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Knowledge Base

Learn more about mortgages in this jargon-busting guide

Jargon Buster

Whether you are a First time buyer, Home mover or Remortgaging your existing home you are bound to come across the minefield of words your Adviser or Estate agent may bombard you with. Below is a list to help you understand what these would mean to you

Agreement in Principle

This is good news – it means that your application for a mortgage (or any kind of financial service) has been agreed in principle, subject to such things as the valuation of your property or confirmation of your income.

Arrangement Fee

Another fairly self-explanatory term – it’s what you might be charged by the lender for arranging the mortgage. Generally, you’’ need to pay this fee on completion of the purchase, but sometimes the amount can be added to the loan itself.

Bank Rate

This is the basic rate of interest determined by the Bank of England.

Completion

The moment you’ve been waiting for! All the legal necessities have been completed and your lender actually advances the funds for the purchase – the funds usually being deposited into an account held by your solicitor.

Completion Date

Another critical milestone in your calendar – completion of the sale of the property to you, when the keys are handed over.

Conveyancing Fee

This is what you have to pay a solicitor (or a licensed conveyancer) for doing all the legal work for registering the property in your name. The final bill for this service should also include stamp duty, land registry fees and his or her disbursements.

Land Registry Fees

If you take out a mortgage or change an existing one on a property, this needs to be registered with the Land Registry, who will make a charge for amending the records.

Loan to Value Ratio

This is a simple ratio or percentage that expresses the proportion of a loan to the value of the property. In other words, if you’re looking to borrow £150,000 on a property valued at £300,000 you’d need to secure a 50% loan to value rate.

Negative Equity

Is something you clearly want to avoid, since it arises when the extent of your borrowing is greater than the current market value of the property.

Procuration Fee

The fee that a Mortgage Lender will pay to an introducer for introducing the business to that lender.

Redemption Charges

These days, the term is better and more clearly known as Early Repayment Charges – the penalty you’ll incur if you wish to repay your mortgage before the end of its full term.

Search Fee

It will be important to make sure that there are no plans in the neighbourhood that might affect the future value of your home. For this, you need to ask the local authority to do a search for you and, of course, there is a charge.

Stamp Duty

This is a tax on buying real property. It’s applied on a sliding scale with First time buyers getting relief but Buy To Let or second homeowners paying an additional 3%. Here is a useful link to calculate your potential cost Stamp duty calculator (Click here)

Term

The length of time over which your mortgage loan is to be repaid.

Valuation Fee

A fee paid by the borrower for the lender’s inspection of the property by a valuer. Normally paid on application

Independent Mortgage People Ltd. is an Appointed Representative of JLM Mortgage Services Ltd, which is authorised and regulated by the Financial Conduct Authority. Registration numbers 758712 and 300629. Further details may be found by visiting www.fca.org.uk. Registered Office: 6 Viewpoint Hyatt Trading Estate, Babbage Road Stevenage, Hertfordshire,SG1 2EQ. Registered Company Number 09523560, Registered in England and Wales. We typically charge a fee of £495 to be paid when you complete on a mortgage arranged by us. We will also be paid commission by the lender and the fee will be reduced by this amount. Where the commission from the lender exceeds £495 we will not charge a fee. So, in many cases, no fee will be payable.

Your home may be at risk if you do not keep up payments on a mortgage or any loan secured upon it.

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