Jargon Buster

APR - Stands for Annual Percentage Rate, this is used to compare mortgage deals as it takes into account the rate of interest as well as any charges and the term of the loan.

Bank of England Base Rate - The rate set by the Bank of England's monetary policy committee which many mortgage rates track and is reviewed once a month.

Buildings insurance - A mandatory insurance when you have a mortgage that covers the repair or rebuilding of your property. Contents cover is optional and covers your belongings within the property.

Buy to Let - A mortgage to buy a property specifically to rent out on a tenancy agreement. See Holiday Let and HMO for other letting types.

Completion - The date you become the legal owner of the property or the date you no longer own the property when selling.

Conveyancing - The process of buying a property including drawing up contracts and compiling searches, this is usually done by either a solicitor or licensed conveyancer.

Credit Score - This is what most lenders will use to see how you have managed your credit in the past, it can increase or decrease depending on how much unsecured debt you have available or have used, missed payments or late payments, CCJ's, Bankruptcy, Defaults. It is very important to keep track of your credit score as a simple mistake can sometimes take years to fix.

Daily Interest - This is where the lender calculates the interest on a daily basis which means you benefit on the same day you make a payment off your mortgage or overpayment.

Deposit - The amount of money you are putting towards a property purchase which must come from either savings, existing equity or a gift from another person or recognised scheme, most lenders will not allow it to come from secondary borrowing like an unsecured personal loan.

ERC - Early redemption charge, this is the penalty lenders charge if you pay off your mortgage within a certain time, for example most lenders that offer fixed rates will charge you a penalty if you pay the loan off within this fixed rate period, some lenders may have an early repayment overhang where they may charge you a penalty for perhaps a year after your initial rate expires, your mortgage adviser will ensure you are aware of any penalties that apply.

Equity - The amount of cash you have in a property, this is worked out by the property value minus any mortgages, loans or charges you have secured against it.

Exchange of Contracts - A very important date when buying a property, this is the point that you legally become liable for the property and are bound to purchase the property, this is when you have to pay your deposit to the buyer and the point you need to ensure the buildings insurance is live.

FCA - Financial Conduct Authority, this is the body that regulates financial services in the UK and replaced the FSA.

Fixed Rate - This is a feature of your mortgage product that ensures your interest rate remains stable for a particular length of time, you may want stability for the next 2 years so choose a 2 year fixed rate - this means that for the next 2 years your mortgage repayments will remain the same per month and will not be affected by any changes to the Bank of England Base Rate or the lenders own base rate.

Freehold - When you own the Freehold to a property you own both the building and the land it is on until you pass it on to another person or trust.

Homebuyers Report - This is a type of valuation done on a property that gives you a more in depth report than a standard mortgage valuation but not as detailed as a Structural Survey, it is usually compiled as a traffic light system so you can easily see where potential issues are.

Interest Only Mortgage - This is a type of repayment method for your mortgage and means you just cover the interest costs each month and not the actual capital, the monthly payments are therefore much lower but you will still owe the full balance at the end of the term.

KFI - Key Facts Illustration, this is the mortgage quote set out in a standard format that is easy to compare with other quotes from other lenders.

Leasehold - Another way of owning a property, if you own the leasehold then you own the property for a particular length of time, flats are usually leasehold to avoid disputes but in many cases you own the right to that property for up to 999 years, it can be very difficult to obtain a mortgage on a freehold flat.

Life Insurance - The insurance that people take out for many reasons but often to cover the mortgage so that in the event they die during the mortgage term the mortgage is paid off.

LTV - Loan to Value, this is the proportion of mortgage you have against the property value, for example a £75,000 mortgage against a property worth £100,000 would be 75% LTV.

Mortgage - A mortgage is actually the legal charge that a lender takes over your property to ensure that they have the right to take the property should you stop paying.

Mortgage Term - This is the total length of time you have the loan facility for, it is not to be confused with the initial product such as a 2 year fixed, this can be anything from 5 years to 40 years depending on many things such as age and lending policy.

Mortgage Offer - This is an offer made by the lender to the borrower after carrying out the usual underwriting checks and usually a valuation and details the terms that they are prepared to offer the mortgage.

Negative Equity - This is when you owe more on your mortgage than the house is worth.

Product Fee - Also known as application fee - this is a fee that you may to get a particular rate, some lenders off rates with no application fee but the rates are usually higher then.

Remortgage - This is the process of swapping your mortgage from one lender to another, maybe because another lender has a lower rate than your current provider or maybe to borrow additional funds with another lender.

Repayment Mortgage - Also known as Capital Repayment, this is the type of mortgage that you pay back a mixture of interest and capital each month so that at the end of the mortgage term you have fully paid off your mortgage.

Stamp Duty - This is the tax the government charge on buying property, there are different rates that apply depending on the purchase price and use.

Standard Variable Rate - This is a rate that tracks the lenders own variable rate, it could be linked to another rate such as the Bank of England but the lender also reserves the right to increase it or decrease it should they wish.

Structural Survey - Also known as structural engineers report, this is the highest level of valuation that is provided by a specialist structural engineer on the state of the property.

Tracker - This is an alternative to a fixed rate where the rate tracks a particular rate such as the Bank of England base rate or lenders standard variable rate and will increase or decrease depending on the rate it tracks.

Valuation - This is the report into the value of the property and whether it is built to a sufficient standard for the lender, there are different types of valuation depending on how in depth you wish to go and wish to pay for, it is usually mandatory to have at least a mortgage valuation when buying a new property.