Oakwood Homes - Property Agents - Margate, Cliftonville, Herne Bay
What does it all mean?
In order to help you cut through the 'jargon' we hope you will find this section helpful. Click the relevant letter to be taken to that section.
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A
Arrangement fees – A fee charged by a mortgage lender
or broker to arrange a loan. These usually apply to loans where a special
interest rate applies.
Additional enquiries – These are questions raised
by the buyer’s solicitor/conveyancer, often relating to matters shown
on a survey or relating to the title on your property.
APR (annual percentage rate) – This is the total cost
of a loan, including all costs, interest charges and arrangement fees. This
is then shown as a percentage rate.
Assignment – This is to transfer the ownership of
an insurance policy or a lease.
Auction – The sale of a property to the highest bidder
with a legally binding contract on the drop of a hammer.
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B
Building Survey – There are varying types of survey that can be carried
out on a property that you are to purchase, normally conducted by a chartered
surveyor.
Basic variable rate – This is the standard rate of interest
that is charged by a mortgage lender which may be increased or decreased
periodically
by the lender depending on prevailing economic conditions.
Bridging Loan – This
is a temporary loan providing financial cover which will allow a buyer to
complete on the purchase of a new property before
selling their previous property.
Buy to let mortgage – This is a type
of mortgage specifically designed for investors buying property with the
intention of letting it out, usually
as an investment.
Buildings & Contents insurance – Insurance to cover damage to
or loss of your home and it’s contents in the event of a fire for example.
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C
Cash Back – An incentive given by some mortgage lenders when a sum
is paid to the purchaser upon completion of the mortgage.
Capped Mortgage – A mortgage where there is an upper limit on the
interest rate but with no lower limit. This rate will vary in accordance
with the lender’s interest rate charges.
Chain – When selling
a property, the situation often occurs when a buyer is reliant on completion
of their home in order to complete the purchase
of a new property.
CML – The Council of Mortgage Lenders who devised
the Mortgage Code to ensure lenders treat customers fairly.
Completion – The
point at which all transactions concerning the property sale are conducted
and legal transfer of ownership passes to the buyer. Invariably,
this is also the day of moving.
Conditions of Sale – These details determine
the right and duties of the buyer and seller. These could be imposed by the
law society or specifically
devised by your solicitors.
Contents Insurance – Insurance that provides
cover for the loss or damage to possessions inside a property.
Contract – An
agreement which is legally binding between the seller of a property and a
buyer. This binds both parties to complete the transaction
at any agreed time.
Contract Race – When two parties have made an offer on the same property
two contracts can (although not commonly) be distributed. The vendor will
sell to whoever exchanges contracts first – i.e. it is a race.
Conveyancer – A
qualified individual such as a solicitor or a licensed conveyancer who will
deal with all the legal aspects of buying or selling
a property.
Conveyancing – This is the traditional term used for the
legal work involved in the sale and purchase of a property in England.
Covenants – Some properties have rules and regulations that govern
what can and can’t be done and would be lodged with the title deeds
or lease.
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D
Deeds - Legal title documents that prove ownership of a property. Often
these deeds will be held by the mortgage lender if a mortgage is lodged against
the property.
Deposit – On exchange of contracts a sum of money is paid
by the buyer to the solicitors which is usually between 5% and 10% of the
overall property
value.
Detached – A term used to describe a property that stands alone
and is separated from all other properties.
Development – Either a newly
built residence or a refurbished and modernised older property.
Dilapidations – Any
damage or disrepair to a property.
Disbursements – These are fees that are paid by the buyer’s
solicitor on the buyer’s behalf such as land registry, stamp duty and
search fees.
Draft Contract – An unconfirmed and preliminary version
of the contract.
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E
Early Redemption Charge – If a borrower terminates a mortgage in advance
of the terms that have initially been agreed by the lender, an early redemption
charge can be payable. This mainly occurs when a borrower has benefited from
reduced payments or cash back in the initial period of a mortgage.
Endowment
Mortgage – A mortgage where the interest only is paid to
the lender which often requires a separate insurance policy with the aim
to pay off the mortgage at the end of the agreed term.
Equity – The
difference between the value of a property and the amount of mortgage that
is owed or other charge against the property.
Excess – An initial sum
paid on an insurance claim by the policy holder.
Exchange of Contracts – This
is the point at which signed contracts are physically exchanged, legally
committing the buyer to buy and the seller
to sell a property at an agreed price.
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F
Failed valuation survey – Sometimes, following a survey, the valuation
report may indicate that the property is not worth the sum that is sought.
At this point, the mortgage lender may turn down an application by the purchaser.
Fixed
Rate Mortgage – An interest rate is set for a brief period of
time on a mortgage with a fixed rate.
Fixtures and fittings – Items
that are included in the purchase of a property but do not form part of the
structure.
Flexible Mortgage – A mortgage where the lender will permit
increased or decreased payments during a specified term.
Freehold – The
description of ownership for a property meaning that it belongs to the owner
without limitation of time.
Flying Freehold – Where part of a freehold
property is over (or under) another freehold property.
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G
Gazumping – This term is often misunderstood. This only occurs when
a seller accepts a higher offer from a third party on a property that exceeds
the initial asking price. This can only occur when a sale has been agreed
prior to legal exchange of contracts.
Gazundering – This is when a buyer
decides to make the seller a lower offer just before contracts are due to
be exchanged.
Ground Rent – An annual charge that is made by the freeholder
to the lease holder payable every year.
Guarantor – A third party who
undertakes to ensure mortgage payments are maintained, who will also promise
to pay the borrowers debt if the borrower
defaults.
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H
Homebuyer’s survey and valuation report – A survey which is
not a detailed as a structural survey but still carried out by a chartered
surveyor who details their findings in report format. This will include both
the condition of the property and it’s valuation.
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I
Interest charges – The charges that are made on a
loan by a bank or building society which are calculated as a percentage of
the amount that
has been borrowed/outstanding.
Interest only mortgage – This is a mortgage
where the monthly payments to the lender purely cover interest only. A savings
plan is often set up
by a borrower which is designed to pay the amount of the loan at the end
of the mortgage term subject to the savings plan performance (see endowment
mortgage). If you choose an interest only mortgage, you are responsible for
ensuring that you have sufficient funds available to repay your mortgage
at the end of the agreed term.
Inventory – A descriptive list of condition
and furnishings and contents of any given property normally associated with
lettings.
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L
Land Registry fee – Payment to the Land Registry to register legal
ownership of a property.
Leasehold – Denotes the ownership of a property by way of it’s
tenure with a given timescale for that ownership. This can be a varying term
but commonly 99 years, 125 years or 999 years.
Legal fees – The amount
of money that needs to be paid to a conveyancer for their fees which will
often include a breakdown of all other fees they
will have incurred on your behalf.
Listed building – A building which
is considered to be of special architectural or historic interest which cannot
be altered or demolished
without the consent of the local government.
Loan to Value (LTV) – The amount of mortgage expressed as a percentage
of the property’s total value.
Local Authority Search – Enquiries raised by the buyer’s
conveyancer to the local authority regarding any outstanding enforcement
or future development
issues within the immediate area surrounding that property. i.e. road alteration
scheme, proposed new development.
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M
Maintenance Charge – The costs that are incurred by a freeholder for
repairing and maintaining internal and external communal parts of a building
which is passed to the leaseholder.
Maisonette – a property that is
arranged over more than one floor, but forming part of a shared property.
Mortgage – The
sum of money which is advanced by a lender that is secured against a property.
Mortgage
deed – The legal document relating to the mortgage lender’s
interest in the property and containing all terms and conditions of the mortgage.
Mortgage
Rate – This is the rate of interest paid to the mortgage
lender dependent upon what mortgage option has been chosen.
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N
Negative equity – Occurring when the value of a property falls below
the outstanding mortgage.
NHBC Certificate - (National House Building Council
Certificate). This is a type of building guarantee available on some newly
built properties designed
to cover defects within a specified time after the building is completed.
Typically this can be for 10 years.
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O
Offer – An amount that a buyer offers to pay for a property.
Offer
of a Loan – The formal document approving a mortgage that a
buyer has requested which details all terms and conditions that will apply.
Ombudsman – An
independent professional body that investigates complaints on behalf of customers
against insurance companies, estate agents and solicitors
for example.
Open Market Valuation – The price that a property will achieve
on the open market.
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P
Penalties – The costs that can be incurred if a borrower repays all
or part of a mortgage prior to the end of an agreed period or switches between
lenders.
Pied à terre – A property kept for temporary, secondary
or occasional occupation.
Peppercorn Ground Rent – A very nominal periodic
rent usually paid per annum.
Preliminary enquiries – Initial enquiries
raised about a property that is being sold by the conveyancer which the seller
must answer before
exchange of contracts.
Purchaser – Anyone who is buying a property.
Probate – The disposal
of a property by an executor of a will following the death of the owner.
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R
Redemption – Occurs when a mortgage is fully repaid.
Re-mortgage – The
re-financing of a property either by switching lenders, or by taking out
a second mortgage to draw on the equity that may have been
gained by the rise in capital value of the property.
Repayment Mortgage – Monthly
payments which can cover both interest and capital so that the amount that
is outstanding will gradually decrease
until the mortgage is fully repaid at the end of an agreed term.
Repossession – This
occurs when the mortgage lender takes possession of the property due to the
non payment of the agreed mortgage.
Retention – This is where a mortgage
lender retains part of a loan until repairs or specified works to the property
have been satisfactorily
competed.
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S
Search – This is a request or enquiry relating to information about
a property that is held by the local authority or a land registry department.
Semi-Detached – A property which is joined to one other house.
Service
Charge – (see “Maintenance Charge”)
Sole Agent – This
is a single estate agent entrusted with the sale of a property usually for
an agreed term.
Solicitor – A legal expert who handles all documentations
of a sale or purchase of a property.
Stamp Duty – A tax paid by the buyer for a property
where the purchase price exceeds £125,001. The rates of duty paid ranges
from 1% to 4% of the purchase price depending upon the total value of the
property bought.
Some areas may be exempt from this charge depending on local conditions.
Structural
Survey (See “Building Survey).
Studio Flat – A
property that consists of one main room or open plan living area which incorporates
both sleeping and cooking facilities generally
with a separate bathroom or shower room.
Subject to Contract – The term
used to confirm that a transaction is not legally binding.
Surveyor – A
professionally qualified expert who carries out any instructed survey.
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T
Tenancy in Common – The form of ownership by two or more parties where
if one should die, their share of the property forms part of the estate and
does not automatically pass to the other party.
Tenure – The conditions
on which a property is held (i.e. freehold or leasehold).
Terraced House – A
property which forms part of a row of adjoining houses.
Title Deeds – The
documents showing any legal ownership of the said property.
Transfer Deeds – A
legal document that transfers the ownership of a property from the seller
to the buyer.
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U
Under Offer – The status of a property that is for sale when the seller
has accepted an offer from a proposed purchaser but no exchange of contract
has yet taken place.
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V
Vendor – The legal name for a person who is selling a property.
Valuation – A basic survey for a property to estimate it’s
value normally for mortgage purposes. Mortgage lenders will insist on this
as a
minimum requirement before agreeing to lend against a property.
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W
Will – A legal document specifying what happens to your assets in
the event of your death.
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Y
Yield – The income from a property calculated as a percentage of it’s
overall value.
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