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Glossary

Confused by property jargon? Here’s a comprehensive glossary of terms to help you.

A   B   C   D   E   F   G   H   I   J   K   L   M   N   O   P   Q   R   S   T   U   V   W   X   Y   Z

A

Additional Security Fee
An up-front, one-off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually charged on mortgages over 75% of the house value. Also known as MIG - Indemnity Guarantee Premium and Mortgage Indemnity Premium.

Agents
(See Estate Agents)

APR
Annual Percentage Rate. The true cost of a loan.

Auctions
Property sale. If you win the bid, you are legally bound to buy the house.

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B

Bailiff
Official who repossess your possessions or house if you cannot keep up on your mortgage repayments.

Banks
A place to go for Mortgages & Loans.

Bridging Loan
An expensive temporary loan to tide you over when having to buy your new house before selling your old home.

Broker
An intermediary who will give advice and offer a range of mortgages.

Building Society
Another place to go for Mortgages & Loans

Buildings Insurance
Insurance to cover any structural damage to your house.

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C

Capital
The sum borrowed in a mortgage.

Chain
This occurs when the seller needs the sale of their house to occur before they can complete the purchase of another property. The same situation may exist for others in the chain. As a result, the whole chain can collapse if one link breaks.

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 ownership legally passes to the buyer.

Contents Insurance
Insurance to cover any loss or damage to your possessions.

Contract Race
When two parties have made an offer on the same house. The vendor will sell to the first party to exchange contracts.

Contracts
The legal documents needed to transfer the ownership of property.

Conveyancing
Legal work involved in buying and selling a house.

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D

Direct Lenders
A new form of mortgage lender who deals solely over the telephone.

Disbursements
Expenses paid by the solicitor on behalf of the purchaser.

Discounted Rate

A reduced mortgage interest rate which is subtracted from the Standard Variable rate.

Double Agent
An Estate Agent who will reveal the seller's lowest asking price to the buyer in order to make a quick sale.

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E

Endowment Mortgage
Type of mortgage where monthly payments are made into a endowment (life assurance) policy. The loan is paid off in one lump sum at the end of the loan period.

Estate Agent
Property agents who link up buyers and sellers. Estate Agents advertise houses & arrange viewings.

Excess
The initial sum you have to pay on an insurance claim.

Exchange of Contracts
The point at which buyer and seller are legally bound to the sale and purchase of the property.

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F

Failed Valuation Survey
When the lender turns down your mortgage application after reading the surveyor's valuation report.

Freehold
Absolute ownership of property and land.

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G

Gazumping
'Gazumping' is the term used to refer to when a seller accepts an offer from one potential buyer, but then accepts a higher offer from someone else. The first buyer is left in the lurch, and either has to offer a higher price or accept that they have lost that home and continue looking. This practice tends to occur in a market when house prices are rising and there are more buyers around than sellers.

The problem is that until contracts have been exchanged the sale agreement is not legally binding. Once your offer has been accepted, either you or the seller can pull out at any time until the exchange of contracts. Unfortunately agents are legally obliged to inform sellers of all offers made on their property, even after one offer has been accepted. But during this period between the acceptance of your offer and exchange, you as the buyer spend a considerable amount of money on surveys, solicitor's fees, and confirmation of your mortgage offer. If the sale falls through you do not get this money back. If you are part of a chain of sales, you could even be affected by someone else being gazumped.

Gazundering
Under English law, the price you agree on is not definite until the `exchange of contracts'. Up until that time (usually 6 - 8 weeks after the seller accepts your offer for the property), the seller can choose to cancel the sale and accept a higher price from another buyer (if the market is moving upwards). Likewise, you have the right to cancel the agreement and buy a cheaper property (if you feel the price you originally offered was too high, or that prices may be falling.)

When the seller takes a higher price (or asks you for an extra £10,000 at the last minute), this is called `gazumping'. When the buyer demands a price drop at the last minute (usually to compensate for decling house prices in the area), this is called `gazundering'.

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I

Indemnity Guarantee Premium
The Mortgage Indemnity Guarantee Premium is a payment often demanded by a lender in order for them to lend.

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J

Joint Agents
When the seller commissions two independent Estate Agents to sell their house.

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L

Land Registry
Carried out by the solicitor to register buyer as the new owner of the house.

Lease
Document in which the owner of a freehold property lets out their premises to a named party at a certain price and for a specified time.

Leasehold
The ownership of a lease.

Lender's Arrangement Fees
Charge passed on to the buyer by lender for arranging a loan.

Lender's Legal Fees
The fees incurred by the lender when arranging a mortgage. These costs are passed on to the buyer.

Lender's Valuation
A valuation of the proposed property carried out by the lender before agreeing to give out a mortgage. This is only a valuation survey. A separate full structural survey will be needed by the buyer.

Life Assurance
An insurance policy which pays out a fixed lump sum on death of an individual. Life Assurance helps protect from financial difficulties.

Loan-to-Value
A percentage expressing size of mortgage value of house. For example, House Value=£100,000, Mortgage Size=£90,000. Loan-to-Value=90%.

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?).

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M

Mortgage
A long term loan to fund the buying of a property.

Mortgagee
The lender of a mortgage.

Mortgagor
The house buyer who takes out a mortgage.

Mortgage Term
Period over which mortgage is to be repaid.

Multi Agency
When a vendor instructs many agents, with the one that finds a buyer taking all the commission. The disadvantages of Multi Agency are:

  1. Commission rates are similar to "Joint Sole Agency" so it can be an expensive way to sell.
  2. Having a house marketed by many agents may be seen as an act of desperation and could cause potential buyers to become suspicious of (or dismiss) the property.
  3. Agents don't like doing business this way and some will refuse to market the property in this way.
  4. Agents prefer exclusive rights to market properties and will prioritise the sale of homes on which they are instructed as "Sole Agent" over multi agency properties.

The obvious advantage of multi-agency, however, is that the house should gain more exposure to would-be buyers.

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N

Negative Equity
When the value of your house falls to less than your mortgage. Over 1.5 million home owners have experienced this during the recent recession.

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P

Pension Mortgage
Monthly repayments made up of a) Interest on loan and b) contribution to a personal pension scheme. The loan on the house is paid off in one lump sum at the end of the loan period.

Premium
The monthly amount payable to an insurance policy.

Principle
The sum of the loan on which interest is calculated.

Public Liability Insurance
Insurance which covers injury or death to anyone on or around your property.

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R

Redemption
When a mortgage if fully repaid.

Relocation Agents
Specialists in finding houses, raising finances, organizing surveys and completing negotiations.

Repayment Mortgage
A basic mortgage capital and interest on the loan are paid off in monthly installments.

Repossession
When the mortgage lender takes away your home because you have fallen too far behind on your mortgage repayments.

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S

Sole Agent
When a seller chooses only one Estate Agent to sell their home.

Solicitor
Legal Professional who acts on behalf of the buyer in the purchase of a house. The solicitor will check the legal position of the house, carry out a local authority search and oversee the exchange of contracts between the two parties.

Stamp Duty
This is the tax that most people will pay when they buy another property. It is generally the purchaser who pays this tax via their solicitor although some sellers will pay this tax for you as part of a sale agreement. The percentage you pay depends on the sale price of your property and is currently only payable on a sale value above £125,000 - the current rates are as follows:

  • Up to £125,000 - 0%
  • Over £125,000 to £250,000 - 1%
  • Over £250,000 to £500,000 - 3%
  • Over £500,000 to £1,000,000 - 4%
  • Over £1,000,000 to £2,000,000 - 5%
  • Over £2,000,000 - 7%
  • Over £2,000,000 (purchased by certain persons including corporate bodies) - 15%

Note that the stamp duty rate shown is payable on all the amount and is not split according to the percentages. So if you have a sale price of £260,000 then your payment rate is 3% of all of the £260,000.

Structural Survey
A report constructed by the surveyor detailing firstly, whether the house is structurally sound and secondly, listing the major/minor defects, (including the necessary work which needs to be done).

Surveyor
The person who carries out a structural survey of the property, examining the structure and general state of the house.

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T

Term
The period in which a mortgage is taken out.

Title
The legal right to ownership of a property.

Title Deeds
The document which shows the ownership of a property.

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V

Valuation Survey
A survey carried out by the lender to ensure that the house's value is not less than the proposed loan. Often the lender will arrange the survey and bill the buyer. This cannot be used as a structural survey.

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Contact Info

Hardings Lettings,
25 High Street,
Amesbury,
Salisbury,
Wiltshire,
SP4 7ET

Telephone: 01722 440999
Telephone: 01980 883999
Email: info@hardingsestates.co.uk