Time for some jargon-busters!
If you’ve never owned a home before, it’s likely there are some words and phrases that are completely alien to you.
We’re here to change that. After all, the more you know, the easier the house-buying journey will be.
Here’s our glossary of property terms.
Agreement in principle
A is for…
Having a mortgage agreement in principle allows you to show proof of how much a lender will lend you. It makes you look like a more prepared, serious buyer rather than a timewaster.
Plus, it will help you narrow down your property search – only viewing houses you can afford.
Borrowing more from your mortgage lender than the initial loan.
You’ll be charged by your mortgage lender for the arrangement of your loan.
How much money the seller wants for their property.
Buying a property at auction involves it being sold to the highest bidder.
You can bag a bargain, but these are often properties that need a level of repairs doing to them. So, always get a property survey so you know exactly what you’re paying for.
You need many types of insurance when buying a home. One of these is buildings, which covers the physical structure of the property itself and its permanent fixtures.
Ideally, take this out in advance – as you often become responsible for the property even before you’ve moved in. In many cases, it’s a requirement of your mortgage lender to take it out.
A building survey is the most thorough type of property survey, often governed by the RICS. It’s the most expensive, but is highly extensive.
A property chain is where the sale of one home depends on another e.g. a hopeful buyer has to sell their home before they can buy the next one.
First time buyers should use their chain-free status to their advantage! This often makes them more attractive to sellers, giving a lower bid a better chance of being successful.
When the property legally changes from one owner to another.
Conditions of sale
Any terms agreed by buyer and seller and their solicitors. This could involve fixtures and fittings, for example.
Insurance that covers what’s inside your property e.g. furniture and possessions.
A contract race is when two parties are interested in a property, and the seller sells to the one who exchanges contracts first.
The conveyancing process involves the legal transaction of the property, transferring it from one owner to another, carried out by a solicitor or conveyancer.
Documents proving legal ownership of a property.
Money paid to the seller to secure the property.
Early version of the contract that is then looked over by solicitors.
Energy performance certificate
The EPC shows the energy efficiency of a property – graded from A (best) to G (worst).
The difference between the value of your home and the amount you owe from your mortgage.
Exchange of contracts
The point when contracts are signed and both parties are legally bound to the sale.
Fixed rate mortgage
Mortgage rates that are fixed for a set period of time.
Fixtures & fittings
Fixtures and fittings are non-structural items that the seller can take or leave.
A freehold property is one where both the building and the land it sits on are owned outright.
Gazumping is when another interested buyer places a higher bid which is then accepted by the seller.
Where the buyer has their offer accepted and then reduces it before contracts are exchanged.
An annual fee paid to the freeholder if you own a leasehold property. This covers maintenance, for example.
Another party responsible for your mortgage should you become unable to repay your loan.
Another type of property survey that is often the most popular. It looks at the property itself and can include a valuation.
Home Buyers’ Protection Insurance
Home Buyers’ Protection Insurance offers a safety net should the house purchase fall through, making sure buyers don’t lose all their money for survey costs etc.
Home condition survey
One of the more extensive types of property survey.
House price index
The house price index looks at property trends in the UK.
Where your monthly repayments refer only to interest, not the initial loan itself.
Co-ownership of a property.
Records of property and land ownership in England and Wales.
A leasehold property is one that’s owned via a lease agreement for a set period of time. Ultimately, the land and building are owned by a freeholder, who the leaseholder must pay ground rent to.
The leasehold scandal has occurred because some leaseholders have found themselves trapped by their lease. Ground rent payments have risen, while the property itself can become ‘unmortgageable’.
Long-term loan used to help buy a property.
A report carried out by a mortgage lender to determine how much a hopeful buyer will be loaned for a specific property. This is all about the security of their loan – it’s not the same as a survey.
When the property falls below the value of the loan.
Stamp duty is a tax paid when purchasing a property. First time buyers don’t pay anything on a property under £125,001.
Standard variable rate mortgage
A mortgage with interest rates that fluctuate
A report on the condition of a property. There are many different types, including:
- Condition report
- HomeBuyers’ report
- Building survey
- Home condition survey
- New-build snagging report
Whether a property is freehold or leasehold.
Another term for seller.
Feel like you have a better understanding of the property world? Now it’s time to begin your journey to becoming a homeowner! As part of our campaign to lower the age of first time buyers, we’ve made it our mission to guide you every step of the way. We’re here to help first time buyers!
From house viewings to completion day, we’ve got everything you need for a successful move. Find our first time buyer advice here in one place!