Property jargon buster

Property jargon can be incredibly intimidating during the house moving process.

If you’re buying or selling a house and getting a little confused by some of the language used, our property jargon buster is for you!

In this guide

A

Annual Percentage Rate (APR)

Annual Percentage Rate (APR) refers to how much you will pay each year in mortgage interest and any additional fees.

Your mortgage interest and any additional fees will be added together and then split across the lifetime of the mortgage. This helps you to carry out a more accurate comparison of the mortgage products available to you.

Arrangement Fee

An arrangement fee may be payable to a mortgage company or mortgage broker to cover the administrative costs of arranging your new mortgage.

Auction

A property auction is an alternative way to buy or sell a house.

The property owner will set a ‘guide’ price for the property, and then interested buyers will bid on it. The buyer who makes the highest bid will secure the property (as long as their bid is above the minimum ‘reserve’ price the seller has said they’re willing to accept). Once the auction has taken place, the winning bidder usually has 28 days to complete the sale.

B

Bridging Loan

A short-term loan you can take out to ‘bridge’ the gap if the purchase of your new home completes before you sell your current property.

Building Survey

A building survey can be a generic term used for a property survey or it may be specifically referring to a RICS Level 3 building survey. A RICS Level 3 building survey is the most thorough homebuying survey offered by RICS. The only more in-depth survey available would be a full structural survey carried out by a structural engineer.

C

Capital Gains Tax

Capital Gains Tax may be payable if you’re selling a property that isn’t your main home. It will only be payable if the property has gone up in value during the time you’ve owned it, and how much you owe will be calculated on the amount of profit you’ve made.

Chain Break

Chain break is the term used when a property sale related to yours (part of your property ‘chain’) falls through, impacting your own sale.

Completion

Completion signifies the end of the legal property transfer process. At the point of completion, all money will be transferred and ownership will legally transfer to the new owner of the property.

Completion Statement

A completion statement is a financial summary of the sale or purchase. It will break down all of the costs involved and payments made.

Condition Report

A condition report is a Level 1 RICS property survey. It is ideal for quite new properties as it will only provide top level basic information on the condition of the property. The surveyor will not do any in-depth exploration or costing.

Conveyancer

A conveyancer is a professional who carries out the legal process of transferring a property from one owner to another. This may be a conveyancing solicitor or a licensed conveyancer.

Conveyancing

Conveyancing is the legal process of transferring ownership of a property from one person to another. The process will include the drafting, reviewing and exchanging of property transfer contracts, managing the transfer of funds, conducting property searches, managing any stamp duty payments, and ensuring that the property transfer process is legally compliant.

Covenant

A covenant is a legal condition placed on a property. This will usually be something the owner of a specific property is required to do or forbidden from doing. Any covenants relevant to your property will be detailed in the title deeds or land registry documents.

D

Deeds

Deeds are legal documents that prove ownership of a property.

Default

Default is the term used if you fail to make the required repayments on a loan eg. your mortgage.

Deposit

A deposit is the money you pay in order to secure your new property. Buyers are usually required to pay a 10% deposit, which will be transferred to the seller when contracts are exchanged. At this point, the sale becomes legally binding.

Disbursements

Disbursements are the payments your solicitor is required to make on your behalf. These payments may be required for things like property searches, land registry fees, survey costs, stamp duty, and any bank transfer fees.

Down Valuation

Down valuation is the term used when your mortgage lender values your property at a lower price than the agreed sale price.

E

Early Repayment Charge

If you choose to repay your mortgage before the end of your initial ‘tie-in’ period (usually between two and five years), you may be liable for an early repayment charge. The closer you are to the end of your tie-in period, the lower this repayment charge is likely to be.

Easement

An easement is a legal agreement for someone to use part of your property for a specific reason. This may include things like legal rights of way, access to sewage or utility services, or access to a shared driveway.

Energy Performance Certificate (EPC)

An Energy Performance Certificate is usually required to sell a property. Following an energy performance assessment, a certificate will be provided to show how energy efficient the property is, improvements that could be made, and how much you might expect to pay in energy bills as the property owner.

Equity

Equity is the term used to explain the amount of cash you have tied up in a property. This will be calculated by subtracting any outstanding borrowing eg. mortgage or secured loans from the market value of the home.

Exchange of Contracts

The exchange of contracts is the point at which the property sale becomes legally binding.

You will move to exchange contracts once all the searches, surveys and enquiries have been completed, and both parties are happy to process.

When you exchange contracts, a signed copy of the property transfer contract will be sent to the other party, the deposit will be paid, and a completion date will be agreed.

F

Fall Through

‘Fall through’ is the term used if your sale or purchase fails before completion. Unfortunately, around one in three property sales will fall through before completion.

Fixed Rate Mortgage

A fixed rate mortgage will mean you make the same monthly mortgage repayment for a set period of time (usually between two and five years). Your interest rate and mortgage repayments will stay the same throughout this period, regardless of what happens to the Bank of England’s base interest rate or what other products your lender brings to the market.

At the end of your fixed rate period, you can either choose a new mortgage product or move onto your lender’s standard variable rate.

Fixtures and Fittings

Fixtures and fittings are the elements of a property that are not part of the construction. This may include white goods, floor coverings, window coverings and light fittings etc. As part of the conveyancing process, it will be made clear which fixtures and fittings are being included in the sale.

Flying Freehold

Flying freehold will apply if any part of the property sits above or below part of a neighbouring property eg. if you have a cellar that expands beneath the neighbour’s property, or you have a room that sits above a neighbour’s garage etc.

Freehold

‘Freehold’ means the owner owns both the property itself and the land the property sits on. Leasehold, by contrast, means the owner owns the property, but the land it sits on remains owned by someone else.

G

Gazumping

Gazumping is the term used when a homeowner accepts a higher offer from a new buyer after a sale has already been agreed.

Gazundering

Gazundering is the term used when a buyer reduces their offer after a sale has been agreed.

Grade II Listed

Grade II listed properties are protected because they are deemed to be of special interest. This might be because of cultural, architectural or historical factors.

Grade II listing is the most common type of property listing. It will mean the property is protected from certain changes and any works must be approved in advance.

Ground Rent

Ground rent is the fee payable on a leasehold property. It will be paid to the freeholder (landlord) who owns the ground the property sits on.

H

Homebuyer Survey

A Homebuyer Survey is a RICS Level 2 survey. It will go into more detail than a Level 1 Condition Report, but will not be as thorough as a Level 3 Building Survey.

I

Interest-Only Mortgage

An interest-only mortgage is a mortgage where you just pay off the interest each month and do not repay any of the capital.

The idea behind an interest-only mortgage is that you will be investing money elsewhere that will enable you to clear your mortgage at the end of the mortgage term. It may also be a product you are able to temporarily move onto in times of financial hardship to avoid defaulting or risking repossession.

Interest Rate

Your interest rate will dictate how much money you have to pay on top of repaying the amount you have borrowed (the capital).

For example, if you have a mortgage interest rate of 4%, you will be required to pay 4% of the outstanding balance each year in interest. Your monthly repayments will be calculated to include both the interest payable and the capital repayment (repaying the amount you initially borrowed).

J

Joint Tenants

When you purchase a property with another person, you will either be ‘joint tenants’ or ‘tenants in common’.

Joint tenants own the house jointly, with an equal share. If one of the joint tenants dies, their share will automatically pass to the other.

K

L

Land and Building Transaction Tax (Scotland)

If you’re buying property or land in Scotland, you may need to pay Land and Building Transaction Tax.

Land Registry

The Land Registry is a UK government department that is responsible for recording land ownership. When you buy a property, you will need to pay a fee to have Land Registry records updated.

Land Transaction Tax (Wales)

Land Transaction Tax is a tax payable when buying property or land in Wales.

Leasehold Property

If you own a leasehold property, you will own the property, but the land the property sits on will belong to someone else. You will normally be required to pay the land owner – the freeholder – ground rent in addition to your mortgage repayments.

Listed Building

A building is listed if it is believed to have significant historical, cultural or architectural significance.

Being listed affords a property certain protections and will prohibit changes being made without permission.

Loan-To-Value (LTV)

Your loan-to-value (LTV) rate will be the amount you borrow in relation to how much the property is worth. A lower loan-to-value rate will pose a lower risk for mortgage lenders. You’re, therefore, likely to be offered more attractive mortgage interest rates/products.

M

Memorandum of Sale

A memorandum of sale is an official document that will outline the basis of the agreement when an offer is accepted on a property. It will contain information such as the agreed sale price, the buyer and seller’s details, solicitor details and property information. The memorandum of sale will also include any conditions of sale, eg. if the offer is dependent on the seller being chain-free or on certain repairs being made to the property before exchange of contracts.

Modern Method of Auction

Modern method of auction is a method of property sale that combines elements of a traditional property auction with an estate agency service.

Properties are advertised on the agent’s website and sometimes also on property portals such as Rightmove. If someone is interested in buying the property, they will need to submit an online bid. The highest bidder will be expected to pay a sizeable reservation fee and will then have 56 days to complete the sale. This means it may be difficult for those purchasing with a mortgage.

Mortgage

A mortgage is a loan you take out to purchase a property. The loan is secured against the property, which means if you fail to keep up with your mortgage repayments, you may be in danger of having your property repossessed.

Mortgage Offer

You will receive a mortgage offer if they are happy to provide you with a mortgage. They will only issue a mortgage offer after your application has been approved and the property has been assessed.

Mortgage Term

Your mortgage term is the amount of time you will spread the loan repayment across.

In the UK, the maximum term you will be offered is currently 40 years.

N

Negative Equity

You are in negative equity if your mortgage is greater than your property is currently worth. You may be in danger of negative equity if the value of your property drops significantly after you buy it.

New Build

A new build property is one that has recently been built and has not been lived in before.

O

P

Part Exchange

Property part exchange allows you to ‘trade-in’ your current property for a new home. This means you don’t have to sell your property on the open market with an estate agent and the sale of your current home will complete to tie-in with when your new home is ready.

Probate

Probate is a legal process that happens after someone has passed away. It is the process of ensuring someone’s estate is distributed according to their wishes and that any debts are cleared.

The probate process usually takes between 6 months and a year, and the process must be complete, with probate granted, before a property can be sold.

Property Chain

A property chain is a series of connected property sales. There will usually be a minimum of three parties in a property chain and can be upwards of eight. The more parties in your property chain, the more vulnerable it will be to collapsing, which is why chain-free buyers and sellers are in demand.

Q

R

Remortgage

When you get a new mortgage agreement, it’s calling ‘remortgaging’.

There might be several reasons why you need to remortgage, including:

Wanting to get a new fixed rate when your existing fixed rate period comes to an end
Wanting to move house (if your current mortgage is not transferable to a new property)
Needing to borrow more money

Repossession

Repossession is what you risk happening if you fail to keep up with your mortgage repayments.

When your property gets repossessed, your mortgage lender effectively claims your property as payment for your outstanding debt. If your property is repossessed, it will be sold. Your outstanding debt will be cleared from the sale proceeds. If any proceeds from the sale remain after the debt has been repaid, they will be paid to you.

RICS

RICS stands for Royal Institution of Chartered Surveyors.

It is a professional body that represents the surveying industry. Choosing a RICS member for your property survey offers assurances about the standard of work and gives a route for recourse if you’re not happy with the service you receive.

Right of Way

A right of way gives a legal right for a person to pass through your property. This may be to access certain services or perhaps to give neighbouring property owners access to their property. It may also apply if a public footpath runs across your land.

S

Searches

When you buy a property, your conveyancer will collect a range of information about it. Much of this will be done with property searches.

Searches can provide information on areas such as:

Local planning applications
Ownership of the property
Rights of way
Covenants
Flood risk
Subsidence in the area
Risk of land contamination
Water and drainage connection
Historic mining activity in the area

Shared Ownership

Shared ownership is a scheme that allows people to own part of a property and pay rent on the remaining portion. Those buying a property with a shared ownership scheme will typically buy between 25% and 75% of the property, allowing them to take a first step on the property ladder if they’re unable to afford to buy the property outright. Most shared ownership schemes will allow the owner to buy a greater share of the property as and when they can afford it.

Share of Freehold

Share of freehold means you are a joint freeholder with other parties. This might be the case if you buy a flat in a building where the freehold is divided between some or all of the other flat owners.

Short Lease

A leasehold property is considered to be short lease if it has fewer than 80 years left on the lease.

Short lease properties can be difficult to mortgage and therefore will be negatively impacted in terms of property value.

Snagging Survey

A snagging survey is a property survey designed specifically for new build properties. It will look for any issues, incomplete works and quality of workmanship.

Sold Subject to Contract

A property is sold subject to contract when an offer has been accepted by the legal transfer of ownership has not yet been completed.

Stamp Duty Land Tax (England and Northern Ireland)

Stamp Duty Land Tax is a tax payable in England and Northern Ireland when you purchase a property or land.

Standard Variable Rate

A mortgage lender’s standard variable rate is the interest rate you will revert onto when your initial fixed term period comes to an end. The standard variable rate is likely to be more expensive than interest rates offered with fixed term deals and will change in line with the Bank of England’s base rate.

Structural Survey

A structural survey is a more in-depth and extensive property survey. A structural survey will be carried out by a structural engineer rather than a property surveyor, and will usually be arranged to explore a specific area of concern, such as potential movement.

Subsidence

Subsidence is the downward movement of ground beneath a building. This can cause cracking and instability in your property. Common signs of subsidence include cracks, sticking doors and windows, and uneven floors.

Survey

A survey is a property inspection, usually carried out as part of the conveyancing process.

T

Tenants in Common

‘Tenants in common’ is a way of dividing ownership when buying a property with one or more other people.

As tenants in common, each of you will own a different and separate portion of the property. If you are tenants in common, you can choose to pass your share onto whomever you choose, it won’t automatically pass to the other owner(s) in the event of your death.

At the point of selling the property, each party will receive proceeds from the sale in line with their share of ownership.

Title Deeds

Title deeds are the legal document that proves property ownership.

Tracker Mortgage

A tracker mortgage is a variable mortgage product. Your mortgage interest rate will change, usually in line with either the Bank of England base rate or the lender’s standard variable rate.

U

Under Propert

If a property is ‘under offer’, a formal offer has been made. Marking the property as ‘under offer’ rather than ‘sold subject to status’ may mean that the offer is being considered but hasn’t yet been accepted. Alternatively, it could mean that the seller has accepted the offer but is still open to receiving other offers.

Underwriting

Underwriting is the financial risk assessment process a lender will carry out before agreeing to make you a mortgage offer.

V

Valuation

A property valuation will need to be carried out before your lender makes you a mortgage offer.

The property valuation will be used to calculate your loan-to-value ratio, which will determine which mortgage products you are eligible for. It will also confirm for the lender whether the property is worth the agreed purchase price.

Valuation Survey

When your lender carries out their valuation, you can usually choose to upgrade to include a property survey at the same time.