At Amber Mortgage Solutions we understand that whether you’re looking for a mortgage, mortgage advice, home insurance or life insurance it can be a complicated and daunting affair. We have created this jargon buster to help you understand the market better or simply contact us now through our live chat service or call us on 01702 619 221

Mortgage Jargon Buster

We have compiled this Mortgage Jargon Buster to assist you. At Amber we try to give advice to customers in a language they can understand and ensure they do not leave their appointment unsure of any aspects discussed. To try and help we have listed some of the terminology used within the industry. Use the quick search below to filter your results, by typing in your term.

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  • Advance

    Loan from a Lender in the form of a mortgage.

  • APR

    Acronym for Annual Percentage Rate, a basic rate of interest. Includes any additional fee­s, showing the true cost of the loan.

  • Arrangement Fee

    A fee you pay to the lender in return for a mortgage deal. This is usually paid on completion of the mortgage and may be added to the loan.

  • Booking Fee

    A fee paid to the lender to book a rate and secure your mortgage application.

  • Bridging Loan

    A temporary loan providing financial cover to bridge the gap between purchasing and selling a property.

  • Building Survey (formerly structual survey)

    A full inspection of the property, conducted by a chartered surveyor, who then writes a detailed report including any property defects. Suitable for any house, particularly older properties and those which have been poorly maintained. Also for properties which have been extensively altered or extended, or any property you may wish to alter or extend.

  • Buildings Insurance

    Insurance to cover any structural damage to your house.

  • Buy to Let

    A mortgage designed for people who buy a property with the intention of letting it out.

  • Capital

    The amount of the loan on which interest is calculated.

  • Capped Mortgage

    Normally agreed for a fixed period of time, many lenders provide mortgages with an upper limit on the interest rate. If the standard interest rate is lower than the upper limit you will be charged the lower rate, but if the standard variable rate is higher you will be charged at the agreed rate.

  • Cash Back

    Many lenders provide a cash incentive to borrowers that they can spend as they wish once the mortgage has completed.

  • Cat Standard Mortgage

    Standing for charges, access and terms, CAT-marked mortgages must comply with benchmarks laid down by the Government. Different CAT marks apply for (discounted) variable rate and fixed or capped rate mortgages. The Government stresses that a CAT mark doesn't mean a mortgage deal is officially endorsed and for many people non-CAT-marked deals will be a better option.

  • CCJ

    County Court Judgement. A decision reached in the County Court which can be for not paying debts. If you pay off the debt, the CCJ is satisfied and a note is put on your records to say this.

  • CHAPS

    Clearing House Automated Payment System. A Payment Release through which the mortgage advance is sent to the conveyancer.

  • Charge

    The term used for the security that the lender relies on when granting a mortgage.

  • Completion

    The point when contracts have been exchanged and legal transfer of ownership on the property from seller to buyer is finalised.

  • Contents Insurance

    Insurance to cover any loss or damage to your possessions.

  • Contract

    Legally binding agreement between the seller and buyer of the property.

  • Conveyancer

    A specialist in the legal aspects of buying a house.

  • Conveyancing

    This is the legal work required for buying and selling a property. The conveyancing process essentially involves the transfer of good title or ownership from one party to another. It is a fairly complicated and longwinded process that involves untangling the legal jargon found in the title deeds, and checking the background of your property with the local authority and title searches.

  • Convenants

    Rules and regulations governing the property contained in its title deeds or lease.

  • Credit Scoring

    A lender's way of assessing whether you are a good risk to lend a mortgage to.

  • Credit Search

    A check the lender makes with a specialist company to find out whether you have any County Court Judgements or a record of not paying loans, credit-card bills and so on.

  • Critical Illness cover

    Insurance that generally pays out a lump sum if you are diagnosed with a life-threatening illness or disease.

  • Decision in Principle

    An indication of the likely outcome of a mortgage application. This is not a formal offer but includes a credit check with a credit reference agency and an assessment of the stated information using our lending guidelines.

  • Decreasing Term Assurance

    Life assurance that pays out an amount if you die during an agreed period or the term of the policy. The amount of cover reduces each year. So, this makes it ideal to cover repayment mortgages where the amount you owe the lender reduces each year. Decreasing term assurance is usually cheaper than level term assurance.

  • Default Notice

    A prescribed notice to be issued on default by a lender wishing to enforce a regulated loan under the Financial Services Authority.

  • Disbursements

    Costs such as stamp duty, Land Registry fees and search fees charged to the acting conveyancer or solicitor but then paid for by the purchaser.

  • Discounted Rate

    Many lenders offer discounted rates on the standard variable rate for an agreed period of time.

  • Early Repayment Period

    Charges paid to the lender in compensation for lost interest if you redeem your mortgage ahead of the end of the rate.

  • Estate Agency Fees

    The amount the estate agent charges you for selling your property. This is usually worked out as a percentage of the sale price. If you were to be charged a 1.5% fee on a property value of £200,000 you would pay £3,535.00.

  • Endowment Mortgage

    On this type of mortgage only interest is paid on the loan to the lender during the term. At the end of its term, the mortgage is paid off with the proceeds of an endowment.

  • Equity

    This is the difference between the value of the property and the outstanding loan.

  • Exchange of contracts

    This is the point when both buyer and seller are legally bound to the purchase and sale of the property.

  • Fixed Rate

    Most lenders offer mortgages on a fixed rate for an agreed period of time. If the standard variable rate increases or decreases, repayments on a fixed rate mortgage will remain the same.

  • Fixtures

    Any item that is attached to a property, and so is legally part of the property.

  • Flexible Mortgage

    Allows you to vary monthly payments to fit temporary changes to your circumstances. You can make additional payments to reduce the loan in months where you have excess cash (for example, as a result of a bonus or extra commission), or you can reduce payments, or even withdraw cash, when you need extra funds. Interest is usually calculated daily, so changes to the loan amount have immediate effect.

  • Freehold

    Ownership of both the property and the land it stands on.

  • Gazumping

    This is when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but not yet exchanged contracts. Although illegal in Scotland this still happens in England and Wales.

  • Ground rent

    The annual charge levied by the freeholder to the leaseholder.

  • Guarantor

    The lender may sometimes require a borrower to appoint a guarantor. This is someone who promises to pay the borrower's debt if or when necessary.

  • Higher Lending Charge

    The higher lending charge, formerly known as a mortgage indemnity guarantee (MIG), is a fee charged by a mortgage lender where the amount borrowed exceeds a given percentage of the value of the property. This fee may be used by the lender to purchase an insurance policy designed to protect it (the mortgage) against loss in the event of you defaulting and ceasing to repay your mortgage. The fee may be insisted on by the lender at the start of the loan. This fee can usually be added to the mortgage amount.

  • HM Land Registry

    The official organisation that keeps records of properties in England and Wales. Transfer of ownership has to be registered with the HM Land Registry.

  • Homebuyer survey and valuation

    This is when a professional surveyor checks the structural state of a property. This is more detailed than a valuation but less detailed than the building survey. The report is optional and you pay the bill; This report should pick up possible problems and may give you the chance to negotiate a lower price. You have more grounds to sue or get compensation from a surveyor for a poor report than you would from a standard valuation.

  • IFAs

    Independent Financial Adviser - an adviser committed to offering products from the full range of financial products offered in the marketplace.

  • Interest-only

    Your monthly payments to your lender are simply made up of interest. You do not pay off any of the mortgage during the term of the Loan. You pay off the mortgage finally using the proceeds of a separate investment plan for example, an endowment, personal pension or PEP and so on.

  • Joint Tenants

    This is the owning of land by two or more people who are co-owners or 'joint tenants'. When one of the joint tenants dies, the ownership of the property automatically passes to the survivor(s).

  • Key Facts Illustration

    Also referred to as a 'KFI'. This is a document given by a lender to a borrower that gives full details of a mortgage, if the mortgage is regulated by the Financial Services Authority.

  • Land Registration Fee

    A fee paid to verify legal title and rights over the property and to register ownership of the property with the Land Registry.

  • Lease

    A document which grants possession of a property for a fixed period of time and sets out the obligations of both parties, landlord and tenant, such as payment of rent, repairs and insurance.

  • Leasehold

    Temporary ownership of the property but not the land on which it stands. When the lease expires, ownership of the property reverts back to the freeholder.

  • Level Term Assurance

    Life assurance which pays out a lump amount if you die during the term. The amount of cover stays the same throughout the term, which makes the cover suitable for interest-only loans because the amount you owe on the mortgage stays the same until the end of the mortgage.

  • Libor

    Is the London Interbank Offered Rate. This is the rate at which banks buy and sell money to each other. It changes daily and is linked to base rates set by the Bank of England. LIBOR usually changes daily and a LIBOR linked mortgage may be adjusted at fixed intervals, e.g. every three or six months.

  • LTV

    Loan to value. This is the size of the mortgage as a percentage of the value of the property or the price you are paying for the property. A £85,000 mortgage on a house valued at £100,000 would mean an LTV of 85%.

  • Local Authority Search

    A search carried out by the Solicitor to find out if there are any Local Authority Notices, with respect to the building itself (e.g. has it been condemned?), and the surrounding area (e.g. have plans gone through to build a motorway next to the house?).

  • Mortgage

    A loan made against the security of property.

  • Mortgagee

    The company or organisation which lends you the money under a mortgage.

  • Mortgage Deed

    The legal charge of the property to the mortgage lender until such time as the loan is repaid.

  • Mortgage Term

    The period of time that the mortgage loan is to be repaid.

  • Negative Equity

    This is where the money you owe on the mortgage is greater than the value of the property. For example, if you had a £165,000 mortgage on a property valued at £150,000, you would have £15,000 negative equity.

  • Offer

    The letter from a lender offering a customer a mortgage loan and setting out the conditions upon which it is offered.

  • Ombudsman

    An impartial commissioner set up to settle complaints made by the public against major industries or institutions; e.g. for the financial sector, the Financial Ombudsman Service.

  • On Risk

    This is when your insurance cover begins. This may be before you have paid a premium.

  • Part and Part

    Where the repayment method is part Repayment and part Interest Only.

  • Premium

    A payment for an insurance policy.

  • Purchaser

    The individual/s buying the property.

  • Redemption

    Full repayment of the loan.

  • Redemption Administration Fee

    A fee charged by the lender for releasing the deeds following repayment of a mortgage.

  • Redemption Penalities

    Penalties sometimes incurred if paying off a mortgage early. Also known as Early Repayment Charges.

  • Registered Land

    Land for which title is registered and recorded at HM Land Registry, the central registry of the title to property in England and Wales.

  • Reinstatement Value

    The cost of rebuilding your home should it be destroyed.

  • Remortgage

    Is when you move your mortgage to another lender without moving house to benefit from a better rate/deal or to raise funds by increasing the size of the mortgage.

  • Repayment Mortgage

    Instalments of capital and interest are paid throughout the term of this type of mortgage.

  • Repossession

    When the mortgage lender takes away a borrower's home because he has fallen too far behind on mortgage repayments.

  • Retention

    If essential repair work to a property is required, the lender may retain a proportion of the mortgage until the remedial work is completed.

  • Searches

    Enquiries made at the Land Registry, the Land Charges Register and Local Authorities to ensure there is nothing to cause concern about title to land.

  • Second Charge

    A second lender takes a charge over the property to secure a loan, whilst the first mortgage remains outstanding.

  • Security

    When a loan is taken out it can be 'secured' on a property. The borrower agrees that in the event of default on repayments, the lender can claim the property.

  • Self-Certification

    You give full details of your income and sign a declaration it is correct. For people who are unable to prove their income in the normal way, e.g. are self-employed, a company director, a contractor, have several sources of income or fluctuating income.

  • Self-Build Mortgage

    Mortgage for those who wish to build their own home, renovate or convert their existing home. Funds are normally released in stages as work progresses following a satisfactory progress report from an architect.

  • Shared Ownership Mortgage

    A prospective buyer buys a share of a house and rents the remaining portion. Successive shares can some times be bought.

  • Solicitor

    The person who deals with the conveyancing.

  • Stamp Duty

    A tax you pay on properties which cost over £125,000. This is charged as follows: Property value £125k - £250k stamp duty = 1%. Property value £250k - £500k stamp duty = 3%. Property value £500k+ stamp duty = 4%

  • Standard Variable Rate (SVR)

    The mortgage lender's interest rate at any give time on mortgages that are not under fixed, discounted or capped rate conditions. This is the rate that the mortgage will often have once the initial benefit period is over.

  • Subject to Contract

    Qualification of a provisional agreement made between buyer and seller, before exchange of contracts, which allows either side to back out without penalty or liability.

  • Surveyor

    Individual that carries out surveys on properties, who must be a member of the Royal Institution of Chartered Surveyors (RICS).

  • Sum Assured

    How much the life assurance or investment company guarantees to pay you, if you have an endowment policy and you die. This figure may be less than the mortgage amount unless the policy is specifically designed to match the mortgage amount.

  • Tenants in Common

    A form of ownership by two or more people in which, if one dies, their share of the property forms part of their estate and does not automatically pass to the other(s).

  • Tenure

    Whether a property is freehold or leasehold.

  • Term

    The period of years over which you take the mortgage and when you have to repay it.

  • Title

    The legal right to ownership of a property.

  • Title Deeds

    Documents stating who has title or right to the ownership of a property, which also show the boundary of the land.

  • Title Searches

    Undertaken by a solicitor or conveyancer to ensure that there are no unusual circumstances governing the ownership or use of a property.

  • Transfer Deed

    A document that, once you sign it, actually transfers the ownership of the property.

  • Transfer of Equity

    A sale or gift of one person's interest in the property to another, most commonly on divorce or separation where the family home is jointly owned.

  • Vendor

    The person selling the property.