Mortgage Glossary
Making sense of the jargon
Advance -
The mortgage loan.
Balance -
The loan outstanding, after taking payments (credits) and any debits into account.
Buildings insurance -
Needed from exchange of contracts to cover the house you are buying against damage.
Building survey -
A full inspection of the property by a surveyor on behalf of and paid for by the buyer.
Capital -
The amount you owe, excluding costs and interest outstanding.
Collateral / security -
The property which the lender can sell to repay the loan if the borrower does not keep up the mortgage payments.
Completion -
The final legal transfer of ownership of the property – when the property becomes yours.
The start of the mortgage (also known as “drawdown”).
Contents insurance -
Cover for all your personal belongings against theft, damage etc.
Contract / contract race -
A contract is the written agreement between the seller and the buyer of a property to transfer ownership. A contract race is where the seller has received two or more offers on the property and will sell to whoever is ready to exchange contracts first.
Deposit -
Two deposits may be payable by the buyer:
A reservation charge payable as sign of good faith to the seller when they initially agree to buy/sell to each other.
The deposit paid towards the total price of the property, payable at exchange of contracts.
Drawdown date / drawdown deadline -
Drawdown is the date when the mortgage starts. The drawdown deadline is the date that applies to some mortgages, by which the mortgage must start.
Exchange of contracts -
In England and Wales (not Scotland), the point when both buyer and seller are legally bound to the transaction and at which point the buyer should take out buildings insurance on the property.
Freehold -
Outright ownership of the property and the land on which it stands.
Gazumping -
When the seller accepts an offer but then, before contracts are exchanged, accepts another, higher offer from someone else.
Ground rent -
An annual charge payable by leaseholders to the freeholder.
Guarantor -
A person who promises they will pay the borrower’s debt, usually if the borrower fails to.
Home-buyer’s survey -
A surveyor’s report on a property which is less extensive than a building survey and is paid for by the purchaser.
Land Registry Certificate -
Provides details of the property including a plan and, if the property is leasehold, a copy of the lease
Land Registry fee -
A fee paid to the Land Registry to register ownership of the property.
Leasehold -
The right to possession, but not ownership, of a property for an agreed period of time. Ultimate ownership remains with the freeholder.
Lender -
The bank, building society of financial institution where you have your mortgage.
Lessee / lessor - The lessee is the person to whom a lease is granted – the tenant. The lessor is the person who grants a lease – the landlord.
Life assurance -
An insurance policy that pays a lump sum on death. Often taken out with a mortgage to provide money for the loan to be repaid if the borrower dies during the term.
Local authority search -
Questions your solicitor/conveyancer will ask the local authority regarding plans for new road building, planning permission for any building work previously carried out, connection to the mains sewer, etc.
Mortgage-
Has a specific meaning in law but has come to mean a loan with property as security.
Mortgagee / mortgagor -
The mortgagee is the lender who lends the money in return for the mortgage granted by the borrower, who is therefore the mortgagor.
NHBC guarantee -
A 10-year guarantee, provided by the National House Building Council, that the builder will put right serious defects affecting a newly-built property. Zurich Municipal and Premier Guarantee both offer similar guarantees.
Specialist report -
A report required by the lender into particular defects discovered at the property to be purchased, such as serious structural movement or dry rot, before they will agree the mortgage.
Stamp duty -
A government tax payable on exchange of contracts on properties over certain values.
Subject to contract -
The phrase used before exchange of contracts which allows either party to withdraw without incurring a penalty.
Surveyor / valuer -
The person qualified by the Royal Institution of Chartered Surveyors to carry out valuations and surveys of properties.
Title deeds / title documents -
The legal documents which provide proof of ownership of a property.
Transfer deeds -
A form which provides details of the transfer of ownership to be entered on the Land Registry register.
Valuation -
An inspection of the property to ascertain its acceptability to the lender as security against the mortgage loan, for which the borrower may have to pay.
Vendor -
The person(s) you are buying your new home from.
If you would like to discuss your specific property requirements with us please e-mail or contact us to arrange a meeting.
Your property may be repossessed if you do not keep up repayments on your mortgage.
For mortgage advice you can choose how we are paid: pay a fee, usually 0.5% of the loan amount, or we can accept commission from the lender.
|
