Town Centre Mortgages

Glossary

You’ll find most of the legal and technical terms involved in mortgages and buying property here, however please contact our advisers if you need any further explanation or help.

APR (Annual percentage rate)
The true cost of the mortgage over the full term, set out as a yearly rate, including all fees, terms and interest. The calculation assumes that you maintain the mortgage for the full term (for example, 25 years). APR is a standard calculation in the mortgage industry and allows mortgages from all lenders to be compared.

Arrangement fee
It is very likely you will be charged an arrangement fee when taking out a mortgage – however our advisers will be able to talk you through the conditions that apply.

Bank of England base rate
The rate set by the Bank of England, which is reflected in the interest rates charged by lenders.

Building survey
An extensive survey, carried out by a qualified surveyor, to spot faults and potential problems in the property you are buying.

Capital
The amount you have borrowed on the mortgage, on which interest will be charged.

Completion
When you become the legal owner of the property.

Conveyancing
The legal work involved in selling and buying property.

Disbursements
The fees, such as stamp duty and Land Registry fees which you pay to the conveyancer or solicitor.

Early repayment charge
The charge some lenders make if a mortgage is paid off early.

Equity
The total value of your property less the amount of the mortgage and any other secured loans you have.

Exchange of contracts
The point where the property sale becomes legally binding.

External inspection valuation
This is a very straightforward valuation which normally occurs when the amount you’re borrowing is well below the value of the property and is particularly useful for remortgages. The surveyor will estimate the value of the property by viewing it from
the road.

Guarantor
If your income isn’t enough to secure a mortgage in your own right, you could ask a guarantor to guarantee the mortgage repayments for you. Your guarantor is fully liable for repaying the mortgage if you default on the loan.

Higher lender charge
Not all lenders charge these, but if you borrow a high percentage e.g. if you borrow more than 75% of the price of the property, you may have to pay this type of fee.

Home buyer survey
This service includes a valuation but also contains a report on the condition of the property, highlighting any defects that the surveyor has spotted.

Home information packs
Every home no matter what size, must have a home information pack. It brings together valuable information at the start of the house buying process and includes a sale statement, local searches, evidence of title and an energy performance certificate.

Interest
The money you are charged for borrowing.

Land Registry fee
A fee paid to the Land Registry to register ownership of a property.

Lease
A legal contract which gives the ownership of a leasehold property to the buyer for a fixed period of time.

Mortgage
A loan to buy a property. The property acts as security for the loan and so can be repossessed and sold if the mortgage repayments are not made.

Mortgage application fees
Fees charged by the lender to organise the mortgage for you. These are not usually refunded if you then do not go ahead with the mortgage. Some lenders will only charge such fees for specific mortgage deals.

Mortgage deed
The legal agreement which gives the lender a legal right to the property.

Mortgage term
The length of time over which the mortgage will be repaid.

Offer of advance
The formal offer of a mortgage from a lender.

Redemption
Paying off a mortgage.

Stamp duty
When you buy property, you may need to pay stamp duty. If the purchase price is £125,000 or less you don’t pay any, if it’s more, you pay between 1-4% of the whole purchase price.

Structural survey
This is a detailed report that’s tailored to your needs and can include tests on drains or utilities. It could be very useful if you’re buying an older or unusual home or you’re thinking about building an extension.

Subject to survey and contract
Wording included in any agreement before the exchange of contracts. This wording allows the seller or buyer to withdraw from the property sale.

Title deeds
The legal documents which set out the ownership of a property.

Valuation
This is the most basic type of survey and is the mortgage lender’s inspection of the property to assess whether it is suitable for a mortgage.