Glossary for First Time Buyers - jargon explained
A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
A
APR - Annual Percentage Rate (APR): The interest charged on a loan / mortgage over a year.
Appreciation: An increase in the value of a property. This could be due to a booming housing market, home improvements, or changes in the local area.
Arrangement Fee: This is a charge imposed by some lenders for setting up a mortgage.
B
Bank of England: Government organisation that decides whether interest rates go up or down.
Base Rate: The base rate is the interest rate set by the Bank of England. Usually banks will eventually pass on an interest rate cut or rise to their customers.
Building Insurance: Usually covers the cost of re-building your house in case of fire, flooding and structural damage. It does not cover the contents of your house, for that you need contents insurance.
Buidling Survey: See Survey.
C
Capital: In mortgage terms, the capital is the money that needs to be repaid (not including the interest).
Capped Rate: A capped rate mortgage will put a cap on the interest rate so it does not increase if the Bank of England Base Rate increases. Unlike a fixed rate mortgage, you can still benefit if interest rates drop.
Contents Insurance: Usually covers the cost of replacing household items against damage and theft.
Conveyancing: The process of hiring a solicitor to handle the legal paperwork involved with buying a house.
Credit Report: Something that banks will get to check a first time buyer's credit history. If a first time buyer has a history of not paying off credit cards or loans, or has previously got into debt, this will affect the amount that a lender is willing to lend.
Credit History: Pay off credit card bills in full each month and stay 'in the black' to keep your credit history clean.
D
Deed (or title deeds): A document that shows ownership of a property. Usually, the legal representatives of the buyer and seller will sort these out when contracts have been exchanged.
Depreciation: A decrease in the value of a property. This could be due to a falling housing market or changes in the local area.
E
Equity: The value of the property, minus the mortgage amount. An owner may enter negative equity if the property depreciates because the mortgage will be more than the property is worth.
F
Fixed Rate: A fixed rate mortgage has an interest rate that stays the same for the length of the arrangement.
Freehold: Buying a freehold property means that you will become the complete owner of the property and the land that it sits on. The opposite to freehold is leasehold.
FSA (The Financial Services Authority): The UK's financial watchdog. They provide some advice on finding a mortgage, see the FSA website.
G
Guarantor: Someone that agrees to meet mortgage repayments of the borrower if the borrower cannot meet the mortgage repayments. A guarantor is usually a parent. Having a guarantor, usually increases the amount that a first time buyer can borrow.
Gazumping: This is where you put an offer in on a property, which is accepted. But then the seller then sells to someone else who has offered more. This is something that is frowned upon but it is not illegal (yet).
H
HLC - Higher Lending Charge: If you borrow more than 90% of a property's value, some lenders impose a Higher Lending Charge because they are taking on extra risk.
Home Buyers Report: A type of survey carried out by a surveyor.
I
Interest: The percentage of the mortgage that is charged to the borrower. This is the cost of borrowing the money. The interest rates charged by banks and building societies is often highly influenced by the Bank of England base rate.
Interest only: A type of mortgage arrangement where the borrower only pays the interest on the amount borrowed.
J
K
L
LTV - Loan To Value: This is the % of a property that is being borrowed for a mortgage. I.e. a mortgage of £75,000 on a house valued at £100,000 would have an LTV of 75%.
Leasehold: Buying a leasehold property means that you are only buying a lease from the owner and not the property itself. When the lease expires, the ownership of the property will return to the owner. Leasehold properties are typically flats. It is possible to apply for an extension to a lease. However, properties with a short lease should generally be avoided.
M
Mortgage: A special type of loan that allows a first time buyer to borrow a seemly ridiculous amount of money towards the purchase of a house. However, mortgages make home ownership possible for the masses.
N
Negative Equity: See Equity.
O
P
Q
R
Repayment: A type of mortgage where the amount borrowed is repaid along with any interest owing.
S
Survey: A survey is where a surveyor comes to inspect the property that you intend to buy. What they inspect and how detailed their inspection depends upon the type of survey that is carried out.
T
U
V
Valuation: When the lender finds out if the property suitable for the mortgage for which you have applied.
Variable rate: A variable rate mortgage has an interest rate that varies for the length of the loan. Interest rates can go up as well as down and they are generally dictated by the Bank of England base rate.
Vendor: The owner of the house up for sale.
W
X
Y
Z
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Website founded by Tim Ballard. First House Page.com trades under the name of Tim Ballard.
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