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Glossary

A

  • Adverse Credit Borrower: A borrower with a poor credit history, such as missed payments or defaults, which can lead to higher interest rates or the need for specialized lenders.

  • Agreement in Principle (AIP): See "Mortgage in Principle."

B

  • Bank: A financial institution licensed to accept deposits and provide loans, including mortgages. Examples of high street banks include Lloyds, Barclays, and NatWest.

  • Bank of England Base Rate: The official interest rate set by the Bank of England, influencing mortgage rates across the UK.

  • Booking Fee: A non-refundable fee for reserving a mortgage product.

  • Bridging Finance: A short-term loan used to cover the financial gap between purchasing a new property and selling an existing one.

  • Bridging Loan: Another term for "Bridging Finance."

  • Building Insurance: Insurance that covers damage to a property’s structure (e.g., walls, roof) from risks like fire or flooding, often required by mortgage lenders.

  • Building Society: A financial institution owned by its members, offering savings accounts and mortgages. Examples include Nationwide and Yorkshire Building Society.

  • Buy-to-Let: A property purchased to rent out to tenants. Typically requires a specialized mortgage with higher interest rates and deposit requirements.

  • Buy-to-Let Mortgage: A mortgage for purchasing property to rent out. Lenders may require higher deposits and charge higher interest rates.

C

  • Chain: A series of linked property transactions where the sale of one property is dependent on the purchase of another.

  • Chain-Free: A transaction where there is no dependency on other property sales, allowing for a quicker and simpler process.

  • Completion: The final stage in a property transaction when funds are transferred, and ownership is officially transferred to the buyer.

  • Completion Statement: A financial breakdown of all transactions during a property purchase, provided by solicitors.

  • Conveyancer: A legal professional who handles the transfer of property ownership, including managing contracts and ensuring correct distribution of funds.

  • Contents Insurance: Covers personal belongings inside a property against theft, loss, or damage.

  • Critical Illness Cover: A policy that provides a lump sum payment if the policyholder is diagnosed with a critical illness during the mortgage term.

D

  • Detached House: A standalone house with no shared walls.

  • Discounted Variable Rate: A rate that is discounted from the lender's standard variable rate for a certain period.

E

  • Exchange of Contracts: The legal point in a property transaction when both the buyer and seller are committed to the sale, usually accompanied by a deposit.

  • Exit Fee: A fee charged when closing or transferring a mortgage.

F

  • Financial Advisor: A professional who provides advice on financial matters, including mortgages, savings, and investments.

  • Financial Conduct Authority (FCA): The UK’s regulator ensuring that financial services, including lenders, operate fairly and transparently.

  • Financial Health Check: An assessment of an individual’s overall financial situation, including income, expenses, savings, and debt.

  • First-Time Buyer (FTB): A person purchasing their first property. These buyers often qualify for special schemes, lower fees, or exemptions from Stamp Duty.

  • Flat Conversion: A property (often an older house) divided into separate flats.

  • Flexible Mortgage: A mortgage allowing for overpayments, underpayments, or payment holidays under agreed conditions.

  • Freehold: Full ownership of both the property and the land it stands on.

  • Fixed-Rate Mortgage: A mortgage where the interest rate remains constant for a set period, providing predictable monthly payments.

G

  • Gazumping: When a seller accepts a higher offer after initially agreeing to sell to another buyer.

  • Guarantor: A person who agrees to pay the mortgage if the borrower fails to do so. Often used by young buyers or those with limited credit history.

  • Government-Backed Schemes: See specific schemes like "Help to Buy" or "Shared Ownership."

H

  • Help to Buy: A government scheme offering equity loans to first-time buyers purchasing new-build homes, with a 5% deposit and a government loan up to 40% in London or 20% elsewhere.

  • High Street Lender: Major financial institutions offering a wide range of financial products, including mortgages. Examples include HSBC, Santander, and Barclays.

  • HomeBuyer Report: A basic survey focused on significant issues in a property, typically used for newer homes.

I

  • Income Protection Insurance: Insurance that provides a portion of your income if you're unable to work due to illness or injury, ensuring that mortgage payments can continue.

  • Interest-Only Mortgage: A mortgage where only the interest is paid each month, with the full loan amount due at the end of the term.

L

  • Land Registry: The government department that records property ownership in England and Wales.

  • Leasehold: Ownership of a property for a set period, with the land owned by a freeholder.

M

  • Maisonette: A self-contained apartment, often spanning two floors, with its own entrance.

  • Market Valuation: An assessment of a property's market value based on condition, location, and current market trends.

  • Mortgage Broker: A professional who acts as an intermediary between borrowers and lenders, helping clients find suitable mortgage deals.

  • Mortgage Guarantee Scheme: A scheme designed to help buyers secure mortgages with just a 5% deposit, with the government guaranteeing part of the loan.

  • Mortgage in Principle (MIP): A statement from a lender indicating how much they are likely to lend, based on an initial credit and affordability check.

  • Mortgage Indemnity Insurance (MII): Insurance that protects the lender if the borrower defaults and the property’s value is insufficient to cover the loan.

  • Moving Home: The process of selling your current property and purchasing a new one, which may involve navigating property chains or bridging finance.

N

  • Negative Equity: When the outstanding mortgage is greater than the property's current market value.

  • Non-High Street Lender: Specialized or alternative lenders that are not major banks or building societies. These may include online lenders or those focusing on specific borrower types.

P

  • Principal: The amount originally borrowed in a mortgage, excluding interest.

  • Product Transfer: Moving to a new mortgage deal with the same lender, typically without the need for a full remortgage process.

R

  • Remortgage: The process of switching your mortgage to a new lender or a new deal with the same lender, often to obtain a better rate or release equity.

  • Repayment Mortgage: A mortgage where monthly payments cover both the loan principal and the interest, gradually reducing the debt.

  • Right to Buy: A program enabling tenants in council or housing association properties to purchase their homes at a discounted price.

S

  • Semi-Detached House: A house sharing one wall with another property.

  • Shared Ownership: A scheme that allows buyers to purchase a share of a property (typically 25%-75%) and pay rent on the remaining portion, often managed by housing associations.

  • Stamp Duty Exemptions: Conditions under which no stamp duty is payable, such as for first-time buyers or homes under a certain price.

  • Stamp Duty Land Tax (SDLT): A tax on property purchases above certain thresholds; exemptions or reduced rates may apply for first-time buyers or low-value homes.

  • Standard Variable Rate (SVR): The lender's default rate, which can change at their discretion.

  • Stress Test: A check to see if a borrower can afford the mortgage if interest rates increase or if their financial situation changes.

  • Studio Flat: A small apartment with combined living, sleeping, and kitchen areas.

  • Sub-Prime Mortgage: A mortgage for borrowers with poor credit, often at higher interest rates.

T

  • Terraced House: A house in a row, sharing walls with neighbors on both sides.

  • Tracker Mortgage: A variable-rate mortgage that follows the Bank of England's base rate, adjusting as the base rate changes.

U

  • Underwriting: The process where lenders assess the financial risk of granting a mortgage, examining factors like credit history and affordability.

V

  • Valuation Fee: A fee paid to assess the value of a property, ensuring it matches the mortgage amount.

  • Variable Rate: A variable rate refers to an interest rate on a loan or mortgage that can fluctuate over time based on changes in a benchmark interest rate, such as the Bank of England base rate or another reference rate. Unlike a fixed-rate mortgage, where the interest rate remains constant throughout the loan term, a variable rate mortgage may cause monthly payments to increase or decrease depending on how the benchmark rate moves.

© 2023-2025 JP Mortgage is a trading company under JP Financial Group Limited (16017945), All rights reserved. 

Registered office within the London Financial District, also known as the Square Mile. Address:  71-75 Shelton Street, Convent Garden, London, WC2H 9JQ . JP Mortgage acts as an intermediary and is not a lender. The FCA does not regulate some investment and commercial mortgage contracts. 

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​DISCLAIMER: Your home may be repossessed if  you do not keep up repayments on your mortgage or any debts secured on it. Protection policies and insurance may be subject to exclusions.

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