Jargon Buster
Here is a brief explanation of some of the terms you may come across when buying your home:
APR
This is the figure used to compare different mortgages and is the true cost of borrowing. It takes into account the fees that you pay to set up your mortgage.
Arrangement Fee
This is a fee that the mortgage lender may charge for the administration of your mortgage. It may be payable up front or sometimes it can be added to your mortgage advance.
Base Rate
The rate of interest as set by the Bank of England.
Booking Fee
This is charged on some mortgages, usually fixed or capped rate mortgages, which guarantee the interest rate or the mortgage funds.
Chain
A chain forms when peoples property sales and purchases are reliant upon each other.
Completion
Where the purchase of your property is complete and your solicitor has forwarded the funds to the vendors' solicitor.
Conveyancing
The legal work that the solicitors carry out for buying and selling a property.
Equity
The value of your property, less any outstanding mortgage amount on it.
Exchange
The point at which buyers and sellers are committed to the deal.
Freehold/Leasehold
Freehold - The owner owns both the property and the land upon which it stands.
Leasehold - One person owns the property, but another owns the land upon which the property stands.
Land Registry Fee
A fee charged by the solicitor to register the ownership of land with the Land Registry.
Loan to Value
The proportion of the value of the property upon which the lender will grant a mortgage.
Local Authority Search
A check conducted by the purchasers' solicitor to see if there are any local authority issues that may affect the value of the property being purchased
Mortgage Indemnity Guarantee Premium (MIGP)
This is an insurance policy taken out by the lender to protect themselves against any financial losses caused by mortgage default. The borrower pays for it and it is usually imposed on mortgages with a loan to value ration of 90% or higher.
Retention
The lender may hold back part of the mortgage advance until certain repairs have been carried out on a property.
Stamp Duty
A tax payable to the Government on the purchase of properties valued at £60001 or more. The amount payable is dependant upon the value of the property at time of purchase.
Term
The period of time over which you choose to repay your mortgage.
Title Deeds
The legal document that shows who owns the property.
Valuation
A report carried out by the mortgage lender to ensure that the property is a sound investment for them to lend the money on and that it is not overpriced.
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