Home Buying Glossary
Helping you feel informed as you buy your home
Key terms explained
When you’re buying a home, you’ll come across words and phrases that may be new or unfamiliar. That’s completely normal, especially if it’s your first time going through the process.
We’ve put together this glossary to help explain some of the most common terms you might hear along the way. You can take your time with it and come back whenever you need to, so you feel a little clearer and more confident at each step.
A
Adverse credit
A credit history that includes missed payments or other issues.
Affordability assessment
A check by a lender to see what you can afford, based on your income and regular spending.
Agreement in principle (AIP)
An early indication from a lender of how much you may be able to borrow before applying for a mortgage.
Annual Percentage Rate (APR)
The yearly cost of borrowing, shown as a percentage, which helps you compare mortgage deals.
Appreciation
When a property increases in value over time.
Arrangement fee
A fee some lenders charge for setting up your mortgage.
B
Balance outstanding
The amount you still owe on a loan or mortgage.
Base rate
The interest rate set by the Bank of England, which can influence mortgage rates.
Bridging loan
A short term loan used to cover the gap between buying a new home and selling your current one.
Buildings insurance
Insurance that covers the structure of your home, such as walls and roof.
Building survey
A detailed report on the condition of a property.
Buy to let
A property bought to rent out rather than live in.
C
Capital
The amount you borrow for your mortgage.
Capped rate
A mortgage rate that will not go above a set level for a period of time.
Cash buyer
Someone who can buy a property without needing a mortgage.
Chain
A series of linked property sales that all need to complete for each move to happen.
Completion
The final stage of buying a home, when ownership is transferred and you receive the keys.
Contract
The legal agreement between buyer and seller.
Contents insurance
Insurance that covers your belongings inside the home.
Conveyancing
The legal process of transferring ownership of a property.
Council tax
A local tax paid by households to fund services.
Covenant
A rule or restriction attached to a property.
Credit score
A number that helps lenders assess how reliable you are at repaying money.
D
Deeds
Legal documents that prove ownership of a property.
Deposit
The amount you pay upfront towards buying a home.
Depreciation
When a property decreases in value over time.
Disbursements
Additional costs paid by your solicitor, such as search fees.
E
Early repayment charge (ERC)
A fee for paying off your mortgage early.
Energy Performance Certificate (EPC)
A document showing how energy efficient a property is.
Equity
The difference between your property’s value and what you owe on your mortgage.
Exchange
The point where contracts are signed and the sale becomes legally binding.
F
Fixed rate
A mortgage interest rate that stays the same for a set period.
Fixtures and fittings
Items included with the property, such as built in units or appliances.
Freehold
Ownership of both the property and the land it stands on.
G
Gazumping
When a seller accepts a higher offer after already agreeing to sell.
Gazundering
When a buyer lowers their offer just before contracts are exchanged.
Ground rent
A payment made on leasehold properties to the landowner.
Guarantor
Someone who agrees to cover your mortgage if you cannot make payments.
H
Homebuyer survey
A report on the condition of a property, more detailed than a basic valuation.
I
Interest
The cost of borrowing money for your mortgage.
Interest only mortgage
A mortgage where you only pay the interest, not the loan itself, during the term.
L
Land Registry
The official record of property ownership.
Leasehold
Ownership of a property for a set number of years, but not the land it stands on.
Loan to value (LTV)
The percentage of the property value that you borrow as a mortgage.
M
Mortgage
A loan used to buy a home.
Mortgage broker
A specialist who helps you find a suitable mortgage.
N
Negative equity
When your home is worth less than the amount you owe on your mortgage.
NHBC
An organisation that provides warranties for new homes.
O
Off plan
Buying a home before it has been built.
R
Repayment mortgage
A mortgage where you pay back both the loan and the interest over time.
Repossession
When a lender takes back a property due to missed payments.
S
Searches
Checks carried out by your solicitor on the property and local area.
Shared ownership
A scheme where you buy part of a property and pay rent on the rest.
Solicitor
A legal professional who handles the buying process.
Stamp duty
A tax paid when buying a property over a certain price.
Survey
An inspection of a property’s condition.
T
Title deeds
Legal documents showing ownership of a property.
V
Valuation
A check to confirm how much a property is worth.
Variable rate
An interest rate that can go up or down.
Vendor
The person selling the property.