Published: 16/09/2022We have put together this list to assist you in understanding some of the terminology in connection with residential property.
Acceptance - a document buyer’s need to sign in order to ‘accept’ the lender’s mortgage offer.
Additional Mortgage Security Fee - a one-off premium paid to a broker up-front, commonly when the loan exceeds 75% of the property value.
Advance - The amount a lender is willing to lend.
Appraisal - An appraisal determines the value of your home and is usually conducted by an estate agent.
APR (Annual Percentage Rate) - The annual rate of interest payable on your mortgage.
Arrangement Fee - The administrative fee charged by lenders for the arrangement of a mortgage.
Assignable Contract - A contract of exchange that allows the sale of a property before the date of completion.
AST (Assured Shorthold Tenancy) - A tenancy agreement that permits the landlord to claim back their property after a designated period of time.
Auction - A way of purchasing property where buyers bid against each other in order to determine the sale price.
Base Rate - The benchmark interest rate set by the Bank of England that is generally used by lenders to set their own rates.
BMV - This stands for Below Market Value and means that a property is valued below what it could potentially fetch on the open market.
Booking Fee - Same as an arrangement fee (see above).
Bridging Loan - A temporary loan which enables a buyer to purchase a property before selling their own.
Break Clause - This clause allows either party to exit the contract before the expiration date, providing the correct notice period has been given.
Buildings Insurance - Insurance to cover structural damage to the property; for example, from storms or floods.
Buyer - The purchaser.
Buy-to-let - Term used for either a property purchased for the purposes of renting (letting) or a mortgage associated with said purchase.
Capital and Interest Mortgages - See Repayment Mortgages below.
Cash Buyer - A buyer who can finance their property move without having to borrow money.
Chain - The other buyers and sellers whose property transactions your move depends on.
Chain Free - A sale or purchase that is not dependant on other parties exchanging contracts at the same time.
Collateral - A guarantee that ensures the lender will have their loan repaid by the sale of the home should you default on your payments.
Completion Date - The last step in your property transaction, when legal documents have been transferred between solicitors and the purchase price has been paid.
Compulsory Purchase Order (CPO) - a legal order which grants local authorities that need to obtain land or property the power to do so without the owner’s prior consent.
Contents Insurance - Insurance cover for the accidental damage or theft of any personal, or moveable, items within the property
Contract - A formal agreement between seller and buyer, usually prepared by a conveyancing solicitor, which details the terms and conditions of the property sale.
Conveyancing - The legal side of buying and selling a home.
Conveyancer - A residential property lawyer.
Covenant - Tenancy agreement terms that include all of the obligations expected of both the tenant and landlord.
Deeds - Legal documentation associated with a property that confirms ownership of the property and land.
Default - Failure to make pre-arranged mortgage payments.
Deposit - A financial lump sum paid from buyer to seller, usually held by solicitors, as a pledge of contract.
Disbursements - The fees your solicitor charges which are separate from the standard legal fees: Local Authority searches and Land registry charges for example.
Discounted Tracker Rate Mortgage - Avariable rate mortgage that is discounted for a designated period and normally based on the current interest rate set by the Bank of England.
Draft Contract - The initial contract for the property transaction, subject to later alterations.
Due Diligence - Your own thorough analysis of a property purchase before you buy a home.
Early Repayment Charge (ERC) – A charge incurred by the borrower to the lender should they decide to pay off their loan before the agreed term expires (may also be referred to as an Early Repayment Penalty in some instances).
Easement - The right of one landowner to make use of another nearby piece of land for the benefit of their own land, for example, a private right of way.
Energy Performance Certificate (EPC) - A way of measuring the efficiency of a property in terms of energy usage with a scale that runs from A through to G (with A showing the greatest efficiency and G showing the least).
Escrow - Money held by a third party until the buyer and seller meet their obligations.
Equity - The amount of money a homeowner has put into a property. This amount builds up over time as the owner pays off a mortgage and the market value of the property goes up.
Exchange of Contracts - The time both the buyer and seller are committed to the transaction; both parties can walk away from the sale at any point before the contracts have been exchanged.
Fixed Price - No offers accepted other than those which match or exceed the asking price.
Fixed Rate Mortgage - With a fixed rate mortgage you pay a set rate of interest for a set period of time, so you know exactly what you are paying each month.
Fixtures and Fittings - Any items that are not deemed structural.
Flying Freehold - This occurs when part of a freehold property overlaps part of a different freehold property or piece of land.
Freehold - A type of occupancy which means you own the property and land it sits on.
Gas Safety Regulations - Regulations that need to be adhered to by landlords in terms of gas safety. A gas safety check must be carried out by Gas Safe CORGI registered engineer prior to a tenancy commencing, and then annually for the duration of the tenancy, and handed to the tenant.
Gazumping - This is where a seller accepts one offer only to reject it when a better offer is made by a third party.
Gazundering - This happens when a buyer lowers their initial offer just prior to contracts being exchanged.
Ground Rent - An annual amount paid by the leaseholder to the freeholder of a property, often with service charges payable as well.
Guide price - The figure marketed by the estate agent for the property's sale, otherwise known as the asking price.
Guarantor - A person who agrees to guarantee repayment of a loan or debt for another should they not be able to make payments.
HMO (House in Multiple Occupation) - As the name suggests, these are properties that house multiple residents. They are also subjected to different rules and regulations than standard rental properties.
Home Buyers Report - A document covering the structural condition of readily accessible areas of the property.
Instruction - You formally 'instruct' an estate agent to market your property.
Interest rate - A charge you pay for the privilege of borrowing usually reflected as a percentage of the outstanding loan.
Inventory - A list of all the property’s contents, as well as the property’s condition and the state of the structural fixtures, commonly used in Assured Shorthold Tenancies.
Joint Tenancy - Two or more people living in one property.
Joint Agency - Two estate agents working together to sell a property.
Joint Mortgage - When two or more people are responsible for the mortgage.
Land Certificate - Documentation proving property ownership.
Land Registry - A governmental body that holds records of all registered properties in both England and Wales.
Leasehold - You own the property but not the land it was built on. For example, you may own a flat, but not the building it sits. in. A leasehold property usually comes with annual maintenance and service charges, made payable to a management company or freeholder.
Lessor - The Landlord (a person or organisation) that grants the lease. As leaseholder, you are a lessee, or 'tenant'.
LTB (Let to Buy) - The process of letting out a current residential property, for the purpose of purchasing a new residential property.
LTV (Loan-to-Value) - The percentage of the loan amount in relation to the market value of the property at the time of purchase.
Maintenance Charge - A charge made towards the upkeep of a leasehold property.
Mortgage Broker - An advisor who can arrange your loan for you, potentially getting a better deal than you’d find elsewhere.
Mortgage Deed - A document that lays out the conditions of a mortgage secured on any given property.
Mortgage Offer - A document from a bank or building society offering you a property loan as well its terms and conditions.
Negative Equity - When the property value is less than the outstanding balance of a mortgage.
New instruction - A property that has recently been added by an estate agent.
Offer - An amount (or bid) by a buyer to a seller indicating the price they are willing to pay for a property.
Offers over - This means offers are invited over the advertised guide price. Abbreviated to OIEO. You may also see OIRO - offers in the region of.
Open Market Value (OMV) - A property’s likely value in an open and balanced market.
Overpayment - The act of paying more than the minimum amount off of your mortgage each month in order to shorten the length of the term and lessen the amount of interest you’ll need to pay.
Part exchange - Developers sometimes offer part exchange (PX) schemes which allow you to trade in your current property as part-payment for a new build home.
PCM - Stands for 'Per Calendar Month'. Often associated with rental property prices, i.e. the amount you’d need to pay the landlord every calendar month.
POA - Price on application is used to advertise properties where the seller wants to keep the asking price secret.
Premium Listing - An enhanced advert offered by property search sites like Rightmove for an extra fee.
Probate - A probate property is one sold by the beneficiary of the deceased owner's estate once they have been granted legal permission.
Public Liability Insurance - Cover that provides indemnity against injury or death to anybody in or around your property.
Referencing - Checks carried out on behalf of a landlord in order to ensure prospective tenants are who they claim to be and are able to meet the letting requirements laid out by the landlord.
Release Clause - See ‘Break Clause’ above.
Repayment Mortgage - A mortgage that pays both interest and principal by way of regular monthly instalments.
Repossession - The unfortunate process of taking back the property in order to sell it and make good on a bad debt should the borrower be unable to pay.
Retention - When the lender witholds part of a mortgage loan until repair works has been completed.
Right to Rent - Controversial government legislation that legally binds landlords to check that any potential tenants are living legally in the United Kingdom and, therefore, have the right to rent property here.
Right to Buy (RTB) - The right for any tenant who has lived in a council-owned home to buy the house or flat at a discounted rate.
Searches - Usually conducted by conveyancing solicitors, these ‘searches’ are simply checks of local council records to see if there are any outstanding planning applications or restrictions in place on the property in question.
Shared Ownership - Commonly provided by housing associations, Shared Ownership is a scheme that allows first-time buyers a chance to buy a share of a home (usually between 25% and 75%), and then pay rent on the remaining amount. The percentage owned can be increased by way of ‘stair casing’ until full ownership is made.
Snagging - This term is most commonly associated with new build properties and simply means ‘make good’ on minor faults, such as missed paintwork, appliances not fitted correctly, etc.
Snagging Survey - Usually conducted before the buyer moves in to a new build home so that workmanship can be assessed and issues addressed.
Sold Subject to Contract (SSTC) - A term that indicates an agreement to purchase a property has been made but contracts are yet to be exchanged.
Stamp Duty - A tax paid by the buyer to the government on completion of a property sale.
Survey - A property inspection carried out by a qualified surveyor.
Tenancy Agreement - Tenancy terms and conditions document which stipulates what is and what isn’t expected of a tenant.
Tenants - Those living in a property that is owned by a landlord.
Tender - The process where the seller requests written offers on a property, with a specified closing date.
Tenure - Refers to various ways you can own your property.
Title - A legal right to property ownership.
Tracker Mortgage - With a tracker mortgage interest rates are linked to the Bank of England rate or another base rate. The interest rate will go up and down depending on this, irrespective of the mortgage lender.
Transfer Deeds - A Land Registry document that transfers legal ownership from seller to buyer.
Under Offer - If a property is under offer this means a seller has accepted an offer from a buyer but the contracts have not been exchanged yet.
Underwriting - The process a lender uses to determine the risk attached to a mortgage application.
Variable Rate Mortgage - With a variable rate mortgage, the interest rate can change at any time. They are partly influenced by the Bank of England base rate but other factors also come into play. The interest you pay on a variable rate mortgage can change even without the base rate moving and similarly the base rate might come down but your mortgage stays the same.
Valuation - The valuation is where an estate agent visits your property to assess the value, after which you decide whether to instruct them to sell the property.
Vendor - Another word for seller.
Vetting - The process of conducting background checks on potential buyers or sellers prior to purchasing.
Verbal Offer - A verbal offer made by the purchaser that is not legally binding.
Writ - A formal written order used by a court, for example to begin legal proceedings on the transfer of a property's ownership.
ZZZ - The End.