Mortgage Glossary

Advance The amount of your mortgage.

Annuity Mortgage A mortgage where interest and part of the loan is repaid each month.

APR An abbreviation for Annual Percentage Rate. An APR is an interest rate calculation designed to reflect the total cost of credit over the whole term of the mortgage.

Chargeable Consideration Some stamp duty is payable if the Chargeable Consideration is above the relevant exemption limit. For houses of flats with a total area greater than 125 sq. metres (1,346 sq. feet),the stamp duty is assessed on either the cost of the site or 25% of the cost of the site plus the building costs (less VAT), whichever is the greater figure.

Collateral Title deeds of your new property given as security against the repayment of the mortgage.

Completion The final legal transfer of the property, where the outstanding balance is paid to the seller and the buyer receives the keys of the property.

Contract The written legal agreement between the seller and the buyer with regard to the property.

Conveyancing The legal work involved between the seller and the buyer.

Deeds Legal documents signifying the owner's legal entitlement to the properly.

Deposit The amount of money the buyer must pay when the contracts are exchanged.

Endowment Mortgage With an endowment mortgage you take out an assurance policy which on maturing is intended to repay the mortgage either on death or at some future date. In the meantime only the interest portion of the mortgage is paid off. Nothing is paid off the principal until the policy matures. As the performance of the policy may not be guaranteed, there is a risk of a shortfall as well as an overage or surplus on maturity.

Equity Difference between the value of the property and the amount of any loans secured against it.

Exchange of Contracts Where both the buyer and the seller are legally bound to the transaction.

Freehold Ownership and free occupancy of property and the land it stands on.

Ground Rent Annual rent (usually low) paid on a leasehold property.

Indemnity Bond An insurance bond taken out by a mortgage provider as additional security to cover loan amounts of over approximately 75% of the property value

Land Registry Fee A fee paid to register ownership of a property.

Leasehold A form of property ownership, where the property is leased by the owner to a leaseholder or tenant for a fixed number of years.

Lessee The person to whom a lease is granted.

Lessor The person who grants a lease.

Mortgage A loan made against the security of a property.

Mortgagee A Bank, Building Society or other lender who lends the money for the mortgage.

Mortgagor The person who borrows money and whose property secures the loan.

Mortgage Protection: Life Assurance cover designed to clear your borrowing in the event of death.

Principal The amount of the mortgage on which interest is calculated.

Redemption Payment of a mortgage loan in full.

Search A legal investigation to establish what charges exist on a property and to determine if it is affected by planning applications etc.

Stamp Duty

A Government tax.

Subject to contract Occurs when the sale of the property has been provisionally agreed. It allows the buyer or the seller to withdraw without incurring any penalty.

Survey A detailed inspection of a property to check that it is structurally sound

Term The period of time (years) over which a mortgage is repaid.

Transfer A deed which transfers ownership of a property.

Valuation Inspection of a property which establishes its market value.