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We understand that mortgages can be confusing, so we try our best to avoid using jargon wherever possible. However, certain terms cannot be avoided, as they are terms that are used in the financial services industry, so here's a breakdown of rithe most common words and phrases used in the home purchase process.

Arrangement Fee

A fee sometimes charged by your mortgage provider for arranging your loan. Find out early on whether this applies to your mortgage.

Annual Percentage Rate of Charge (APRC)

The Annual Percentage Rate of Charge (APRC) is the annual cost of your mortgage and includes interest, one-off fees and ongoing costs.

Buildings Insurance

It's compulsory to have suitable buildings insurance if you have a mortgage. This covers the structure of your building, not the contents.


A mortgage that is used for borrowers who wish to purchase a property to rent out.

Capital & Interest Mortgage

Please see the description under Repayment Mortgage. 

CHAPS Transfer Fee

The Clearing House Automated Payment System or CHAPS is a British company which offers same-day sterling fund transfers. For details of our mortgage fees click here.

Charges and Fees

Most lenders charge administration and other fees for mortgage-related services. For details of our mortgage fees click here.


Completion is the point at which the property you are purchasing becomes yours in legal terms.

Consent to Let

If your mortgage is arranged on a residential basis, you should obtain permission from your mortgage provider to let the property. This is known as Consent to Let. Your mortgage provider may charge you for this service.

Contents Insurance

A contents insurance policy would cover your possessions against damage or theft.


When you are buying or selling a property, the legal process required to process the transfer of property title from the vendor to the buyer is called Conveyancing.

Credit Search

A credit search is when a mortgage provider carries out a search on your name and address with a credit reference agency to help them understand more about your credit history. Each time a search is performed it is noted on your credit record to let other organisations know that information about you has been requested. 

Debt Consolidation

A loan taken in order to repay existing outstanding debts.

Decision in Principle (DIP)

The Decision in Principle (DIP) will tell potential buyers roughly how much they are able to borrow, allowing buyers to search for properties within realistic price brackets. The DIP is a process whereby acceptance of the mortgage application is approved subject to the normal lender checks. 


The funds that you are using to purchase the home. This will be the difference between the property purchase price and mortgage amount. 

Discounted Variable Rate

This type of mortgage offers a discount on a lender's standard variable rate (SVR) for a set period of time, typically two or three years.

Early Repayment Charges

An Early Repayment Charge (ERC) is a charge you may have to pay if you repay the whole or part of your mortgage, by paying it back early (which includes if you move to a different product or move to a different lender) during a certain period.

Endowment Policy

An endowment policy is a life insurance contract designed to pay a lump sum on maturity or on death of the policy holder.  This is designed as a repayment vehicle to repay an interest only mortgage. 

Energy Performance Certificate (EPC)

A document outlining how energy efficient a home is on a scale of A-G, with 'A' being the most efficient and having lower fuel bills. Every house on the market must have one included in their Home Information Pack. 


The difference between the value of your property and the total amount of mortgage secured against it. 

Exchange of contracts

Once the seller and buyer exchange contracts, the deal becomes legally binding.

Execution Only

A mortgage transaction completed upon the specific instructions of the customer where the lender does not provide advice relating to the suitability of the mortgage transaction.

Financial Conduct Authority (FCA)

The Financial Conduct Authority is responsible for the regulation of firms' conduct and ensures the appropriate level of protection for consumers. 

First Charge

A legal charge used to secure the main mortgage. A lender with a first legal charge over a property has a first call on any funds available from the sale of the property. See also: second charge.

First Time Buyer

An individual who has not previously owned a property.

Fixed Rate

This type of mortgage means that the interest is fixed for a specified period of time which means that the monthly repayments will remain unchanged until the product period ends.


A freehold tenure means that you own not only the property, but the land on which it stands.


With a guarantor mortgage, a parent or close family member guarantees the mortgage debt. This means that if the buyer misses their mortgage repayments the guarantor will have to cover them.

Ground rent

As a leaseholder, you may have to pay a ground rent to the owner of the land your property stands on.

Help to Buy

A government equity loan scheme designed to make more affordable homes available to all buyers. The Help to Buy scheme is relevant to specific newly built properties only. See our Help to Buy page for more information.

Home Mover

A person selling one property and purchasing another property.


Interest is money paid by a borrower to a lender for a mortgage or a similar liability.

Interest-Only Mortgage

An interest only mortgage enables cheaper monthly payments on a home loan but no debt is being repaid. At the end of the mortgage term the lender is still owed the amount borrowed and borrowers need to have plans to repay this when the mortgage term ends.

Land Registry

Land Registry registers the ownership of property across England and Wales.


As a leaseholder, you own the property but not the land on which it stands. You should find out how long is left on the lease before purchasing as once the lease expires, the ownership of the home reverts to the owner of the land - the freeholder.

Loan-to-Value (LTV)

The amount of mortgage expressed as a percentage of the value of the property or purchase price, whichever is lower.

Local Authority Search

Part of the conveyancing process when you buy a property. It gives details of any matters which, from the local council's point of view, affect the property. It reveals any proposed changes to the local area, such as road improvements, and details any planning permission given for the property.

Mortgage Deed

The legal document by which the lender secures the loan against the borrower's property.

Mortgage Term

The length of time over which a mortgage is repaid.


A more formal term describing the bank or building society that is lending the mortgage.


Another term for a borrower.

New Build

The definition of a 'new build' means a property that has not been occupied since construction.


When more than the normal, agreed monthly payments are made. Overpayments made to a mortgage allow it to be repaid earlier.

Part Interest-Only, Part Repayment (Part & Part) Mortgage

A mortgage that is split between two repayment methods, interest only and repayment (capital and interest). This means that you will repay part of the mortgage balance as repayment and the other part as interest only. This will reduce your mortgage balance at the end of your term, although you will still have an amount of the capital to pay back.

Portable Mortgage

If a mortgage is 'portable', it can be transferred from one property to another, subject to the normal mortgage checks being carried out at the time of transfer. 

Prudential Regulation Authority (PRA)

The Prudential Regulation Authority (PRA) is responsible for the prudential supervision and regulation of banks, building societies, and other financial firms.

Property Valuation

When a mortgage is applied for, the borrower may be asked to pay a valuation fee to cover the cost of valuing the property. See our General Information & Charges page for more information.

Redeem / Redemption

To pay off the outstanding balance of a mortgage in full.

Redemption Admin Fee

A fee charged by the lender for the administration work involved in redeeming a mortgage.


Moving a mortgage from one lender to another or borrowing against a property owned outright (unencumbered). 

Repayment (Capital & Interest) Mortgage

The regular repayment is made up of some of the amount borrowed plus interest every month. It means the mortgage will be repaid in full by the end of the term providing all payments are maintained in full and on time.

With a repayment mortgage you gradually pay off the amount you borrowed over the term of the loan (the 'capital'), together with interest. 


Repossession is a term used to denote a financial institution taking back an object or property that was either used as collateral or rented or leased.

The process involved when a lender takes possession of a property used as security against a mortgage as a result of a borrower defaulting on their mortgage.

Representative Example

In line with the Mortgage Credit Directive Regulation, lenders are required to provide you with a representative example for each product listed.  This is provided to allow you to make an informed choice when considering which mortgage product is best for you.  The mortgage amount, term and repayment method used in the representative examples below are based on the average mortgage held with the lender.

Right to Buy

The Right to Buy scheme allows council tenants with at least 5 years' tenancy to purchase their home with a significant discount.

Shared Ownership

An affordable home ownership scheme allowing a buyer to purchase a share in a property initially. See our Shared Ownership page for more information.

Solicitor (or Licensed Conveyancer)

A conveyancer is a solicitor who specialises in the legal aspects of buying and selling real property, or conveyancing.

Stamp Duty Land Tax (SDLT)

This is a tax on the purchase price of land and buildings. When you buy a property or take on a lease, you may have to pay SDLT. For more information, visit the HMRC website.

Standard Variable Rate (SVR)

A Standard Variable Rate is a type of variable rate mortgage and is a lenders default rate when a fixed or variable rate deal comes to an end.

Title Deeds

These are paper documents showing the chain of ownership for land and property and also  details boundaries and rights of way.

Valuation Report

A basic property survey for mortgage purposes. This is less comprehensive than both a Homebuyers Report and a Full Structural Survey.  The Basic Valuation Report includes the type of property, construction type, market value, insurance re-instatement value and general condition of the property.  A fee may be payable for this report.  For details of our valuation fees click here.

Variable Rate

The variable rate is the basic rate of interest charged on a mortgage. This may change in reaction to market conditions resulting in your monthly repayments going up or down. 


The person selling the property.

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