Frequently Used Terms in Mortgages

Buying a home is a major financial decision, and it's important to understand the language and terms used in the mortgage industry. This comprehensive list will help you become more familiar with the most frequently used terms in mortgages.

Arrangement fee: A fee charged by the mortgage provider to cover the costs of setting up a mortgage. This fee can range from £0 to several thousand pounds.
Capital: The amount of money you borrow when taking out a mortgage.
Conveyancing fee: A fee paid to a solicitor for their services in handling the legal aspects of buying or selling a property.
Deposit: A minimum of 5% of the value of the property that is required by many mortgage providers as a down payment.
Equity: The difference between the value of a property and the amount still owed on the mortgage.
Equity release: A way for homeowners to access the equity in their home by taking out a loan or selling a portion of the property.

Fees: Any additional charges or expenses incurred when taking out a mortgage, such as arrangement fees, booking fees, mortgage valuation fees, CHAPS fees, mortgage account fees, higher lending charges, and search fees.
Financial adviser: A professional who provides advice on financial products, including mortgages.
Financial Conduct Authority (FCA): A government body responsible for regulating financial services in the UK, including the mortgage industry.
Further advance: An additional loan taken out on top of an existing mortgage.
Help-to-buy schemes: Government-backed initiatives aimed at helping people buy their first home.
Help to Buy: Equity Loan: A government-backed loan that provides up to 20% of the cost of a new-build property.
(London) Help to Buy: Equity Loan: A variation of the Help to Buy: Equity Loan, specifically for new-build properties in London.
Help to Buy ISA: A savings account that provides a government bonus to first-time buyers when they save to buy a home.
Help to Buy Mortgage Guarantee: A government-backed guarantee on certain mortgages, designed to increase the availability of loans for people with small deposits.
Home reversion: A type of equity release where a homeowner sells a portion of their property in exchange for a lump sum or regular income.
Income multiplier: A calculation used to determine the maximum amount of mortgage a person can afford based on their income.
In principle: A decision by a mortgage provider indicating that, subject to certain conditions being met, they are willing to lend a specific amount of money.
Lifetime ISAs: A type of ISA that allows people aged 18 to 39 to save for their first home or retirement.
Lifetime mortgage: A type of equity release where a homeowner takes out a loan secured against their property, but retains the right to live in it for the rest of their life.
Loan-to-value ratio (LTV): A ratio used to determine the size of a mortgage in relation to the value of a property.
Mortgage: A loan used to buy a property.
Mortgage (types): There are several types of mortgages, including repayment, interest-only, and part and part.
Mortgage provider: A financial institution that provides mortgages.
Mortgage term: The length of time over which a mortgage is repaid.
Mortgagee: The lender in a mortgage agreement.
Mortgagor: The borrower in a mortgage agreement.

It’s always a good idea to seek professional advice when choosing a mortgage. By understanding these commonly used terms, you can feel confident in making informed decisions when it comes to purchasing a property.

Please note your home may be repossessed if you do not keep up repayments on your mortgage

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