Can You Afford To Buy Right Now?

Can you afford to buy a house right now?


Things to consider

In terms of UK house prices this is one of the best times in history to buy property.

But how about for your personal circumstances?

Buying a home is probably the biggest financial decision you will ever make so it is worth taking time to consider whether it is the right choice for you. You will become responsible for all the costs of maintaining the property, including major structural repairs, routine repairs and improvements.

There are a lot of costs to consider initial costs as well as ongoing costs.

Here I’d like to breakdown all the costs involved in buying a property for you so that you know whether it is something you can afford right now an dthe options available for you if you need help.

Upfront costs needed
 

  1. Your Deposit
  2. Surveyor fees
  3. Stamp Duty
  4. Land registry fee
  5. Solicitor fees
  6. Mortgage arrangement and broker fees
  7. Furniture, decorating and moving costs

 
Ongoing costs to consider

  • mortgage repayments
  • mortgage protection insurance for if you fall ill or lose your job
  • life assurance to enable your family to pay off the mortgage if you die
  • contents insurance against the risk of theft, fire, flood or other accidents
  • council tax and water charges
  • gas, electricity, telephone, etc
  • ground rent and service charges may apply
     

These costs may vary dramatically depending on a number of factors. It is wise to consider your own circumstances and seek financial advise.

Jargon Buster

Jargon Buster

If you are purchasing a property for the first time, you may be unfamiliar with some of the legal and financial terms. This jargon buster outlines some of the terminology involved in the purchasing process. However, if in any doubt, you should contact your legal advisor.

Click on a letter to go directly to that place in the alphabetical listing

A       B       C       D       E       F       G       H       I       J       K       L       M       N       O      P      Q      R      S      T      U       V       W      X       Y       Z

 

Absolute title

Absolute title is the complete and outright ownership of a property.

Advance

A sum of money lent enabling the borrower to purchase a property (usually by a bank, building society or similar organisation).

Agreement

Another word for the Contract between Seller and Buyer.

Arrears

If you go into arrears it means that you have 'defaulted' at least once on your mortgage repayments, ie missed a month's payment. You will now owe a sum of money ‘in arrears’ to your lender.
If you find yourself in this circumstance you should contact your lender to seek help as soon as possible.

Auction

Where property is bought by a person bidding against others. Contracts are exchanged and the purchase is legally binding once the auctioneers hammer goes down.

 

Banker's draft

This is a cheque signed on behalf of the bank by a manager or one of his authorised staff. Because it is not signed by the customer it is treated as being equivalent to cash.

Bridging loan

Usually arranged through a clearing bank, but occasionally through a building society, a loan arranged over a short period until permanent funds are available.

Build complete

This is the point at which the house is ready for its final NHBC (National House-Building Council) inspection, at which point the CML (Council of Mortgage Lenders) certificate will be issued.

See also: NHBC website
See also: CML website
 

Bankruptcy Search

A search made by the Conveyancer to check whether the Buyer has
been, is or is about to be made bankrupt. The search is required by the mortgage lender.


Borrower

A person taking out a loan or Mortgage on a property. They may also be
known as a mortgagor.


Boundaries

The boundaries define the extent of the property. These are usually marked
out on the ground by fencing or by hedging, known as a boundary feature. Boundaries may be shown on the Land Registry title plan but are often not shown, especially with older properties.


Bridging Loan

A loan taken out to “bridge” the gap whilst waiting for the sale of a
property or receipt of a Mortgage Offer to fund a purchase.


Building Insurance

Insurance taken out by the owner of the property to protect the
property against damage from risks such as fire or structural damage. Buildings Insurance is required by a mortgage lender. The responsibility to insure a property may pass to a Buyer upon exchange of contracts.


Building Regulations

Approval by the local authority to the design and materials used in construction work including extensions or alterations to a property. Building Regulations also now cover matters such as the installation of double glazing and replacement boilers or hot water heaters.


Buyer

The person that is buying the property. They may also be known as the purchaser.

Buy-to-let

A buy-to-let property is purchased with the sole intention of renting it out to a tenant as an investment. Most mortgage lenders offer special 'buy-to-let' mortgage deals for this purpose.
As this type of lending poses a greater risk to the lender, you will usually need to put down a larger deposit upfront than for a residential mortgage.


Capped rate

On a capped-rate mortgage deal, the interest rate charged by your lender will never exceed the upper 'capped' limit, regardless of wider interest rate hikes by the Bank of England.
Such products give peace of mind in times of higher interest rates, but could mean you're in for a shock if rates have crept up significantly by the time your deal period ends. Read more on different types of mortgage deal in our guide.

Capital Gains Tax

A government tax on the sale of assets including property. Not usually relevant in domestic conveyancing save where a person owns more than one property.


Cashback

With a cashback mortgage your lender gives you a certain amount of cash on completion, which could be useful to spend on decorating, for example.
This is used as an incentive to entice you to take out the product, however it might not always be worthwhile – if you end up paying a higher interest rate, for example. It is in cases like this where you will need to find out the 'true cost' of the mortgage deal.

Caveat Emptor

“BUYER BEWARE” – The principle that the Buyer is responsible for
finding out the condition of the property by survey and inspection and with reference to matters affecting the legal title to the property by using a conveyancer to check the title and carry out Searches.


Chain

 
The series of individual transactions carried out by Buyers and Sellers which are linked together to form a chain of transactions for your particular sale or purchase. The chain may consist of only two people i.e. the Buyer and Seller in relation to one property or may extend to include several Buyers and Sellers. The beginning of the chain usually starts with a first time Buyer or Buyer with nothing to sell and the end of the chain usually ends with the Seller who is buying a brand new home or who is not buying another property.

As each transaction is linked, the chain moves at the rate of the slowest party within the linked transactions.


Chancel Repairs

An archaic liability affecting some properties to contribute towards the
upkeep of the chancel of the parish church. This may be revealed in historic title deeds or may be revealed by a Chancel Repair search which identifies areas of potential liability.

Establishing a liability for chancel repairs may require the seller to take out an Indemnity Insurance policy if there is none already in place to protect the property.


Charge

A charge is an entry in the Land Registry record that indicates the offering of a property as collateral for a loan (for example, a mortgage).
See also: Land Registry website


Collateral/Security

An insurance policy or property pledged as a guarantee of repayment of a loan.


Completion

When a transfer of property from vendor to purchaser takes place and in exchange for the balance of the purchase price, the necessary documents are handed over. This describes the point at which ownership is transferred to the purchaser.


Contract

A contract is legally binding. When applied to the sale of a property, this is a document which comprises two identical parts, one signed by the purchaser and the other by the vendor. At the moment of exchange, both parties are legally committed to completing the transaction, at which point ownership of the property transfers from one to the other in full exchange for payment of the full purchase price.


Conveyance

The deed which, in the event of a freehold property having unregistered title, transfers ownership of said title to the purchaser. In the event of a property being leasehold, the deed remains the same but is called an assignment, with further change being that if the title is registered the deed is then called a transfer.

Client

The person who has asked the Conveyancer to act for them in legal matters.


Client Care Letter

The Conveyancer must send the client this letter at the beginning of
the transaction to give clear details of the work to be carried out, who will be doing it at what cost and the complaints procedure of the firm.

Many Conveyancers will not start work for a client until they have the signed Client Care Letter returned to their offices.


Coal Mining Search

If the property is in an area designated as coal mining area as
advised by the Coal Authority the Conveyancer will carry out this search to see if there are any Coal Mining issues which have or currently affect the property.

Collar

If your mortgage deal has a collar then it means your interest rate will not fall any lower than the specified amount. So if rates drop to 3.75% and your deal is collared at 4%, you'll miss out on the savings this lower rate will bring.
However, the financial security this gives the lender may mean that some standard fees (such as the arrangement or valuation fees) when you take out the product are waived – offsetting the risk you take.


Commonhold 

New form of legal title to the property giving owners joint control over
common areas.


Completion Date

The last stage in the conveyancing process by which the purchase price
is paid by the Buyer’s Conveyancer and received by the Seller’s Conveyancer.
The Seller must move out of the property on this date and the keys are then released to the Buyer and they may move into the property. It may be referred to as your moving date.


Completion Statement

This is the final account that the Conveyancer will send and it
will detail fees plus VAT and all disbursements.

This is usually sent after Exchange of Contracts and before the Completion Date to enable any balance purchase monies to be paid over to the Conveyancer or on the occasion of a sale to establish the Mortgage Redemption
figure and the balance to be paid over to the Seller.


Conditions of Sale

The Conditions of Sale are detailed in the Contract that the Sellers Conveyancer prepares and sends to the Buyers Conveyancer. There are standard conditions governing property transactions to which the Conveyancer adds any special conditions applying to the transaction.


Conservation Area

This is an area protected by the Local Authority traditionally to preserve the character of a particular location. Additional Local Authority restrictions will apply particularly relating to the exterior of the property.


Contract

The legally binding agreement specifying the details of the house sale or
purchase. The Sellers Conveyancer prepares the Contract and sends it to the Buyers Conveyancer. Once all searches are received and queries are answered the Contract will then be approved and the Seller and the Buyer each sign their own copy.


Contract Package

This is the package of legal documents sent by the Sellers
Conveyancer to the Buyers Conveyancer and consists of;

•    The Contract
•    A copy of the deeds for the property
•    A plan of the Property
•    A Property Information form
•    A Schedule of Fixtures Fittings & Contents included or excluded from the sale.


Conveyancer 

Conveyancing is the legal description for the work which is done to
transfer ownership of a property from one person to another. Conveyancer is the job description of the person doing the legal work and may include a solicitor, legal executive or licensed conveyancer.


Conveyance

 
This is the old fashioned name for the document that transfers a property
from one person to another. Now known as a Transfer document.


Covenants/Restrictive Covenants

These are obligations/restrictions that are attached to
the property and contained within the Title Deeds. These may be positive for example an obligation to maintain a fence or negative for example a restriction upon carrying out a business from the property.

Deeds

Deeds are legal documents confirming your entitlement to ownership of a property.


Deposit

A deposit is a percentage of the full purchase price, normally 10%, which is paid by the purchaser on exchange of contracts.

Defaulting

If you cannot meet your minimum required monthly mortgage repayment and go into arrears on your mortgage, this is known as 'defaulting'.
If this happens you should speak to your mortgage lender about how to remedy the situation and there are also Government schemes designed to help people whose homes are at risk from repossession. See our guide to mortgage arrears and repossession for more information.

Defective Title Insurance

A form of Indemnity Insurance which will apply if there is a problem with the deeds relating to the property. The deeds may be missing, destroyed, lost or simply inadequate – for example if the plan of the property is not of a sufficient quality.

It is for the Seller to provide a defective title insurance policy in these situations to protect the Buyer and the Buyers Mortgagee from any financial loss which could result from the defective title.


Dematerialisation

The process introduced by the Land Registry following registration of
the property whereby the evidence of title is held electronically to supersede the need for paper title deeds.

Deposit

This is the amount you are required to pay towards the cost of the property yourself.
Some mortgage lenders used to offer deals where borrowers, commonly first-time buyers, did not have to pay any deposit, however the turbulence in the mortgage market and the wider economy has led these lenders to pull such products from their range.
Borrowers typically now have to pay at least 5% of the value of their home in the form of a deposit – more to get the best deals.


Disbursements

Expenses paid out by your Conveyancer on your behalf to third parties such as VAT, stamp duty, land registry fees and search fees.

Discounted-rate mortgage

A discounted-rate deal is one where the interest rate you are charged is a set amount less than your mortgage lender's standard variable rate (SVR). For example, if the lender has an SVR of 5.5% and the discount is 1% then you will actually end up paying 4.5%.


Drainage/water search

A search carried out by the Conveyancer to check whether the
property is connected to mains water and drainage and whether there are any other issues relating to drainage/water affecting the property.

Early repayment charges

These penalty fees, also known as redemption penalties or ERCs, are imposed if you want to leave your mortgage deal at any time within a specified period – often during your initial deal.
These are designed to stop you hopping from product to product. Penalties charged tend to be between 1-3% of the value of the outstanding loan, i.e. the amount that you have left to pay off.


E-Conveyancing

Proposals not yet in force to provide for all aspects of the property
transfer process to be handled electronically. Full E-Conveyancing is some years away but some parts of the process are now carried out electronically such as the money transfer, registration issues at the Land Registry and some searches.


Easements

This term means a right given to the property owner of adjoining land over the
property. Typically, this will be a right of way or a right of drainage or right to a water supply. It is the Sellers responsibility to disclose easements affecting the property.


Energy Performance Certificate 

A compulsory component of Home Information Packs
which are to be introduced in June 2007. This is an assessment of the energy efficiency of your home.


Environmental Search

A search carried out by your Conveyancer to check whether
there are any environmental issues affecting the property. This may include matters such as flooding, coal mining, landfill issues and radon gas.


Enquiries before contract

Prior to the purchaser's solicitor allowing the purchaser to sign the contract, either party is fully entitled to ask a collection of detailed questions regarding many aspects of the prospective property for purchase, and the vendor or his solicitor is requested to answer these fully before any contracts may be signed. This may also be called preliminary enquiries.


Equity

 
The equity in your property is the amount of money you have left after taking away the amount outstanding on your mortgage from the value of your property.
People who bought their house during the 1990s property boom saw a sharp increase in the equity contained in their property following a surge in property prices.
By contrast, people, especially first-time buyers, who have taken out mortgages for 100% of the value of their home or more in recent years are at greater risk of ‘negative equity’, where the mortgage debt is greater than the value of the property.


Equity release scheme

While equity release is the commonly used term to describe these products, there are two specific types – lifetime mortgages and home reversion schemes.
An equity release scheme allows older homeowners to release the cash tied up in their property. There is a minimum age limit to take out one of these products, usually between 55 and 65 years old, depending on the provider.
These schemes are not something to be entered into lightly and terms vary depending on the type of scheme taken out.
It is imperative that you consult an independent financial adviser who specialises in equity release if you are thinking about taking out one of these products.


Estate Agent

The estate agent acts on behalf of the Seller to sell the property. The estate
agent prepares the details relating to a property which must be approved by the Seller and which must be accurate. The estate agency will negotiate the sale between the Buyer and Seller and once terms have been concluded, prepare a Memorandum of Sale detailing those terms and the parties Conveyancers.


Exchange of Contracts

The Buyers Conveyancer and the Sellers Conveyancer exchange
contracts on the telephone and the Sellers Conveyancer will then receive the Contract signed by the Buyer with the Buyers Conveyancer receiving the Contract signed by the Seller.
This is when the Deposit is paid over, the transaction becomes legally binding and the Completion Date is fixed. If there is a chain, everybody in the chain must exchange contracts on the same day.

Fixed-rate mortgage

A fixed-rate deal has a set interest rate for the initial period – usually two to five years. This means you can be sure of exactly what you will be paying on your mortgage each month but your rate won't go up or down with the Bank of England base rate as a variable-rate mortgage would.


Fixtures and Fittings List

This is a list of items that will remain or be removed from the
property. This is completed by the Seller and a copy is attached to each part of the Contract so that it is legally binding.


Flexible mortgage

A flexible mortgage deal will allow you to overpay, underpay or even take a 'payment holiday' from your mortgage.
This can be useful if you get regular bonuses from your work and want to put this extra cash towards paying off a chunk of your mortgage, or if there are certain leaner months during the year where you might struggle to meet the standard repayment.
Each lender will have its own definition of 'flexible', so make sure that the deal you choose adequately meets your needs.
Visit our guide to flexible mortgages to find out more.


Flying Freehold

Where one part of freehold property is built over part of another so that
it does not touch the ground – often where a bedroom is built over a passageway. Indemnity
Insurance will be required if the necessary rights of support are not included on the Title Deeds.


Freehold

Where a person owns the property and land outright subject only to matters
contained in the Title Deeds affecting the property such as any Mortgages, easements or covenants.


FSA

The Financial Services Authority is an independent government body concerned with consumer protection in the financial market and regulates financial advisers.


Gazumping

This is where the Seller sells to another Buyer for a higher price. This
happens after an initial offer has been accepted but before Exchange of Contracts.


Gazundering

This is where the Buyer lowers his offer on the property after agreeing a price. This can only happen before Exchange of Contracts.


Ground Rent

This is the rent paid to the Landlord on a Leasehold property where there is a long Lease.


Guarantor

A guarantor is a third party who agrees to meet the monthly mortgage repayment should the main applicant find themselves unable to do so. This is more commonplace where first-time buyers are concerned, with the guarantor being their parent or guardian.


Homebuy schemes

These are governmental schemes designed to help existing tenants and key workers (doctors, nurses etc) to get onto the property ladder.
The scheme is extended to other potential first-time buyers depending on the individual's circumstances.
Homebuy schemes are similar to, but not to be confused with, shared ownership schemes. Click here for more information about getting on to the property ladder.


Home demonstration

A home demonstration is a meeting to demonstrate the property's fixtures and fittings to the purchaser. This should take place during site and sales normal working hours.

Home Information Packs

A compulsory pack of detailed information about a property.
Sellers must provide a Home Information Pack as from 1st June 2007 if their property is put on the market after that date. The Home Information Pack will include title information, some searches and an energy performance certificate. Please refer to our HIPS page for further information.
Indemnity
Single payment for a guarantee policy covering lenders in the event of the sum they advance being higher than the average amount normally applied to a purchase price.

Indemnity Contribution

All solicitors and licensed conveyancers must take out
insurance to protect Clients who may suffer any losses arising from errors or fraud in dealing with their matter. Some firms will insist that a Client contributes a small amount to the cost of their professional indemnity insurance premium.


Indemnity Insurance

A particular type of insurance taken out to cover a difficulty with the property or its title deeds. This includes defective title insurance, chancel repair liability insurance, flying freehold insurance and other particular policies. Usually it will be for the Seller to pay a one off premium to put the insurance in place to protect the Buyer and the
Buyers Mortgage lender. The value of the insurance is to the value of the property and it may be necessary for the value of the policy to be “topped up” at a later date if house prices rise.


Inland Revenue 

A government department that now collects tax on behalf of the government including Stamp Duty Land Tax.


Instructions

Authorisation by the Client to the Conveyancer. When a Conveyancer asks for instructions from a Client it is a request as to how the Client wishes the matter to proceed.

Joint Tenants

Where two or more persons own property together they may own it as joint
tenants or as tenants in common. With a joint tenancy, if one person dies the property passes
to the other owner automatically without a Will. This is how the majority of long term couples own their main home..

Land Registry

An official government office which registers and maintains all details of land ownership and any changes relating to that ownership.

See also: Land Registry website

Land Registry charge

A fee related to the value of the property being purchased for registering the ownership of the property in a new owner's name.


Lease

This is the ownership of a property for a fixed term. This will usually include payment of ground rent on a pre-set term basis.


Leasehold

A situation where a property is built on land owned by a person or organisation other than the owner of the property that is erected on the land. The leaseholder will have occupational rights for a fixed term in accordance with the specification of the lease assignment, which is of course subject to any conditions contained within the lease.


Lessor

The person or organisation who authorises and grants a lease.


Land Registry

A government department that holds records of all property in the United
Kingdom. Most property is currently Registered and any Unregistered land will be due for first registration following a sale and purchase.


Land Registry Search/fees 

The Buyer’s Conveyancer will make a search at the Land
Registry immediately before Completion to prevent any charge being placed against the property before the Completion Date by the Seller. This search is required by Mortgage lenders as it also protects their interest. The Land Registry charges a fee for registering the change of ownership of a property or the first registration of a property. The scale of the fees depend upon the value of the property.


Landlord

A landlord is the owner of the Freehold of a Leasehold property to whom rent
will be paid and who has the right to enforce the terms of the Lease.


Lease

A complicated document which lets a property for a fixed period which may be as long as 999 years. Leases will contain restrictions upon the use of the property and monies will be paid to the Landlord including rent and often a Service charge.


Leasehold

A leasehold property is one in which the owner of the property owns the Lease but not the Freehold. Almost all flats are leasehold but it is less usual with houses.


Lender

The Bank or Building Society who lends money to buyers to buy a property. May also be known as the Mortgagee.


Listed Building

A building considered to be of sufficient historic or architectural interest
to merit protection. A listed building is subject to additional planning restrictions.


Local Search

This is a search made by the Conveyancer on behalf of the Buyer and/or
Lender with the Local Authority. This is a list of questions which covers matters such as whether the road serving the property is maintainable by the Council, whether there has been any applications relating to the property or enforcement action taken.
The search is specific to the property and will not cover matters such as planning applications applying to surrounding properties.


Local Search Indemnity Insurance

This insurance is used commonly on re-mortgages where there is no need to carry out a full Local Search as one was carried out when the Buyer bought the property. Occasionally it may be used on a purchase if there is insufficient time to make a full Local Search if the Lender permits.

Management Company

If property is Leasehold then there will often be a Management Company owned by the Tenants set up to deal with the day to day running of the property and repairs and renewals. The Management Company will collect the Service Charge from the property owners.


Money Laundering Checks

Identity checks that Conveyancers and banks have to carry out to comply with Money Laundering Regulations.


Mortgage

A mortgage is a financial loan to enable the purchase of a property. A mortgage is also called a legal charge. A deed is drawn up which pledges freehold or leasehold property as security for a loan. If the mortgage payments are not paid in full on the due date, it gives the lender (such as the bank or building society) well defined rights to the property, including the power to sell the same if the lender so wishes. In accordance with the agreed terms of the mortgage, when the loan advanced is repaid with all due interest, these rights are completely cancelled.


Mortgagor

This simply means the borrower.


Mortgage Deed

This is the document the borrower signs to agree to the terms set out in
the Mortgage Offer. The Mortgage Deed is registered at the Land Registry upon completion and the Mortgage Deed is recorded in the Charges Register of the property.


Mortgage fees

May be charged by your Financial Adviser for acting on behalf of the Bank or Building Society.


Mortgage interest

In return for the loan that has been advanced on a property by the lender, you will pay a certain sum in interest. The rate of interest can be affected by economic conditions prevailing at any given time and the general financial state of the lender. This will therefore lead to a fluctuation of rate unless you have a 'fixed rate' mortgage.


Mortgagee

The lender


Mortgage Offer

A written offer to lend money on a property. The Mortgage Offer will contain all the terms of the Loan and the conditions upon which the money is leant to the borrower.

Mortgage protection policy

An insurance policy is taken out against a mortgage which ensures that, in the event of your death or sickness, the full outstanding amount of the loan will be paid off. It is also possible in certain circumstances to take out a similar policy, which ensures that in the event of the borrower's redundancy, the mortgage payments are met for a fixed period. This is invaluable as it allows time for the borrower to find alternative employment.


Mortgage term

When a mortgage is arranged it will be for a fixed period of time.

Mortgage guarantee policy

In the event of the loan required by the purchaser exceeding the normal maximum advance, the amount of loan may (subject to agreement) be increased by the issue of a mortgage guarantee insurance policy from a recognised insurance company. The premium for this policy is then paid by the borrower.

Mortgage Valuation Fee

A fee the borrower pays to the Lender to have the property
valued for mortgage purposes. The extent of the valuation will vary as between lenders as some mortgage valuation reports will involve a full visit and check at the property whilst others will be carried out on a desk top basis i.e. without the property being visited. Some lenders will not release mortgage valuation reports to the borrower. It can sometimes be upgraded at payment of an additional fee to a Homebuyers Report/Survey for the borrowers benefit.

NHBC - National House-Building Council

The authoritative body which provides insurance backed warranties to the majority of new homes constructed in the United Kingdom.

See also: NHBC website

New Build

Where a property is being purchased for the first time from the builder or
developer.

New Build Insurance

Usually offered by the NHBC but there are other providers such as
the Zurich Municipal or the Premier Guarantee. The scheme provides protection against major structural defects of a new property for the first ten years since construction

NLIS

A system allowing most searches to be made electronically in order to speed up the conveyancing process.

Offset mortgage

An offset mortgage is linked with your savings and sometimes your current account. The credit in these accounts is offset against your mortgage debt to reduce the amount you pay interest on.
You do not get interest on your savings or current account but you will pay less interest on your mortgage as a result. Interest rates are generally higher than for standard mortgages so you'll need a high credit balance to benefit overall.


Offplan

Where a property is being bought at the planning stage only and has yet to be
constructed.


Overriding Interests

Not all matters affecting the property are Registered or capable of
being registered at the Land Registry. The property will still be subject to those matters and the Sellers will be asked to disclose any overriding interests affecting the property.

Planning Permission

Approval by the Local Authority to the construction to the building, or change of use or extension to a property.

Portability

Your mortgage broker or lender will be able to tell you if your mortgage is portable or not. A portable mortgage will enable you to transfer borrowing from one property to another, sometimes to avoid additional fees or keep a specific discounted rate.

Possessory Title

Title acquired by a trespass over a number of years. This may also be
seen where Title Deeds have been lost and the Land Registry has accepted an application on the basis of use and occupation of the property. Will require Indemnity Insurance.

Preliminary or Pre-Contract Enquiries

A set of questions sent to the Sellers Conveyancer by the Buyers Conveyancer. These may be specific to the property or may be a more general questionnaire routinely used in a transaction.

Principle

Also known as capital sum, meaning the amount of the loan on which interest is calculated over the mortgage term.

Property Information Form

A standard form to be completed by the Seller giving details about the property.


Redeeming your Mortgage

When a property owner pays back the Mortgage on the
property the process is called redeeming the mortgage. If carried out by the Conveyancer as part of the conveyancing process, the Conveyancer will obtain a redemption statement showing the precise sum owed upon which the conveyancer will then rely to submit the funds.

This will also show details of any redemption penalties typically incurred when a person repays a mortgage early, typically if repayment is within the period of any fixed interest or other concessionary interest rates given by the Lender.

Redemption

The mortgage is finished when the final payment is made by the borrower. In the event of a mortgage being repaid earlier than the agreed fixed term, some organisations make a specific charge called a redemption fee. If applied, this fee will vary dependent upon the lender's terms.
Roofed in the point at which the roof is fully complete on a new property.

Registered Land

A property whose title is registered at the Land Registry.


Rent Charge

May be shown on a freehold title being the payment of the sum of money to a third party. Maybe historic in nature. May also require Indemnity Insurance if the rent charge has not been paid.

Remortgage

If you're looking to change your mortgage to a different deal but you're not looking to move home then you are 'remortgaging'.
Some lenders will offer more competitive deals to existing customers to tempt them into staying with them, while other lenders will actively seek out remortgage business to attract new customers.

Roofed in

The point at which the roof is fully complete on a new property.

Searches

Questions asked of various bodies (local authority, Environment Agency, etc.) about a property in which a potential purchaser has an interest, through their solicitors.


Second charge

A legally binding agreement whereby an organisation or individual who has advanced additional monies above the initial mortgage or loan has, in the event of due repayments not being made, the right of retention of property - but only in a secondary way to the main mortgage.


Site manager

This is the company representative who is responsible for the day-to-day operational control of an individual housing development.


Stamp duty

Transfers of property ownership will usually incur a government levy. The rates currently payable are; nothing to pay up to the property value of £175,000, nothing to pay up to the value of £250,000 for first time buyers only, 1% of the value between £175,000 and £250,000, 3% of the value between £250,000 and £500,000 and 4% between £500,001 and £1 million.


Subject to contract

In the event of the purchaser and the vendor having agreed terms 'subject to contract', this means a provisional agreement has been made either verbally or in writing, but either party may still withdraw from the transaction without having to give any reason for so doing.


Survey

Action carried out by way of inspection of a property by an independent surveyor, usually on behalf of the person intending to purchase the property or financial body.


Self-certification mortgage

Also known as 'self-cert', these mortgages target self-employed people.
Applicants who run their own business or don't technically have an employer (for example, someone who is working on a freelance basis) are granted a mortgage without having to confirm their income by way of a P60, payslips, accounts etc.
These mortgages have virtually disappeared now.

Seller

The person selling the property who may also be known as the vendor.

Service Charge

Payment under a Lease to the Landlord or Management Company for maintenance, insurance and other services.

Shared ownership

Shared ownership schemes are designed to allow people who would otherwise be unable to get a foot on the property ladder to do so.
The home buyer will enter into an agreement, usually with a local housing association, which sees them take out a mortgage on a share of the property and pay rent on the remainder. The portion that is owned will vary depending on the circumstances.


Stamp Duty Land Tax

A tax payable to the government payable upon the purchase of a property where the value of the property exceeds the stamp duty threshold, currently at £125,000.

Stamp Duty Land Tax Return

Lengthy form to be submitted to the Inland Revenue detailing the transaction and tax payable. Usually completed by the Buyers Conveyancer sometimes at an additional charge.


Standard variable rate

More commonly known as the SVR, the standard variable rate is the default mortgage interest rate your lender will charge.
While you are likely to pay less than this when you first take out your mortgage depending on the type of deal you choose, when your 'tie-in' period is up, your interest rate will move to the lender's SVR.
This rate can be higher than the one you were previously paying, so you should consider shopping around and remortgaging to a better deal at this point.
However, as the Bank of England base rate has fallen significantly in recent months you may not save money by switching so check the terms of your mortgage carefully.

Structural Survey

A survey giving details of the property commissioned by the buyer to
provide survey information than a Mortgage Valuation. Known by different names but the most common is the Homebuyers Report commissioned by the Buyer.
If a survey identified a deficiency, it may then be used to assist in renegotiating the purchase price to take account of any reduced value in the property by reason of the deficiencies identified.

Subject to Contract

 Before Exchange of Contracts all negotiations relating to the property are subject to contract i.e. they are not legally binding until contracts are exchanged.

Sub-prime/non-conforming

A sub-prime mortgage, also known as a non-conforming mortgage, is geared towards those with a less than perfect credit history. This could be bankruptcy or county court judgements (CCJs), or you could have fallen into arrears in the past.
These products, because of the circumstances, have higher rates, but mean that those who couldn't otherwise obtain finance for their property purchase can do so.
It is now much harder to get a mortgage if you have had credit problems than before the credit crunch.

Telegraphic transfer

The purchaser's solicitor will often use this method of transfer of monies during the completion process to move the balance of the purchase price of the property to the vendor's bank. On the receipt of this sum the vendor's bank will instruct the vendor's solicitor that it has been received, and at this point the vendor's solicitor will then request the vendor to release the keys of the property to the purchaser.


Telegraphic Transfer Fee

This is a bank charge for sending money electronically from bank to bank.

Tenants in Common

Where people own a property jointly but each owns a specific
percentage of the Equity. The share of the Equity is an asset which is governed by a persons Will and does not pass automatically to a co-owner as with a joint tenancy. Tenants in Common is typically used where the property is purchased for investment purposes or where one person is making a greater financial contribution.

Tie-in period

This is the period during which you are 'locked in' to your mortgage deal and will pay an early repayment charge to move your mortgage elsewhere – for example, if you have a two-year fixed-rate mortgage deal, your 'tie-in period' might be two years.
Once an initial deal is up, you will move from your introductory rate to your mortgage lender's 'standard variable rate' (SVR), which is usually higher, so if you don't have to pay early repayment charges to switch to a new deal at this point you will usually save money by doing so.
You should avoid mortgages that tie you in after your deal period has ended.

Transfer Deed 

The legal document that transfers the ownership of the property upon payment of the purchase.


Under offer

This is when a vendor has received an offer either verbally or in writing for the property, but no contracts have been formally exchanged.


Unregistered Land

Property which has not yet been registered with the Land Registry
because the ownership of the property has not changed hands for many years.
The Buyers Conveyancer will have to submit all the Title Deeds and documents to the Land Registry for first registration and will therefore have to investigate the title deeds very closely and obtain an up to date plan to ensure that the registration is fully correct.


Valuation

Lenders carry out a valuation to verify that the property is worth the amount you want to borrow. Some lenders will insist you use a specified firm, however there can be a certain amount of leeway for you to carry out a valuation yourself.

Valuation report

A professional assessment of the value of the property for mortgage purposes, made by a person nominated by the organisation that has received the mortgage application.


Vendor

A vendor is an individual, company or organisation which owns a property and wishes to sell it.