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Jargon explained

We believe in keeping things simple, here is a glossary of the terms you may have heard when looking for a mortgage:

Use the + symbol to find out what the jargon means in plain english.

Affordability/Income Multiples

Affordability is the method by which a lender calculates the maximum loan amount available to a client. The calculation includes the clients’ incomes, existing debt and monthly outgoings i.e. household bills, living expenses and any dependant relatives. Income multiples were once used by all lenders to calculate the maximum loan available but in recent times has been phased out.

It still can be used as a guide however, generally the lower the loan to value the higher income multiple lenders will allow.

APR

Or Annual Percentage Rate is a rate which can allow you to compare mortgages like for like. It takes into account the initial incentive rate, associated fees, as well as the lenders standard variable rate for the full term of the mortgage.

Arrangement fee/Product Fee/Booking Fee

This is a fee charged by the lender for setting up a new mortgage. Often they can be added to the mortgage upon commencement and interest would be payable on this but some may need to be paid at point of application. The total to pay method of calculation establishes the best value mortgage over a period of time and takes into account any fees.

Arrears

Most people will pay their mortgage by direct debit however it can be paid at any time during the calendar month. If the payment is not made then the mortgage will fall into arrears, failure to clear arrears can force the lender to take action (see Repossession). There are government bodies and charities set up to assist those who are in financial difficulty such as the citizen’s advice bureau.

Base rate

Base rate can refer to the Bank of England Base Rate or a lenders own rate (standard variable rate or SVR) which it charges customers who are not in an incentive rate period. Most tracker mortgages track the bank of England base rate for a specific period of time. The bank of England meets on the first Thursday of every month to determine the base rate for the month ahead although individual lenders can change their own rate at any time if the deem necessary.

Bridging loan

Is a type of loan where fees and interest are generally a lot higher as the finance can be arranged very quickly. Bridging is popular with those buying property in need of major renovation and deemed unsuitable for mortgage purposes in the eyes of most lenders. The interest on a bridging loan is often charged on a monthly rather than annual basis as with most mortgages and is only for short periods. This is usually a higher risk strategy than standard mortgage loans given the short term nature and higher interest rates. We work with leading bridging lenders and brokers to ensure our clients get access to market leading and exclusive rates.

Most of Bridging finance are not regulated by the Financial Conduct Authority.

Building Society

A building society is run for the benefit of members rather than shareholders. Whereas banks can borrow money from other financial institutions, building societies are limited as to how much they can borrow and often use their savers money to lend to individuals and business making them more financially stable, something evidenced in the recent banking crisis.

Buildings Insurance

Is compulsory on all mortgages. The lender is entitled to charge a fee for not taking buildings insurance with them as they will need to cover themselves in the event of the policy not paying out. Our insurance brokers will ensure that savings made will more than compensate for the fee that the lender may charge. The cheapest insurance may not always be the most suitable as you need to ensure that the quality of cover is in place in the event of a claim. Generally mortgage clients will opt for contents insurance as part of their buildings insurance policy to maximise cover, our brokers will be happy to discuss the various levels of cover available.

Buy-to-let

Buy to Let or BTL mortgages are for those looking to purchase or remortgage a property to rent out or to let. These will often incur higher charges and fees than residential mortgages but are readily available on an interest only basis to enable the landlord to maximise profit from the rental income. Buy to let mortgages are generally quicker to arrange than residential as the emphasis is on the property rather than the individual. Generally the most competitive deals are available through brokers as this is specialist lending the lenders encourage clients to use brokers for consistency of applications.

Most forms of Buy-To-Let mortgage are not regulated by the Financial Conduct Authority.

Capital Gains Tax

Or CGT is only payable on property which is not your main residence but may be payable to landlords who buy and sell property. Speak to us for more information on Capital Gains planning.

Capped rate

Generally have not been popular over recent years due to interest rates being so low however if rates do start to increase their popularity may increase. Your rate may increase but will not go over the capped (or ceiling) rate irrespective of any interest rate increases the Bank of England may make.

In the same way that capped rates have a higher limit, a collared rate has a lower limit where the rate will not go below. Again, these are not very popular due to interest rates being static over the last few years.

Cash back

This can be by way of a Cash back mortgage, where the lender will give you a percentage of your mortgage balance in cash on completion. Or a Cash back incentive where the lender will offer a fixed sum of money as part of the mortgage deal. Both are popular with those buying properties as it can be a relief against fees which can be expensive.

CHAPS fee

Is the fee the lender charges you to send the money needed to buy the property to the solicitor you have chosen to represent you and the lender. This fee can be anywhere from £25-£50 and in many cases can be added to or deducted from your mortgage advance. There may be additional chaps payments needed to complete the purchase when your conveyancer sends the funds to the vendors solicitor so be sure to check this out with them first.

Conveyancing /Legal Fees

Is the legal process carried out by a solicitor to buy or remortgage a property. Searches or Disbursements will be payable on purchases and in some instances stamp duty land tax is payable so it is worth speaking to us to ensure you are aware of all of the costs involved.
When paying for a conveyancer or receiving quotes for the Conveyancing fee you must be aware that the conveyancer will need to be registered with a lender to enable them to release the funds to that solicitor. The solicitor will in most cases represent both the applicant and the lender though if your chosen conveyancer is not on that particular lenders panel you may be charged additional fees so that the lender can finds a suitable conveyancer to represent them. We work with many leading legal firms to ensure the work is carried out at competitive prices with excellent service, please ask us for details.

Completion

Many confuse completion with their mortgage coming to an end. Completion is actually when the mortgage begins or you complete on your purchase or remortgage application. In this instance completion can be compared to commencement.

Consent to Let

This is required from your current mortgage provider if you no longer wish to live in your current residential mortgaged property and are seeking to let it out. This is common where clients wish to move home and are unable to sell their current residence (see Let to buy).

Contents Insurance

This is often taken by clients in conjunction with the compulsory buildings insurance when applying for a mortgage. Contents covers possessions and furniture and with some policies cash and personal effects that are taken out of the property. Our specialist brokers can advise on the various types of cover available

CCJ

Or a County Court Judgement is recorded on your credit report and will be picked up on a credit search by all lenders. They must be declared when applying for any credit at the outset. They will be removed from your credit report after 6 years irrespective of them being settled or not. By settling a CCJ, you are increasing your chances of getting a mortgage but this may not guaranteed. As a CCJ is classified as adverse credit, the interest rates and fees may be higher than high street lenders.

Credit Repair mortgage

This is for those with missed payments or defaults on their credit reports. This kind of mortgage can be a stepping stone towards clean credit and residential high street rates. Due to the increased risk, these mortgages are normally more expensive in terms of fees and interest rates. (Also see Sub-prime or adverse credit mortgage).

Credit Report/Score

Is the major reason for a mortgage being approved or declined. It provides a profile of a client’s credit worthiness; it is used by all lenders as the foundation of their lending decision. The better credit has been maintained the more likely a mortgage is to be agreed on better terms.
Experian, Call Credit and Equifax are the major credit reference agencies used by banks and building societies. Prior to applying for a mortgage it is prudent to obtain a copy of your credit report so your broker can tailor the best deal for you. Credit reference agencies may have introductory offers to help clients obtain this information; speak to your broker for further details.

Current Account Mortgages

A mortgage where the current account or in some cases savings account is linked to the mortgage account to minimise interest charged. Funds paid into the current account will in some instances not earn interest but will offset the interest charged against the equivalent part of the mortgage to over pay into the capital to reduce the term. AS the interest is charged daily this can maximise salaries etc. which will be paid into your current account then drawn down over the course of that month. We have the ability to show these savings using sophisticated calculators so please enquire for more details

Deed of Postponement

Is a legal document that a mortgage lender will require from another lender who has a secured loan against a property. This ensures that your mortgage lender will remain first charge in the unlikely event of repossession that they will receive their money first, and the other secured loan lender will remain second charge.

Deeds Fee/Sealing fee/ Mortgage Account Fee/ Discharge Fee

Although this fee has various names from lender to lender it exists in the same format across all of them. Irrespective of whether you are in an Early Repayment charge (ERC) period the lender will charge a fee for formally ending the mortgage account. Although no interest is payable on this for the duration of the relationship with the lender it is added to your final redemption figure and does vary in size from lender to lender but will always be included within the Key Facts Illustration or mortgage offer.

Default

A default is where unpaid debt is passed on to a debt collection agency, who will in turn contact the individual regarding repayment of the debt. They will be removed from the credit report after 6 years irrespective whether they have been settled or not.
By settling a default, chances of getting a mortgage will improve but this may not guaranteed. As a default is classified as adverse credit, the interest rates and fees may be higher than high street lenders. Some defaults that been recorded in error can may be removed from the credit report (unlike CCJ’s), in the event of this contact our brokers who will be able to assist you.

Deposit

The amount of money a client has to contribute towards the purchase a property. Deposits can also take the form of equity where property is already owned. The larger deposit available the lower risk it is to the lender therefore more competitive terms is generally granted. Proof of this will be required on all applications. Gifted deposits from family and friends are acceptable however these are subject to letters, declarations, ID checks and proof of source of funds.

Discounted mortgage

Is a mortgage incentive rate whereby the lender gives you a discount or reduction off their standard variable rate for a specified period of time. For example, a 2 year discount of 1.5% would mean a variable rate which would give a discount of 1.5% from that lenders base rate. This deal will often come with an early repayment charge period and doesn’t guard against rate increases, which could happen, even the bank of England base rate didn’t increase. With this in mind these mortgages are not as popular as bank of England base rate trackers as they provide less security against future rate rises.

Early repayment charges (ERC)

Is a charge the lender will impose if you wish to redeem (or make overpayments, subject to terms and conditions) a mortgage whilst in an incentive period. This is normally a percentage of the mortgage balance on completion and is fully explained in Section 10 of the KFI or mortgage offer. These may be waived if looking to move home and retain the current mortgage deal (see Porting)

Endowment Mortgage

Popular in the 70’s and 80’s endowment polices were an investment vehicle which would eventually be used to repay an interest only mortgage. Many of these endowments were mis-sold leaving the client with a short fall to repay their mortgage at the end of the term. As a result they become widely unavailable and many decide to convert their mortgage to a capital and interest repayment mortgage.

Equity

This is the difference between the value of the property and the mortgage secured against it, these funds are usually used when moving to a new property (also see deposit)
If the value of the property is less than the mortgage secured against it, this in known as negative equity which means if a property is sold, the difference will have to be paid using the clients own resources.

Equity Release Mortgage

Also known as lifetime mortgages are aimed at the retired or those on low or no income but who own property with large amounts of equity tied up in it. These applicants don’t want to sell their home but want access to finance in the form of a lump sum or a monthly income. The money that is released is secured against the home and will be payable on the eventual sale of the property whenever this may occur.

Exchange of Contracts

Is when the transaction of buying a property becomes legal. Prior to exchange of contracts, gazumping or gazundering can occur and upon exchange of contracts, deposit monies must be paid by the buyer and buildings insurance must be in place even though the completion hasn’t yet occurred. In England and Wales exchange of contracts and completion often occur on the same day but in certain instances such as auctions, the buyer must exchange contracts upon agreement to buy the property.
In the instance of failing to complete on the purchase once exchange has taken place, deposit monies would be lost. The biggest reason for this occurring is the inability to obtain finance after exchanging contracts, placing even more importance to using a specialist mortgage broker in the first instance.

Fixed-rate mortgage

The lender will fix the interest rate for a specified period of time where clients will know exactly how much they are paying each month, making budgeting of outgoings a lot easier. The interest rate cannot change whilst in the fixed rate period, regardless of any interest rate changes the Bank of England may impose.

Freehold

A freehold property is where the client owns both the land and the building, in some cases a lease on land may have been granted (see Leasehold) however when this lease expires the building will revert back to the freeholder.
When the property overhangs another freehold, for example a shared access way where there is property above it, this is known as Flying Freehold.

Flexible mortgage

Most residential mortgages from high street lenders are flexible. Flexible features include the ability to make overpayments and in some cases underpay and take payment holidays. Daily Interest is a feature of flexible mortgages and can help the applicants to minimise interest charges and repay the debt more quickly.

Further advance

This is where additional funds are borrowed from the existing lender but do not change the deal currently held. This will often be done within an incentive rate period to allow the client to borrow additional funds without incurring an early repayment charge. You should always speak to us first as remortgage options may be more financially beneficial so it is worth checking all options prior to applying for a further advance.

Gazumping/Gazundering

Is when a vendor accepts a higher offer on a property from a new buyer after previously agreeing a price with another prior to exchange of contracts. Often the legal work and mortgage application can take some time in between agreeing to a purchase and actually exchanging contracts so it is essential you employ mortgage brokers and conveyancer who can get the purchase to exchange of contracts as quickly as possible.
Gazundering is similar to gazumping but is where the buyer reduces their offer prior to exchange of contracts in the hope that the vendor will decide the sale is too far progressed to deem it justifiable in remarketing or looking a new buyer.

Ground rent

Is an annual charge payable to a freeholder from a leaseholder under the terms of the lease. This can take many forms and is payable on leasehold properties which include the vast majority of flats in England and Wales.

Guarantor

Is a third party who guarantees to meet the monthly mortgage repayment if the client is unable to. This is more common with first time buyers who expect their incomes to increase in the near future, for example newly graduated students.

Help to Buy

This is a government backed scheme designed to help those buy property with only a 5% deposit. Since the credit crunch lenders have generally asked for larger deposits from applicants which many simply didn’t have. By indemnifying lenders the government has insisted that they lend to those with only 5% and this has resulted in many more mortgage applications and increased house sales. The help to buy scheme is currently available to anyone who will not have more than one property on the commencement of the help to buy mortgage
Help to Buy Phase one is available to those buying new build properties and involves an equity loan from the government in addition to a mortgage and the applicants own deposit. The loan would be interest free for the first 5 years although the applicant would be free to remortgage the property within this period to repay all or part of the loan to avoid interest being charged.
Help to buy phase 2 is available on second hand properties which are not new build. This is a lot simpler as it doesn’t include an equity loan and the applicant only needs to apply for a 95% mortgage and provide their own 5% deposit. The mortgage can be redeemed at any point like a regular mortgage subject to exit penalties.

Higher lending charge (HLC)

This is an indemnity policy taken out by the lender in some instances to protect them against the applicant defaulting on the mortgage. It is only charged where loan to value exceeds certain levels and will be shown in section 8 of the KFI or mortgage offer

Incentive Period

Sometimes referred to as a tie-in period, is the length of time a specified interest rate is applied. For example, a 2 year fixed rate guarantees the rate to be fixed for 2 years after which the rate would revert to the lenders Standard Variable Rate. Clients are usually tied-in for the length of the incentive period, meaning if they were to redeem the mortgage it would be subject to an Early Repayment Charge (see ERC).

Interest only mortgage

Are only available on residential mortgages and in most cases require a repayment vehicle in place to cover the repayment of the capital. Unlike capital and interest repayment mortgages where the loan is paid back over a term interest only mortgages have a fixed amount of interest applied to the loan depending on the amount borrowed and the rate charged. This isn’t a fixed rate but because the loan isn’t actually being repaid the interest rate will remain constant until either the lender changes the rate or the loan amount changes.

Interest Only mortgages should only be taken where a clear repayment strategy is in place, and not to keep the monthly outgoings more affordable. They are very popular with landlords as the interest charged on a mortgage can be used as a tax break against any income earned through the rental of a property. As capital cannot be offset in such a way many landlords chose to save up the capital and repay it at a later date or even from the eventual sale of that property. Please enquire with us if you would like more information on portfolio planning and a fact sheet on BTL & Taxation.

Most forms of Buy-To-Let mortgage are not regulated by the Financial Conduct Authority.

Interest Rate

The interest rate is the charge made by the bank for lending money. It can be charged on a daily, monthly or annual basis. If for example a borrower took a mortgage for £100,000 on a rate of 5% annually this would mean the borrower had to pay the lender £5,000 per annum in interest. Lower interest rates will make mortgage payments cheaper so are very popular but only the most credit worthy applicants can benefit die to the reduced risk being taken by the lenders or the higher levels of security being offered by the borrower.

Joint tenancy

Is where the ownership of a property passes to the surviving owner on the death of the other joint owner and in doing so avoiding probate or any instructions set out in the will of the deceased.

Jointly and severally liability

Joint applicants on a mortgage, even should the relationship break down or one of the owners leaves the property both remain jointly and severally liable for the repayments. Even in the event of death the debt would pass to the surviving applicant and would need to be maintained under the original conditions of the loan.

Key Facts Illustration

This is a quotation for a mortgage set out in a standardised form to enable borrowers to compare mortgages on a like for like basis. Although the Key Facts Illustration or KFI documents the actual features of the mortgage it doesn’t constitute an actual mortgage offer which will come once all the relevant checks and referencing has taken place and been deemed acceptable by the lender.

The KFI will show all fees and charges made for the arrangement of that mortgage and will show the impact changing interest rates will have on the payments. Your broker will go through the KFI document with you prior to applying for the mortgage and will explain each section in detail and any questions you have can be raised at this time.

Land registry

Is the record where property ownership is maintained. A land registry search will be carried out by lenders and conveyancer to establish ownership prior to a mortgage transaction being completed.

Landlord insurance

When a property is being rented out the owner or landlord must have a specific type of insurance to cover the building. This is different from regular buildings insurance so it is essential to get specialist advice in setting up this type of cover as policies set up in correctly could be invalid meaning non pay-out in the event of a claim and wasted premiums from the policy owner.

Leasehold

A leasehold property in simple terms is a property that the buyer is purchasing for an agreed period of time which is known as the length of the lease. Once the lease expires the ownership of the building will pass back to the freeholder. This can result in the value of a leasehold property reducing in value as the length of time remaining in the lease approaches its end. Leases can be extended if agreed by the freeholder who owns the land that the building is built upon although this will often come at a cost to the leaseholder seeking the extension. Lenders will often have minimum length remaining on lease requirements prior to lending which can affect the resale value of leasehold properties so please seek guidance from your mortgage broker on this issue. The leaseholder may have the right to extend the lease under certain circumstances. 

Let to Buy (LTB)

Is when a client is seeking to let their current residential mortgaged property in order to buy a new home. A client may look to transfer their current property to a Buy to Let or seek Consent to let from their current lender. Let to Buy will involve maintaining two mortgages simultaneously, and involves specialist mortgage advice as some lenders will not allow this. Let to Buy is not to be confused with a Buy to let mortgages.

LIBOR

The LIBOR or London Inter-Bank Offered Rate is the rate at which banks lend to each other and is in certain mortgages linked to an incentive rate offered by a lender or linked to their own standard variable rate. This will be documented in your KFI given to you by the lender prior to application.

Life insurance

Life Insurance is a policy which pays out an agreed amount of cash on death of an individual within certain timescales. Often polices are set up to cover mortgages and other debt but can also be arranged to cover potential loss of earnings that an individual may have to a business or family. Although not compulsory, any applicant arranging a mortgage through Baltic Mortgage Solutions will be required to sign a disclaimer form if they do not arrange adequate protection to cover the mortgage in the event of death.

Lifetime mortgages

See Equity release

Loan-to-value (LTV)

Is a ratio which is calculated using the loan amount required against the value of the property. Due to the higher risk involved with higher loan to value mortgages the interest and fees applicable are usually higher. To qualify for lower interest rates, applicants generally have to reduce their loan to value in multiples of 5%. Your broker will explain the how a varying range of deposits will impact you repayments.

Mortgage agreement in principle (DIP, AIP, and Mortgage Promise)

Is a document your proposed lender will produce based on affordability and credit score subject to the application being fully underwritten and a satisfactory survey being carried out and which does not constitute a mortgage offer.

Mortgage deed

Is a contract put in the place on completion of a mortgage; it enables the lender legal rights to the property in the unlikely event of repossession.

Mortgage term

Is the length of term of a mortgage over which interest is paid. Ideally the term of the mortgage should end before the proposed retirement age of the applicants however, this is not deemed necessary provided adequate pension provisions are in place or if the mortgage is Buy to Let.

Negative equity

See “Equity”.

Offset mortgage

See Current Account Mortgage (CAM)

Overpayment

This is where a client pays a lump sum into their mortgage account to reduce the balance owed and the amount of interest charged moving forward. Overpaying can be beneficial as it can reduce the amount of interest charged each month or reduce the number of years remaining on the overall mortgage term in capital and interest repayment mortgages.

Overpayments are a feature of flexible mortgages but are not always allowed with every lender and overpayments within incentive periods may be restricted so contact your broker for guidance.

Porting/Portability

When a client wishes to move home but retain the terms and conditions of their current mortgage deal, they may be able to port. This is subject to lenders agreement that may treat this as a new mortgage application therefore is not always approved.

Payment holiday

This is a feature of a flexible mortgage and allows the borrower to take up to 3 months in some instances payment break where they make no mortgage repayments at all. The interest charged during the holiday is added to the capital and often the mortgage repayment will increase as a result. Although not suggested as a means of saving money they have been very popular in times of increased expenditure.

Rebuild cost

Sometimes referred to as the reinstatement value, is a figure an insurance company will use to determine the full cost to rebuild the property in the event of a disaster. This figure will be established by a chartered surveyor when the property is valued.

Redemption

Redemption is the term used for repaying or redeeming your mortgage. Sometimes Early Repayment charges are referred to as early redemption charges. Some lenders will charge for redemption of a mortgage even if no early repayments charges apply see Deeds Fee.

Remortgage

Is when a client wishes to redeem the mortgage against their current property and take out a new one with a different lender. Taking out a new deal with the current lender may be the best option available however our brokers will compare this and advise on the best option.
The client may wish to release equity from their current property for various purposes (subject to lender agreement), seek a better mortgage deal or a different type of mortgage entirely.
When the incentive period of a mortgage product expires it may be cost-effective to seek a more competitive deal elsewhere, this is likely to occur many times during the term of a mortgage and is knows as rate hopping. Our brokers will be able to find the most competitive mortgage deals across the whole of the marker to ensure clients will always benefit from the most cost-saving products.

Repayment Mortgage/ Capital and Interest Repayment

This mortgage is based on paying a combination of capital and interest each month so that the original debt is repaid within a period of time known as the mortgage term. These are the most common and safest way of guaranteeing the repayment of a mortgage debt and can be taken over a term as long as 40 years with certain lenders.

Repayment Vehicle

This is the investment required to repay an interest only mortgage. This can be through an investment policy such as an endowment, ISA or Pension for example or could be the sale of the property being mortgaged or other owned asset or even a future inheritance.

Repossession

If a client is unable to keep up with the monthly repayments of a mortgage, and the lender has exhausted all other options, they are legally entitled to repossess the property. This means that the clients will be vacated from the property and the lender will become the owners. The lender will then look to sell it to recoup the mortgage against it. Clients should make the broker aware if you have ever had any trouble with maintaining mortgage payments or had a property repossessed in the past.

Right to buy

Is the process by which a council tenant buys their home from the local authority and often requires specialist advice. Our brokers have local knowledge and have been responsible for many of these types of mortgages so please contact us for more details if this applies to you.

Sealing fee

See Deeds Fee.

Searches

When buying a property the purchaser’s conveyancer is required to carry out several searches which are often referred to as disbursements. These are 3rd party searches so will need to be paid for in advance in most cases and are non-refundable in the event of the purchase not proceeding. It is often wise to ensure that you can obtain the finance prior to paying for searches to avoid losing money if the purchase does not proceed for any reason.

Secured loan/ Second Mortgage/2nd Charge Loan

This is a loan which is offered by a lender who in the event of repossession would have to waive their rights to the sales proceeds until the 1st charge had been satisfied. As this represents an increased risk to this lender in the event of repossessions they are often charged at higher rates of interest than 1st charge mortgages. These types of mortgages are often popular with those with adverse credit or who are within an early repayment charge period with their current lender. See Deed of postponement

Self-build mortgages

Are mortgages for those planning to build their own home or to finance the building of their own home using skilled professionals. The money is released in stages as the property is being built to allow for the next phase to be finished. Self-build are specialist mortgages so consulting your broker is essential if this is something you are planning to explore further.

Self-certified

Self-Certified mortgages were very popular with the self-employed as the applicant effectively told the lender what they earned without actually proving it. These types of mortgages are not available anymore in light of the credit crunch meaning all mortgage applications are now subject to full income and affordability evidence being provided.

Shared ownership

This enables a client to buy a share in a property that they would otherwise not be able to afford. For example, the client would buy 50% of a property and a housing association would own the other 50% and charge rent for their share. The client then has the option to buy the remaining share in the future.

Stamp duty

Is a tax levied upon the purchase of a property which is determined by the purchase price irrespective of any discounts involved. Any properties worth £125,001 to £250,000 will have a stamp duty of 1%.
Properties worth between £250,001 and £500,000 will have a stamp duty of 3%. Properties worth between £500,001 and £1,000,000 will have a stamp duty of 4%. Properties worth between £1,000,001 and £2,000,000 will have a stamp duty of 5% and any property over £2,000,000 will be charged 7%.
Any properties under £125,000 are exempt from stamp duty. It is payable to the conveyancer along with the balance of their costs upon completion of the purchase, the purchase will not be registered at the Land Registry until this has been paid meaning clients would be unable to sell or remortgage the property until stamp duty has been paid.

Standard Variable Rate - SVR

See Base Rate.

Sub-prime/non-conforming

See Credit Repair Mortgages.

Survey

For mortgage purposes a basic mortgage valuation will be carried out by a suitably qualified surveyor who is approved by the lender. This report known as a level 1 or basic survey is for the benefit of the lender and is generally paid for by the borrower and is the cheapest form of survey available or in some instances the lender will offer a free basic mortgage survey to incentivise their mortgages and make them more appealing to borrowers looking to keep their initial outlay costs to a minimum.
Many remortgage deals will come with incentives such as free basic survey and free legals fees to attract them to customers looking to remortgage their home to find a more competitive rate than the lenders SVR.
A level 2 or Home buyers survey is more in depth than a basic mortgage valuation and is also more expensive. Although this is carried out by a chartered surveyor who may well also carry out the mortgage valuation this report is a much more in depth document where the surveyor has gone into much more detail and is likely to flag up any issues which although wouldn’t affect resale value may need to be given extra attention by the vendor prior to exchange of contracts. As the purchase of a property is a large investment we would always encourage the buyer of a property to get an in-depth survey carried out to ensure value for money on any purchase.
The level 3 or Full Structural Survey is the most in depth form of survey available and is also the most expensive survey but this is the only survey which provides the borrower with the option of legal recourse should the surveyor fail to publish anything which later turned out to be an issue.
In some instances when a mortgage survey is carried out the survey will then advise the lender that a full structural report is required and the borrower will have to pay for this if they want to continue with the mortgage application. Many lenders are now asking for damp and timber reports in the wake of national flooding so please speak to us if you are buying a property and work to work out the best value for money surveyors and types of report available as we use all the leading firms and can negotiate discounted prices.

Telegraphic transfer fee

See CHAPS fee.

Tenants in common

In contrast to joint tenants, tenants in common have a share of the property which can be equal or can be determined by one party providing a larger proportion of the deposit monies for example so would have this interest protected in the event of the resale of the property. This is common with friends who may buy property together or business partners who are not financially connected for any reason other than this purchase.

Title Deeds

Is the legal document which shows who own the property and the land on which it is built.

Total to Pay

This is a method of calculation by which all fees and associated monthly payments are added together to find the best value mortgage deal over any particular time. Sometimes the lowest interest rates often come with large arrangement fees which can cancel out the benefit of the lower rate of interest being charged. When borrowing smaller amounts TTP can ascertain if it is better value taking a deal with the lowest rate or the deal with the lowest fees.

Tracker mortgage

Is a mortgage product designed to track the Bank of England’s base rate or in some instances LIBOR. The interest rate is a fixed percentage above or below this rate and will increase or decrease when that rate changes. Most lenders’ Standard Variable Rate will also track the Bank of England’s base rate (see LIBOR and Base Rate).

Transfer of equity/Change of Parties

Is the legal process of adding or removing an applicant from a mortgage and the title deeds of the property. This can be done through the existing mortgage lender or by arranging a new mortgage with a new lender but the legal process must be carried out by a suitably qualified conveyancer. To ensure you get the best value for money when carrying out this often delicate process you should seek specialist guidance through your mortgage broker.