Knowledgebase
Property jargons explained

The whole process of buying or selling a property can be a fascinating and exciting experience, but it can also be frustrating, cumbersome and bewildering. Fast-talking experts, lengthy documents and endless negotiation between interested parties all add to the stress and anxiety.  We have compiled this handy guide help shed light  on the most commonly used property jargon.

Annual percentage rate (APR) - APR takes into account the interest rate of your loan, repayment arrangements and any other associated fees to give you an indication of the overall cost of the loan. It's useful when comparing different loan offers; generally, the lower the APR, the better the deal for you.

Arrears – is when someone have fallen behind with mortgage payments. If this happens, the mortgage lender may take action to repossess the property.

Building survey - is a thorough inspection of a property carried out by a chartered surveyor. They write a report detailing any defects in the property you are looking to buy. Building surveys are often carried out when people are buying older homes with potentially costly structural problems, or properties that have been heavily altered or poorly maintained.

Chartered surveyor - A surveyor is someone employed to carry out a building survey to check for any problems with the property you are looking to buy. The chartered bit simply means he/she is suitably qualified and a member of the Royal Institution of Chartered Surveyors (RICS).

Conveyancing - This is any legal work involved in buying and selling a property, including advising buyers and sellers of their rights, researching legal ownership of properties, drafting contracts and leases, and liaising with mortgage lenders and estate agents. A conveyancer is a solicitor, or other legally qualified individual, who deals with this work.

Endowment mortgage - This is one of three main types of interest only mortgage. As well as making regular payments to cover the interest on your mortgage, you pay into an endowment policy to save up money to pay off the actual loan. An endowment policy is a life assurance savings scheme designed to pay out a lump sum at the end of a given period.

Fixed rate mortgageis a type of mortgage were you pay a fixed rate of interest on your mortgage for a set period, so you know exactly what you\'ll be paying each month. When that period ends, you will often end up paying a variable rate of interest controlled by your mortgage lender.

Freehold is when you own a property outright and have responsibility for all maintenance and repairs.

Gazumping - refers to a situation in which a seller accepts a higher offer from a third party on a property they have agreed to sell to someone else, before contracts have been exchanged. Gazundering is when a buyer offers a seller a lower offer just before contracts are due to be exchanged.

Interest only mortgage - The monthly payments your make to your mortgage provider only cover the interest on your mortgage. You also have to make regular payments into a long-term savings plan, so that you can pay off your mortgage at the end of the agreed period (the term). There are three main types of interest only mortgages, which are ISA, endowment and pension scheme.

ISA mortgage - This is one of three main types of interest only mortgages. As well as making regular payments to cover the interest on your mortgage, you pay into an Individual Savings Account (ISA) to save up money to pay off the actual loan. ISAs are tax-free savings and investment accounts which have replaced PEPs and TESSAs. They are used to save cash or invest in stocks and shares.

Leasehold – is when your ownership of a property is for  a certain length of time. The lease will stipulate this period, and say who is responsible for maintaining and repairing various parts of the property. You will normally pay a small amount of ground rent to the owner of the land (the freeholder). It is generally considered unwise to buy a property with a lease that has less than 50 years remaining.

Loan to Value (LTV) - Expressed as a percentage, this is the ratio of the value of your mortgage to the value of your house. For example, if a property is worth £100,000 and you take out a mortgage of £50,000 then the LTV is 50%. Some mortgages are only available if you are borrowing under a certain proportion of the total value of the property, so buyers contributing a sizable deposit themselves can get better deals.

Mortgage - This is a loan taken out to buy a property. Your mortgage provider or mortgage lender might be a bank, building society, or specialist mortgage lending company. If you change your mortgage lender or your method of repayment without moving house, you are remortgaging.

Negative equity - This is a situation which arises if the value of your house falls to less than the value of the mortgage you have taken out to buy it.

Pension scheme mortgage - This is one of three main types of interest only mortgages. As well as making regular payments to cover the interest on your mortgage, you use part of your pension to pay off the actual loan. This type of mortgage is generally suited to self-employed people and higher rate taxpayers.

Pied à terre - refers to a property kept for temporary, secondary or occasional occupation.

Public liability insurance - This type of insurance covers you should anyone suffer injury or death in or around your home,

Repayment mortgage – when you make monthly payments to your mortgage provider for an agreed period (the term) until you have paid back both the loan and the interest on it.

Secured - A mortgage is a loan secured on your home. Meaning if you don't repay it, your mortgage lender may retrieve their money by selling your home.

Sitting tenant - This is someone who has a legal right to occupy a property, even if that property changes ownership. They are entitled to apply to the local authority to set a fair rent. Properties with sitting tenants are generally worth less than they would be if sold on the open market without being occupied.

Stamp duty - Stamp duty is the government tax you pay when purchasing property or shares. The rate of stamp duty is dependent on the value of a property and is payable by the purchaser when a house is sold.New stamp duty rates have been introduced for first time buyers. For a period of two years from April 2010, first time buyers won't have to pay stamp duty on any house purchased up to the value of £250,000.

This concessionary stamp duty rate replaces the normal 1% and 3% stamp duty rates and applies to first time buyers only. First time buyer stamp duty rates are valid until 24th March 2012.

New stamp duty rates will be introduced from April 2011 and will apply to houses sold in excess of £1 Million. The new stamp duty rate will be 5% applied to the sale price of the property.

Standard variable rate mortgage - Here you will be paying back money at a rate decided by your mortgage lender, without any discounts or deals. Its variable, meaning the interest may go up or down.

Subject to contract - An agreement to buy a house which is not actually legally binding. It only become so when contracts have been exchanged

Tenancy agreement - A tenancy agreement is a contract agreement between a tenant and a landlord. It may be written or oral. It defines the legal relationship between a tenant and a landlord,

Title deeds - Title deeds are used as an official record of who owns the title to a property. The title deeds may also have details on whether there are mortgages on the property, and whether anyone else has an interest in the property. The title deeds are also useful in gaining information on property boundaries and rights of way through a property.

Tracker mortgage - Tracker mortgagefollow movement in the Bank of England base rate at an agreed differential. The Tracker rate mortgage is available for a fixed period or the life time of the loan. The most common tracker rate period is 2 years, though many mortgage lenders now offer 3 year, 5 year and even 10 year track rate mortgages.

If the tracker rate is for a set period of time the mortgage will revert to the lenders standard variable rate at the end of the tracker rate period.

Under offer - If a property is under offer, the seller has accepted an offer from a buyer but not yet exchanged contracts.

Vendor - A person who sells a property is called a vendor. Vendor sells the property for a price to the buyer there by transferring his rights on the property.