Mortgage Jargon Buster

Buying a property and moving home can be difficult enough even if you have done it before, so you don’t want to be confused by the terminology and abbreviations used during the process. Here’s our A to Z glossary to help you beat the jargon.

Your home may be repossessed if you do not keep up repayments on your mortgage.
Additional secured borrowing
Additional borrowing is borrowing more money from your current lender. This is secured on your property. Skipton does consider additional borrowing but only where we hold first legal mortgage.
Affordability check
An affordability check works out how much you might be able to afford to pay back on your mortgage based on your income and outgoings. It is for illustrative purposes only and doesn't provide all the information you need to choose a mortgage. You can carry it out using an online tool like our affordability calculator.
Annual Percentage Rate of Charge (APRC)
An indicative guide to help you compare the cost of different mortgage deals, taking account of interest rates payable (both during the initial product period and after) and fees.
Arrears
Mortgage payments which have not been paid and become overdue.
Bank of England Base rate (BoEBR)
This is the rate which is set on a monthly basis by the Monetary Policy Committee (MPC) of the Bank of England and influences the rates banks and building societies charge customers to borrow money.
Binding offer
The society will issue a binding offer following receipt of an acceptable mortgage application.
Broker
A mortgage broker provides mortgage advice by looking for the most suitable mortgage deals based on your circumstances. They may offer advice on mortgages from a selection of lenders or may even be totally independent and advise customers on mortgage products available across the whole of the market.
Buy to Let
A buy to let property is a property bought with the sole intention of renting it out to tenants. If you want to borrow money to buy a house for this purpose, you'll need a Buy to Let mortgage. Find out more about our buy to let mortgages.
Completion
The point at which the money is released to remortgage your home or to buy your new home. Your conveyancer will ensure that ownership is transferred to you enabling you to move. This is known as Settlement in Scotland.
Conclusion of Missives
The point at which both buyer and seller are legally bound to the purchase (Scotland only).
Consumer Buy-to-Let (CBTL)
A Buy to Let contract where the borrower is not acting wholly for a business purpose. Examples of CBTLs include:
  • Where the borrower or a relative has lived in the property since it was purchased
  • Where there was no intention for the property to be let out at the time of purchase
  • Where the property was inherited
Conveyancer
This is an individual who specialises in the legal process of buying and selling a property.
Credit check
When you make an application for a mortgage all lenders will carry out a credit check to see how you have managed your finances in the past. The companies that provide these checks will give you a credit score. Generally, the higher this number is, the more likely that you’ll be accepted for credit, but some lenders can have different scoring systems.
Deposit
A deposit is the amount of money you are required to pay up front towards the cost of the property. For example, if a property is worth £125,000 and the lender wants a 20% deposit, you’ll need to contribute £25,000 of your own money.
Decision in Principle (DIP)
Sometimes also known as an Agreement in Principle or Mortgage in Principle, it gives an indication as to how much you could borrow and many estate agents will insist on seeing evidence as an assurance before they'll put your offer to the seller. A DIP is for illustrative purposes only and doesn't provide all the information you need to choose a mortgage. To help make the process of getting a Skipton DIP as simple as we can, we make it easy to request one online.
Disbursements
The fees your solicitor has to pay to others on your behalf e.g. Stamp Duty Tax, Land Registry fees, search fees.
Early repayment charges (ERCs)
A charge which applies if you repay your mortgage early or make an overpayment that's more than your annual overpayment allowance. They will normally apply during the initial period of your mortgage.
Electronic Transfer
This is the method by which your mortgage advance is paid to your conveyancer.
Equity
The positive difference between the value of your property and the amount of any outstanding loans secured against it (i.e. the amount you own outright).
Exchange of Contracts
This is the moment when you exchange the legal agreements to buy or sell a property. At this point you are legally bound to go ahead with the purchase or sale. In Scotland this stage is known as Conclusion of Missives.
Fixed rate mortgage
Fixed rate means the interest rate is fixed on your mortgage for an agreed period of time – typically for two, three, five, seven or ten years. So your interest rate won’t change even if external interest rates go up or down.
First legal mortgage
Also known as first charge mortgage. This means that the loan takes priority over any other borrowing secured on your property, if your property is sold the first charge will be paid off first.
Freehold
In a freehold property you own both the property itself and the land that it stands on and there is no time limit to your period of ownership. This generally relates to houses.
Gazumping
Gazumping happens when a seller has accepted an offer but before contracts are exchanged accepts another higher offer from someone else.
Help to buy
These are schemes which have been launched by the government with the aim to make home buying easier. At Skipton we offer mortgages as part of the Help to Buy Equity Loan schemes in England, Wales and Scotland. You can find out more details about these schemes by visiting our Help to Buy page.
Interest only (Interest only mortgage)
The monthly payments over the term of the mortgage cover only the interest charged on the amount borrowed. This means that the original amount borrowed together with any fees or charges debited to your account, will be owed in full at the end of the term.
Joint mortgage
This is a mortgage taken out by two or more people which might be used if you were buying a property with a partner or friend. Parents could use this to help their children onto the property ladder.
Law of Property Act receiver (LPA receiver)
A receiver appointed under a mortgage or charge by the charge holder and typically over the property. A secured creditor or the Court may appoint a Receiver Manager to operate and manage any existing BTL agreement and also make the decision to end a pre-existing agreement and with a view of selling the property.
Leasehold
With a leasehold property you own the building but not the land and a lease defines the fixed period during which you can live on it. Possession of the property will be subject to the payment of an annual ground rent. It can be any period up to 999 years but for properties in which there are fewer than 70 years left on the lease it may be hard to get a mortgage. Flats tend to be leasehold properties.
Lender
The bank of building society you have your mortgage with.
LIBOR
London Inter-Bank Offered Rate. The interest rate that the banks charge each other for loans (usually in Eurodollars).
Loan
Sometimes called the advance. This is the actual amount of money that we agree to lend you.
Loan to Value (LTV)
This is the value of your loan as a proportion of your property's value. For example, if you were purchasing a home for £100,000, and had a deposit of £15,000 then you would need to borrow £85,000. This would mean that you would require a mortgage product that offered an LTV of at least 85%.
Missives
The formal written offer to purchase and the acceptance (Scotland only).
Mortgage deed
The mortgage deed is the formal contract between a lender and borrower, outlining the legal obligations of the borrower and the rights the lender has if the borrower fails to make repayments towards their loan.
Monthly repayment
Your monthly repayment is the amount of money you pay to your mortgage lender each month.
Mortgage Illustration (MIL)
This document, or ones similar to it, must be provided to you by law from a lender and shows you all the key information you need when choosing a mortgage. You can use it to compare different mortgages with different lenders.
Mortgage Term
Your mortgage term is the amount of time between the date you take out your mortgage and the date by which it has to be repaid in full to the lender.
Part and Part (Part and Part mortgage)
This is a combination of both repayment and interest only mortgage. For example, a loan of £50,000 could be made up of £30,000 repayment and £20,000 interest only, so there would be a remaining capital balance of £20,000, plus any fees and charges which have been debited, to repay at the end of your mortgage term.
Porting
The process of transferring your existing mortgage product to a new property. All of the terms and conditions of your mortgage product remain the same, but the mortgage is moved onto the new property that you are purchasing. When you port your mortgage, you may require additional borrowing and for this you may require an additional mortgage product.
Remortgage
Remortgaging is moving from one mortgage deal to another, this could be with your current lender or with a new lender.
Redemption Administration fee (sometimes called a Mortgage Exit Fee)
A fee charged by the lender for releasing the legal charge over your property following repayment of a mortgage.
Reflection period
This is a formal period of time which allows you to consider a mortgage offer. The reflection period does not affect how long your offer is valid for.
Repayment (Repayment Mortgage)
Your monthly mortgage payments cover the original amount borrowed plus any interest, together with any fees or charges debited to your account.
Repayment Strategy
This is the means by which you choose to pay off the amount borrowed on an Interest Only or part and part mortgage when the mortgage term comes to an end. You need to check with us to make sure that your chosen repayment strategy is acceptable to the Society.
Second charge borrowing
This is where a lender offers a loan secured on the property which, if your property is sold, will be paid off after the first legal mortgage.
Searches
For example, enquiries made at the Land Registry, the Land Charges register and local authorities to ensure there is nothing to cause concern about the property.
Shared Ownership
With the government's Shared Ownership scheme, you purchase a share of the property you want to buy (usually between 25% and 75%) and rent the rest of your home from a housing association. Find out more about Shared Ownership.
Subject to Contract
A provisional agreement made between buyer and seller, before exchange of contracts, which allows either side to back out without penalty (England and Wales only).
Title
The legal right to ownership of a property.
Title Deeds
The documents showing the ownership of the property.
Transfer Deed
The legal document which transfers ownership of registered land.
Transfer of Equity
The adding or removal of a person to/from an existing mortgage account and ownership of the property.
Valuation - for mortgage purposes
An inspection of a property required by the lender to make sure it’s worth what they’re going to lend you to purchase it.
Variable rate mortgage
Your monthly repayments can go up or down with a variable rate mortgage because of changes to your interest rate. Rate changes can happen for a variety of reasons - some will be decided by your lender. Sometimes variable rate mortgages may be subject to a "floor" (below which the rate can never fall), or a "ceiling" (which the rate cannot go above).
Vendor/Seller
The person(s) selling the property.
Your home may be repossessed if you do not keep up repayments on your mortgage.
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