Taking the mystery out of mortgages

The annual percentage rate of charge (APRC) is the total cost of the loan expressed as an annual percentage.  It's provided to help you compare different offers.

If you fall behind on your mortgage payments you are "in arrears".

A rate of interest set by the Bank of England that tracker rates and lenders' standard variable rates usually follow.

An independent adviser who can help you with mortgages and other financial matters.

Your monthly payment covers the interest and also reduces the total balance outstanding.

A fee to cover the cost of electronically transferring the mortgage funds to the borrower. Our CHAPS fee is £30.

The legal process of buying and selling property. This can be done by an Advocate or specialist-licensed conveyancer.

The difference between the amount you borrow and the amount you’ll end up paying back, taking into account interest and other charges.

The amount you need to pay yourself towards the cost of the property. This varies depending on the product and lender.

Some mortgages, such as a fixed rate mortgage, charge a fee if you pay back the loan early. This can vary, so check your original letter of approval or terms and conditions for the amount.

The difference between the current value of your home and the amount outstanding on your mortgage.

This is an administration fee payable to service providers when you fully repay your mortgage.  

A mortgage where the interest rate stays the same for a specific period (e.g. two or five years) even if the base rate changes in the meantime.

Property ownership where you own both the property and the land it stands on.

Gazumping occurs when a seller accepts a verbal offer (a promise to purchase) on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously verbally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase.

This is where you hold property ownership rights equally with another person or persons. If one person dies, ownership reverts entirely to the surviving person or persons. This legal agreement supersedes any Will the deceased may have made.

This is where you own the property but not the land it is built on, for a specific number of years. Flats are usually owned on a leasehold basis. You may find it hard to get a mortgage if there are fewer than 70 years left on the lease of the property you want to buy. Leases are renegotiable, but the shorter the remaining years, the more expensive it will usually be.

LTV means Loan to Value. The size of your mortgage as a percentage of the value of your property. For instance, if you have £70,000 mortgage and your home is worth £100,000, your LTV is 70%.

The date the mortgage must be repaid in full, or by which a new agreement needs to be taken out.

The amount you pay to your lender for your mortgage each month.

This is your guaranteed offer. Once your mortgage is approved you'll get a formal offer setting out the terms and conditions.

The amount of time you are repaying your mortgage over (e.g. 25 years).

When the value of your home falls below the amount of your mortgage.

This is when you pay extra, over and above your monthly mortgage payment. Overpayments save you interest and may help you to pay your mortgage off sooner.

Where an existing mortgage can be transferred between properties when you move house.

This is a set-up fee for your mortgage. Lenders will charge different product fees so do shop around.

The amount it would cost to rebuild your home if it's destroyed (by fire for instance). This is needed for insurance purposes.

When a person transfers their mortgage from another lender.

SVR means Standard Variable Rate. This is the default mortgage interest rate your lender will charge you after your initial mortgage deal ends if you choose not to take a new fixed or tracker rate deal.

The fee charged by a lender who, with the customer's written consent, requests details from their existing mortgage lender.

A tracker mortgage is a variable rate mortgage which means that the interest you pay and therefore your monthly mortgage payment can be subject to change. The mortgage interest rate is set at a fixed percentage above the Bank's base rate, which usually tracks the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the Bank's base rate.

Mortgage lenders require a valuation to prove that the property is worth the amount you want to borrow.