalty to get out of their first charge mortgage, or if they want to clear debts or have bad credit and high st lenders are not willing to consider lending. 

Basically a large short term loan secured against some form of asset. It's designed to allow you to do something you may not be able to do with more traditional finance. Commonly utilised for people buying at auction, where they have to immediately exchange and complete within 28 days. Can also be used for buying a property if you are trying to sell and it's taking a little more time than you thought.  

If you're looking to buy a commercial premises, unusual development, like a pub/church/factory or maybe land to develop

You see this all over mortgage documents and it simply means the amount of mortgage you want expressed as a percentage. If you have a 10% deposit, the LTV is 90%. 

If you're looking for a fixed rate mortgage, chances are it will have some sort of ERC if you pay it off within the fixed period. It can vary from lender to lender and is usually a percentage of the loan outstanding. If your ERC is 1%, and your current mortgage is £200,000, your ERC translates to £2,000. Most lenders will allow a certain percentage of over-payments each year without incurring the ERC. 

Sometimes called the lenders follow on rate and applies to the mortgage after the initial discount period offered by the lender. It can vary with the BoE base rate, and other indicators, and is traditionally much higher than a new fixed rate mortgage. If approaching the SVR on your mortgage it's a good time to approach your broker to review. 

A lender is always required to quote the APRC when advertising a loan or borrowing rate. It is a standard interest rate calculation designed to reflect the total amount of interest that will be paid over the entire period of the loan.

Simply the legal actions your solicitor undertakes during the sales process when acting on behalf of their client(s). Remember, your solicitor is not only acting for you, they are acting for the mortgage lender too, so will act in both of your best interests. 

The process your solicitor undertakes while conveyancing. They are making sure everything is correct with the property/mortgage and that the transfer can be done from the old owner to the new. 

Lenders will allow you to pay more than you need to each month up to a point. Many of the high st lenders will allow 10% of the loan amount to be paid back each year without incurring the ERC. This does vary from lender to lender, so it's always worth checking with your broker if you are unsure.  

Exchange happens when you pay part of your deposit (most commonly 10%) and everyone is legally tied into the contract. You should have buildings insurance in place at this point and put any life policies live as you are now liable for the mortgage

Completion is the day you get your keys and can finally relax and choose your first meal as a new owner.  

You fix the interest rate for a number of years so you have some certainty about the monthly payments during that period 

The interest rate is flexible and can be subject to change. The individual lender terms vary but an example would be a tracker rate tracking a certain amount above the Bank of England base rate. If the base rate is 0.75%, your tracker might track 1.25% above this, meaning your mortgage rate is 2%. If the BoE puts the base rate up to 1.00%, your mortgage rate would become 2.25% 

A residential mortgage is for the purpose of the owner occupying the property. A Buy to Let mortgage means you will rent out the property to a tenant. There are different criteria to satisfy for each and may be restrictions on deposit size, rental agreements and other aspects. Always best to ask your adviser for more details 

A Remortgage is simply replacing the current mortgage on your property. Essentially it's starting again, looking at all the options in the mortgage market and selecting the right product for the criteria. A product transfer is simply switching your mortgage over with your current lender to their latest rates/products.

Porting is simply keeping the same mortgage but moving it to a new property. Sometimes topping up or reducing the amount of the mortgage.  

The Vendor is the person selling the property and the purchaser is the one buying it.

Often referred to by the estate agents, the chain is how many properties involved in the transaction. So you may be buying from someone, who is, in turn, buying from someone else, who is buying from someone else etc. The chain is every dependent property involved with your sale/purchase

Means you will own the property, inside and out, and usually the land it is built on. There are slightly different rules for freehold flats, but this is the most common definition 

Basically means more than 50% of the owners in a block have got together and purchased the freehold. So the owners of the flats also own the land between them. The flats still have leases, but extending the leases are much less complicated and much less costly for the residents.

Means you are leasing the internal space of the property for the number of years on the lease. You will not normally own the land, exterior of the building

Traditionally, mortgage companies are not keen on short leases. This had become a little more flexible recently, with some of the larger lenders relaxing their stance. However, a short lease means a less valuable property and will probably need extending. Extending a lease can be a long, costly process so make sure you check out all the costs and connotations before you purchase. If you're worried, discuss things with your mortgage adviser. 

A sort of mix of freehold and leasehold, in Scotland, the property owner holds land in a hierarchical structure under the Crown and does not own land outright themselves

If you sell an investment property, you will usually be liable for capital gains tax. This does not apply to your primary residence. for more info visit: -

https://www.gov.uk/capital-gains-tax 

The amount of tax due on inheritance if the estate is above a certain value: -

 https://www.gov.uk/inheritance-tax 

If someone owns their own home and wants to take some of the money out of the property, continue to live there and may not be eligible for a traditional mortgage. Companies will offer money to the client at a percentage of the home value, plus interest, and the client can stay in the property until death. Can also be used for homemovers.

Buying a property to rent out. If you are doing this you need a certain type of mortgage. You cannot put tenants into a property on a residential mortgage unless you have permission to let from your lender. 

If your personal circumstances change and you need to move out of your home but want to rent out your property while you are away, you can ask your lender for permission to let. They will likely increase your interest rate, charge a small admin fee, and allow you to rent the property. If you are not tied into a fixed rate period on your residential mortgage, or know you will not return to live in the property then a buy to let re-mortgage might be the better option. 

You want to move home, but keep your existing property and rent it out. You will need a Let to Buy mortgage on that property, getting a new residential mortgage on the one you are buying/moving to. Very similar to a buy to let mortgage.

Stamp Duty Land Tax is what you pay to the government for the transaction of buying a property. Rates vary, so it's always best to use a calculator. Our favourite is: --

https://www.stampdutycalculator.org.uk/ 

A first time buyer is defined differently by different lenders. Some are if you've never owned a property, others are if you've not owned for three years etc. This only affects the product. For the purposes of stamp duty, a first time buyer is defined as someone who has never owned a property anywhere in the world: -

 https://www.gov.uk/stamp-duty-land-tax 

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 We recommend Checkmyfile as it lists three credit agency data for each client. 

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A CIS mortgage can be tricky if you aren't sure what you are looking for. However, there are several major high st lenders comfortable with CIS contractors, so a mortgage really shouldn't be a problem.