Ideal Properties - About Us

Jargon Buster

A - B Additional security fee, Arrear, Assignment, Broker, Buy to Let...
C - D Capital, Conveyance, Deeds, Dilapidations, Draft Contract...
E - G Early redemption charge (ERC), Equity, Freehold, Guarantor...
H - J Homebuyer's survey, IFA, ISA, Inventory, Joint Tenants...
K - N Land registry fee, Leasehold, Maisonette, NHBC scheme...
O - R Offer, Ombudsman, Payment break, Redemption, Retention...
S - T Search, Stamp duty, Standard variable rate, Tenure, Transfer Deeds...
U - Y Under offer, Variable base Rate, Vendor, Yield...

A - B

Additional security fee: An up-front, one off fee paid to the lender to protect them against the borrower defaulting on the loan. Usually, charged on mortgages over 75% of the house value. Also known as MIG, Indemnity Guarantee premium and Mortgage Indemnity Premium.
Annual percentage rate: A lender's APR states the total cost for taking out the mortgage. It includes not just the interest rate, but also takes into account any additional charges you will have to pay, so is the best way to compare different mortgages.
Arrears: If you fall behind with your mortgage payments, you will get into arrears. If this happens, the lender may want to repossess your home.
Arrangement fees: Charged to arrange a loan on certain products. Usually applied to loans where a special interest rate applies e.g. fixed or capped rates.
Assignment: The transfer of ownership of an insurance policy or lease.
Accident, sickness and unemployment insurance (ASU): Sometimes called mortgage payment protection insurance, but is different from mortgage protection insurance (see below). ASU is insurance cover that would keep up your mortgage repayments for a time if you were unable to work because of illness, accident or redundancy.
Auction: The sale of a property to the highest bidder.
Bank base rate (BBR): This is the interest rate set by the Bank of England, which is used by mortgage lenders to set their standard variable rate (SVR).
Base rate tracker mortgage: If you have a base rate tracker mortgage, the rate of interest you are charged will be set at a fixed percentage above the bank base rate, and will follow its rise and fall. Some base rate tracker mortgages offer an initial discounted rate.
Broker: Mortgage broker is an intermediary who helps you find and buy a mortgage. They will usually a charge commission or a fee for this service.
Bridging loan: A temporary loan providing financial cover which allows a purchaser to complete on the purchase of a new property before selling the previous property.
Building survey (formerly full structural survey): A full inspection of the property, conducted by a chartered surveyor, who then writes a detailed report including any property defects. Suitable for any house, particularly older properties and those which have been poorly maintained. Also for properties which have been extensively altered or extended, or any property you may wish to alter or extend.
Buildings insurance: You will need to take out buildings insurance on your property as a requirement of your mortgage. It should cover the full cost of rebuilding your property. You don't need to take out your mortgage lender's own insurance unless you've agreed to a special package that includes it.
Buy to let mortgage: A type of mortgage specifically designed for people buying a property with the intention of letting it out.

C –D

Capital: This is the sum of money you borrow from a lender, such as a bank or building society, in order to buy your home. In addition to paying this back, you will also have to pay back interest on the loan. Capital is sometimes called the advance or principal.
Capped mortgage: The interest rate of a capped rate mortgage is guaranteed not to rise above a certain level during the capped period, which is often between three and five years. A capped and collared mortgage sets a minimum as well as a maximum rate for this period.
Cashback mortgage: Some lenders offer cashback deals where you get a percentage of the loan - say 5% - as a lump sum to spend on your move or whatever you choose.
CAT standards: These are standards set by the government for mortgages. CAT is short for Charges, Access and Terms.
Current account mortgage: A current account (or all-in-one) mortgage combines a flexible mortgage with a current account in one package. Money in your current (or savings) account can be set against the amount you owe on your mortgage, so that your interest payments are reduced.
Chain: The situation that occurs when a buyer is reliant upon completion of the sale of his existing property, in order to complete on the purchase of his new property.
CML: The council of mortgage lenders, the Mortgage Code to ensure lenders treat customers fairly.
Completion: The point at which all transactions concerning the property’s sale are concluded and legal transfer of ownership passes to the buyer/purchaser.
Conditions of sale: The details which determine the rights and duties of the buyer and seller. These may be national, statutory, or the Law Society’s conditions.
Contents insurance: Insurance policy to cover any loss or damage to your possessions within the property.
Contract: A legal agreement between the vendor and purchaser of a property which binds both parties to complete the transaction.
Contract race: When two parties have made an offer on the same property. The vendor will sell to the first party to exchange contracts.
Conveyance: Traditional term for the legal work involved in the purchase and sale of a property.
Covenants: Rules and regulations governing the property, contained in its title deeds or lease.
Deeds: Legal title documents proving ownership. The deeds will be held by the mortgage lender.
Deposit: Many lenders won't let you borrow more than 90 or 95% of the value of the property or of the purchase price, depending on which is lower, so you will have to pay the rest as a deposit.
Discounted rate mortgage: If you have a discounted rate mortgage, for a fixed period of time you will be charged an interest rate that is lower than your lender's standard variable rate (SVR) but which will rise or fall in line with it. Once the discount period is over, you will probably be charged the SVR.
Detached: Term used to describe a property that stands alone and is separate from other properties.
Development: A newly built residence or an older property which has been refurbished and modernised.
Dilapidations: Any disrepair or damage to a property.
Disbursements: Fees paid by the buyer's solicitor on the buyer’s behalf such as stamp duty, land registry and search fees.
Discharge: Paying off a mortgage.
Draft Contract: Preliminary, unconfirmed version of the contract.

E – G

Early redemption charge (ERC): When you pay off your mortgage before the end of the term. Your lender may charge a penalty for this, called an early redemption charge.
Endowment mortgage: Interest-only repayments combined with monthly premiums into an endowment policy designed to pay off the loan at the end of the term. See interest only mortgage.
Endowment policy: A savings plan you can take out to repay the capital of your mortgage if you have an interest only mortgage.
Endowment shortfall: Many people who took out an endowment policy in the past have found it hasn't made enough money to pay off their mortgage. This is called an endowment shortfall.
Equity: Equity is the difference between what your home is worth and how much you owe on your mortgage. For example, if your home is worth £100,000 and your mortgage is £75,000, your equity will be £25,000. If the value of your home is less than your mortgage, you will have negative equity.
Excess: The initial excess (stated in your policies T & C’s ) sum you have to pay on an insurance claim.
Exchange of contracts: The point at which signed contracts are physically exchanged, legally committing the purchaser and vendor to the purchase and sale of a property at the agreed price.
Fixed rate mortgage: This guarantees that the interest rate on your loan won't change for a set period - usually, from two to five years.
Flexible mortgage: If you have a flexible mortgage, the interest you pay will usually be calculated daily. In addition, you will have more freedom to repay the mortgage at a speed which suits you.
Fixtures & fittings: All non-structural items included in the purchase of a property.
Freehold: Technical word for the Ownership of the property, meaning that it belongs to the owner without limitation of time.
Gazumping: This is when a seller accepts a higher offer from a third party on a property that they have agreed to sell to someone else, but have not yet exchanged contracts.
Ground rent: The annual charge levied by the freeholder to the Leaseholder.
Guarantor: If you are a student or on a low income, you may get a mortgage if you can find a guarantor. If you default on your mortgage, the guarantor will be legally responsible for making the payments, so it isn't something to take on lightly. The lender will check that the guarantor would be able to afford the payments should this happen.

H – J

Homebuyer's survey and valuation (house/flat buyer's report): This is a survey report, which is not as detailed as a structural survey, carried out by a chartered surveyor to assess property and its value.
Homes of Multiple Occupancy (HMO): Property consisting of Multiple Occupancy.
Independent Financial Advisor (IFA): IFAs offer impartial advice on all aspects of your personal finances and help you find the right products or services (such as mortgages, insurance, savings plans and pensions).
Individual savings account (ISA) mortgage: A tax efficient savings plan. You may pay into an ISA if you have an interest only mortgage.
Inter-generational mortgage: This is a new kind of interest-only mortgage that doesn't have to be paid off before you die. Instead, the property and the loan are left to your heirs (for example, your children), who can choose to continue making the mortgage payments, or can sell the home to pay off the debt. Inter-generational mortgages are not yet available in Scotland.
Interest: As well as paying back the capital you borrow, you will also have to pay interest on the loan. This may be calculated on a daily, monthly, quarterly or annual basis. You will save money if it's calculated on a daily basis. If you have a CAT mortgage, the interest must be calculated daily.
Interest-only mortgage: With an interest only mortgage, you take out a loan to buy your home but only pay back the interest to the lender; you don't repay any of the capital until the end of the mortgage term. Instead, you pay into a long term savings plan, such as an ISA or endowment policy which should clear your mortgage debt when it matures.
Intermediary: An adviser who helps you choose the mortgage that's right for you and makes your application to the lender. An intermediary can be an IFA, a broker, a solicitor, an estate agent or an accountant.
Inventory: A list which describes the condition of furnishings and contents of a leased property at the commencement of the tenancy in order that any damages/dilapidations during the tenancy can be identified.
Joint mortgage: You may wish to take out a mortgage with another person, for example your spouse, partner or a friend.
Joint tenants: A form of ownership for two parties whereby if one of them dies, their share of the property will automatically transfer to the remaining party, giving them full ownership (regardless of the terms of the deceased owner's will)

K – N

Land registry fee: Paid to the Land Registry to register ownership of a property.
Lease: A legal document by which the freehold (or leasehold) owner of a property lets the premises or a part of it to another party for a specified length of time, after the expiry of which ownership may revert to the freeholder or superior leaseholder.
Leasehold: Denotes that the ownership of the property is by way of a lease.
Lender’s arrangement fees: Charge passed on to the buyer by the lender for arranging a loan.
Lender’s legal fees: The fees incurred by the lender when arranging a mortgage. These costs are passed on to the buyer.
Lender: The bank, building society or other financial institution which lends you the money for your mortgage.
Letting: If you are having problems paying your mortgage and need to increase your income, or if you need to go away for a long period of time, you may wish to rent out a room in your home to a lodger or let your home to a tenant.
Listed building: One officially listed as being of special architectural or historic interest, which cannot be demolished or altered without (local) government consent.
Loan to value (LTV): This is the amount of money you've borrowed as a percentage of the value of your home. So, for example, if your home is worth £100,000 and your mortgage is £80,000, you will have an LTV of 80%. If your mortgage has a high LTV, say 90 or 95%, you may have to take out a mortgage indemnity guarantee.
Local authority search: Procedure whereby a buyer's solicitor makes an enquiry to the local council regarding any outstanding enforcement or future development issues which might affect the property or immediate area.
Maintenance charge (or service charge): The cost of repairing and maintaining external or internal communal parts of a building charged to the tenant or leaseholder.
Maisonette: A property arranged over more than one floor (i.e. a portion of the house).
Mortgage: An amount of money advanced by a lender such as a bank or building society on the security of a property and repayable over a term period.
Mortgage deed: A legal document relating to the mortgage lenders interest in the property and containing the terms of the mortgage.
Mortgage certificate: If you apply for a mortgage before you have found a property to buy, you can ask the lender for a mortgage certificate stating in principle how much you can borrow. This can be useful if you need to show the seller that you are a serious buyer, but it isn't a guarantee that you'll definitely get a mortgage for that particular property. However, this practice is more prevalent in England.
Mortgage indemnity guarantee (MIG): Also known as a mortgage insurance premium (MIP) or high loan to value fee. A mortgage indemnity guarantee (MIG) is an insurance policy which covers the lender if you default on your loan.
Mortgage indemnity premium (MIP): An insurance policy that protects the lender against default of mortgage repayments. Although the policy benefits the lender, it is the borrower who usually pays the premium.
Mortgage payment protection (MPP): This is an insurance designed to pay your monthly mortgage for a limited period usually a year if you are unable to work through illness, disability or redundancy. (See also ASU)
Mortgage protection insurance (MPI): This is life insurance, which would pay off the loan if you die, or your partner in a joint mortgage dies.
Mortgage rescue scheme: If you are having problems paying your mortgage, your lender may offer you a mortgage rescue scheme, whereby your home is bought but you can remain there as a tenant paying rent.
Mortgage rate: The standard variable interest rate quoted by all mortgage lenders which normally varies with the Bank of England Base Rate. All discounted rates are based on this mortgage rate.
Mortgage term: The period of time over which (repayment mortgage) or at the end of which (endowment mortgage) the loan is to be repaid.
Mortgagee: The lender of a mortgage (i.e. bank or building society).
Negative equity: If the value of your home is less than your mortgage, you will be in negative equity. For example, if your mortgage is £75,000 but your home is only worth £65,000 you will have negative equity of £10,000.
NHBC scheme (National House-Building Council): A type of building guarantee available on some newly built homes under which defects occurring within a specified time after construction are remedied.

O – R

Offer: A sum of money that the buyer offers to pay for a property.
Offer of a loan: A formal document approving the mortgage offer you have requested, detailing the terms and conditions.
Off-set mortgage: See current account mortgage.
Ombudsman: A watchdog organisation that offers free, impartial advice to consumers and can help you resolve disputes with service providers. If you have a mortgage and are unhappy with the service you have received, you can complain to the Financial Services Ombudsman.
Open market value: The price a property would achieve when there is a willing buyer and willing seller.
Payment break: An option on flexible mortgages that allows you to stop making mortgage payments for up to 6 months.
Penalties: Early repayment charges that may apply or be incurred if the borrower decides to repay the loan early or switches between lenders.
Pension scheme mortgage: With this kind of mortgage you use part of your pension fund to pay off the loan. This type is mainly suited to self-employed people and higher rate taxpayers.
Peppercorn ground rent: A nominal periodic rent usually paid annually.
Premium: The monthly amount payable for an insurance policy.
Premium lease: Lump sum paid up front as rental for a property.
Principal: The sum of the loan on which interest is calculated.
Public liability insurance: Insurance which covers injury or death to anyone on or around your property.
Purchaser: A person who is buying a property.
Redemption: Paying off your whole mortgage.
Re-mortgage: A Re-mortgage is the process of paying off your current mortgage with the proceeds from a new mortgage using the same property as security. Also you may be able to borrow additional cash you need in the process.
Repayment mortgage: This is sometimes called a capital and interest mortgage. If you take out a repayment mortgage, every month you will pay back some of the capital as well as the interest on the sum still outstanding.
Repossession: If you don't keep up the mortgage payments on your home, your lender may take your home and evict you.
Retention: Holding back part/full of the mortgage loan until repairs or specified works to the property are satisfactorily completed.

S – T

Search: A request or enquiry for information concerning the property held by a local authority or by the land registry.
Semi-detached: A property which forms part of two connected houses.
Service charge: See Maintenance Charge.
Sharia’a mortgage: Under the Islamic law of Sharia’a, the charging and paying of interest is not permitted. A Sharia’a mortgage provides a Halal (permissible) alternative to a repayment or interest only mortgage by allowing you to purchase your own home without having to pay interest (Riba).
Stamp duty: A tax you may need to pay when you buy a home.
Standard variable rate (SVR): This is the basic rate of interest charged by your lender, and goes up and down as the bank base rate changes.
Standard rate mortgage: If you have a standard rate mortgage, you will be charged interest at your lender's standard variable rate (SVR).
Sole agent: When a seller chooses only one estate agent to sell their home.
Solicitor: Legal expert handling all documentation for the sale or purchase of a property.
Structural survey: See Building survey.
Studio Flat: A flat consisting of one main room or open-plan living area incorporating cooking and sleeping facilities and a separate bathroom/shower room.
Subject to Contract: Indication that an agreement is not yet legally binding.
Surveyor: Professionally-qualified expert who carries out the survey.
Tenancy: A temporary possession of a property by a tenant.
Tenancy agreement: A legal agreement designed to protect the rights of the tenant and landlord and setting out all the terms and conditions of the rental arrangements.
Tenant: A person who has temporary possession of a property.
Tenants in common: A form of ownership by two or more people in which if one of them dies their share of the property forms part of their estate and does not automatically pass to the other(s).
Tenure: Conditions on which a property is held (i.e. length of lease).
Terraced house: A property which forms part of a connected row of houses.
Term: The term of your mortgage is the length of time you have in which to pay back the capital and interest on the loan. The usual term is 25 years, but it can be longer or shorter. Shortening or extending the term of your mortgage will increase or reduce your monthly mortgage payments, and also reduce or increase the amount of interest you'll pay in total.
Title deeds: Documents showing the legal ownership of a property.
Transfer deeds: The land registry document that transfers legal ownership from vendor to buyer.

U – Y

Under offer: The status of a property for sale, when a seller has accepted an offer from a purchaser but prior to exchange of contracts.
Valuation: Before they agree to give you a mortgage, a lender will get their surveyor to look over the property to see how much it's worth and assess its suitability for mortgage purposes. You will be charged for the valuation, but may get the money refunded when you take out the mortgage. A valuation is not the same as a survey. A lender will always require a valuation but a more detailed survey may also be required if the surveyor recommends it.
Value: This is how much your home is worth in the current housing market. This may not be the same as the amount of money you paid for your home.
Variable base Rate: If you have a Variable Rate Mortgage, your payments will go up and down according to the rise and fall of interest rates. There are several kinds of variable rate mortgages.
Vendor: The legal name for the person selling a property.
Voluntary repossession: If you're unable to keep up with your mortgage payments, you may have to hand over the keys to your lender as a last resort.
Yield: Income from a property calculated as a percentage of its value.

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