Mortgage Jargon Buster

We have put together some of the most popular mortgage terms that you may see when you’re speaking with a mortgage broker like ourselves or when you start looking to purchase a house.

Popular terms you may see during the mortgage process


‘Annual percentage rate’ – the overall cost of a mortgage (including the interest and fees). 


The amount of money you borrow to buy a property. 


The legal process you must go through when you buy or sell a property. This is most commonly done by a solicitor or a licensed conveyance. 


The amount of money that you put down towards the cost of a property. 


Most common with first time buyers, a guarantor is a third party who agrees to pay the monthly mortgage repayments if the buyer was unable to. 

A guarantor is usually a parent or a guardian. 

Help to buy scheme

The Government has launched a number of different schemes to make the process of buying a home easier. Some of these schemes are equity loans, mortgage guarantees, ISAs and specific schemes for Scotland and Wales. 

A help to buy ISA is a tax free savings account where the Government pays first time buyers a cash bonus toward the purchase of a property. The Government will pay up to £3,000 into the ISA.

land registry

The official body is responsible for maintaining details of property ownership.

Loan to value (LTV)

The size of your mortgage is a percentage of the property’s value.

Mortgage deed

A contract between the lender and the borrower, outlining the legal obligation of the borrow and the rights the lender has if the borrower fails to make a repayment.

mortgage term

The amount of time you are taking the mortgage out for. 

Negative Equity

This is when the amount that you owe to the mortgage lender is more than the value of your home.

service charges

The fee paid to a managing agent for the ongoing maintenance of a leasehold property.

Stamp Duty

Stamp duty land tax is payable when you a buy a property for more than £125,000 or £40,000 if it’s a buy to let property or a second home.

Visit the Gov website for the latest rates and any holidays in place for the UK’s Stamp Duty Land Tax

subject to contract (STC)

An agreement that is not yet legally binding. Usually seen on property websites like Rightmove and Zoopla when a house is under offer

Valuation survey

Lenders always carry out a valuation survey to check whether the property is worth the amount you’re paying for it. You may want to organise your own survey to check for structural problems. 


The person(s) who you are buying your new property from. 

Terms related to Documents


An annual summary of all your payslips which your employer will supply to you at the end of each tax year. 


A form showing your proof of earnings issued by the HMRC. 

Terms related to types of mortgages

Early repayment charges

A charge you have to pay if you want to leave your mortgage during a specified period. 

flexible mortgage

A flexible mortgage allows you to overpay, underpay or even take a payment holiday from your mortgage. This type of mortgage can help you pay off your mortgage early or save money on your interest, but flexible mortgages are usually more expensive than conventional ones.

fixed rate mortgage

The interest rate on your mortgage will stay the same for a certain period of time from one to ten years. During that period, your mortgage rate won’t go up or down and you will be paying the same amount each month.

joint mortgage

A mortgage that is taken out by two or more people. 

Off Set mortgages

An offset mortgage links your mortgage with your savings and sometimes your current account. Your credit balances are offset against your mortgage debt so you only pay interest on the difference while also paying off the capital. 


This is when you change your mortgage without moving house. This is usually done to save money, to change mortgage type or to release equity from your home.

repayment mortgage

This type of mortgage is when you pay the mortgage interest and part of the capital of your loan each month. Unless you miss any repayments, you are guaranteed to have paid off your mortgage by the end of the term.

Variable Rate Mortgage

A variable rate mortgage is a type of mortgage where your interest rates can go up and down and in return, your monthly repayments can vary.

The variable rate you’re on will be set by your lender and won’t necessarily always rise or fall in line with the changes to the Bank of England base rate. 

Terms related to types of Properties

Buy to Let Property

A property which is brought with the sole intention of letting it to tenants. A buy to let property will need a buy to let mortgage.

Freehold property

You own the building and the land that it sits on


You own the building but not the land that it sits on and only for a certain period of time (anything up to 999 years).

New Build Property

A property that is typically two years old or less

Shared ownership

This is when you buy a share of a property – usually between 25% and 75%. Then you will pay rent on the remaining share, which is owned by the local housing association.

Terms related to Home Insurance

Building Insurance

Insurance to cover you for the damage of the structure of the house. Most lenders will require for you to have buildings insurance in place when you take out a mortgage. 

Rebuild cost

The cost of rebuilding your property if it was destroyed. This is usually for insurance purposes.