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A - Z OF USEFUL TERMS
Additional security fee
An up-front, one off fee paid to the lender to protect them against the borrower defaulting on the loan. This is usually, charged on mortgages over 75% of the house value, and is also known as an MIG, Mortgage Indemnity Guarantee, premium or Mortgage Indemnity Premium.
Annual percentage rate
(APR) the total cost of a loan - including all costs, interest charges and arrangement fees - shown as a percentage rate and easily comparable with mortgage interest rates.
Arrangement fees
The fees charged for arranging a loan on certain products. These are usually applied to loans where a special interest rate applies e.g. fixed or capped rates.
Assignment
The transfer of ownership of an insurance policy or lease.
Auction
The sale of a property to the highest bidder.
Basic variable mortgage rate
The mortgage lender's standard rate of interest which may be increased or decreased periodically by the lender depending on prevailing economic conditions.
Bridging loan
A temporary loan providing financial cover which allows a buyer to complete on the purchase of a new property before selling the previous property.
Building survey (formerly a full structural 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 as well as for properties which have been extensively altered or extended, and any property you may wish to alter or extend.
Buy to let mortgage
A type of mortgage specifically designed for investors buying a property with the intention of letting it out.
Capped mortgage
Provided by lenders with an upper limit on the interest rate which is normally agreed for a fixed period of time. Thus if the standard interest rate is lower than the upper limit the borrower will be charged interest on the lower rate, but if the standard variable rate is higher the borrower will be charged at the agreed rate.
Chain
The situation that occurs when a buyer is reliant upon completion of the sale of his existing property, in order to complete on the purchase of his new property.
Completion
The point at which all transactions concerning the property's sale are concluded and legal transfer of ownership passes to the buyer.
Conditions of sale
The details that determine the rights and duties of the buyer and seller. These may be national, statutory, or conditions imposed by the Law Society.
Contents insurance
Insurance covering any loss of or damage to your possessions within the property.
Contract
A legal agreement between the seller and buyer of a property which binds both parties to complete the transaction.
Contract race
Occurs when two parties have made an offer on the same house. The vendor will sell to whoever exchanges contracts first, ie: it's a race!
Conveyancer
A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.
Conveyancing
Traditional term used for the legal work involved in the purchase and sale of a property.
Covenants
Rules and regulations governing the property and contained in its title deeds or lease.
Deeds
Legal title documents proving ownership. The deeds will be held by the mortgage lender.
Deposit
A sum of money (usually 10% of the property value) paid by the buyer on exchange of contracts.
Detached
Term used to describe a property that stands alone and is separated from all others.
Development
A newly built residence or an older property which has been refurbished and modernised.
Dilapidations
Any disrepair or damage to a rented property.
Disbursements
Fees paid by the buyer's solicitor on the buyer's behalf such as stamp duty, land registry and search fees
Discharge
Paying off a mortgage.
Draft contract
Preliminary, unconfirmed version of the contract.
Early redemption charge (ERC)
A charge made by the lender if the borrower terminates a mortgage in advance of the terms of that particular mortgage. This usually occurs when the borrower has benefited from reduced payments or cash back in the early period of a mortgage.
Endowment mortgage
Interest-only repayments combined with monthly premiums into an endowment policy designed to pay off the loan at the end of the term.
Equity
The difference between the value of a property and the amount of mortgage owed.
Excess
The initial sum paid on an insurance claim.
Exchange of contracts
The point at which signed contracts are physically exchanged, legally committing the buyer and seller to the purchase and sale of a property at an agreed price.
Failed valuation survey
Occurs when the lender turns down a mortgage application after the surveyor's valuation report indicates the property is not worth the sum sought.
Fixed rate mortgage
A mortgage in which the interest rate is set for an agreed period of time.
Fixtures & fittings
All non-structural items included in the purchase of a property.
Flexible mortgage
An arrangement whereby mortgage repayments can be increased or decreased.
Freehold
Technical term describing the ownership of the property, meaning that it belongs to the owner without the limitation of time.
Gazumping
Occurs when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but have not yet exchanged contracts on.
Gazundering
When a buyer makes the seller a lower offer just before contracts are due to be exchanged.
Ground rent
The annual charge levied by the freeholder to the leaseholder.
Guarantor
The lender may require a borrower to appoint a guarantor; this person promises to pay the borrower's debt if the borrower defaults.
Homebuyer's survey and valuation (house/flat buyer's report)
This is a survey report, which is not as detailed as a structural survey, and is carried out by a chartered surveyor to assess the state of a property and its value.
IFA
Independent Financial Advisor.
Individual savings account (ISA) mortgage
An interest-only mortgage linked to an Individual Savings Account fund, which is designed to pay off the loan at the end of the period.
Interest charges (mortgage)
The charges made on a loan by banks, calculated as a percentage of the amount borrowed.
Interest-only mortgage
An interest-only mortgage stays the same throughout the mortgage term. Interest and a premium to an investment vehicle are paid monthly. At the end of the term, the proceeds from the investment vehicle are intended to repay the mortgage. The amount will depend on the performance of the investment vehicle. If you choose an interest-only mortgage you are responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the term.
Inventory
A list which describes the condition of furnishings and contents of a leased property at the start and end of a tenancy in order that any dilapidation during the tenancy can be identified.
Land registry fee
Are paid to the Land Registry to register ownership of a property.
Lease
A legal document by which the freehold or leasehold owner of a property lets the premises (or a part of it) to another party for a specific length of time, after which point ownership may revert to the freeholder or superior leaseholder.
Leasehold
Denotes that ownership of a property is by way of a lease.
Lender's arrangement fees
Charges passed on to the buyer by the 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.
Listed building
A building listed as being of special architectural or historic interest, which cannot be demolished or altered without local government consent.
Loan to value (LTV)
The size of a mortgage quantified as a percentage of the property's value.
Local authority search
A procedure whereby a buyer's solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect a property or immediate area surrounding a property.
Maintenance charge (or service charge)
The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.
Maisonette
A property arranged over more than one floor (ie: a portion of the house), acessed via a private entrance.
Mortgage
A sum 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.
Mortgage deed
A legal document relating to the mortgage lender's interest in the property and containing the terms of the mortgage.
Mortgage indemnity guarantee (MIG)
An insurance policy that mortgage lenders may require buyers to pay for if their loan is above a specified amount of the purchase price.
Mortgage indemnity premium (MIP)
An insurance policy that protects the lender against default of mortgage repayments. Although the policy benefits the lender, it is the borrower who usually pays the premium.
Mortgage payment protection (MPP)
An insurance designed to pay your monthly mortgage for a limited period (usually a year) if you are unable to work through illness, disability or redundancy."
Mortgage rate
The standard variable interest rate quoted by all mortgage lenders. All discounted rates are based on this mortgage rate.
Mortgage term
The period of time over which (repayment mortgage) or at the end of which (endowment mortgage) the loan is to be repaid.
Mortgagee
The lender of a mortgage (a bank or building society).
Negative equity
Occurs when the value of a property falls to less than the outstanding mortgage.
Offer
A sum of money that the buyer offers to pay for a property.
Offer of a loan
A formal document approving the mortgage that a buyer has requested and detailing the terms and conditions that will apply.
Ombudsman
Independent professional bodies who investigate complaints on behalf of customers against, for example, estate agents, solicitors and insurance companies.
Open market value
The price a property should achieve when there is a willing buyer and willing seller.
Payment break
An option on flexible mortgages that allows the borrower to stop making mortgage payments for up to six months.
Penalties
Costs that may be incurred if the borrower repays the loan too early or switches between lenders.
Pied-a-terre
A property kept for temporary secondary or occasional occupation.
Preliminary enquiries
The initial enquiries about a property put forward to a seller which the seller must answer before the exchange of contracts.
Premium
The monthly amount payable for an insurance policy.
Premium lease
The lump sum paid up front as rental payment for a property.
Principal
The sum of the loan on which interest is calculated.
Public liability insurance
Insurance which covers injury to or death of anyone on or around a property.
Purchaser
The person who is buying a property.
Redemption
Occurs when a mortgage is fully repaid.
Re-mortgage
Refinancing a property by either switching a mortgage from one lender to another or by taking out a second mortgage to draw upon any equity gained by a rise in value.
Repayment mortgage
Monthly payments which cover both interest and capital (as opposed to an interest-only mortgage) so that the amount outstanding gradually decreases until the mortgage is fully repaid.
Repossession
Occurs when the mortgage lender takes possession of a property due to non-payment of the mortgage.
Retention
The holding back of part of a mortgage loan until repairs or specified works to the property are satisfactorily completed.
Search
A request or enquiry relating to information (concerning a property) held by a local authority or by the land registry.
Semi-detached
A property which is joined to one other house.
Service charge
See Maintenance charge.
Sole agent
A single estate agent entrusted with a sale or let.
Solicitor
A legal expert handling all documentation for the sale or purchase of a property.
Stamp duty
The tax paid by buyers of property with a value in excess of €127,000 of between 3% and 9% depending on the value of the property. (Various categories and conditions apply; see ‘Stamp Duty Rates’)
Structural survey
See Building survey.
Studio flat
A flat consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.
Subject to contract
Words used to indicate that an agreement is not yet legally binding.
Surveyor
A professionally qualified expert who carries out the survey.
Tenancy
Temporary possession of a property by a tenant.
Tenancy agreement
A legal agreement designed to protect the rights of the tenant and landlord setting out all the terms and conditions of the rental arrangements.
Tenant
The person who has temporary possession of a property.
Tenants in common
A form of ownership by two or more parties whereby if one of them dies, their share of the property forms part of their estate and does not automatically pass to the other party.
Tenure
The conditions on which a property is held (i.e. length of lease).
Terraced house
A property which forms part of a connected row of houses.
Title deeds
Documents showing the legal ownership of a property.
Transfer deeds
The land registry document that transfers legal ownership from seller to buyer.
Under offer
The status of a property, when a seller has accepted an offer from a purchaser prior to exchange of contracts.
Valuation
A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.
Variable base rate
The basic rate of interest charged on a mortgage. This may change in relation to market conditions, meaning monthly payments can go up or down.
Vendor
The legal term used to describe the person selling a property.
Yield
The income from a property calculated as a percentage of its value.