Additional Enquires
Questions raised by the purchaser’s solicitor when in contact with the vendor’s solicitor.
APR (Annual Percentage Rate)
The APR includes important factors such as:
All lenders have to tell you what their APR is before you sign an agreement. It will vary from lender to lender. Generally, the lower the APR the better the deal for you, so if you are thinking about borrowing, shop around.
Arrangement Fees: A fee that is sometimes charged for arranging a loan where a special interest rate applies e.g. fixed, discounted or capped rate
Arrangement Fees
A fee that is sometimes charged for arranging a loan where a special interest rate applies e.g. fixed, discounted or capped rate.
Assignment
Transfer of ownership of a lease or insurance policy.
Auction
The sale of a property to the highest bidder.
Basic Variable Rate
Every Mortgage lender has a standard variable rate, or SVR, of interest on which it bases all its mortgage deals. The standard variable rate is, in turn, based on the Bank of England’s base lending rate – and this is decided at monthly meetings of the Bank’s monetary policy committee, or MPC. Every time the MPC raises its rate, mortgage lenders race to increase their standard variable rates, generally by the same amount. And every time the MPC lowers its rate, the lenders do too – only often not so quickly! But that doesn’t mean mortgage lenders charge the same as the Bank of England.
Bridging Loan
A temporary loan providing financial cover to a buyer wishing to complete on a purchase of a property before selling their own home. These loans are expensive and are usually considered to be a last resort. But if a bridging loan can tide you over in the short term then the extra expense may save you from losing money already spent in the purchase process, as well as reducing stress.
Buy To Let Mortgage
A type of mortgage specifically designed for people who want to invest in the property market by purchasing one or more properties and letting them out to tenants.
Capital
The amount of the loan which interest is calculated.
Capped Rate Mortgage
Are supposed to offer the best of both variable and fixed rate deals. You agree to have a limit – a cap – on the maximum amount of interest you will pay over a particular period of time while allowing it to fall if the variable rate drops.
Chain
The parties involved in a linked transaction of more than one sale/purchase. A delay in one link in a chain can hold up all other related transactions.
Completion Date
The date when the transaction relating to the sale/purchase of a property is completed. This is usually the date you become the owner and can move in.
Completion Statement
A financial statement from the solicitor detailing all financial transactions in relation to the sale/purchase including costs and disbursements.
Conditions of Sale
The terms by which the buyer and seller agree to sell/buy the property. The Law Society sets standard conditions. The conveyance lawyer may set special conditions in each case.
Contents Insurance
Covers your personal possessions within the property.
Contract
The legally binding agreement specifying the detail of the sale or purchase. The seller’s conveyance lawyer draws up two copies of the same contract, and each party signs their own copy. When both parties are ready to legally commit, the two contracts are “exchanged” at which point the sale becomes binding on both parties.
Conveyancer
The property lawyer who manages all of the matters arising from the sale of a house or the purchase of a house. This can be a solicitor or a licensed conveyancer.
Conveyance or Transfer
The legally binding document that transfers the rights and burdens and the benefit of the land.
Convenants
Are restrictions that are imposed on the use of land or property by a former owner. If land or property is subject to any covenants, these will be shown within the deeds of the property. The existence of any covenants should be brought to the attention of a purchaser by their Solicitor when the land / property is sold.
Deeds
The legal title document which provides historical information about the property, possibly including details of any restrictive covenants, etc..
Deposit
The amount on exchange of contracts, which is only refundable in exceptional circumstances. Contracts usually provide for 10% of the purchase/sales price but this can often be negotiated to a lower level. The deposit forms part of the purchase price and should not be confused with the “deposit” towards a mortgage, which is the “cash” difference between the purchase price and the amount of mortgage.
Disbursements
The various costs the solicitor/licensed conveyancer will pass on to you in addition to their professional fees. E.g. land registry charges, search fees, photocopying etc.
Draft Contracts
Preliminary and unconfirmed version of the contract which is shared between solicitors to finalise.
Drainage Search
This will show whether or not the surface and/or foul water drains run into a public or private sewer.
Early Redemption Charge
A charge made by the mortgage lender if the borrower terminates a mortgage in advance of the terms of that particular mortgage. ERCs are generally imposed on fixed or discounted mortgages offering a relatively cheap deal for an initial period. They usually run only until the end of the initial cheap deal period, though some mortgages impose extended redemption penalties which continue even though the borrower has moved back onto the lenders standard variable rate.
Easement
A right given to the owner of a property over an adjoining property (e.g. right of way).
Environment Search
It has more recently been recommended that the buyer’s solicitor should also carry out an environmental search to see if there are any landfill or waste disposal sites in the area, if the property has been built on an old industrial site and whether there are any risks from contaminated land, toxic emissions, flooding, subsidence etc.
Equity
The proportion of the value of the property you actually own, as opposed to the amount mortgaged.
Excess
A fixed sum paid to the insurance company at the commence of any claim.
Exchange of Contract
The point that both parties are legally committed to the transaction. The time and date of exchange is recorded by the conveyancing lawyers of each party.
Fixed Rate Mortgage
A type of mortgage where interest repayments to the lender are fixed until maturity or for a specified term.
Fixtures and Fittings
A list of the items at the property, which are either included or excluded from the agreed price.
Freehold
Recognised by English law, freehold is the complete and indefinite ownership of a piece of land and any buildings on it. There can still be restrictions on the use of the land.
FSA
The Financial Services Authority is an independent government body concerned with consumer protection in the financial market.
Gazumping
When the seller accepts a higher offer from another buyer after an initial offer has been accepted.
Gazundering
When the buyer lowers their offer after the sale has been agreed.
Ground Rent
An annual charge paid by the leaseholder to the freeholder.
Guarantor
Someone who agrees to stand surety for your mortgage and will be liable to pay it off should you default.
Homebuyers Survey and Valuation
A survey done to a standard format set out by RICS.It is most suitable for conventional properties built within the last 150 years, which are in reasonable condition. It doesn’t detail every aspect of the property, and only focuses on urgent matters needing attention. It’s not usually suitable for properties in need of renovation, or if you’re planning major alterations.
HMO
Homes of Multiple Occupancy.
IFA
Independent Financial Advisor.
Individual Savings Account (ISA) Mortgage
An interest only mortgage that works on the same principle as endowments: you invest in a fund which is expected to build up enough cash to repay the mortgage at the end of the term, usually 25 years.
Indemnity Insurance
An insurance taken out by conveyance firms to cover losses to clients arising from errors or fraud in dealing with their matters.
Interest Only Mortgage
In an interest-only mortgage your repayments only cover the interest on the mortgage amount and do not repay any of the underlying loan capital. While there may be good reasons for operating a mortgage in this way, it is imperative that provision is put aside to pay off the loan at the end of the term. Using an investment vehicle to build up a capital sum may be one way of doing this e.g. through an ISA plan, but with all investments there is an associated risk that the sum provided on maturity may not meet the liability. It is important to get advice in this area to ensure that an interest-only mortgage is right for your circumstances.
Inventory
A list which describes in detail the condition of furnishing and contents of a property to be let out. This is done before the tenancy commences in order that any dilapidation during the tenancy can be identified.
Joint Tenants
Two or more people owning property. In the event of the death of one of the tenants, the property passes to the survivor(s). (regardless of the terms of the deceased owner’s will)
Land Charges Search
If you are obtaining a mortgage the lender will ask your solicitor to carry out a search to make sure that are you are not bankrupt!
Land Registry
The official body responsible for recording the ownership of land.
Land Registry Fees
Fees paid by your conveyance lawyer on the buyer’s behalf to register the ownership of property with the Land Registry.
Land Registry Search
This is carried out just before completion in order to find out if there are any new mortgages registered against the property that have not previously been disclosed. If there are then the buyer’s conveyance solicitor will require confirmation that these will be repaid.
Lease
A contract in which the legal owner (freeholder) of property agrees to another person using that property or part of it in return for a regular specified payment (known as rent) over a set term. Once the lease expires the ownership may revert to the freeholder or superior leaseholder.
Leasehold
This usually relates to a flat or apartment and is a form of ownership recognised by English law that is for a fixed period of time. The freeholder owns the freehold and the property will usually revert to him at the expiry of the leasehold period.
Licensed Conveyancer
A licensed conveyancer is a specialist in the transfer of property. Much like a solicitor, except that a licensed conveyancer might not be as qualified in non-property related aspects of the law.
Life Cover
An insurance policy that pays out a lump sum in the event of your death – often used as a form of additional security for a mortgage loan.
Listed Building
Buildings are ‘Listed’ because they are considered to be of special architectural or historic interest and as a result require special protection. Listing protects the whole building, both inside and out and cannot be altered or demolished without local government consent.
Loan To Value (LTV)
Loan to value refers to the amount of money borrowed (the loan), expressed as a percentage of the value of the property to be purchased or remortgaged (the value). The value of the property is defined as either the purchase price or the valuation, whichever is the lower.
Local Authority Search
This reveals details of the planning history for the property and whether the Council is aware of any breaches of planning, also any proposals for new roads or traffic schemes, tree preservation orders, conservation areas etc.. that are within the Council’s control that may affect the property.
Maintenance Charge
The cost of maintaining and repairing the internal, external or communal parts of a building charged to the tenant or leaseholder.
Maisonette
A property that is arranged over more than one floor often having their own entrance from outside.
Mortgage
A loan to help you buy your house. The loan is secured on the property to prevent you selling the property without paying off the loan. If you fail to meet the mortgage payments as agreed, the lender could force you to sell your home.
Mortgage Deed
The legal document gives the lender certain rights over the property.
Mortgage Fees
An amount charged by your financial advisor, or the lender, to cover the cost of arranging your mortgage.
Mortgage Offer
If the lender is happy with the valuation and references, you’ll be made a formal offer approving the mortgage and detailing all terms and conditions. This is usually sent to you and your solicitor.
Mortgage Repayment Protection (MRP)
An insurance policy which covers your monthly mortgage payments should you fall ill.
Mortgagee
The lender of the mortgage (i.e.: bank or building society)
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