Existing customers

Additional borrowing - the term used when an existing mortgage customer increases their mortgage borrowing. This can be done six months after the main mortgage loan has completed. Additional borrowing is commonly used to fund home improvements but can be used for any purpose aside from raising money for a business or to buy land or property for letting out.

Agreement in principle - an initial document from your lender that gives you an idea of the amount that they would be likely to lend you. It serves as an idea of the size of your mortgage and if you can afford the property that you’re looking at. You might also hear it referred to as a ‘lending decision’ or ‘decision in principle’.

Binding offer - this means that once a lender makes the offer, they are bound by its terms. If, however, there is a material change in your financial or personal circumstances or your solicitor raises any issues which deem the property unacceptable to the lender, the offer could still be withdrawn.

Buy-to-let mortgages - specific mortgages for those that buy property to rent out.

Capital - the amount of money you have actually borrowed, or the amount you still owe on your property (excluding interest or other charges).

Completion - the final stage of a property sale when the ownership changes hands from the seller to the buyer.

Conveyancing - the process carried out by a solicitor of transferring ownership from one person to another.

Credit rating - a rating system used by financial institutions to judge an individual’s creditworthiness. A credit score is based on an individual’s credit history; the number of open accounts, total levels of debt, repayment history, and more.

Debt consolidation - taking out one loan to pay off a number of debts. It may be possible to increase your mortgage to pay off debts, but always seek advice before doing this. Find out more about remortgaging to pay off debt.

Early repayment charges - the charge that may be payable if you repay a loan or mortgage early or make an overpayment of more than your overpayment allowance.

Equity - the difference between the current market value of a property and the mortgage loan held against that property

Exit fees - the charge some lenders put in place when you exit a credit agreement early.

Fixed rate mortgage - when a mortgage’s repayments are fixed at one price until the end of the deal period.

Freehold - when you have complete ownership of a property and the land on which the property is built for an unlimited time.

Home mover - refers to someone selling one property and purchasing another.

Interest rates - the rate at which the lender calculates the interest they charge you.

Interest only mortgage - when your monthly payments only cover the interest on the amount you owe, so you are not reducing the outstanding sum each month.

Land Registry - a government department that records registered land in the UK.

Loan to Value (LTV) - represents the amount you are looking to borrow, or the remaining amount of your existing mortgage, as a percentage value of the property. Example - your property is valued at £100,000 and you have a £90,000 loan. The LTV is 90%. 

Leasehold - when you have the right to use the property for a set period of time, usually in return for paying ground rent to the freeholder. When the lease ends, you lose your rights.

Mortgage Protection Insurance - insurance that covers your mortgage payments if you can’t work due to unemployment, or become seriously ill or injured. Find out more about mortgage protection.

New build property - refers to a property that has not been occupied within two years of being newly constructed, converted, or refurbished.

Offset mortgage - allows you to save on the interest you will pay on your mortgage debt by ‘offsetting’ any savings you have linked to your mortgage. Example - your mortgage is £120,000 and you have savings of £20,000 with your lender. You would only pay interest on £100,000.

Overpayments - when you pay more than your required minimum monthly mortgage payment and build up an overpayment reserve. This allows you to pay off your mortgage earlier, or possibly make underpayments in the future.

Payment holidays - when a lender allows you to miss occasional mortgage repayments agreed in advance. These are paid back at a later date.

Porting - when you transfer your mortgage from one property to another when you are selling up and moving house.

Product fee - a fee charged in some instances to secure a particular mortgage deal. This is also sometimes referred to as a ‘reservation fee’.

Product transfer - when you switch from one product to another with your current lender.

Property valuation - the process of getting an estimate of the value of your home, based on its location, size, condition etc. It helps you to get an idea of a fair asking price for your property.

Remortgage - when you move your mortgage to another lender, without moving home. Find out more about remortgaging.

Reservation fee - a fee charged in some instances to secure a particular mortgage deal. This is more commonly called a ‘product fee’.

Standard mortgage rate (SVR) - the rate that you will be transferred onto when a fixed, tracker, or discount deal comes to an end. Each lender sets its own SVR and this is the default interest rate that you’ll be charged if you don’t remortgage.

Survey - the inspection of a property that must be carried out by a qualified surveyor before buying a property.

Title Deeds - the documents held at the Land Registry that prove legal ownership of a property.

Tracker rate mortgage - a mortgage where the interest rate that you are charged tracks the Bank of England’s base rate up and down by an agreed percentage. This means your payments will go up and down in line with the rate changes.

Underpayments - when you pay less than your monthly repayment. You can only do this by first making overpayments to your mortgage account, as this gives you the flexibility for the future.

Valuation fee - the charge for obtaining a valuation report of a property.

Variable rate mortgage - a mortgage where the interest rate offered by the provider varies and can move up and down with market fluctuations.