Glossary of property terms

Posted 11 September 2015 by Keith Osborne

Explaining the words and phrases associated with buying, selling and owning a home.

For homebuyers, the jargon associated with buying, selling and owning a home can be really confusing. Our guide will help you understand every term you’ll need to know, as well as providing handy tips on navigating the trickier elements on the path to homeownership.


Appraised value: The value, rather than price, of the home you want to buy, as decided by a surveyor (see structural or building survey)

Arrangement fee: Sum charged by lenders to arrange your mortgage deal (see mortgage fees).

Auctions: The process of buying and selling a property at auction. Often a tool used to sell properties which are not occupied by the owner, or which have been repossessed by banks or mortgage lenders. Bidding publicly for a property at auction against other buyers can often prove a more affordable route into home ownership for first-time buyers, rather than purchasing on the open market.

Auctioned properties are often in a state of disrepair and may have been vandalised. Commissioning a full buildings survey before bidding is advisable, as is ensuring you have a mortgage offer in place. Unless pre-agreed with the auctioneer, successful bidders are required to pay a 10% balance of the total purchase price on auction day, with the full mortgaged sum due within a general period of 28 days.


Bank of Mum and Dad: The financial help first-time buyers receive from parents or grandparents when buying their first home. This could take the form of a cash sum for a deposit or assistance with future mortgage payments.

Base rate: National interest rate set by the Bank of England which acts as a yardstick for all banks and lenders to follow. It’s reviewed each month.

Buildings insurance: A policy that covers the structural costs incurred by homeowners to damage to their properties, such as fire or flood. Permanent fixtures such as baths and fitted kitchens should also be covered, while your household contents may be if you have a joint policy (see contents insurance). Buildings insurance may or may not be part of any mortgage package you obtain (see mortgage fees)

Buy-to-let mortgage: Not usually a term that applies to first-time home buyers. But it’s worth knowing that this is a type of mortgage designed for buyers who want to rent out a property for profit, rather than using it to live in.


Chain: A situation involving several buyers buying and selling their property whose transactions are inter-related, where the completion of each individual transaction is necessary for the chain to proceed. The breaking of one link of the chain – if for example, a buyer pulls out of a purchase – can often lead to its collapse.

First-time buyers are usually only linked to a chain if purchasing a second-hand property. Buying a new property is an additional way to avoid becoming part of a chain, as is purchasing a home at auction.

Commonhold: Introduced by the Commonhold and Leasehold Reform Act 2002, commonhold is a system of property ownership, typically for flats which was drawn up as an alternative to leasehold ownership (see leasehold). Essentially, homeowners who’ve bought a commonhold property own part of the freehold (see freehold), and have shared ownership and responsibility for common areas and annual services (see service charge). It is as yet an uncommon form of property ownership, although it has significant advantages for new owners - properties owned on a commonhold basis don’t depreciate in value in the same way that properties owned on a leasehold basis will as they come to the end of their lease period.

Completion: The point at which your property purchase is completed after contracts have been exchanged between buyer and seller.

Contents insurance: Insurance policy that covers the contents of your home – i.e. your possessions and furniture that may be sold with buildings insurance when you buy your home as part of your mortgage.

Conveyancing: Legal process transferring property ownership from vendor to purchaser

Co-ownership: A way for first-time buyers to get on the property ladder by spreading the associated costs with friends or family. If you’re thinking of buying a home with a co-ownership mortgage, see a lawyer before you buy a property, in order to draw up a co-ownership contract, and make sure you know what will happen if one person wishes to sell their share, or what they’ll want to do with it in the sad event of their death.


Deposit: The sum of cash you need to put down when buying a home to obtain a mortgage. Deposits required by lenders have risen from between 0 and 10% since 2007 to between 20 and 40%, leading to a government to help first-time buyers with a 5% deposit buy a new-build home (see First Buy Scheme) with a 20% low-interest loan.

Down valuation: Limit set by your lender on the amount of money you can borrow on a mortgage if the surveyor’s valuation report (see structural or building survey) suggests the home you want to buy isn’t worth what you’re happy to pay for it. This could help you renegotiate a price with the seller.


Early repayment charges (ERC): This is a penalty lenders impose to offset the loss they may incur if you’re trying to pay off your mortgage early, and are making overpayments each year. Often, you can overpay by a specific percentage before you start to incur charges. If you’re hoping to pay some of your first mortgage off early to build up the equity you have in your home, a deal with substantial ERCs won’t be suitable.

ERCs apply to fixed rate and variable mortgages, but not if the rate of interest you’re paying back is at the standard variable rate - at which point you are free to overpay by as much as you wish (see below).

Equity: The amount of money that is actually yours in terms of its market value, set against the percentage of it that’s owned by the bank you have a mortgage with. For example, if you’re putting down a 20% deposit towards your property, the equity you’ll hold on it will be 20%, unless the value of your home falls (see negative equity)

Energy performance certificate (EPC): Document commissioned by the seller to show the energy efficiency of their property on a scale of A-G – A being the most energy efficient. The more energy efficient a property is, the cheaper it is to run and to heat.

Estate agent: Sellers of property, who will act as mediator between you and the sellers of properties you view or make an offer on.  

Exchange of contracts: The point at which the property price becomes fixed between buyer and seller when the contracts of your terms of sale and purchase have been exchanged between the buyer and seller’s solicitors.

Exit fees: Charges by your lender if you’re paying off your mortgage or are switching to another lender. Check the small print of your lender’s terms and conditions to see if one will be levied if you decide to switch lenders (as many homeowners do).


Fixed-rate mortgage: Type of mortgage where the interest rate you’re initially paying remains the same throughout the term of your loan.

Fixtures and fittings: An inventory list of the fixtures and fittings in the home you’re buying. This typically includes lighting fixtures, boilers and radiators, white goods, such as the fridge, the washing machine, dishwasher, etc, plugs, carpets, curtains, built-in wardrobes and cupboards, TV aerials, lampshades, and so on. It’s estimated that if the seller removed all these items from your new home that it will cost you a whopping £15,000, so it’s important to use your solicitor or conveyancer to negotiate exactly what the seller’s leaving behind. Removal of white goods, for example, puts you in a good position to renegotiate the price. A typical list looks like this.

Bear in mind that there’s no law that specifies what the seller must leave behind – legally, they’re not actually obliged to leave anything. However, if you find when you’ve bought your new home that the seller has taken expensive items they’ve promised to leave you with, you’re entitled to take them to the small claims court to recover what it will cost you to replace the missing item.

Freehold: Ownership of the land on which a property sits. Common form of ownership for blocks of flats, which are divided up for tenants into leasehold properties. Bear in mind that your home will be worth more, and will be easier to sell, if you own a share of the freehold.


Gazundering: A demand from buyer to seller at the point of exchange of contracts to drop the agreed sale price. This may be a move on the part of the buyer to compensate for falling house prices.

Gazumping: Thought to derive from a Yiddish word for swindle, gazumping as a term refers to the seller’s rejection of your offer at the point of contract exchange, generally in order to accept a higher offer from another buyer, or to get a higher price for the property if house prices are on the rise.

Ground rent: If you own a leasehold flat, you’ll need to pay ground rent each year to your freeholder as payment for your right to occupy the land. Ground rent is likely to increase significantly as your lease increases in years. This is a charge that is separate from the payments you will need to make as a service charge to your freeholder (see service charge).

Guarantor: You may need a friend or parent to act as guarantor if your income isn’t enough to obtain the mortgage you need. The guarantor will promise to pay your debt if you default on any payments.


Income multiplier: A tool used by some mortgage companies to calculate how much they will be able to lend you to buy a home, according to your income.

Interest-only mortgage: A cheaper way to buy a property than with a repayment mortgage, as you are only required to pay to your bank the interest amassed over the period you’ve held the mortgage for. At the end of your mortgage term, the original sum you have borrowed will still need to be settled. Rare for owner-occupiers these days, but still available on some buy-to-let products.

Interest rates: The sum of money your lender will charge you to borrow the money you need to buy your home over the full term of your mortgage. The sum will vary according to what the Bank of England base rate is (see base rate), and whether or not you have a tracker or fixed-rate mortgage (see tracker and fixed rate).

You could easily wind up paying the same amount of money on interest that you spent on your property over the years, so it may be worth thinking about paying off your mortgage early (see early repayment charges). Your lender will give you a list forecasting your full predicted costs you’ll be paying back before you sign up to your mortgage.

Bear in mind that if a lender is offering a you particularly low interest rate, they may be offsetting this by increasing the size of the mortgage fee they will charge you to arrange the loan, so work out if a lower interest rate will save you money in the long run using a mortgage repayment calculator.


Joint income: If you’re buying a home with a friend or partner, your lender will take into account both of your incomes when deciding how much you can borrow

Joint tenants: Purchasing a property with a friend or a partner, which you will both hold as co-owners. If one of you dies, their share of the property will automatically pass to the surviving owner. Your solicitor will ask you if you’re buying your home with a partner whether you want to jointly own your property, or whether you each own a specific share (see tenants in common).


Lease: A document detailing your right to occupy the flat you’ve purchased according to the terms laid down by the freeholder (see freehold) when the building was first constructed. It will set out the length of the lease (usually between 99 and 125 years), the terms and conditions (to own pets, for example, you may need to ask the freeholder’s permission), the sum of ground rent you will need to pay every year (see ground rent), and the proportion of the annual service charge that you will need to pay (see service charge).

Leasehold: The most likely property ownership status you’ll have if you’ve bought a flat. This means you own the property, or flat, that you’ve purchased, but not the actual ground it sits on, which is owned by a separate freeholder – often your local council, a housebuilder, or a private individual (see lease for the terms and conditions of your occupancy).

Lender’s valuation survey: A valuation of the property you’re aiming to buy which will be carried out by your lender before agreeing to give you a mortgage. Bear in mind that the price that you’ve agreed to pay may be deemed to be too high. As this is a valuation survey, you will also need to commission a separate structural survey to ensure the property is structurally sound.

Loan-to-value (LTV): A percentage expressing the size of your mortgage in relation to the deposit you have at the point of purchase. For example, if the home you’ve bought is worth £200,000, and you have a mortgage of £180,000 following a deposit of £20,000, your LTV will be 90%.


Mortgage: A loan to finance the purchase of a property from a bank or financial institution, set with specified monthly payment periods in a set period of time, usually 25 years, and at defined interest rates. The lender with whom you have a mortgage is likely to change several times over the course of your mortgage term, as most mortgages will only lock you in to a particular rate of interest for between three and five years. The two main types of mortgage you can buy on the market are fixed rate and variable mortgages. Shopping around is important when taking out a mortgage to get the most favourable rates – comparing prices online first is a good place to start.

Mortgage fees: Sum of money charged by a bank to set up a mortgage. This may include a product fee (also known as an arrangement, reservation or a booking fee), a valuation fee, where the bank will pay a surveyor to value your property, a higher lending charge (HLC), if you are borrowing more than 75% of your property’s value, an insurance fee (if your lender wants to sell you buildings insurance, they may charge you a fee if you decide to buy it elsewhere) and a legal fee, which covers the lender’s costs incurred when you take out a mortgage, which is set by their solicitor. ‘Free legals’ is sometimes offered as a mortgage incentive.

Mortgage statement: A document sent by your bank annually once you’ve purchased a property that outlines how the amount you’ve borrowed as a mortgage is decreasing over the term of your loan.

Mortgagee: The lender of a mortgage, usually a bank or financial institution.

Mortgagor: The holder and borrower of a mortgage.


Negative equity: If the value of your home plummets to below the amount of money you owe your lender.

New build property: Brand new property built by a housebuilder or private builder. May come with a range of incentive programmes, such as part payment towards your house deposit with a low or no-interest loan that has to be paid off within a certain period of time, or when you sell your home.

NHBC (National House Building Council): The most common (though not the only) building guarantee on new build homes, which insures you against structural damage for a specified period of time.


Off-plan: Buying a property literally ‘off the plans’, which hasn’t yet been fully constructed. This refers specifically to new-build homes, and means contracts between buyer and seller (in this case, the developer) are exchanged before the actual building work has finished.


Premium: Amount you need to pay each month for an insurance policy.


Repayment mortgage: A mortgage which covers the repayments of the total capital sum you’ve borrowed to buy your property, as well as the interest charged by the bank with whom you hold the loan.

Repossession: When your home is seized by the bank or financial institution with whom you have taken out a mortgage if you can’t keep up with your monthly repayments.


Searches: The Local Authority, environmental and Land Registry investigations carried out by your solicitor or conveyancer to make sure your proposed new home won’t suffer in the future from adverse future development or environmental plans.

Service charge: Charges billed yearly by freeholders to cover the costs they’ve incurred by providing services to maintain the building and land that your flat occupies. This should cover general maintenance, repairs, lighting, buildings insurance, weekly maintenance of communal areas such as stairways and halls. It also may include the salary your freeholder is paying a managing agent to carry out all this work on their behalf, contributions to a reserve fund in case significant repair work is necessary in the future, and if your flat is particularly flashy, a concierge service. The terms of what you should or shouldn’t be paying for, and the proportion of the service charge each flat in your development will be paying should be laid out in your lease (see lease).

Shared Ownership: This can refer to buying a home with a friend or family member, but it can also refer to a part-ownership system of buying a property via a housing association, where you can buy a proportion of your home, and aim to buy the rest in due course.

Once you’ve purchased a property, you’ll need to pay a subsidised rent to the housing association, in addition to your mortgage payments. The legal fees associated with this form of homeownership tend to be very high.

Solicitor (or conveyancer): Legal professional you instruct to represent you in the purchase of your home. They will carry out Local Authority, environmental and Land Registry searches, arrange for your home ownership to be registered with the Land Registry, draw up and oversee the exchange of contracts between buyer and seller, transfer your Stamp Duty and the total cost of the property from your bank to the seller. You’ll also collect the keys for your new property from them on completion. Your solicitor may also be able to store your title deeds.

Choosing the right solicitor is crucial to a smooth, fraught-free home purchase in what can be a very stressful time. Search the Law Society’s database to find a good one in your area. Your estate agent, mortgage lender or developer, if you are buying a new home, is likely to recommend a solicitor, but instructing a solicitor independently will give you more control of the process if anything goes wrong.

Snagging: The checking process used by developers to ensure new homes don’t have any defects or structural faults. Most new homes are bought off-plan (see above), which exposes buyers to a greater risk of snagging. You can download a form to see the sort of areas that are covered.

Stamp duty: A tax charged by the government for property purchase on buyers. The amount you pay will depend how much your home is worth. 

Standard variable rate (SVR): The basic rate of interest established by your bank on its loans, which will reflect market conditions. For example, if the base rate of interest (see above) set by the Bank of England is low, as it currently is, this will be reflected accordingly in the SVR. This may actually be lower than the rates set by your bank for fixed rate and tracker mortgages.

Structural or building survey: A report commissioned from a surveyor to check if the home you want to buy is structurally sound, and to list its major and minor defects. The survey results can be used to negotiate with the seller if the amount of work you need to undertake on the property on purchase is significant.

Surveyor: Professional employed to carry out a structural survey of the new home you’re planning to buy.


Tenants in common: Joint, but not necessarily equal, ownership of property on purchase. For example, you may own 90% of the property, and your partner may own 10%, according to how much you’ve each contributed to its costs. If one of you dies, the share will not automatically pass to the other partner, but will be divided up amongst their beneficiaries if they’ve made a will.

Title: The legal right you hold to ownership of your property.

Title deeds: The documents which testify to and show the ownership of a property.

Tracker mortgages: Mortgage set at a variable rate of interest which tracks the Bank of England’s base rate, and moves up or down according to market conditions.


Vendor: Another term for the seller.

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