Jargon Buster: key terms in Home Buying
It’s no secret that the property industry uses a lot of jargon. Some of this is unavoidable so we created a glossary of terms that are related to the property purchasing process.
At Jacobs Steel, we understand how to deliver the best service to each and every one of our customers, and that starts with open, honest and clear communication. We believe you should feel confident and empowered throughout your property buying process and hope you find this helpful. Not understanding these terms could lead to costly mistakes.
Glossary
Annual Percentage Rate of Charge (APRC)
A figure that shows the total cost of a mortgage per year, including interest and associated charges, useful for comparing different mortgage offers.
Base Rate
The interest rate set by the Bank of England that influences borrowing costs across banking institutions.
Broker
A professional who assists potential home buyers by comparing various mortgage products from different lenders, providing advice and assistance in application. Brokers typically earn a commission from the chosen lender.
Bridging Loan
A short-term loan used to cover the interim period between buying a new property and selling an old one, often with high interest rates.
Buying Scheme
Government initiatives designed to help individuals secure property ownership, such as Right to Buy, Shared Ownership, or Help to Buy.
Closing Date
The deadline set by an estate agent for submitting offers on a property.
Completion
The final step in property purchase when ownership officially transfers from the seller to the buyer, who then receives the keys.
Conveyancing
The legal process which involves the transfer of property ownership, handled by solicitors for both the buyer and seller.
Covenant
Restrictions or conditions listed in the title deeds that the property owner must comply with, potentially affecting property use or alterations.
Deeds
Legal documents that record property and land ownership, maintained by the Land Registry in England and Wales, with separate systems in Scotland and Northern Ireland. Initially handled in paper form, deeds are now updated electronically.
Disbursements
Expenses paid by conveyancing solicitors on behalf of their clients for various services, which are then charged to the client.
Early Repayment Charge
A fee imposed by lenders if a mortgage is paid off early or if a borrower exits a fixed-rate deal prematurely.
Energy Performance Certificate (EPC)
A document rating the energy efficiency of a property from A (most efficient) to G (least efficient), required when selling or renting a property.
Equity
The percentage of a property’s value owned outright by the homeowner, free of any mortgage.
Fixed Interest Rate
An interest rate on a mortgage that remains unchanged for a specified period, typically two or five years. At the end of this period, the borrower must secure a new mortgage deal or default to the lender’s standard variable rate.
Freehold
Ownership of both the property and the land it stands on. Common for houses in the UK, whereas flats and some estate properties are often leasehold.
Gazumping
Occurs when a seller accepts a higher offer from a new buyer after already accepting an initial offer, potentially displacing the original buyer.
Gazundering
A situation where a buyer lowers their offer just before closing the deal, pressuring the seller to accept the reduced bid to avoid starting over with a new buyer.
Land Certificate
Previously issued as paper certificates, these are now part of the electronic records held by the Land Registry, detailing property ownership.
Lease
In a leasehold arrangement, the buyer purchases the right to occupy the property for a set term, which can drastically range in duration. Owning a leasehold might involve additional costs like ground rent or service charges.
Mortgage
A loan specifically for purchasing property.
Stamp Duty
A tax paid by the buyer to HM Revenue and Customs upon purchasing a property, with specific terms in Scotland and Wales known respectively as Land and Buildings Transaction Tax and Land Transaction Tax.
Surveying
The process in which a professional surveyor assesses a property for any existing or potential issues, typically after an offer is accepted. Surveys vary in depth but generally include checks on the property’s condition, utilities, flood risk, and safety concerns.
Tender
A method of selling property where buyers submit blind bids by a specific deadline, often contributing to the agent’s fees.
Variable Interest Rate
A mortgage interest rate that can fluctuate, such as a standard variable rate or a tracker rate. These rates might be higher than fixed rates but often don’t carry early repayment charges.
