Glossary Of Terms


Agency sales fee

A fee to be paid to the estate agent for helping you to sell your home. There may be an initial fee followed by a final payment, often a percentage of the value of your home, paid to an estate agent upon completion.

Auction

Selling a property by bid where the house is sold to the highest bidder.

Annual percentage rate (APR)

The total cost of a loan, including all costs, interest charges and arrangement fees shown as a percentage rate.

Agreement in principle

A basic assessment by a mortgage lender to show that they will lend to you based on some information you have given. It can be used as evidence for a seller that you can actually get a mortgage to cover the purchase price of the house they are selling.

Architects certificate

Not all new properties are guaranteed by NHBC and in this case an Architects Certificate would be provided instead.

Appraisal

An estimate of the value of a property by an independent agent who knows local property values. It would be common to arrange 2-3 market appraisals before instructing a selling agent.

Bank of England base rate

The rate of interest set by the Bank of England which is generally followed by all lenders.

Bankers draft

Similar to a cheque but is guaranteed by your bank and therefore seen as more reliable.

Bridging loan

A short term, temporary bank loan which may be required when the completion date of the new house you are buying occurs before the completion date of the house you are selling.

Building survey (formerly full structural survey)

A detailed survey of a property conducted by a chartered surveyor. It is more detailed than a normal house survey and therefore also more costly. It would normally only be requested for very old houses or those not in a good state of repair.

Buy to let mortgage

A mortgage designed for people buying a property to let out. It would normally require a larger deposit than a residential mortgage.

Capped mortgage

This is similar to a variable rate mortgage where the interest rate can fluctuate during the term of the mortgage. However, with a capped mortgage there is a maximum rate over which payments can not rise.

CCJ (County Court Judgement)

A court order that may be registered against you if you fail to pay for something. It sets out how much is owed and when it must be paid by. Having a CCJ registered against you will affect your credit rating and could impact your ability to get a mortgage or other loan.

Completion

The final point in the home buying process when all transactions are completed and the ownership is legally transferred to the buyer.

Contract

A legal agreement between the seller and buyer of a property whereby both parties are agreeing to complete the transaction and abide by the terms of the contract.

Conveyancing

The legal work involved in the purchase and sale of a property, completed by an appointed solicitor.

Co-ownership Scheme

A home buying method available in Northern Ireland where you buy an agreed portion of the property via a residential mortgage and rent a portion from Co-Ownership Housing. It can be a good option for First Time Buyers who want to get their foot on the property ladder.

Covenants

These are the rules and regulations relating to a property set out in the title deeds or lease. These may have been placed on the property by a previous owner of the land stating that something may not be done eg no future building work to be carried out on the property.

Damp proof course

A type of waterproofing applied to walls to prevent moisture seeping through the walls into interior spaces.

Deeds

Legal documents showing the chain of ownership of a property. These are held by the mortgage lender or the property owner if there is no mortgage held on the property.

Deposit

A sum of money (usually a minimum of 5%) paid by the buyer on exchange of contracts.

Dilapidations

Any disrepair or damage to a rented property.

Disbursements

Things like stamp duty, land registry and search fees paid by the buyers solicitor on their behalf.

Discharge

Paying off a mortgage.

Draft Contract

First, unconfirmed version of the contract.

Early repayment charge (ERC)

A charge levied by a lender when a borrower pays off a mortgage in advance of the agreed term of the mortgage or within a set period.

Easement

The right to use someone else's property, such as a shared pathway.

EPC (Energy Performance Certificate)

It is mandatory to have an EPC when selling a property. This Certificate provides information on the property's energy use and typical energy costs and recommendations on how to save on energy use and costs. It gives an energy efficiency rating from A (being most efficient) to G (being least efficient) and is valid for 10 years.

Exchange of contracts

The stage before completion when signed contracts are exchanged, legally committing the buyer and seller to the purchase and sale of a property at the agreed price.

Failed valuation survey

This is when a valuation does not meet the level expected by the lender, meaning the house is worth less than the agreed asking price. They may turn down the application as a result.

First time buyer

A person who does not yet own a property and is therefore mortgage free.

Fixed rate mortgage

A mortgage with an interest rate which will remain unchanged for a set time period.

Fixtures & fittings

All non-structural items included in the purchase of a property.

Flying freehold

When part of a freehold property overhangs or underlies another freehold property or piece of land eg a balcony which extends over another property

Freehold

A technical word for the ownership of the property including any land attached to it, meaning that it belongs to the owner outright.

Freeholder

The person or persons who own a property outright.

Gazumping

This when a seller accepts an offer from one party, but during the 'subject to offer stage' accepts a higher offer from someone else. This is not common in Northern Ireland.

Gazundering

This is when a buyer reduces their offer at the last minute, usually during the contract negotiation stage. Often it would be left so late that the seller has no option but to accept or risk losing the sale completely.

Ground rent

An annual charge levied by the freeholder to the leaseholder.

Guarantor

On a mortgage if affordability is restricted then a lender may ask the borrower to appoint a guarantor. This person promises to pay the borrower's debt if the borrower defaults on his repayments.

Homebuyer's survey and valuation (house/flat buyer's report)

This is the most common type of survey and is not as detailed as a structural survey, carried out by a chartered surveyor to assess the state of a property and its value.

IFA (Independent Financial Advisor)

Someone who provides independent financial advice without being tied to a particular lender.

Interest-only mortgage

This is a mortgage where each month you pay only the interest to the lender and none of the initial capital borrowed. This means that during the term of the mortgage the capital is not reducing and therefore must be paid back at the end. It would be normal to have a repayment vehicle running alongside this loan, such as an investment, into which a premium is paid each month and the proceeds then used to pay off the mortgage at the end of the term. There is no guarantee that the amount of the investment at the end of the term will be sufficient to pay off the loan, however the responsibility to pay off the mortgage remains with the borrower. If you choose an interest only mortgage you will be responsible for ensuring that you have sufficient funds available to repay your mortgage at the end of the term.

Inventory

A list of contents of a leased property, confirming their condition, at the start of the tenancy. The inventory will then be checked again at the end of the tenancy and any dilapidation during the tenancy can be identified.

Joint agency

This is where you appoint two agents to sell your property. You will have to pay commission to both agents.

Joint tenancy

This is where two people own a property jointly, often with a joint mortgage. Both own an equal share and if one party dies then the full ownership of the property automatically passes to the surviving party under right of survivorship.

Land registry fee

This is paid to the Land Registry to formally register ownership of a property.

Lease

A legal document by which the owner of a property lets the premises to another party for an agreed length of time under agreed terms.

Listed building

A building officially listed as being of special architectural or historic interest which cannot be demolished, extended or altered without special permission from the local planning authority.

Local authority search

A buyer's solicitor will request specific information about the property being purchased and its surrounding area, as part of the conveyancing process. This would include information on outstanding enforcements or future developments which may affect the property.

Maintenance charge (or service charge)

A charge made to the tenant or leaseholder of a property for repair and maintenance of external or internal communal parts of a building.

Mortgage rate

The percentage rate of interest charged on a mortgage in return for borrowing the money. There are various types of rates including standard variable rate (SVR), fixed rate, capped rate, tracker rate and discounted rate. These will all use the Bank of England base rate as their starting point.

Mortgage term

The period of time after which a mortgage must be repaid. On a repayment mortgage the balance reduces throughout the mortgage term with repayments set at a level to ensure the balance reaches zero by the end of the mortgage term. On an Interest Only mortgage a repayment vehicle will be set up with premiums aiming to be equal to the amount of the mortgage therefore enabling it to be repaid in full at the end of the term.

Mortgagee

The lender of a mortgage ie bank or building society.

National House Building Association

A governing body for new homes who will issue a 10 year structural guarantee. Their inspectors will ensure that a new home is built to their set standard and is safe.

Negative equity

When the value of the property is less than the outstanding mortgage.

NHBC scheme (National House Building Council)

A type of warranty available on some newly built homes under which defects occurring within a specified time after construction are remedied.

Notice

An official request by the freeholder or landlord to vacate a property. A freeholder or landlord may serve notice on a home for a variety of reasons and will give a notice period in which to find alternative accommodation.

Off-plan

This is agreeing to purchase a new home before it has been built based on the plans and artist's impressions. Discounts can sometimes be available if buying off-plan.

Ombudsman

These are Independent professional bodies who represent the public and investigate complaints on their behalf against, for example, estate agents, solicitors and insurance companies.

One hundred percent mortgage

A loan for the full cost of the property being bought if a deposit cannot be raised. Currently such mortgages are not available in the market.

Open market value

The price a property would achieve when there is a willing buyer and willing seller.

Part exchange

When buying a newly built home the builder may offer to take your existing home as part exchange in payment of the new home. This avoids becoming involved in a property chain but often the builder will offer a below market value so that they can make a profit when they sell it.

Peppercorn ground rent

A nominal periodic rent usually paid annually.

Personal search

Similar to a local search this is a manual search by a conveyancer or some other specialist. These can be completed in a matter of days rather than weeks though they do end up being more expensive.

Preliminary enquiries

The initial enquiries about a property put forward to a seller which the seller must answer before the exchange of contracts.

Probate property

This is the sale of a property which has passed to executors after death of the owner. Probate must be granted before a probate property sale can be completed.

Property Chain

This can occur when the buyer of a property also has a property to sell meaning the purchase of the new property is reliant upon theirs being sold, creating a 'chain' of people involved in the transaction.

Rebuild cost

This is the basis of the sum assured on a buildings insurance policy and is the cost of rebuilding a property if it was destroyed for example in a fire. It should include the cost of clearing the site and rebuilding the property to its previous standard.

Redemption

Repaying a mortgage in full.

Re-mortgage

Switching a mortgage from one lender to another.

Repayment mortgage

This is a mortgage where each month your payment will be made up of partly interest and partly repayment of capital. This type of mortgage guarantees that at the end of the term the full balance of the mortgage will be repaid.

Repossession

When mortgage payments cannot be made over a period of time the lender will take possession of the property and become the owner.

Retention

If a property being mortgaged requires repairs to make it the value being declared then the lender may hold back part of the mortgage loan until those repairs have been completed.

Right of way

This is the right to use someone's property such as a shared driveway or pathway.

Search

A request for information about a property held by a local authority or by the land registry.

Septic tank

This is used in houses which are in an isolated area and therefore not connected to a sewage system.

Service charge (or maintanence charge)

A charge made to the tenant or leaseholder of a property for repair and maintenance of external or internal communal parts of a building.

Sitting tenant

Someone who has a legal right to reside in a property even if it has been sold to someone else.

Sold subject to contract

The stage when buyer and seller have verbally agreed to the purchase and sale of a property but the contracts have not yet been exchanged.

Solicitor

Legal person who handles all conveyancing and documentation with regard to the sale or purchase of a property.

Stamp duty

Government tax imposed on home buyers. The rate depends on the value of the property.

Subject to Contract

Indicates that an agreement is not yet legally binding

Telegraphic transfer

This is the electronic transfer of monies between two parties. Monies sent by a lender for a mortgage are normally done in this way and a fee will be charged for the transaction.

Tenancy

The occupation of property by a tenant.

Tenancy agreement

A legal agreement between tenant and landlord setting out the terms and conditions of the rental.

Title deeds

Documents showing the legal ownership of a property, usually held for safe keeping by the lender on the mortgage.

Transfer deeds

A document that transfers ownership of a property from seller to buyer

Under offer

The status of a property for sale when a buyer has placed an offer which has been accepted by the seller but contracts have not been exchanged.

Valuation

A basic survey of a property, arranged by a mortgage lender, to establish the value before agreeing to lend.

Vendor

The legal name for a person selling a property.