Navigating the mortgage world can feel like learning a new language. From APR to Valuation, the terminology can be overwhelming especially if you’re a first-time buyer, self-employed, or applying for a buy-to-let mortgage.
To help, here’s an A-Z glossary of common mortgage jargon you’ll encounter, along with clear explanations to make your journey smoother and smarter.
Additional Borrowing
Also known as further advance is mortgage jargon that refers to borrowing extra money from your existing lender on top of your current mortgage. This is often used for home improvements, debt consolidation, or large expenses. The lender will assess your affordability again, and the new borrowing may be on a different rate or term from your original mortgage. It’s an alternative to remortgaging or taking out a personal loan.
Advance
An advance in mortgage terms refers to the amount of money a lender provides to the borrower to purchase a property. It is typically the loan portion of the total property price, minus the borrower’s deposit. For example, if a property costs £200,000 and the borrower contributes a 10% deposit, the lender would provide an advance of £180,000. The advance is then repaid, typically with interest, over the course of the mortgage term.
Affordability check
This is a key part of the mortgage application process where lenders assess whether you can realistically afford the repayments on a mortgage. They review your income, regular outgoings, debts, and financial commitments, as well as stress-test your ability to pay if interest rates rise. This helps ensure you’re not overstretching yourself and that the mortgage is manageable both now and in the future.
Agreement in Principle (AIP)
Also known as a Decision in Principle, this is a conditional approval from a lender stating how much they might lend you, subject to full checks. It’s useful when house hunting as it shows estate agents you’re a serious buyer.
Having an AIP puts you in a strong position when putting an offer in on a property.
Annual Percentage Rate Of Change (APRC)
The Annual Percentage Rate of Change (APR) represents the total cost of a loan or credit, expressed as a yearly interest rate. It includes not only the interest rate but also any associated fees or charges, providing a clearer picture of the true cost of borrowing.
APR is used to help consumers compare the cost of different financial products, such as mortgages, loans, and credit cards. A lower APR typically means the loan will be less expensive in the long term.
Applicant
An applicant is an individual who applies for a mortgage, loan, or credit. In the context of a mortgage, the applicant is the person seeking to borrow money from a lender to purchase a property.
The lender will assess the applicant’s financial situation, including income, credit score, and affordability, before deciding whether to approve the application. In some cases, there may be multiple applicants, such as a couple applying for a joint mortgage.
Appraisal Value
The appraisal value is an estimate of a property’s market value, determined by a professional valuer. This value is typically used by lenders to assess the worth of a property before approving a mortgage. The valuer considers various factors, including the property’s condition, location, size, and comparable sales in the area. The appraisal helps ensure that the lender isn’t lending more money than the property is worth, reducing the risk of the loan.
Arrangement Fee
This is a charge that some lenders apply for setting up your mortgage. It’s also known as a product fee or booking fee and can range from a few hundred to a few thousand pounds. You can usually choose to pay it upfront or add it to your mortgage though adding it will increase the total amount you repay over time. Not all mortgage products have arrangement fees, so it’s worth comparing deals carefully.
Arrears
This is a term used when a borrower has missed one or more mortgage payments. Falling into arrears can affect your credit score and may lead to legal action if not addressed quickly. Lenders will usually contact you to discuss your situation and may offer solutions like a repayment plan to help you catch up. It’s important to seek advice early if you’re struggling with payments to avoid more serious consequences.
Automated Valuation Model (AVM)
An Automated Valuation Model (AVM) is a digital tool used to estimate a property’s value using mathematical models and data analysis. It pulls information from sources like recent property sales, tax records, and market trends to generate a quick, computer-based valuation.
AVMs are commonly used by lenders during the initial stages of a mortgage application to get a fast, cost-effective idea of a property’s worth, though they may still require a physical valuation for accuracy in some cases.
Bad Credit
This refers to a poor credit history, often caused by missed payments, defaults, County Court Judgments (CCJs), or bankruptcy. Having bad credit can make it more challenging to get approved for a mortgage, but it doesn’t make it impossible.
Some specialist lenders offer bad credit mortgages designed for people with adverse credit, though these may come with higher interest rates or larger deposit requirements. Improving your credit score over time can help unlock better mortgage deals.
Balance Transfer
A balance transfer typically refers to moving the outstanding balance of an existing mortgage to a new lender, often as part of a remortgage. The main goal is usually to secure a better interest rate, reduce monthly repayments, or switch to a mortgage product that better suits your needs. This process may involve early repayment charges or arrangement fees, but it can offer long-term savings if managed carefully.
Base Rate
The interest rate set by the Bank of England, which influences mortgage rates. When the base rate rises or falls, tracker and variable mortgage rates often follow suit.
Booking Fee
This is a charge some lenders apply to secure a particular mortgage deal, especially fixed or tracker rate products. It’s typically paid upfront when you submit your application and is often non-refundable even if the mortgage doesn’t go ahead. Booking fees are sometimes included within the overall arrangement fee or charged separately, so it’s important to check the small print when comparing mortgage offers.
Broker
A broker is a qualified professional who helps you find and apply for the right mortgage. They work with a range of lenders sometimes across the whole market to match you with deals that suit your financial situation and goals. Brokers can save you time and money by handling the paperwork, providing advice, and explaining complex terms. Some brokers charge a fee, while others are paid commission by the lender.
Bridging Loan
A bridging loan is a short-term funding solution designed to cover the gap between buying a new property and selling your current one. It’s commonly used when someone wants to buy a property before selling their current home or during property renovations or auctions.
Bridging loans are usually secured against property and can be arranged quickly, but they tend to have higher interest rates and fees than standard mortgages. They are ideal for buyers needing fast access to funds for a short period.
Budget
A budget is a financial plan that outlines your income and expenses over a specific period, helping you manage your money effectively. When applying for a mortgage, creating a realistic budget is essential to understand how much you can afford to borrow and repay each month. It includes regular costs like bills, groceries, and transport, as well as mortgage repayments and savings. A well-planned budget helps avoid financial stress and ensures you stay on track with your homeownership goals.
Building Survey
A building survey is a detailed inspection of a property’s condition, typically carried out by a qualified surveyor. It is especially recommended for older properties or those with visible defects.
The survey provides a comprehensive report on the structure, identifying any issues such as damp, subsidence, or roof damage, and can include advice on necessary repairs and maintenance. Unlike a basic valuation, a building survey offers in-depth insight, helping buyers make informed decisions before completing a property purchase.
Buildings Insurance
This is a policy that covers the structure of your home such as the walls, roof, floors, and permanent fixtures against damage from events like fire, flood, storm, or subsidence. The majority of mortgage lenders insist on buildings insurance being in place from the day you exchange contracts, as a way to protect their financial interest in the property. It’s essential for homeowners, as repairs or rebuilding costs can be significant without cover.
Buy-to-let Mortgage
This is designed for people who want to purchase a property to rent out rather than live in themselves. These mortgages are typically interest-only, meaning you pay just the interest each month and repay the full loan at the end of the term. Lenders assess affordability based on the expected rental income rather than just personal income. You will usually need a larger deposit—typically at least 20–25%. Buy-to-let mortgages are popular with landlords looking to build property portfolios.
Capital and Interest Mortgage
A standard repayment mortgage where each monthly payment covers both the loan amount (capital) and the interest. By the end of the term, the mortgage is fully repaid.
Capital Appreciation
Capital appreciation refers to the increase in a property’s value over time. This growth can occur due to market conditions, improvements made to the property, or increased demand in the local area.
For homeowners and investors, capital appreciation is a key benefit, as it can lead to greater equity and potential profit when the property is sold. While not guaranteed, long-term property ownership in a stable or growing market often results in capital appreciation.
Capital Gains Tax
Capital Gains Tax (CGT) is charged on the profit you make when you sell or dispose of an asset—like a property—that has gone up in value. In the UK, CGT typically applies to second homes or investment properties, not your main residence. The tax is calculated on the gain, not the total sale price, and individuals have an annual tax-free allowance. Understanding CGT is important for property investors, as it can significantly impact the net return on a sale.
Capital Raising
Capital raising in the context of property and mortgages refers to borrowing additional funds against the equity in your home, usually through a remortgage. Homeowners often raise capital to fund home improvements, consolidate debts, or invest in another property. Lenders will assess your property’s value, existing mortgage balance, income, and affordability before approving the additional borrowing. It’s a popular way to access funds without selling the property, but it increases the overall loan size and monthly repayments.
Capped Rate Mortgage
This refers to a type of mortgage interest rate that has a limit, or “cap,” beyond which the rate will not rise, even if market rates increase. This provides borrowers with some level of security, knowing that their repayments won’t exceed a certain amount. Capped rates are often associated with variable-rate mortgages, where the interest rate can fluctuate, but the cap offers protection against significant increases.
Cashback Mortgage
These are mortgage deals where the lender offers a lump sum of cash to the borrower upon completion of the mortgage. This cash is typically paid once the mortgage is in place, and it can be used for various purposes, such as home improvements or covering moving costs. While cashback mortgages may offer attractive upfront cash, they often come with higher interest rates or fees, so it’s important to consider the long-term cost before choosing this type of mortgage.
County Court Judgement
A County Court Judgment (CCJ) is a legal decision issued by a court when a borrower fails to repay a debt. It’s typically a result of a creditor taking legal action for unpaid debts, such as loans or credit cards. A CCJ can significantly impact your credit score and make it harder to secure future credit, including a mortgage.
If you receive a CCJ, it’s important to address it promptly by paying the debt or negotiating a settlement to avoid long-term financial consequences.
Depending on the registered date and amount, this may restrict the amount of high street lenders. A broker will be able to help and source a specialist lender if required.
Chain
A chain refers to a sequence of property transactions that are linked together because each sale depends on the success of another. For example, a first-time buyer purchases from a homeowner who is also buying another property, creating a chain.
If one part of the chain falls through, such as a buyer pulling out or a mortgage being declined, it can delay or collapse the entire sequence. Chains are common in the property market and can cause uncertainty, which is why chain-free sales are often preferred for speed and reliability.
Clawback Period
The clawback period in the Right to Buy scheme refers to the time during which the government can reclaim a portion of the discount you received when purchasing your council property. If you sell the property within a certain period, usually 5 years, the local authority may require you to repay some or all of the discount.
The amount to be repaid is calculated based on the length of time you’ve owned the property and the size of the discount. This helps ensure that the scheme benefits those who intend to live in the property long-term.
Commission
Commission refers to the fee paid to mortgage brokers or advisers for helping clients secure a mortgage deal. This commission is typically paid by the lender, and the amount can vary depending on the type of mortgage and the lender’s policies.
While some brokers may charge a fee directly to the client, others work on a commission basis, receiving a percentage of the loan amount or a fixed sum. It’s important for borrowers to understand how brokers are compensated to ensure transparency in the mortgage process.
Completion Date
The completion date is the day when the property sale is officially finalised, and ownership is transferred from the seller to the buyer. On this date, the buyer’s mortgage funds are released, the seller receives payment, and the buyer is legally able to move into the property.
Completion typically happens after exchange of contracts and marks the final step in the home-buying process. It’s important to ensure all conditions are met and the necessary payments are made before this date.
Consumer Buy-to-Let
A consumer buy-to-let mortgage is for what is classed as an ‘accidental landlord’. This would be if you were looking to buy a new residential property and decided to keep your existing home to rent out.
Contents Insurance
Contents insurance is a type of home insurance that covers the cost of replacing or repairing personal possessions within a property, such as furniture, electronics, clothing, and valuables, in the event of damage, theft, or loss.
Unlike buildings insurance, which covers the physical structure of the home, contents insurance protects the items inside. It is often recommended for renters or homeowners alike to safeguard their belongings against unexpected events like fire, flood, or burglary.
Conveyancing
Conveyancing is the legal process of transferring property ownership from one person to another. It involves tasks such as conducting property searches, preparing and reviewing legal documents, and ensuring that all necessary payments are made.
A conveyancer or solicitor usually handles this process on behalf of the buyer and seller, ensuring that the transaction is legally sound. The goal is to make sure the property is transferred smoothly and that all legal requirements are met before completion.
Credit Reference Agency
A credit reference agency is a company that collects and maintains information about an individual’s or business’s credit history. These agencies gather data from various sources, such as banks, lenders, and public records, to compile credit reports that assess creditworthiness.
Lenders use these reports to help determine whether to approve a loan or mortgage application and at what interest rate. The main credit reference agencies are checkmyfile, Experian, Equifax, and TransUnion. Your credit score, which is calculated based on your credit history, is an important factor in securing finance.
Credit Score
A credit score is a numerical representation of your creditworthiness, based on your credit history. It reflects how well you’ve managed debt, including your payment history, the amount of credit you’ve used, and how often you apply for new credit.
Lenders use your credit score to assess the risk of lending to you, with higher scores generally leading to better loan terms. A good credit score can help you secure mortgages, loans, and credit cards, while a poor score can make it harder to access finance.
Decision in Principle
A Decision in Principle (DIP), also known as an Agreement in Principle (AIP), is an indication from a lender of how much they are willing to lend you based on your financial situation. It’s not a guarantee, but it gives you a clearer idea of your borrowing potential before you start house hunting.
A DIP is typically based on an initial affordability assessment, which takes into account factors like your income, debts, and credit score. Having a DIP can help demonstrate to sellers that you’re a serious buyer.
Deeds
Deeds are legal documents that formally transfer ownership or rights to a property from one party to another. In property transactions, a deed serves as proof of ownership and outlines the terms and conditions of the transfer.
When purchasing a property, the deed is registered with the Land Registry, ensuring that the new owner has legal rights to the property. Deeds may also include other information, such as easements or covenants, that affect how the property can be used or modified.
Default
A default occurs when a borrower fails to meet the agreed-upon terms of a loan or credit agreement, such as missing a mortgage payment or failing to repay a credit card balance. Defaults are serious and can negatively impact a borrower’s credit score and their ability to secure future loans.
Lenders typically send warnings and may offer solutions, such as payment plans, before taking more severe actions like repossession or legal proceedings. Defaults remain on a credit report for six years and can make it more difficult to access credit in the future.
Deposit
The amount of money you put towards the cost of a property. Most lenders require at least a 5–10% deposit, though buy-to-let and bad credit mortgages usually require more.
Deposit Unlock
Deposit Unlock is a government-backed scheme designed to help first-time buyers and those looking to move home by offering a low deposit mortgage option. Under this scheme, buyers can secure a mortgage with a deposit as low as 5%, making homeownership more accessible for those struggling to save a larger deposit.
The scheme is available on new build homes from participating developers and is supported by major lenders, offering more flexibility in the property market. Deposit Unlock helps bridge the gap for buyers who may otherwise struggle to meet the typical deposit requirements for a mortgage.
Disbursements
Disbursements are the additional costs and fees that a solicitor or conveyancer pays on your behalf during the process of buying or selling a property. These can include expenses such as local authority searches, Land Registry fees, stamp duty, and bank transfer charges.
Disbursements are separate from your solicitor’s professional fees and are itemised on your final bill. Understanding disbursements is important, as they can significantly affect the overall cost of your property transaction.
Discharge Fee
A discharge fee, also known as an exit fee or mortgage closure fee, is a charge made by a lender when you fully repay your mortgage, either at the end of the term or when switching to another lender.
This fee covers the administrative costs involved in closing your mortgage account and removing the lender’s charge from the property at the Land Registry. The discharge fee is typically outlined in your original mortgage agreement and can vary between lenders.
Down Valuation
A down valuation occurs when a mortgage lender’s surveyor assesses a property’s value to be lower than the agreed purchase price. This can affect the mortgage offer, as lenders base their loan amount on the property’s market value, not the sale price.
A down valuation may result in the buyer needing to increase their deposit to make up the shortfall or renegotiate the purchase price with the seller. Down valuations are common in uncertain markets and can delay or even derail a property purchase if not resolved.
Early Repayment Charge
An early repayment charge (ERC) is a fee charged by a lender if you repay your mortgage early, either in full or by making overpayments that exceed your allowed limit during a set period, typically within a fixed or discounted rate term. This charge compensates the lender for the interest they lose as a result of your early repayment.
ERCs can vary depending on your mortgage terms and are usually calculated as a percentage of the outstanding loan. It’s important to check your mortgage agreement before making large repayments to avoid unexpected costs.
Energy Performance Certificate (EPC)
An Energy Performance Certificate (EPC) is a document that rates the energy efficiency of a property on a scale from A (most efficient) to G (least efficient). It provides an overview of the property’s energy use, typical energy costs, and recommendations for improving efficiency.
EPCs are legally required when selling, renting, or building a property in the UK and are valid for 10 years. A better EPC rating can make a property more attractive to buyers or tenants and may lead to lower energy bills.
Equity
The portion of the property you own outright. It’s the difference between your property’s value and your outstanding mortgage. You can release equity through remortgaging.
Equity Release Scheme
An equity release scheme is a financial product that allows homeowners, typically aged 55 or over, to access the equity tied up in their property without having to sell or move out. The most common types are lifetime mortgages and home reversion plans. With a lifetime mortgage, you borrow against your home’s value and the loan, plus interest, is repaid when you die or move into long-term care.
Home reversion involves selling a portion of your home in exchange for a lump sum or regular payments. Equity release can provide financial flexibility in retirement but reduces the value of your estate.
Exchange of Contracts
Exchange of contracts is a crucial stage in the property buying process where the buyer and seller legally commit to the transaction. At this point, both parties sign and swap identical contracts through their solicitors, and a deposit—usually 5-10% of the purchase price—is paid by the buyer.
Once contracts are exchanged, the sale becomes legally binding, and a completion date is agreed. If either party pulls out after this stage, they may face legal and financial penalties.
Execution Only
Execution only refers to a type of mortgage or financial transaction where the customer makes their own product choice without receiving any advice from a broker or lender. In this scenario, the customer takes full responsibility for selecting the mortgage product based on their own research and understanding.
While this option can offer more control and potentially lower fees, it also carries more risk, especially if the customer chooses a product that isn’t suitable for their financial situation. Execution only is best suited for experienced borrowers who fully understand the market and their needs.
Fixed-Rate Mortgage
A mortgage with a fixed interest rate for a set period (e.g. 2, 5, or 10 years), offering predictable monthly payments.
Freehold
Freehold refers to a type of property ownership where the owner has complete and indefinite ownership of both the building and the land it stands on. Unlike leasehold, there is no time limit on ownership, and the freeholder is solely responsible for the maintenance and upkeep of the entire property.
Freehold is generally considered the most straightforward and desirable form of ownership, especially for houses, as it offers greater control, fewer restrictions, and no ground rent or service charges typically associated with leasehold properties.
Gazumping
Gazumping occurs when a seller accepts a higher offer from another buyer after already agreeing to sell to someone else, but before contracts have been exchanged. This practice is legal in England and Wales because property transactions aren’t legally binding until contracts are exchanged.
Gazumping can be frustrating and costly for buyers who have already invested in surveys, legal fees, or mortgage arrangements. While it can be difficult to prevent, moving quickly and maintaining good communication with the seller can help reduce the risk.
Gazundering
Gazundering is when a buyer lowers their offer on a property at the last minute, just before the exchange of contracts. This puts the seller in a difficult position, especially if they are relying on the sale to complete a property chain.
While gazundering is legal in England and Wales, it’s considered unethical and can cause significant delays or even the collapse of a sale. It often happens in a buyer’s market where buyers feel confident in negotiating better terms due to weaker demand.
Green Mortgages
Green mortgages are a type of mortgage specifically designed to incentivise the purchase or refurbishment of energy efficient homes. Lenders offer these products to borrowers who buy properties with high energy efficiency ratings or make energy-saving improvements, such as installing solar panels or upgrading insulation.
Green mortgages typically come with lower interest rates or other financial incentives, reflecting the environmental benefits of reducing a home’s carbon footprint. They are part of a growing trend towards sustainable living and can help homeowners save on both mortgage costs and energy bills.
Guarantor Mortgage
A type of mortgage where a family member or friend agrees to cover repayments if you can’t. Helpful for those with low income or no deposit.
Ground Rent
Ground rent is a payment made by the leaseholder of a property to the freeholder (or landlord) for the land on which the property is built. It is typically a small, annual fee, often set out in the lease agreement. Ground rent is common in leasehold properties, where the leaseholder owns the building but not the land.
While ground rent is usually low, some leases have clauses allowing the rent to increase over time, which can lead to higher costs for the leaseholder. It’s important for buyers to be aware of ground rent terms when purchasing leasehold properties.
Help to Buy (now closed)
A government scheme that offered a loan for up to 20% (40% in London) of a new build home’s price. Although closed, Help to Buy repayment advice is still relevant.
Higher Lending Charge (HLC)
Higher Lending Charge is a fee that lenders may apply when a borrower’s loan-to-value (LTV) ratio exceeds a certain threshold, typically above 90%. This charge is designed to protect the lender in case the property value falls or the borrower defaults on the loan. The fee is usually added to the mortgage amount and paid off over the loan term.
HLCs have become less common in recent years, as many lenders now offer high LTV mortgages without the need for this additional charge. However, borrowers should be aware of the potential costs when borrowing a larger percentage of the property’s value.
Intermediary
An intermediary is a person or organisation (such as a mortgage broker) that acts as a middleman between borrowers and lenders. Intermediaries help borrowers find suitable mortgage products by comparing deals from multiple lenders and often assist in completing the application process.
They are particularly valuable for those with complex financial circumstances, first-time buyers, or those seeking better rates. Some intermediaries are tied to specific lenders, while others offer whole-of-market access for broader comparisons.
Interest-Only Mortgage
An interest-only mortgage is a type of loan where you pay only the interest each month for an agreed term. At the end of that term, the full original loan amount (capital) is still owed and must be repaid in one lump sum. Borrowers are expected to have a repayment plan in place, such as savings, investments, or proceeds from selling a property.
Interest-only mortgages have lower monthly payments than repayment mortgages but carry higher long-term risk if the repayment plan fails.
Joint Mortgage
A joint mortgage is when two or more people (commonly partners, family members, or friends) apply for a mortgage together. All parties are jointly responsible for repayments and are typically co-owners of the property. The lender will assess the income and creditworthiness of all applicants to determine how much can be borrowed.
Joint mortgages can help increase affordability, but everyone involved shares equal liability—even if one party stops contributing to repayments.
Key Facts Illustration (KFI)
A Key Facts Illustration is a document that outlines the important details of a mortgage offer in a standardised format. It includes information on interest rates, fees, monthly repayments, and the total cost of the mortgage.
KFIs help borrowers compare mortgage products easily and understand the true cost of a loan before making a decision. They’re typically provided at the start of the application process.
Land Registry
The Land Registry is a government department that records the ownership of land and property in England and Wales. When you buy or sell a property, the details are updated with the Land Registry to reflect the change of ownership.
This record ensures clarity about who owns what and provides legal protection for property owners. A registration fee is usually payable as part of the conveyancing process.
Leasehold
Leasehold refers to a type of property ownership where you own the building but not the land it sits on. Instead, you lease the property from the freeholder (landowner) for a set number of years—often 99 or 125 years, though it can be longer.
Leaseholders may pay ground rent and service charges, and they must follow terms outlined in the lease agreement. Leasehold ownership is common for flats and apartments, and short lease terms can affect mortgage eligibility and property value.
Loan to Value (LTV)
Loan to Value is a ratio that compares the size of your mortgage to the value of the property you’re buying. It’s expressed as a percentage. For example, borrowing £180,000 for a £200,000 property equals a 90% LTV.
The lower the LTV, the better the mortgage deals you’re likely to be offered. High LTVs (e.g. 95%) can attract higher interest rates or require additional insurance.
Mortgage
A mortgage is a long-term loan used to buy property. The borrower agrees to repay the money, plus interest, over a set period—usually 25 to 35 years. The property acts as security for the loan, meaning the lender can repossess it if repayments aren’t made.
Mortgages come in many forms (fixed, variable, interest-only, etc.) and are offered by banks, building societies, and specialist lenders.
Mortgage Agreement in Principle
Also known as a Decision in Principle, this is an indication from a lender of how much they’d be willing to lend, subject to full underwriting and valuation. It helps demonstrate to estate agents and sellers that you’re a serious buyer.
Mortgage Deed
A mortgage deed is a legal document that outlines the terms and conditions of your mortgage agreement. It confirms that the property is being used as security for the loan. Once signed, it allows the lender to register their legal interest in your property with the Land Registry.
Mortgage Offer
This is a formal document from a lender confirming they are willing to lend you a specific amount under certain terms. It follows a successful application, affordability assessment, and property valuation. A mortgage offer is typically valid for a limited period (e.g. 3–6 months).
Negative Equity
Negative equity occurs when the value of your home falls below the outstanding balance on your mortgage. For example, if you owe £190,000 but your property is now worth £180,000, you’re in negative equity. This can make it difficult to sell or remortgage, especially if you’re moving home or need to refinance.
Overpayment
An overpayment is when you pay more than your agreed monthly mortgage amount. Overpayments help reduce your loan balance faster and can save you money on interest. Some mortgages allow overpayments without penalty, while others may impose limits or early repayment charges.
Porting
Porting is the process of transferring your existing mortgage deal to a new property when you move house. This allows you to keep your current interest rate and terms. While most mortgages are portable, the lender will still assess affordability and the new property must meet lending criteria.
Product Fee
A product fee (or arrangement fee) is a charge made by lenders for setting up a particular mortgage deal—often lower-rate products. It can usually be paid upfront or added to the mortgage balance (though that means paying interest on it). Consider the total cost of the deal when comparing mortgages—not just the rate.
Redemption
Redemption is the process of paying off your mortgage in full—either at the end of the term or earlier. If repaid before the end of the deal period, an early repayment charge may apply. Once redeemed, your lender removes their legal interest in your home.
Remortgage
Remortgaging means switching your mortgage to a new lender or deal, either to get a better rate, raise money, or consolidate debts. You don’t need to move home to remortgage. It can be a good way to reduce monthly payments or release equity—but be aware of fees and affordability checks.
Repayment Mortgage
Each month you repay a portion of the loan plus interest. By the end of the term, the mortgage is fully paid off. This is the most common and lowest-risk mortgage type.
Right to Buy
A scheme (mostly now closed) that allowed council tenants to buy their home at a discount. Still active for some housing association tenants in specific areas.
Shared Ownership
A government-backed scheme where you buy a share (usually 25–75%) of a property and pay rent on the rest to a housing association. You can increase your share over time through “staircasing.” It helps people get on the property ladder with lower deposits and income.
Stamp Duty
Stamp Duty Land Tax (SDLT) is a tax paid when buying property over a certain value in England and Northern Ireland. First-time buyers often receive relief. The amount payable depends on the property price and buyer status.
Standard Variable Rate (SVR)
The default rate a lender charges after your initial mortgage deal ends. It can go up or down depending on market conditions and is usually higher than fixed or tracker rates.
Term
The length of time you agree to repay your mortgage, typically between 25 and 35 years. Shorter terms mean higher payments but less interest overall.
Tracker Mortgage
A type of variable mortgage that “tracks” the Bank of England base rate, plus a fixed percentage. If the base rate rises, your payments increase. If it falls, your payments decrease.
Valuation
A basic check by the lender to ensure the property is worth what you’re paying (or borrowing). It’s not a full survey and may not spot issues like damp or structural problems.
Variable Rate
A mortgage interest rate that can change during the term. This can include tracker mortgages or a lender’s SVR. Payments can go up or down, so budgeting is harder.
