Mortgage Jargon Buster – Your Guide to Mortgage Terms
At Bowen Mortgages, we believe in making the mortgage process as simple and transparent as possible. Here’s a breakdown of common mortgage terms to help you understand your options with confidence.
A – C
🔹 Agreement in Principle (AIP) – A statement from a lender indicating how much they may be willing to lend you, based on an initial assessment.
🔹 APR (Annual Percentage Rate) – The total cost of borrowing, including interest and fees, shown as a percentage.
🔹 Arrangement Fee – A charge by the lender for setting up your mortgage, often added to the loan.
🔹 Base Rate – The interest rate set by the Bank of England, which influences mortgage rates.
🔹 Buy-to-Let Mortgage – A type of mortgage designed for landlords buying a property to rent out.
🔹 Capital – The amount of money you borrow from the lender (excluding interest).
🔹 Conveyancing – The legal process of transferring property ownership from the seller to the buyer.
D – M
🔹 Deposit – The upfront amount you pay towards the property purchase, typically between 5-20% of the property value.
🔹 Early Repayment Charges (ERC) – Fees charged if you pay off your mortgage earlier than agreed.
🔹 Equity – The difference between your property’s value and the amount you still owe on your mortgage.
🔹 Fixed-Rate Mortgage – A mortgage where the interest rate stays the same for a set period, usually 2-10 years.
🔹 Freehold – Full ownership of a property and the land it stands on.
🔹 Interest-Only Mortgage – A mortgage where you only pay interest each month, with the full loan amount due at the end of the term.
🔹 Loan-to-Value (LTV) – The percentage of the property’s value that is covered by the mortgage. A 90% LTV means you’re borrowing 90% of the property’s price.
🔹 Mortgage Term – The length of time you agree to repay your mortgage, typically 25-40 years.
N – Z
🔹 Negative Equity – When your property is worth less than the amount you owe on your mortgage.
🔹 Overpayments – Extra payments made towards your mortgage to reduce your loan balance faster.
🔹 Porting – Moving your existing mortgage to a new property without changing the terms.
🔹 Remortgaging – Switching to a new mortgage deal, either with your current lender or a different one, to secure better terms.
🔹 Stamp Duty Land Tax (SDLT) – A tax paid when buying a property above a certain value in England and Northern Ireland.
🔹 Standard Variable Rate (SVR) – The default interest rate set by the lender after a fixed or discounted rate mortgage ends.
🔹 Tracker Mortgage – A mortgage that follows (or “tracks”) the Bank of England base rate, meaning your payments can go up or down.
🔹 Underwriting – The process a lender goes through to assess your application and decide whether to approve your mortgage.
🔹 Variable-Rate Mortgage – A mortgage where interest rates can change based on market conditions.
Need More Help?
If you have any questions about mortgage terms or need expert mortgage advice, Bowen Mortgages is here to help!
📞 Call us: 0151 203 4409
📧 Email us: enquiries@bowenmortgages.co.uk
🌍 Visit us: www.bowenmortgages.co.uk
