Buying and selling Jargon buster

Unsure of all the property jargon? Don’t worry, here are some practical terms and definitions you may hear to make you feel more confident.

• Advance – another term used to describe your mortgage loan.

• APR (annual percentage rate) – the total cost of your mortgage loan, including all costs, arrangement fees and interest charges, which is then shown as a percentage rate so you can compare this like for like with other rates

• Balance outstanding – the total amount of the loan outstanding after a certain period of time

• Bridging loan – a short-term funding solution enabling you to ‘bridge’ two situations, for example a bridging loan might be used if you were purchasing a new build property but had yet to complete the sale of your current property
• Building insurance – Cover taken out to rebuild your property from scratch should it be damaged by fire, thunder or lightening. The policy may also include  insurance against other situations. Your lender might also ask to be noted on the policy as they’ll have an interest due to the mortgage they have provided to you. You must insure your new property from the point you exchange contracts, which is the time you become liable for the building.
• Buy-to-let – if you are buying a property to let out to tenants, or you plan to let your current home, you will need a  buy to let mortgages, as well as checking you have the correct buildings and contents insurance cover.
• Chain – a very common situation where other people are involved in selling their home at the same time as you, and therefore you’re all reliant on one another (called the chain) to complete the transaction. It would take just one of the party not to sell and another not buy, for the whole chain to collapse.
• Completion date – this is the point in the process where you actually own your new home. All funds have been transferred, paperwork completed and keys handed over, usually by the estate agent involved.
• Contents insurance – this is cover insuring all the movable contents inside your home against accidental damage and theft. Buildings  insurance is taken out to cover the actual property.
• Contract – a Legal Agreement setting out contractual terms between the buyer and seller; it is drafted by a solicitor or conveyancer.
• Conveyancer – an alternative to a solicitor, qualified to act in the sale or purchase of a property.
• Conveyancing – Refers to the legal process involved in property transactions. We can discuss recommendations.
• Council tax – This is the local authority charge for providing local amenities and services. Your property will be given a council tax band which determines how much you’ll pay.
• Covenant – a condition contained with the lease that the buyer must comply with. Such a condition is normally passed on to subsequent owners for the duration of the lease period, subject to its wording. A restrictive covenant prohibits the owner from doing something.
• Deeds – a set of legal documents helping to define the ownership and boundary of property and land
• Deposit – the sum of money initially put down by a buyer when purchasing a property.
• Disbursements – this relates to fees which are normally shown separate to the standard legal fees charges by a solicitor or conveyancer in the purchase and sale of a property. This includes stamp duty, search fees, Land Registry fees etc
• Draft contract – this refers to an initial contract which is then edited to include the necessary information as required
• Early repayment charge – this refers to a charge made by a lender should you decide to pay a mortgage off earlier than the agreed repayment period. This could be either a flat percentage of the total loan or a fixed fee
• Energy Performance Certificate (EPC) – An EPC provides an energy performance rating for your home, with ratings varying from A (most efficient) to G (least efficient). It also gives recommendations of how to improve the home’s energy efficiency to save further money. An EPC is a legal requirement for a seller to provide to the buyer
• Equity – the difference between the mortgage owed on your home and the value of your property
• Exchange of contracts – the point in the process of selling and buying a home when both parties become legally bound to complete the deal and can no longer change their minds without financial repercussions
• Fixtures and fittings – a description referring to non structural items that are included in a sale such as carpets and curtains
• Freehold – when you buy a property to own it and the land it is on, outright. Houses are more likely to be sold on a  freehold basis.
• Gazumping – when you’ve had an offer accepted on a property you want to buy, but the seller accepts a higher offer from another buyer
• Gazundering – a situation where a buyer decides to lower their offer just before exchange of contracts.
• Ground rent – the annual fee received by a freeholder where the property is  leasehold.
• IFA –Independent Financial Adviser.
• Interest only mortgages– a mortgage where only the interest on the loan is paid each month. You will need to arrange a savings scheme so that you can pay back the capital amount borrowed at the end of the loan term
• Joint mortgage – this refers to when there’s more than one person on a mortgage
• Land Registry – the government body holding records of all registered properties in England and Wales
• Leasehold – a leaseholder owns the property and its land for the length of the lease agreement with the freeholder. Flats are more likely to be sold on a leasehold basis. During the period of ownership, they’ll pay ground rent and possibly also service charges for the maintenance of the building and land. When the lease ends, ownership returns to the freeholder unless the  lease is extended. Leases are normally granted for 125 years, but you may want to  extend it at the point of purchase if there is a shorter amount of time remaining on the lease
• Maintenance or service charge – the charge for the upkeep of a leasehold property. This is more common in blocks of flats or apartments, with the charge normally apportioned to the number of units within
• Mortgage deed – a legal document relating to and acknowledging, the Mortgage lender’s interest in the property
• Mortgage offer – a formal written offer to you from a bank or building society to lend an approved amount against a property
• Offer – an offer made by a prospective buyer to purchase a property. At this point the offer is not legally binding
• Offers over – offers over the price advertised are invited
• Property – either your home, the property you’re looking to purchase or another dwelling
• Repayment mortgage – a mortgage where the  monthly repayments consist of repaying the capital amount borrowed as well as the accrued interest. The amount borrowed decreases throughout the term and by the end of the loan term has been fully repaid
• Retention – where the lender holds part of the mortgage advance back until specified repair works to the property have been completed
• Sale agreed – the seller has verbally agreed to the offer made
• Searches – these are checks on local authority records to show up planning applications, highways, restrictions and land charges. Further searches may be requested by a solicitor such as chancel (a legal obligation to pay for repairs to the parish church), utilities, drainage etc. if they feel this is appropriate. Your solicitor may ask for payment for searches in advance
• Solicitor – a legal expert regulated by the Law Society, who is able to act for the purchase or sale of a property
• Stamp duty– tax paid to the government on the purchase of a property. The fee that’s actually paid can vary as it’s based on a percentage of the purchase value of the property. It is payable at the point of  completion.
• Subject to contract – a situation where an offer has been accepted, but contracts are yet to be exchanged. At this point it’s not legally binding
• Survey– a property inspection carried out by a qualified surveyor. The mortgage provider will insist on a survey | valuation  by a surveyor of their choice, but you can opt for the surveyor to do a more in-depth survey than the mortgage company needs. You can also arrange your own survey in addition
• Tenants – people living in a property owned by someone else
• Tender – the seller invites written offers for a property, which have to be received by a set closing date
• Title – this indicates who the legal owner is and is normally attached with the title deeds. If the property is registered, then a copy of this document can be obtained from Land Registry
• Under offer – when a seller has accepted an offer, but contracts are yet to be exchanged
• Variable interest rate – a rate of interest rate that fluctuates over time in line with general  interest rates.
• Vendor – another name to describe the seller