Administration Fee/Applicaation Fee - This is a charge applied by a mortgage lender to cover the costs of processing an application. If an application is not completed, the fee may not be refunded.
APR - The APR is a compound interest rate figure used to compare different mortgages. Defined by law, it includes repayments on the loan plus any mortgage related fees such as booking, arrangement of basic valuation fees. The APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations.
Appraised value - The value of a property, as estimated by a surveyor.
Appreciation - The increase in value of property as a result of changes in market conditions.
ARLA - The Association of Residential Letting Agents, ARLA, is the only professional body solely concerned with the self-regulation of letting agents. For nearly 25 years ARLA has been actively promoting the highest standards across every aspect of residential lettings and management in the private rented sector.
Arrangement Fee - Fees charged by some mortgage lenders for providing or 'arranging' a loan.
Assured Shorthold Tenancy - An Assured Shorthold Tenancy is a specific type of lease or tenancy agreement which offers the landlord a guaranteed right to repossess his/her property at the end of the term.
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Bankers Draft - It is similar to a cheque, however the money has been debited to your bank account so unlike a cheque it is guaranteed to clear in the recipients bank account. You will normally need to give a bank in the UK 24 hours notice and they will normally be charge an administration fee.
Basic Mortgage Valuation - assesses whether the property represents a suitable security against the amount of the mortgage requested. It will not provide you with detals of the property's condition.
Break clause - Also referred to as a release clause. A clause sometimes inserted in a fixed term tenancy, typically if the initial fixed term is for a year or more. A break clause will usually be worded in such a way as to allow either the landlord or tenant to give written notice at any stage after a particular date or period of the tenancy, in order to terminate the tenancy agreement earlier than the end of the original fixed term.
Bridging Loan – This is a loan that is usually taken out to solve a temporary cash shortfall that may arise when buying a property. It is not a mortgage, and is usually only a short term lending solution. A typical example of when you may need one would be if you want to buy a second property before you've sold your first.
Buildings Insurance – An insurance policy that pays the cost of repair or rebuild in the event your property is damaged or destroyed. Most mortgage lenders will require buildings insurance to be taken out as a condition of their loan.
Buy-To-Let Mortgage – A type of mortgage specifically designed for people buying a property with the intention of letting it out.
Building Survey - This type of survey is more details and provides a comprehensive report on the current condition of the property. This kind of survey is recommended if the property is very old or you intend to carry out large renovations that will affect the structure of the property.
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Capped Rate - The maximum set interest rate you will pay on a mortgage for a set period of time. This means that the interest rate cannot go higher than the capped rate during the specified time period, usually the first few years of the loan.
CCJ - This stands for County Court Judgement - a judgement against you for defaulting on a debt.
Chain - This refers to a sequence of buyers and sellers. Most people who sell their homes are also buying at the same time. There can be a 'chain' of several buyers and sellers, each dependent on one another for the sale and purchase of their new homes. If one buyer or seller drops out the whole chain may collapse, leading to a domino effect where the sale of several properties is delayed or cancelled altogether.
Commission - The fee you pay your estate agent for selling your property.
Common areas – Areas of land or buildings such as gardens, hallways, recreational facilities and parking areas where more than one resident shares access.
Company let - Let to a bona fide company.
Comparative search – A search that looks at the sale prices of similar properties in the same area as the one you are looking to purchase.
Completion date – Property completion is the day that final funds are transferred between solicitors and you get the keys to your new property and/or hand the keys over for the property you have sold. The date will have been agreed between you and the other buyers/sellers in the chain prior to exchange of contracts and will be a fixed date on which both you and the property seller are contractually bound to complete.
Conditions of sale - The details that determine the rights and duties of the seller and buyer. These may have been agreed between the buyer and seller e.g. to leave certain fixtures and fittings at the property on completion or they may be national or statutory conditions e.g. it is a condition imposed upon your solicitor to verify your identification before completing conveyancing for the sale of your property.
Contract – A legal agreement between the seller and buyer of a property, which binds both parties to complete the transaction.
Conveyancer – Is a person who is qualified to process conveyancing transactions but is not a qualified solicitor, and does not have certain legal authorities that a solicitor would have.
Conveyancing – The name of the legal process that transfers property ownership from the seller to the buyer carried out by a solicitor or conveyancer.
Covenants – Rules and regulations governing the property, contained in its Title Deeds or Lease.
Credit check – A procedure by which a check is made on the credit history of an applicant. The credit check will reveal history of credit card payments, outstanding debt, arrears and county court judgements (CCJs).
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Deeds – Legal documents proving ownership, generally held by the mortgage lender.
Deposit (buyer) - Paid by the buyer to his solicitor before contracts can be exchanged. A deposit is usually around 10% of the value of the property.
Deposit (security deposit) (tenant) – An amount of money held by the landlord or agent for security against damage and unpaid rent. This is usually an amount equivalent to five weeks’ rent and is payable before moving in. At the end of the tenancy the tenant has to be notified of any deductions within a given time.
Deposit scheme – All deposits paid by a tenant for an Assured Shorthold Tenancy must be registered with a government-recognised deposit protection scheme within 14 days.
Depreciation – The decline or reduction in the value of a property caused by changes in market conditions.
Dilapidations – Any disrepair or damage to a rented property. The cost of the dilapidations is usually recovered from the deposit.
Disbursements – The name given to fees the buyer will incur when conveyancing to purchase a property including stamp duty, land registry fees and search fees.
Discount mortgages – Mortgages charged at a rate discounted from the published bank standard variable rate for a set period of time. The rates are variable and are subject to go up or down in line with any changes made to the bank of England’s base rate.
Down valuation – When the lender restricts the amount you can borrow after the surveyor’s valuation report indicates the property is not worth the sum sought.
Draft contract – Preliminary version of the contract.
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Early repayment charge - This is a charge or 'fee' payable if you pay part or all of a mortgage earlier than agreed. This is used to compensate the lender for interest that would have been paid if the mortgage had run for the full time period agreed.
Endowment mortgage - This is a form of mortgage where monthly premiums are made into an endowment policy that pays off the loan at the end of the term. At the same time, the interest is repaid monthly.
Energy performance certificate (EPC) – An EPC measures the property’s energy efficiency, and carbon output using a scale of A - G. It is a legal requirement and the seller’s/landlord’s responsibility to provide a valid EPC when marketing a property for sale or to let.
Equity - The amount of money either put into buying a property or the deposit placed on a property. Also known as capital, it describes the proportion of value of your property that does not have a charge against it.
Exchange of contracts - The point at which contracts are physically exchanged, legally binding the seller and buyer to the sale and purchase of a property at the agreed price.
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Fixed rate mortgage - A mortgage which has a 'fixed' rate of interest for a set period of time.
Fixtures & fittings - These are items in a house that maybe included in the sale or let. For example lighting fixtures, carpets, white goods and so on.
Flexible mortgage - A mortgage that allows for agreed increases or decreases in the repayments to be made.
Freehold - Complete ownership of a piece of land and the property that is on it.
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Gazumping – When a seller accepts an offer from a third party on a property they have already agreed to sell to someone else prior to exchange of contracts.
Gazundering – When the buyer threatens to pull out just before exchange of contracts if the price is not reduced.
Guarantor (buyer) - A person who agrees to guarantee that they will pay a debt or loan if you default on payment.
Guarantor (tenant) - A person who is prepared to guarantee rental payments and other obligations of a tenancy. The guarantor will be liable for rental payments if a tenant is unable to pay them, so the guarantor will need to have a regular income. Guarantors should be referenced just as a potential tenant would be.
Ground rent – A sum of money paid (usually annually) to a freeholder or leaseholder.
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Higher lending charge – An upfront, one off fee paid to the lender to protect them from the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value.
Holding fee – An amount paid by the tenant to temporarily secure the property, giving them time to return all the information required for their tenancy application.
HMO - House in Multiple Occupation – A property occupied by a number of individuals who share facilities, or do not have exclusive occupation of the whole property.
Homebuyer's survey & valuation – Provides a snapshot of the overall condition of the property and identify which areas (if any) need more specific investigation.
Home information pack (HIP) – A HIP is a selection of legally documents relating to the property. As of the 20th May 2010 it is no longer a legal requirement for sellers to provide a HIP, although they do still have to provide an Energy Performance Certificate (EPC) when marketing a property.
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Interest charges – The charges that banks make on a loan, calculated as a percentage of the amount borrowed.
Inventory – In its most basic form, an inventory is a list of the contents of a property. Most will also include a schedule of condition and photographs. It is essential that an inventory covers all areas of the property that the tenants use, such as garages, outhouses, sheds, gardens etc.
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Joint and several liability - Where there is to be more than one (adult) person living in the property, the tenancy will say they are ‘jointly and severally’ responsible. This means that any one person within the tenancy is responsible for fulfilling ALL the terms i.e. each individual tenant is responsible for the whole rental payment, not just their share of it, and if one person breaches a term in the tenancy ALL tenants have breached and are equally liable.
Joint tenants – A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner’s will).
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Landlord - A person, persons, company or body with a formal interest in the premises and the right to let the property.
Landlord reference – A reference given by a previous landlord which confirms the applicant’s history of payment of rent and their previous conduct as a tenant.
Lease - A legal document by which the Freeholder of a property lets the premises/land or a part of it to another party for a specified length of time. After the expiry of which, ownership may revert back to the freeholder or superior leaseholder.
Lease agreement – Also referred to as the tenancy agreement or contract. A formal legal document between a landlord and tenant that reflects the negotiations between them. It constitutes the entire agreement between them and sets out their basic legal rights.
Leasehold - Land or property is 'leasehold' when the owner has to pay the freeholder an annual sum of money, often referred to as ground rent.
Lender - A person or company that lends money for an agreed time period. They expect to have the money repaid back with interest added - your mortgage company is a lender.
Lien - The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.
Loan to value (LTV) – The proportion of the value of the property on which the lender is prepared to loan.
Local authority search – Procedure whereby a buyer's solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area.
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Maintenance charge – The cost of repairing and maintaining external or internal communal areas charged to the landlord. Also known as a service charge.
Memorandum of sale – A legally recognised document that lists the people involved in a property transaction and the terms of that transaction, including the agreed sale price.
Mortgage – An amount of money advanced by a lender such as a bank or building society on the security of a property and repayable over a long period of time.
Mortgage broker – Someone who advises buyers on the types of mortgage loan available and helps to process any subsequent application.
Mortgage offer – A formal offer from a mortgage lender confirming funds will be made available upon request within a certain time frame, and details the terms and conditions of the loan.
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NAEA – Is the National Association of Estate Agents. Estate agents that are members of the NAEA must meet certain standards to gain membership and must follow strict codes of practice that influence the way they conduct their business.
Negative equity - This term is commonly used to describe the situation of having a home that is worth less than your mortgage.
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Offer (buying) – A sum of money that the buyer offers to pay for a property. All offers should be placed in writing to you with the terms of the offer to ensure that it’s genuine.
Offer (letting) - A sum of money that a tenant offers a landlord to rent the property.
Office of fair trading – The Office of Fair Trading offers advice on all consumer matters. They aim to protect consumers, explain their rights and try to ensure that businesses compete and operate fairly. They have useful guides to consumer rights and the Law. The OFT does not take up cases on behalf of individual consumers, but will investigate reports of bad business practice and take necessary action.
Ombudsman - An independent organisation that investigates professionals such as estate agents, or solicitors when complaints are made by their customers.
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PCM - Per calendar month.
Portable appliance test (PAT) – A test carried out by a competent person to ensure all electrical installations and appliances within a property are safe in accordance with the Electrical Equipment (Safety) Regulations 1994.
Preliminary enquiries - The initial enquiries raised by the buyer’s solicitor to the Seller about a property. The Seller must fully answer these before exchange of contracts.
Premium lease – Where the rent for the property is paid in full up front.
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Redemption - This is when you pay off your entire mortgage in full. You redeem the loan. Some lenders will charge a redemption penalty if you repay the mortgage during a specified term.
References - Checking a tenant’s ability to pay the rent and their track record in earlier rentals. This often involves contacting previous landlords and present employers (or accountants if the tenant is self-employed) and carrying out credit checks.
Remortgage - Mortgaging a property you already own, usually replacing an existing mortgage. You can remortgage to obtain lower monthly payments, or if you have sufficient equity in your property, to raise money for a number of purposes.
Renewal of contracts – When a tenancy agreement has expired or will shortly expire, you and the landlord sign new contracts and create a new agreement to carry on the let.
Retention – The ability of a lender to hold back (retain) part of a mortgage until certain conditions are met.
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Search - The enquiry of information about the property held by the Land Registry or by the Local authority.
Service charge – Also known as maintenance charges, are paid by the owner of a property and cover the cost of providing various services (i.e. maintenance and repair of the building, lighting, security etc). Often associated with leasehold property.
Sitting tenant – A person occupying a property who is legally protected against being moved.
Solicitor – A legal expert handling the conveyancing for the sale or purchase of a property.
Stamp duty – A government tax paid by the buyer on completion of a property transaction.
Standard variable rate – Mortgage lender’s standard rate of interest which may be increased or decreased periodically by the lender depending on prevailing and current economic conditions.
Subject to contract (STC) – Words that confirm an agreement is not legally binding.
Structural Engineers Report - This is not a survey; it is simply a specific report on a particular defect that may have been highlighted.
Superior landlord - People or person to whom the ownership of a property might revert at a later stage.
Superior lease or head lease – Where a property is leasehold the landlord will be governed by the freeholder, otherwise known as the head lease, and the lease agreement between the landlord and the freeholder will place certain responsibilities and obligations/covenants on the landlord.
Survey - A survey is the report produced by a surveyor for the purpose of determining the value of the property and its structural condition.
Surveyor – A professional person qualified to determine the value and condition of land and property.
Subject to Contract (STC) – Words that confirm an agreement is not legally binding
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Tenant - A person(s), company or organisation who is entitled to occupy a property under the terms and conditions of a tenancy agreement.
Tenancy agreement – Also referred to as the contract or lease agreement. A legal agreement designed to protect the rights of the landlord and tenant, setting out all the terms and conditions of the rental agreement.
Tenants in common - A form of ownership for two parties whereby if one of them dies, their share of the property form part of their estate and does not automatically pass to the other(s).
Tenure - The type of ownership of a property such as Freehold or Leasehold.
Term of lease – The length of time the lease runs, e.g. 999 years. The remaining term of the lease will be the time left from today’s date until the expiry date of the lease.
The term of tenancy – The length or period of time the tenancy covers. Most initial tenancy agreements are for a minimum of six months.
Title deeds – Documents showing legal ownership of a property.
Title search – An investigation carried out by a conveyancer or solicitor into the history of ownership of a property. The search will check for liens, unpaid claims or restrictions or any other problem that may affect ownership.
Transfer deeds – The land registry document that transfers legal ownership from seller to buyer.
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Under offer – The status of a property when an offer has been accepted but contracts have not been exchanged, also referred to as Sold Subject to Contract (SSTC).
Utilities – Also referred to as Services. These are normally electricity, gas, water and sewerage.
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Valuation report – This is a survey carried out by a surveyor on behalf of a mortgage lender to confirm a property’s value. Lenders will carry out this survey to protect their interests, and it may be a condition of the loan that the buyer pays for this valuation report. It is not a condition report.
Vendor - Vendor is the legal term used to describe the Seller of a property.
Void period – Period of time when a property is empty or unoccupied by a tenant.