Mortgage jargon buster
Taking the mystery out of mortgages
YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE
Icon expand Capital and Interest Payment
Your monthly payment covers the interest and also reduces the total balance outstanding.
Icon expand CHAPS Fee
A fee to cover the cost of electronically transferring the mortgage funds to the borrower.
Icon expand Conveyancing
Is the legal process of buying and selling property. This can be done by an Advocate or specialist-licensed conveyancer.
Icon expand Cost of Credit
The difference between the amount you borrow and the amount you’ll end up paying back taking into account interest and other charges.
Icon expand Early Repayment Charge (ERC)
Some mortgages, such as a fixed rate mortgage, charge a fee if you pay back the loan early. This can vary, so check your original letter of approval or terms and conditions for the amount. This is known as an Early Repayment Charge (ERC).
Icon expand Equity
Is the difference between the current value of your home and the amount outstanding on your mortgage.
Icon expand Exit Fee
This is an administration fee payable to service providers when you fully repay your mortgage.
Icon expand Gazumping
Gazumping occurs when a seller accepts an oral offer (a promise to purchase) on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase.
Icon expand Joint Applicants/ Joint Mortgages
This is where you hold property ownership rights equally with another person or persons. If one person dies, ownership reverts entirely to the surviving person or persons. This legal agreement supersedes any Will the deceased may have made.
Icon expand Leasehold
You own the property but not the land it is built on for a specific number of years. Flats are usually owned on a leasehold basis. You may find it hard to get a mortgage if there are fewer than 70 years left on the lease of the property you want to buy. Leases are renegotiable, but the shorter remaining terms, the more expensive it will usually be.
Icon expand LTV (Loan to Value)
LTV means Loan to Value. The size of your mortgage as a percentage of the value of your property. for instance, if you have £50,000 mortgage and your home is worth £100,000, your LTV is 50%.
Icon expand Maturity Date
The date the mortgage must be repaid in full, or by which a new agreement needs to be taken out.
Icon expand Monthly Repayment
The amount you pay to your lender for your mortgage each month.
Icon expand Mortgage Offer
This is your guaranteed offer. Once your mortgage is approved you'll get a formal offer setting out the terms and conditions.
Icon expand Mortgage Term
The amount of time you are repaying your mortgage over (e.g. 25 years).
Icon expand Standard Variable Rate
The default mortgage interest rate your lender will charge you after your initial mortgage deal ends and you choose not to take a new fixed or tracker rate deal.
Icon expand Service fee
The fee charged by a lender who, with the customer's written consent, requests details from their existing mortgage lender.
Icon expand Tracker Rate Mortgage
The mortgage interest rate is set at a fixed percentage above the Bank's base rate, which usually tracks the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the Bank's base rate.
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