If you wish to accept a lender’s mortgage offer this document will need to be signed and return to the lender.
This is a charge levied by the lender to cover the costs of processing a mortgage application. If an application is not completed, the fee may not be refunded.
The gradual elimination of a liability, for example, a mortgage through regular payments over a set time period or the amount paid by way of capital or principle repayments on a loan annually.
A notional rate that is often quoted on interest paid on savings and investments. It aims to demonstrate what your interest return would be if the interest was compounded and paid annually instead of monthly (or any other period).
The APR is a compound interest rate figure used to compare different mortgages. Defined by law, it includes repayments on the loan plus any mortgage related fees such as booking, arrangement or basic valuation fees. The APR shows the true cost of borrowing over the entire term and should appear on all mortgage illustrations..
Any form of property owned by a person, including currency, stocks and enforceable claims against others.
This is a charge levied by the lender to cover the costs of administering and reserving the funds for certain types of mortgage. May be paid seperately or added to the loan amount.
A means of selling a property whereby it is listed at an auction and if the property does not reach the reserve price then it is not sold. If it does then the auctioneer's hammer falls that represents an exchange of contracts and the successful bidder is legally obliged to pay a 10% deposit and sign a memorandum of sale before leaving the auction. Completion usually takes places 28 days later and the buyer is not in a position to re-negotiate any of the stipulated terms and buys the property "as seen". Structural surveys and searches would have to be made in advance by a bidder.
The lowest rate of interest a bank will charge when it lends money, used as a benchmark to set interest rates for borrowers. This rate is set by the Bank of England and is reviewed several times a year. Lenders will charge borrowers a margin above the base rate.
Refers to a person who owns land and is entitled to it for his own benefit. Not, for instance, a trust that holds the land for the benefit of another.
A short term loan commonly used to cover or 'bridge' the overlap between the purchase of a new property and the sale of an old one
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.
The amount of money either put into buying a property or the deposit placed on a property. Also known as equity.
A capped-rate mortgage sets a maximum rate of interest that the lender can charge, but only for a specified period.
Entries on the land register protecting the interests of a third party. Any applicant for first registration of title is notified to him whereupon he can take appropriate action to protect his interests.
The situation that occurs when a buyer is reliant upon completion of the sale of their existing property in order to complete on the purchase of the new property.
A certificate issued by the Land Registry to a lender giving evidence of the lender's charge over the property.
Areas of land or buildings, such as gardens, hallways, recreational facilities and parking areas, where more than one resident shares access.
A search that looks at the actual sale values of similar properties in the same area as your property. This search is normally carried out by a surveyor and should give an indicative sale price for a property.
The finalising of the sale when all monies are exchanged and the purchaser gains access to the property.
The completion date is the day on which money is transferred from the buyer's to the seller's solicitor. It is the date that the buyer becomes the legal owner of the new property.
The details that determine the rights and duties of the seller and buyer. These may be national, statutory or the Law Society's conditions.
Insurance that covers the contents of a home, including electrical goods, carpets, furniture and curtains.
Entered into by the vendor and purchaser of a property that only becomes binding on exchange of contracts, i.e. when both parties have signed the contract and the purchaser has handed over the agreed deposit (if any) to the vendor.
This involves two or more purchasers who want to buy the same property. Either purchaser or vendor can instigate it although usually it is the latter. The winner is the first purchaser to exchange contracts.
A qualified individual such as a solicitor or licensed conveyancer who deals with the legal aspects of buying or selling a property.
The charge made by a solicitor or conveyancer for undertaking the legal process necessary for the transfer of ownership of a property.
Whenever someone fails to pay for something and is subsequently taken to court, the magistrate may issue a County Court Judgement against that individual to pay the outstanding debt that will only be removed when the debt is cleared.
A legal requirement of the owner to do, or not to do, something in relation to the property. For example; restrictions on its use, changes to its appearance.
The procedure by which a check is made on the credit history of an applicant, usually conducted by one of the large dedicated credit rating agencies. The check will reveal history of credit card repayments, outstanding debts, arrears and County Court Judgments.
A history of an individual`s open and fully repaid debts. Checking a credit history helps a lender to assess the likelihood that a prospective borrower will maintain their mortgage repayments.
An assessment of a person`s likelihood of keeping up - or otherwise - on the repayments on thier loan. A credit rating is usually based on a person`s credit history.
A company that collects and stores financial and public records dealing with the payment history of a prospective borrower. Most lenders will employ a Credit Reference Agency to check your payment records as part of their assessment of your application.
A report prepared by a Credit Reference Agency and which details the credit history of an individual. The credit report will be used by a lender to help assess the applications of prospective borrowers.
The ratio of net operating income to debt payments on a investment real estate. It is a popular benchmark used in the measurement of an income-producing property's ability to cover its mortgage payments. The higher this ratio is, the easier it is to borrow money for the property.
The fee charged by lenders at the end of a mortgage term to cover the administrative costs of transferring the property ownership documents to the borrower.
Completion can take place anytime after exchange of contracts. If this takes longer than 28 days it is referred to as delayed.
The decline or reduction in the value of a property caused by changes in market conditions (the opposite of appreciation).
Fees paid by the buyer's solicitor on the buyer's behalf such as stamp duty, land registry and search fees.
Mortgages charged at a rate discounted from the published bank standard variable rate for a set period of time. The rates are variable and are subject to go up or down in line with any changes to the Bank of England base rate.
When the lender restricts the amount you can borrow after the surveyor's valuation report indicates the property is not worth the sum sought.
A charge levied by the lender as a penalty if part or all of a mortgage is paid off is paid earlier than agreed.
A legal right that one person has over a property he or she doesn’t own. A positive easement is a right to do something on another person’s property. A negative easement is the right to prevent the owner of the property from doing certain things.
Earnings before Interest, Taxes, Depreciation and Amortisation. EBITDA equates to operating revenue minus operating expenses plus other revenue.
Interest-only repayments combined with monthly premiums into an endowment policy designed to pay off the loan at the end of the term.
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.
The formal and final version of a document prepared by a solicitor ready for signing and sealing following agreement of the final draft between the parties.
A report on the land uses of a property and its surroundings now and in the past. This will indicate the likelihood of contamination or pollution.
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 mortgage taken out on a home that is already fully owned, typically in order to make use of the capital tied up in it.
The stage when the buyer and seller exchange signed, binding contracts of purchase and sale. Both then become committed to complete the transaction.
Your financial outgoings, such as loan repayments, regular fees or child maintenance before taking out a mortgage. Borrowers are obliged to disclose all such outgoings as part of the mortgage application process.
All non-structural items that are included in the sale of a property, e.g. carpets, curtains, curtain rails, wall lights, cooker etc.
A flying freehold exists when one part of a property extends over, or under, a neighbouring property / land.
Refers to the lease terms obliging the tenant (as opposed to the landlord) to carry out all repairs and maintenance to the building both internally and externally. Many (but not all) leases to retail or commercial tenants are on this basis.
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.
Using loaned funds to progress investments. For example, buying a house with a small deposit and the rest with a mortgage and then selling the property on at a higher price, making a profit. Leverage is another word for gearing.
The lender may sometimes require a borrower to appoint a guarantor. This is someone who promises to pay the borrower's debt if the borrower defaults.
Often referred to in auction catalogues. The guide prices are often subject to change and are not necessarily what the property will sell for. Sometimes the reserve price is higher than the guide price. Outside of the auction process a guide price may be used to indicate that the property should achieve in the region of this level, usually above.
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.
This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.
An insurance policy that protects against loss or damage to the property caused by fire, some natural causes and acts of vandalism. Also see Buildings insurance and Contents insurance.
A building of three floors or more which is to be occupied by three or more people and where these people live as more than one household and share facilities such as bathrooms, toilets or cooking facilities.
An investment is said to be illiquid if it can’t easily be turned back into cash quickly and at a low cost.
Insurance against any aspect of a property transaction such as an adverse search result or breach of planning/building regulations. This will not solve any problems but it will provide compensation
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.
The term used when the estate agent is formally instructed by a property owner to market the property, usually by private treaty, in order to find a purchaser. The resulting contractual agreement confirms the terms under which the instruction is offered by the vendor and accepted by the estate agent.
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.
This is used to measure development or investment opportunities. It takes into account all of the income streams, in terms of the initial outlay, net rental or other income, and growth in capital value of the asset. Most importantly it takes into account the timing of each payment or distribution.
A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner's will).
The process of registering your title to an area of land with the Land Registry, typically handled by a solicitor.
A Government department where details of properties with a registered title are recorded along with any charges e.g. mortgages.
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 specified length of time, after the expiry of which, ownership may revert to the Freeholder or superior Leaseholder.
A type of ownership in which a person owns a property, but not the land on which it is built. The owner of the Freehold will grant a lease on the property for a specified length of time.
The proportion of the value of the property that the lender is prepared to loan. This can be up to 100%.
A building officially listed as being of special architectural or historic interest, which cannot be demolished or altered without prior local government approval.
Procedure whereby a buyer's solicitor checks with the local council regarding any outstanding enforcement or future development issues that might affect the property or immediate area.
The rate of interest at which banks offer to lend money to one another in the wholesale money markets in the City of London.
Firm employed by a landlord or management company to arrange practical maintenance and general management of a building.
The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.
A self-contained apartment (usually on two floors) in a larger house 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.
Someone who advises buyers on the types of loans available and helps to process any subsequent application.
An insurance policy taken out by a lender against any loss caused by a mortgage default. MIG is typically required for loans with an LTV of 90% or higher. Also known as Mortgage Indemnity Fee and as Mortgage Indemnity Premium.
The letter or advice from the lender offering a loan and setting out the terms and conditions upon which it is offered.
This is 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.
The standard variable interest rate quoted by all mortgage lenders which normally varies in line with the Bank of England base rate. All discounted rates are based on this mortgage rate.
A situation where two or more agents are acting on behalf of the vendor. The agent who introduces a successful purchaser is the only one paid.
A situation in which the value of a property has fallen to below the level of the loan secured on it.
A method used in evaluating investments whereby the net present value of all cash outflows (such as the cost of the investment) and cash inflows (returns) is calculated using a given discount rate, usually a Required Rate of Return. A positive NPV means the investment is acceptable.
A type of building guarantee available on some newly built homes under which defects occurring within a specified time after construction are remedied.
Outgoings incurred by a landlord of a property which cannot be recovered from a tenant via, for example, a service charge. These may typically include property management and letting agency fees, an allowance for vacancies and rent arrears, an allowance to cover the costs of refurbishment of vacant units in order to re-let and possible certain items of maintenance cost depending upon what is referred to in the lease.
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.
An option on flexible mortgages that allows you to stop making mortgage payments for up to six months.
A specified charge that is levied by the lender under certain circumstances, usually for full or part repayment within a specific period linked to a discount, tracker, fixed or other product type.
The initial enquiries about a property put forward to a seller, which the seller must answer before the exchange of contracts.
Sale of a property by private treaty is the method employed by most estate agents, preparing descriptive details of the property and quoting a definitive asking price. Details are circulated – by post, email, website, local paper etc: potential buyers may view the property and either agree to buy at the asking price or submit an offer to purchase. Agreement to buy at this stage (for England and Wales) is subject to formal contracts being prepared and those contracts being signed and exchanged between the vendor and the purchaser.
The official process of proving the validity of a will. In many cases part of the estate will involve a property, which might need to be valued for Inheritance Tax purposes. A probate valuation is generally a negotiated value with the district valuer representing the Inland Revenue. A sale cannot proceed to exchange of contracts until probate has been granted.
Also known as a Protocol Form the PIF is provided by the seller's solicitor and is completed by the seller. It forms part of the conveyancing process and covers such matters as boundaries, services, guarantees for work carried out and planning consents.
Questionnaire completed by the seller to provide details relating to the ownership of the property and information about services such as council tax banding and the utilities.
The rate of interest, less the current rate of inflation. For example, if a bank account pays 6% interest and inflation is 3% then the real rate of interest is 3%.
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.
Land (including buildings on it) the title to which is registered at the Land Registry and legal ownership is guaranteed.
A mortgage in which monthly charges are used to repay the interest and reduce the outstanding capital.
Usually referred to in an auction catalogue as the minimum price at which a seller is willing to sell.
An individual's legal right to use a particular part of a property, in order to gain access to any particular part of his own property.
A request or enquiry for information concerning the property held by a local authority or by the Land Registry
A mortgage intended for borrowers who are unable to categorically prove thier income by conventional means such as payslips and fully audited accounts, but can provide alternative evidence and thereby demonstrate the level borrowing is affordable. Typically the lender will charge higher rates of interest, or require a larger deposit.
SIPPs allow complete control over pension savings and where they are invested. SIPPs may be used to invest in stocks and shares, government securities, unit trusts and investment trusts. SIPPs may also be used for commercial property, insurance company funds, traded endowment policies, deposit accounts with banks and building societies, and National Savings products. They may, under certain circumstances, be used for residential property investment.
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.
A Scheme whereby a borrower purchases part of a property and the other part is purchased by a third party, such as a housing corporation. A shared equity scheme differs from shared ownership in that no ongoing rent is paid to the third party. However, any future increases to a property`s value results in the third party`s share of equity in the property increasing proportionately. In other words, a borrower does not fully benefit from future increases in a property`s value.p>
To occupy the property as a tenant, and have legal rights without a lease. Any sale would be subject to any rights of a tenant who has occupation. A property with a sitting tenant can often have a much reduced asking price.
Where one agent has complete control of the sale, and is entitled to his fee however the property is sold.
A government tax paid by the buyer of a property, which ranges between 0% and 5% depending on the value of the property.
Mortgage lender's standard rate of interest, which may be increased or decreased periodically by the lender depending on prevailing economic conditions.
A survey of the condition of a property, undertaken by a qualified surveyor, and for which the surveyor is responsible. A structural survey is the most detailed - and most expensive - of the property reports available. Also known as a "Building Survey".
A flat consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.
Legal terminology that indicates an agreement is not yet legally binding and depends upon the terms yet to be agreed within the contract.
Amount paid by a leaseholder as a contribution to the cost of maintaining and repairing the structure of a building and its insurance. Can be paid to a landlord, managing agent or management company. Also known as maintenance charge.
Tax payable to HM Revenue & Customs when a purchase price is more than £125,000 or more than £250,000 for first time buyers.
Negotiations between a buyer and seller before exchange of contracts. Any agreement is not binding until contracts are exchanged.
The standard interest rate (SVR) set by lenders, and which is subject to increasing or decreasing at the discretion of the lender. The standard variable rate often applies at the end of any fixed, capped or discounted period.
Loans or mortgages given to borrowers with poor credit records who are often unable to obtain more conventional loans. Borrowers put down little or no cash themselves.
This is the lease that the landlord holds. This is often the case in a property where the owner has the leasehold interest, but another individual owns the freehold. There is then this lease under which the Property owner is responsible for the obligations/covenants. When a property is let the tenant renting also has to comply with any of these obligations - e.g. not to hang out washing on a balcony etc.
After contracts are exchanged a purchaser may seek to take possession of a property before financial and legal completion. This could be to carry out repairs and decorations or to take up residence early. This can often be organised and a licence arranged between both parties' solicitors. The purchaser paying an appropriate rate of interest on the balance of the outstanding monies (i.e. purchase price less deposit paid) instead of rental.
Where a property is purchased jointly with equal or unequal shares. If one or more of the owners dies their share of the property forms part of their estate and does not automatically pass to the other(s).
This is the situation where the asking price is not actually stated, but offers are invited. Details of the property are prepared, circulated and advertised and the closing date for the tender is noted. In most cases the vendor will reserve the right to refuse the highest offer, thereby not being committed to sell. Offers tendered are usually opened at a prescribed date and time.
The Property Ombudsman (TPO) is a free, fair and independent arbitration service which provides sellers, buyers, landlords and tenants with an assurance that they will receive the highest level of customer service.
A summary of title documentation used in the Conveyancing of unregistered properties to prove that the vendor has the right to sell.
These are legal documents describing the rights and liabilities that are attached to the property and prove ownership of 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.
Solicitors' certificate confirming that the title of the property is acceptable. A Lender must have a Title Report before an advance cheque for the mortgage monies can be issued.
An investigation carried out by a conveyancer or solicitor into the history of ownership of a property. The search will check for liens, unpaid claims, restrictions or any other problems that may affect ownership.
A type of mortgage whereby any changes in the rate of interest charged follow exactly ('track') another, specified, interest rate or index. Typically a tracker mortgage will track the Bank of England base rate.
The Land Registry document that transfers legal ownership from seller to buyer. This will be prepared by the buyer’s solicitor.
The status of a property for sale when a seller has accepted an offer from a buyer, prior to exchange of contracts.
Situation where repayments are reduced so that the mortgage is not repaid by the end of the agreed term. Some mortgages (flexible mortgages) allow for a specified level of underpayment.
A basic survey of a property to estimate its value for mortgage purposes. Mortgage lenders will insist on this before lending.
The price of a property under normal conditions, i.e. when the buyer is not forced to buy and the seller not forced to sell.
The basic rate of interest charged on a mortgage. This may change in reaction to market conditions so monthly payments can go up or down.
Refers to the financial income from an investment. The income yield on an investment is the annual dividend or interest payment, multiplied by 100 and divided by the market price.
Rate of return on an investment after subtracting all expenses, such as commissions, costs of purchase, and taxes.