Glossary
Making sense of the jargon

Advance
The mortgage loan.

Balance
The loan outstanding, after taking payments (credits) and any debits into account.

Buildings insurance
Needed from exchange of contracts to cover the house you are buying against damage.

Building survey
A full inspection of the property by a surveyor on behalf of and paid for by the buyer.

Capital
The amount you owe, excluding costs and interest outstanding.

Collateral/security
The property which the lender can sell to repay the loan if the borrower does not keep up the mortgage payments.

Completion
The final legal transfer of ownership of the property – when the property becomes yours.

The start of the mortgage (also known as ‘drawdown’).

Contents insurance
Cover for all your personal belongings against theft, damage etc.

Contract/contract race
A contract is the written agreement between the seller and the buyer of a property to transfer ownership. A contract race is where the seller has received two or more offers on the property and will sell to whoever is ready to exchange contracts first.

Deposit
Two deposits may be payable by the buyer:
A reservation charge payable as sign of good faith to the seller when they initially agree to buy/sell to each other.

The deposit paid towards the total price of the property, payable at exchange of contracts.

Drawdown date/drawdown deadline
Drawdown is the date when the mortgage starts. The drawdown deadline is the date that applies to some mortgages, by which the mortgage must start.

Exchange of contracts
In England and Wales (not Scotland), the point when both buyer and seller are legally bound to the transaction and at which point the buyer should take out buildings insurance on the property.

Freehold
Outright ownership of the property and the land on which it stands.

Gazumping
When the seller accepts an offer in England and Wales but then, before contracts are exchanged, accepts another, higher offer from someone else.

Ground rent
An annual charge payable by leaseholders to the freeholder.

Guarantor
A person who promises they will pay the borrower’s debt, usually if the borrower fails to.

Home-buyer’s survey
A surveyor’s report on a property which is less extensive than a building survey and is paid for by the purchaser.

Home Information Packs (HIPs)
All three-bedroom homes or larger on the market from 10 September 2007 require a home information pack (HIP), containing title deeds, land searches and an energy performance certificate (EPC). These sellers' packs apply to approximately 20 per cent of the UK property market.

Land Registry Certificate
Provides details of the property, including a plan and, if the property is leasehold, a copy of the lease.

Land Registry fee
A fee paid to the Land Registry to register ownership of the property.

Leasehold
The right to possession, but not ownership, of a property for an agreed period of time. Ultimate ownership remains with the freeholder.

Lender
The bank, building society or financial institution where you have your mortgage.

Lessee/lessor
The lessee is the person to whom a lease is granted – the tenant. The lessor is the person who grants a lease – the landlord.

Life assurance
An insurance policy that pays a lump sum on death. Often taken out with a mortgage to provide money for the loan to be repaid if the borrower dies during the term.

Local authority search
Questions your solicitor/conveyancer will ask the local authority regarding plans for new road building, planning permission for any building work previously carried out, connection to the mains sewer, etc.

Mortgage
Has a specific meaning in law but has come to mean a loan with property as security.

Mortgagee/mortgagor
The mortgagee is the lender who lends the money in return for the mortgage granted by the borrower, who is therefore the mortgagor.

NHBC guarantee
A 10-year guarantee, provided by the National House Building Council, that the builder will put right serious defects affecting a newly built property. Zurich Municipal and Premier Guarantee both offer similar guarantees.

Specialist report
A report required by the lender into particular defects discovered at the property to be purchased, such as serious structural movement or dry rot, before they will agree the mortgage.

Stamp duty
A government tax payable on exchange of contracts on properties over certain values.

Subject to contract
The phrase used before exchange of contracts which allows either party to withdraw without incurring a penalty.

Surveyor/valuer
The person qualified by the Royal Institution of Chartered Surveyors to carry out valuations and surveys of properties.

Title deeds/title documents
The legal documents which provide proof of ownership of a property.

Transfer deeds
A form which provides details of the transfer of ownership to be entered on the Land Registry register.

Valuation
An inspection of the property to ascertain its acceptability to the lender as security against the mortgage loan, for which the borrower may have to pay.

Vendor
The person(s) you are buying your new home from.

If you would like to find out more, please email or contact us for further information.

This article is for your general information and use only and is not intended to address your particular requirements. Although endeavours have been made to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No individual or company should act upon such information without appropriate professional advice after a thorough examination of their particular situation. Your home may be repossessed if you do not keep up repayments on your mortgage.

Article date: 09.07