Mortgage Jargon Buster

Also known as a Decision in Principle (DIP) or Mortgage in Principle. A statement from a lender indicating how much they might be willing to lend you based on a quick check of your finances.

The total cost of the mortgage over its full term, including interest and fees, expressed as an annual percentage. It helps you compare different mortgage deals.

A fee charged by the lender to set up your mortgage. You can usually pay this upfront or add it to your mortgage loan (which means you'll pay interest on it).

The interest rate set by the Bank of England. Many variable and tracker mortgages move up and down in line with this rate.

An independent adviser (like me!) who helps you find and apply for the best mortgage deal from the whole market, rather than just one bank.

The most common way to repay a mortgage. Your monthly payment covers the interest charged that month AND pays off a bit of the money you borrowed. By the end of the term, the debt is fully cleared.

The big day! This is when the money is transferred to the seller, you get the keys, and the property legally becomes yours.

The legal work involved in buying and selling property. This is done by a solicitor or licensed conveyancer.

See 'Agreement in Principle'. It's the same thing - just a different name.

The chunk of money you put towards the cost of the property yourself. The rest is covered by the mortgage.

A penalty fee you might have to pay if you leave your mortgage deal early or pay off too much of it in one go.

The difference between what your home is worth and how much you still owe on your mortgage. If your house is worth £200k and you owe £150k, you have £50k equity.

The point where the sale becomes legally binding. You sign contracts, pay your deposit, and can't back out without losing money.

Someone buying a property who has never owned a home before. You often get special perks like Stamp Duty relief and access to specific government schemes.

A mortgage where your interest rate (and monthly payment) stays exactly the same for a set period, usually 2, 3, or 5 years.

When you own the property AND the land it stands on. Most houses are freehold.

A mortgage where a parent or close relative agrees to be responsible for the debt if you can't make the payments.

A mortgage where your monthly payments ONLY cover the interest. You don't pay off any of the actual loan, so you need a plan to pay back the full amount at the end.

When you own the property for a set number of years, but not the land it sits on. Common with flats.

The size of your mortgage as a percentage of the property's value. If you have a 10% deposit, you need a 90% LTV mortgage.

When your home is worth LESS than the amount you still owe on your mortgage. This can make it hard to move or remortgage.

Switching your mortgage to a new deal with a different lender without moving house. Usually done to save money when a fixed rate ends.

A tax you pay to the government when buying a property. First-time buyers often get a discount or pay nothing at all.

A lender's default interest rate. You usually move onto this (expensive) rate when your fixed deal ends. It can change at any time.

The length of time you take the mortgage out for. A typical term is 25 or 30 years, but it can be shorter or longer.

A variable rate mortgage that 'tracks' the Bank of England Base Rate plus a set percentage. If the Base Rate goes up, your payments go up.

A check carried out by the lender to make sure the property is worth what you're paying for it. This is for their benefit, not a full survey for you.