Estate agents, conveyancers, lenders and surveyors all have their unique brands of home-buying jargon that can be confusing to a First Time Buyer. Our informative glossary of common terms will help make dealing with property professionals much more straightforward.
The increase in a property’s value. This may be due to a number of factors, from a booming property market to recent home improvements or developments in the local neighbourhood.
Fees which may apply to signing up for a particular mortgage deal. These are usually payable up front, or in some cases can be added to the final loan amount. Be aware that adding them to the loan increases your mortgage debt and the amount of interest you’ll pay, so it’s always cheaper over the long term to pay these as up front.
The interest rate set by the Bank of England.
Designed to cover homeowners in the event of damage to the property following events such as a fire, flood or structural damage. This does not cover the contents of your house (See 'Contents insurance' further down).
Building Survey (Level 3 Survey)
The most comprehensive level of home survey offered by RICS-accredited chartered surveyors. It is especially suited to older buildings or more run-down properties. You can read more about Building Surveys in our guide.
In the context of a mortgage, capital is the mortgage debt that needs to be repaid by the end of the agreed term – not including interest payments. With a repayment mortgage the capital will reduce over the mortgage term; the capital on an interest-only mortgage does not reduce unless you make additional part repayments.
A scenario involving several buyers and sellers whose purchases are inter-related and dependent on one another in a chain-like fashion. First Time Buyers are therefore usually the first link in a chain, enabling the owners of the house they wish to purchase to move up to a different property, and so on.
The date your property purchase is completed following the exchange of contracts between buyer and seller. This is typically the day that you’ll move into the property once all legal matters are settled and the monies are transferred. Read more about what happens on completion day.
Condition Report (Level 1 Survey)
The most basic type of home survey offered by RICS-accredited chartered surveyors. It is recommended for newer and conventionally built properties that appear to be in good condition.
An insurance policy that protects possessions within the home – different to buildings insurance which is designed to protect buyers in the event of structural damage to their home.
The legal process of transferring a property from one owner to another. Your property lawyer – a conveyancing solicitor or licensed conveyancer – will deal with the majority of the legal paperwork and administration in relation to your house purchase. Read more about conveyancing for First Time Buyers.
The document detailing the ownership of a property. Legal representatives of both parties will arrange the transfer of these when contracts have been exchanged.
A percentage of the agreed purchase price that must be paid to the seller’s property lawyer upon exchange of contracts.
The decrease in the value of a property. This is usually attributed to either a downturn in the broader UK housing market or issues within the local area.
Fees paid by a conveyancer on your behalf in order to carry out necessary checks such as local authority searches. These disbursements will then be invoiced to you at the end of the moving process.
Energy Performance Certificate
An official document detailing the energy efficiency of a property. You can read more about them in our guide to EPCs.
The overall value of the property, minus the mortgage or debt amount. A property owner may encounter negative equity if their home depreciates in value and ends up worth less than the amount they owe on their mortgage.
The title which confirms you as the owner of both the property and the land it sits on. The alternative to a freehold property is a leasehold (See 'Leasehold' further down this page).
Financial Ombudsman Service
The UK’s financial ombudsman; this is an impartial body that adjudicates on complaints and disputes between customers and financial services providers, including mortgage lenders.
A person that agrees to meet mortgage repayments of the borrower if the borrower is unable to meet the repayment deadlines for any reason. A guarantor is usually a parent or guardian and can significantly increase the amount a First Time Buyer can borrow.
Where a buyer has an offer on a property accepted, but the seller then chooses to sell to someone else, usually someone who has made a higher offer. Although gazumping is frowned upon it is not illegal and can happen at any time prior to the exchange of contracts.
Help to Buy
A range of government schemes aimed at supporting affordable home ownership, particularly for First Time Buyers.
HomeBuyer Report (Level 2 Survey)
The most popular type of RICS home survey, more detailed than a Condition Report (Level 1) but not as detailed as a Building Survey (Level 3). In a HomeBuyer Report, the surveyor rates the condition of all permanent structures included in the property and highlights important problems or defects that could affect the property’s value.
The percentage of the mortgage that is charged to the borrower on top of the mortgage repayments. Interest rates charged by mortgage lenders are usually influenced by the Bank of England base rate.
First Time Buyers purchasing a leasehold property are legally only acquiring a lease from the owner for a right to occupy the property, and not the property itself. Typically when the lease expires the property will return to the owner, however it is possible to apply for an extension to a lease.
A licensed conveyancer is someone who is qualified to process the legal aspect of property transactions. Conveyancers do not necessarily have to be qualified as a solicitor to handle your conveyancing; however, they must be regulated by the Council for Licensed Conveyancing (CLC). The CLC is a regulatory body that oversees the licensed conveyancing industry.
A special type of loan that enables buyers to pay for their new home over an agreed term.
Refers to buying a new-build property before it is actually constructed, with only the plans available for inspection.
Money repaid to the mortgage lender by the borrower along with any interest owing as part of the agreement.
If a homeowner defaults on the repayments of their mortgage or any other loans secured against their property, their home could be taken back by the lender. This means that the lender will ask you to vacate the property and then the property is sold, usually at auction and often for less than the full market value.
The Royal Institution of Chartered Surveyors is the accrediting body for professional home surveyors in the UK, responsible for setting and maintaining professional standards in the industry.
The solicitor you use to buy a property is a conveyancing solicitor. All solicitors must be regulated by the Solicitors Regulation Authority (SRA), which regulates and has an independent ombudsman scheme to handle any disputes. Before you choose a conveyancing solicitor, always make sure that they are listed on the SRA website.
Properly known as Stamp Duty Land Tax (SDLT), this is a transaction tax paid on the purchase price of your new property and its land. The money goes to HM Revenue & Customs and your conveyancer will submit the payment and the associated tax return on your behalf. Stamp Duty must be paid at the time of purchase, and cannot form part of your mortgage loan. There amount of Stamp Duty payable depends on the purchase price of the property.
First Time Buyers are exempt from paying Stamp Duty if the property they're purchasing is under £300,000, and they will pay a reduced rate if the property is priced between £300,000 and £500,000. You can use our Stamp Duty calculator to work out how much you'll need to pay.
Property surveys are carried out by surveyors to inspect the property you intend to purchase and ensure there are no major issues with its structure such as damp, subsidence, woodworm etc. The three levels of report offered by RICS surveyors are the Condition Report (Level 1 Survey), HomeBuyer Report (Level 2 Survey) and Building Survey (Level 3 Survey).
An assessment of the market value of a property. There are several different kinds, such as a mortgage valuation (a report requested by the mortgage lender to ascertain whether a property is suitable security for their mortgage loan).
The owner of the property available for purchase.
Updated April 2020