Your Comprehensive Guide to Mortgage and Property Terminology

This page provides concise explanations of key mortgage and property terms, including adverse credit mortgages, APR, equity release, and more, offering valuable insights for borrowers and homeowners.

An Adverse Credit Mortgage is designed for individuals with past financial issues like missed payments, defaults, or bankruptcies that may have negatively affected their credit score and mortgage eligibility.

Amortization is the process of gradually paying off your mortgage through regular monthly payments, which include both the principal (loan amount) and interest (cost of borrowing).
APR is the Annual Percentage Rate, which represents the total cost of borrowing expressed as a percentage. It includes the interest rate, lender fees, and other charges, providing a more accurate measure of the mortgage’s true cost.
An Arrangement Fee is a one-time fee charged by the lender for setting up your mortgage, often added to the total mortgage amount.
The Base Rate is the interest rate set by the central bank and influences other interest rates, including those for mortgages. It can impact your mortgage interest rate.
Bridging Finance is short-term financing that covers the gap between buying a new property and selling your existing one, often used when you haven’t yet sold your current home.
A Buy to Let Mortgage is designed for purchasing properties with the intention of renting them out to tenants. These mortgages have different criteria and interest rates compared to residential mortgages.
Completion is the final stage of a property purchase when ownership is transferred to the buyer, including exchanging contracts and receiving keys.
Conveyancing is the legal process of transferring property ownership from the seller to the buyer. It involves checks, contracts, and various legal requirements.
Your Credit Score is a numerical representation of your creditworthiness, influencing lenders’ assessment of your risk as a borrower. A good credit score can improve your mortgage eligibility.
Initial payment made by the buyer when purchasing a property, typically a percentage of the property’s price. It demonstrates your commitment to the purchase.
An Early Repayment Charge is a fee imposed by some lenders if you repay your mortgage or a portion of it early, typically during a fixed-rate period, to compensate for lost interest income.
Equity is the value of your property minus the remaining mortgage balance, representing your ownership stake in the property.
Equity Release is a financial product allowing homeowners, typically retirees, to access cash tied up in their property without selling it, often through lump sum payments or regular income.
An Exit Fee is a fee charged by some lenders when your mortgage ends, typically when you repay the full loan amount or remortgage with another lender.
A Fixed-Rate Mortgage is a mortgage with a set interest rate that remains unchanged for a specified period (e.g., 2, 5, or 10 years), providing stability in monthly payments.
Help to Buy is a government scheme offering financial assistance to first-time buyers and home movers, including Help to Buy ISAs and Help to Buy Equity Loans.
Interest Rate is the cost of borrowing money, typically expressed as an annual percentage. It can be fixed (unchanging) or variable (subject to change) in mortgages.
A JBSP Mortgage allows multiple borrowers, but only one person’s name is on the property’s title, which can help borrowers with different income levels.
A Joint Mortgage is taken out by more than one person, and each person is jointly responsible for the mortgage repayments.
Leasehold is a property ownership type where you lease the property from the freeholder for a set period, typically long-term, with certain obligations and restrictions.
A Lifetime Mortgage is a type of equity release mortgage available to homeowners aged 55 and over, allowing them to access a lump sum or regular payments while remaining in their home.
The LTV Ratio is the ratio of the mortgage amount to the property’s value, often expressed as a percentage. A lower LTV ratio can result in better mortgage rates.
A Mortgage Broker helps you find the right mortgage by comparing offers from different lenders, potentially saving you time and finding more favorable mortgage terms.
A Mortgage Offer is a formal document from a lender confirming the approval of your mortgage application. It includes details such as the loan amount, interest rate, terms, and conditions.

The Mortgage Term is the length of time you commit to repaying your mortgage, typically 25 to 30 years. It influences your monthly payments and the total interest paid.

Negative Credit Events are past financial issues like missed payments, defaults, or bankruptcies that can negatively affect your credit score and mortgage eligibility.

Negative Equity occurs when the outstanding mortgage balance exceeds the property’s current value, potentially limiting your ability to sell or remortgage without additional funds.
Overpayments refer to the option to make extra payments toward your mortgage, reducing the balance and the total interest paid, potentially helping you repay your mortgage faster.
Porting is the ability to transfer your existing mortgage to a new property when you move, allowing you to keep your current mortgage terms and interest rate.