14 terms
Mortgages Property Terms
Understand mortgage products, rates, and lender terminology to make informed borrowing decisions.
- AIP (Agreement in Principle)
- A conditional indication from a mortgage lender of how much they may be willing to lend you, based on a soft credit check. Also called a Decision in Principle (DIP) or Mortgage in Principle (MIP). ...
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- Base Rate
- The interest rate set by the Bank of England, which influences the rates that banks and building societies charge borrowers. When the base rate rises, variable-rate and tracker mortgage payments ty...
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- Bridging Loan
- A short-term loan used to bridge the gap between buying a new property and selling an existing one. Interest rates are higher than standard mortgages and the loan is usually repaid within 12 months...
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- CCJ (County Court Judgement)
- A court order issued when someone fails to repay money they owe. A CCJ stays on your credit file for six years and significantly affects your ability to get a mortgage. Some specialist lenders will...
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- Equity
- The portion of a property's value that you own outright — the difference between the property's market value and the outstanding mortgage balance. Equity increases as you repay the mortgage and as ...
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- Interest-Only Mortgage
- A mortgage where your monthly payments only cover the interest — you don't repay any of the capital. At the end of the term, you must repay the full loan amount. Lenders require a credible repaymen...
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- LTV (Loan to Value)
- The ratio of your mortgage to the property's value, expressed as a percentage. For example, a £180,000 mortgage on a £200,000 property is 90% LTV. Lower LTV ratios unlock better interest rates. Key...
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- Mortgage
- A loan secured against a property, used to fund the purchase. If you fail to keep up repayments, the lender can repossess the property. UK mortgages typically run for 25–35 years. The two main type...
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- Mortgage Offer
- A formal, legally binding offer from a lender to provide a mortgage. Issued after the lender's full underwriting process, including property valuation and credit checks. Typically valid for 3–6 mon...
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- Mortgage Overpayment
- Paying more than your required monthly mortgage repayment. The extra money reduces your outstanding balance, saving you interest over the mortgage term and potentially shortening it. Most lenders a...
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- Negative Equity
- When the outstanding mortgage on a property exceeds its current market value. This can happen after a fall in house prices or if the property was purchased with a very high LTV. Being in negative e...
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- Remortgage
- Switching your mortgage to a new deal, either with your existing lender (a product transfer) or a different one. Most people remortgage at the end of their fixed-rate period to avoid reverting to t...
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- SVR (Standard Variable Rate)
- The default interest rate a mortgage lender charges after a fixed-rate or discounted period ends. SVRs are typically 1–2% higher than the best available fixed rates and can change at any time at th...
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- Tracker Mortgage
- A variable-rate mortgage where the interest rate tracks the Bank of England base rate plus a fixed margin (e.g., base rate + 0.5%). Unlike SVR, the margin is contractually fixed. Payments go up and...
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