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Jargon Buster for Residential Sales

When purchasing or selling a home, many of the terms used by estate agents, mortgage advisors and solicitors can be a little unfamiliar when you first hear them. Here we have identified which ‘Jargon’ you may come across and have provided a useful explanation of its meaning.

The total cost of a loan, taking into account interest charges, arrangement fees and other costs, shown as a percentage. The APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations.

The person or party registering for a property to buy.

The value of a property, as estimated by a surveyor.

The increase in the value of a property as a result of changes in market conditions.

These are the fees charged by a mortgage lender or broker to arrange a loan/mortgage.

The rate of interest which the Bank of England charges for lending to other banks. These banks then use it as a benchmark for the interest rates they charge when lending money to consumers, often stipulating an interest rate “X% above the base rate”.

A temporary short-term loan enabling someone to purchase a property before selling his or her existing property.

A full inspection of the property, conducted by a chartered surveyor, who will write a detailed report setting out the soundness of a property and any property defects. Suitable for any house, particularly older properties and those that have been poorly maintained as well as properties that have been extensively altered or extended, or any property due to be altered or extended.

An insurance policy that pays the cost of repair or rebuilding 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.

A type of mortgage specifically designed for people buying a property with the intention of letting it out.

Capital, also known as equity, is an asset that is less liquid than cash. It represents the amount of money you have put into a property, investment or deposit.

Growth or gain in the value of a property or asset over time. 

A tax on profits above a fixed level made from the sale of financial assets such as a house, flat or shares.

A chain is formed when several property sales and purchases are inter-dependent. A chain can be complicated but a good estate agent will be able to help keep it moving.

The point at which the sale of the property is concluded and the buyer receives the keys.

A document which your solicitor or conveyancer will provide as a record of all the financial transactions and costs.

Where two or more purchasers are given a draft contract and the first one to exchange contracts buys the property.

A representative, solicitor or licensed conveyancer, who deals with the legal aspects of buying or selling a property. The buyer and seller will each appoint their own conveyancer.

The legal process of transferring the ownership of a property.

Rules governing the property in its title deeds or lease.

Also known as Title Deeds. They are the legal title documents that prove ownership of a property. They are transferred to the new owner on the sale of a property and are held by the mortgage lender.

The sum of money that is paid to the vendor on exchange of contracts on a property.

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When a buyer reduces their agreed offer prior to exchange of contracts.

You have to pay this to some lenders for releasing their hold over a property once you’ve paid off your loan. It often applies if you pay off your mortgage early before the standard term has run but not always.

This is a guaranteed reduction on the lender’s variable rate. It is usually only available for an agreed period of time such as two to five years after which the interest rate reverts to the lender’s variable rate.

The preliminary, unconfirmed version of the contract that is drawn up when the sale is first agreed. It will set out the conditions of sale and will need to be confirmed by the vendor’s solicitor.

A legal document issued by the vendor’s solicitor to the purchaser’s solicitor setting out the terms and conditions of sale. 

A charge levied by the lender as a penalty if a mortgage is paid off within a specified period.

A right that affects a property – such as the right of neighbours to pass over an access path or the right of the water company to have their pipes and drains running under the property

An EPC measures the energy efficiency of a property using a scale of A-G. It is a legal requirement to have a valid EPC commissioned before a property can be marketed.

Questions which are raised by the buyer’s conveyancer, often about survey or property information forms.

The amount of money either put into buying a property or the deposit placed on a property which exceeds the amount of any money borrowed against the property. Also known as capital.

The initial sum paid on an insurance claim.

The point at which signed contracts are physically exchanged, legally binding the seller and buyer to the sale and purchase of a property at the agreed price.

An independent body that regulates the financial services industry in the UK.

A mortgage in which the interest rate is set for an agreed period of time.

All non-structural items included in the purchase of a property.

An arrangement whereby you can increase or decrease your mortgage.

A flying freehold exists when one part of a property extends over, or under, a neighbouring property/land ownership. For example, a bedroom that is located over a public walkway owned by the local council

Where the owner of the property also owns the land on which it is built.

When a seller accepts a higher offer from a third party on a property that they have already agreed to sell to someone else prior to exchange of contracts.

When a buyer reduces their agreed offer prior to exchange of contracts.

The annual charge levied by the freeholder to the leaseholder.

The homebuyer’s report comments on the structural condition of most parts of the property that are readily accessible, but does not involve in-depth investigation or the testing of water, drainage or heating systems.

The general rise in prices over time.

The charges that banks make on a loan, calculated as a percentage of the amount borrowed.

A type of mortgage in which the borrower only repays the interest on the loan for the duration of its term and repays the full loan amount at the end of the mortgage period.

The total gross income of the two borrowers in a joint mortgage.

Land document issued by the Land Registry to the owner of registered land as proof of ownership. It includes a copy of the register and the plan showing the extent of the land.

Concerns the assessment of compensation where land, or some other interest in land, is being acquired, either compulsorily, or by agreement, by an authority possessing compulsory purchase powers.

The official body responsible for recording the ownership of land.

Fees paid by a solicitor on the buyer’s behalf to register ownership of property with the Land Registry. This ensures that once you have purchased the property you are the legal owner of the land (if freehold).

A formal application for an inspection of the Land Registry register. A certificate is issued showing the current situation of the land in question.

This means you own a property for a set number of years. When the lease expires, the property returns to the freeholder. Flats are commonly sold as leasehold or your house may be built on leasehold land.

Fees that will be charged by your solicitor or conveyancer in relation to the purchase or sale of your property. They will include professional fees as well as any search and mortgage fees.

Buildings of special architectural or historic interest. A listed building may carry certain obligations and restrictions governing its use, repair, and maintenance.

The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.

A self-contained apartment (sometimes over two or three floors) with its own entrance from the outside.

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.

The NAEA Propertymark (formally the National Association of Estate Agents), the UK’s leading professional body for estate agency.

Where the sale value of a property is less than the amount outstanding on the mortgage.

A type of building guarantee available on some newly built homes under which defects occurring within a specified time after construction are remedied.

A sum of money that the buyer offers to pay for a property.

A formal document approving the mortgage you have requested and detailing the Terms and Conditions that will apply.

An official document from the Land Registry confirming ownership of and borrowings against a property.

A process, normally managed by an estate agent, where several house hunters are given a time of a few hours when they can all go and view a property for sale instead of separate, private viewings.

A nominal periodic rent usually paid annually.

The Property Ombudsman offers a free and independent service for resolving disputes between sales and letting agents, which are members of The Property Ombudsman, and buyers/sellers of residential property in the UK.

Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to take advantage of any equity gained by a rise in value.

When a mortgage is fully repaid.

A mortgage in which monthly charges are used to repay the interest and reduce the outstanding capital.

When the mortgage lender takes possession of a property due to non-payment of the mortgage.

The ability of a lender to hold back (retain) part of a mortgage until certain conditions are met.

A request or enquiry for information concerning the property held by a local authority or by the Land Registry

A property which is joined to one other house.

Service charges are paid by the owner and cover the cost of providing various services (i.e. maintenance and repair of the building and common parts, provision of heating, lighting and security).

Where the freehold on which the property stands is owned by a limited company and the shareholders of that limited company are the owners of the property.

When a seller chooses only one estate agent to sell their property.

The tax paid to the government by the purchaser of a property. Rates of SDLT can vary. Changes in December 2014 mean that the tax rates are “banded” progressively in the same way as income tax. Nothing is payable on the first £125,000 of the purchase price. From £125,001 to £250,000 2% is payable and from £250,001 to £925,000 the rate is 5%. £925,001 to £1.5 million is 10% and over £1.5 million it is 12%.

The Government has abolished stamp duty for first time buyers on homes worth up to £300,000.

The mode of holding ownership of a property: for example, leasehold or freehold.

Documents showing the legal ownership of a property.

An insurance policy which a buyer can take out to allow a sale to complete where there is a potential problem with the documentation in proving legal ownership of some part of the land they are buying.

An investigation carried out by a conveyancer or solicitor into the history of ownership of a property. The search will check for liens (charges), unpaid claims, restrictions or any other problems that may affect ownership.

The status of a property for sale when a seller has accepted an offer from a buyer, prior to exchange of contracts.

A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending and the report is produced for them.

The person selling a property.

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