Mortgage jargon buster

Taking out a mortgage is a big financial commitment, so it’s important to be clear on exactly what you’re getting. But with a ton of technical terms to wade through, that’s easier said than done.

To help you get to grips with mortgage jargon quickly, we’ve put together a glossary of some important terms and acronyms. Whether you want to know the difference between an AIP and APRC, or you’re curious about this ‘equity’ you apparently have, simply look up the term in our alphabetically-ordered list.

Mortgage terms explained

Agreement in Principle (AIP)

If you get an Agreement in Principle from a mortgage lender, it means that, based on basic information about you, they think they can probably give you a mortgage. An AIP can be useful for property viewing and making an offer on a house. However, it doesn’t guarantee you a mortgage – you’ll still need to go through a full affordability check and credit search.

Annual Percentage Rate of Charge (APRC)

APRC is the total yearly cost of your mortgage and includes all interest, fees, and charges the lender may apply.

Arrangement fee

Some lenders may charge you for setting up your mortgage. This is called an arrangement or administration fee – it’s typically around £1,000, although this can vary.


If you’re in arrears, that means you’ve missed a mortgage payment. You might get a penalty fee, and your credit score may be damaged.

Bank of England base rate

The Bank of England sets the official rate of interest, called the base rate. Most tracker rate mortgages follow this rate, and lenders may decide to change variable rate mortgages in line with it too. So, if the base rate goes up, you may have to pay more interest.


If you want help finding and applying for a mortgage, you could use a mortgage broker. Their expertise and industry contacts can help them find the right mortgage for you. Some brokers are free to use, but you should always ask how much of the market they cover.


The completion date is the day you finally become the legal owner of your new property. It typically happens a few weeks after the exchange.

Conveyancer / Conveyancing

A conveyancer is a specialist lawyer who looks after the legal process of buying, selling or remortgaging property, which is known as conveyancing.

Deposit amount

This is an amount of money you put towards the price of a property when you first buy it – the rest of the cost is covered by your mortgage.

Early repayment charge

Some lenders may charge you a fee if you go above the agreed limit for overpayments, change to a different mortgage or pay back your mortgage while you’re still in a fixed rate period.


The difference between the value of your property and the amount you still owe on your mortgage is called your equity. Many people remortgage to free up equity for spending on things like home improvements.


The exchange date is the day you officially exchange contracts with the seller (usually through your solicitors) and the property sale becomes legally binding.

Fixed rate mortgage

With a fixed rate mortgage, the interest rate is fixed at a set amount for a specific period of time, so your mortgage payments stay the same each month.


If you own your property on a freehold basis, you own both the property and the land it stands on.


A guarantor is someone who agrees to pay your monthly repayments if you can’t afford to. This is usually a friend or family member.

Higher lending charge

If you’re borrowing a high percentage of the property’s total value, you may have to pay a higher lending charge. This helps protect the mortgage company in case you can’t keep up with your payments.

Home mover

If you sell your home and move to a new one, you’re a home mover.

Interest only mortgage

With an interest only mortgage you only pay interest each month. At the end of the mortgage term, you’ll still owe the full amount borrowed.

Joint mortgage

If you take out a mortgage with another person or people, such as your partner or friends, it’s called a joint mortgage.

Joint tenants

This is when two or more people jointly own a property. Each has the right to survivorship – meaning if one of them dies, full ownership of the property goes to the remaining tenants.


If you’re a leaseholder, you own the right to live in your property for a fixed period, but you don’t own the space or land it sits in. You’ll usually pay ground right and service charges to the freeholder.

Life assurance

This is a type of insurance that pays out a tax-free lump sum of money if you die, which can be used to pay off your mortgage. It may be more expensive than standard life insurance, but this is because it covers you throughout your whole life – as long as you continue to pay the premium – and it guarantees a lump sum payment when the policy ends.

Loan-to-value (LTV)

The loan-to-value ratio is how much you’ve borrowed with a mortgage compared to the value of your property. It’s calculated as a percentage – so if your house is worth £300,000 and you owe £270,000 on your mortgage, your LTV is 90%. Generally, the lower your LTV, the better your chances of getting a low rate.

Mortgage term

This is the length of time you have to repay your mortgage. The typical mortgage term is 25 years, but they may be as short as 6 months or as long as 40 years.

Negative equity

Negative equity happens if the value of your property drops below the amount you owe on your mortgage

Portable mortgage

You can transfer a portable mortgage from one property to another, for example if you move home.


Remortgaging means changing your mortgage, either with your current mortgage provider or a new one.


If you default on your mortgage because you can’t make the repayments, your mortgage company can take your property and sell it to recover the money you owe them. This is called repossession, and it’s only ever used as a last resort by lenders.

Stamp duty

When you buy property, you’ll usually have to pay Stamp Duty Land Tax (SDLT) to the Government. The amount you pay depends on the price of your property.

Standard Variable Rate (SVR)

If you have a promotional interest rate period on your mortgage, you’ll usually be put on the SVR when it ends. This is the mortgage company’s default interest rate.


When you’re looking to buy a home, a surveyor can check the property for any potential problems, such as dry rot or subsidence.

Tenants in common

This is when two or more people own a property together. Their shares may not be of equal value – for example, one person may own 30% of the house, and the other 70%. Tenants in common don’t have the right to survivorship, so they can leave their share to anyone they choose in their will.

Tracker rate mortgage

With a tracker rate mortgage, the interest rate follows an independent interest rate – usually the Bank of England base rate – going up and down as it does. This means the amount of interest you pay could change during the mortgage term.


This is an estimation of the worth of your property and is usually carried out by a professional valuer or surveyor.

Variable rate mortgage

With a variable rate mortgage the interest rate isn’t fixed and may change over time, going up or down.

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