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Advance
Another term for the mortgage loan.
Bonuses
Relevant to endowment policies. Bonuses are added by the life assurance company to the endowment at the end of the term of the policy.
Broker
Someone who will arrange a mortgage with a lender on your behalf.
Building Survey
A survey to identify any faults and potential problems in the property you wish to buy.
Completion
The point at which you become the legal owner of the property.
Contract
The legal document which transfers the property's ownership from the seller to the buyer.
Conveyancing
The process of transferring the ownership from the seller to the buyer.
Disbursements
Fees, for example Stamp Duty and Land Registry fees, which you pay to the
company doing your conveyancing.
Early Repayment Charge
The charge some lenders make on some types of mortgages if you pay off your mortgage early.
Energy Performance Certificate
Defines energy efficiency of a property and gives advice on improvements.
Equity
The net value of your property, i.e. the value of your home less the mortgage amount.
Exchange of Contracts
The point at which the sale of the property becomes legally binding. (Missive in Scotland.)
Freeholder
The person or company who owns a property and the land it stands on. (Feudal in Scotland.)
Ground Rent
A fee - normally annual - that the leaseholder must pay to the freeholder or
landlord who owns the land the leasehold property is on.
Higher Lending Charges
A fee that some lenders charge for borrowing a high proportion or percentage
of the property's value.
H.I.P. - Home Information Pack
Key information on a property to include compulsory documents for freehold and leasehold: index, energy performance certificate, sale statement, standard searches and evidence of title. For leasehold properties add the following information - copy of lease, Management Regulations, service changes, proof of payments by vendor of service charges, ground rent and insurance, name/address of landlord and/or managing agent, summary of work undertaken.
Home Condition Report
Non-invasive property condition report.
Interest
The money you are charged for borrowing.
Interest-only Mortgage
With an interest-only mortgage you make regular payments (normally monthly) to the lender to pay the interest on the loan, not the capital that has been borrowed. To be able to repay the capital at the end of the mortgage term, you must make payments into a suitable investment, such as an endowment, an ISA or a pension.
Land Registry
The Government department responsible for recording the details of all registered properties.
Land Registry Fee
A fee paid to the Land Registry to register ownership of a property.
Lease
The legal contract giving ownership of a leasehold property to the buyer for a fixed period of time.
Leaseholder
Someone who owns a leasehold property, for a fixed period of time. (Feudal in Scotland.)
Mortgage
A loan to buy a property.
Offer of Advance
The formal offer of a mortgage from a lender.
Redemption
Paying off a mortgage loan.
Repayment Mortgage
With a repayment mortgage, every payment you make to the lender goes towards repaying the capital (the amount borrowed) and the interest on the loan. With each repayment you make, the amount you owe will reduce.
Restrictive Covenant
A promise made by the buyer of land to the seller that restricts the way in which the buyer may use the land. For example, a buyer may promise to use the property only for a particular purpose, or to limit the number of houses he may build on it.
Retention
A lender may hold back some of the mortgage money until certain repairs have been done. The amount that they hold back is known as a 'retention'.
RICS
The Royal Institute of Chartered Surveyors.
Security
The property the mortgage is being used to buy is the lender's 'security' for the loan. Therefore, the lender has rights over the property. If the mortgage repayments are not kept up to date, the lender can repossess the property and sell it to recover the debt.
Stamp Duty Land Tax
A government tax on buying properties costing more than £120,000.
Subject to Survey and Contract
The wording that is included in any agreement before the exchange of contracts. This wording confirms that nothing has yet been legally agreed, and allows the seller or buyer to withdraw from the property sale.
Term Assurance
Life insurance to pay off a mortgage if the borrower dies.
Title Deeds
The legal documents which set out the ownership of a property.
Valuation
The lender's inspection of the property to assess whether it is suitable for a mortgage.
* Please note: these definitions are provided for general guidance only. Some terms may have alternative meanings in Scotland.
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