Mortgage jargon buster (plain English)

Mortgage jargon buster (plain English)

Mortgage conversations can be full of abbreviations and technical terms. This glossary explains common words you may see across the mortgage process—whether you’re buying a home, letting a property, remortgaging, or arranging property finance.

Use it as a quick reference when you come across terminology in an offer, valuation, or legal paperwork.

---

How to use this glossary

• Find the first letter of the term you’re looking for.
• Read the definition to understand what it means in practice.
• If a word appears in documents you receive, use the explanation here to help interpret what it’s referring to.

---

A

Acceptance

A document confirming that a mortgage provider has accepted your application/offer.

Adverse credit / poor credit

A general term used for applicants with a history that may indicate missed or late payments, defaults, or other credit issues. Different lenders assess adverse credit differently.

Affordability assessment

The checks a lender carries out to understand whether you can afford the mortgage repayments over the agreed term.

Agreement in principle (AIP)

An early statement from a lender indicating they may lend up to a certain amount, subject to further checks and a final application.

Annual Percentage Rate (APR)

A figure designed to show the overall cost of borrowing as a percentage, taking into account interest and certain fees.

Annual Percentage Rate of Charge (APRC)

A similar concept to APR, used to reflect the overall cost of a mortgage as a percentage across the lifetime of the agreement, including relevant charges.

Arrangement fee

A fee charged by the mortgage provider when setting up the mortgage.

Arrears

When mortgage payments are not made as required under the mortgage contract (typically after a period of missed payments). Lenders have processes to deal with arrears, and it can put the property at risk if not addressed.

Assign

To transfer rights in relation to a property or agreement from one party to another.

Assured Shorthold Tenancy (AST)

A common type of rental agreement in the UK for private tenants. If you’re buying to let, you may encounter ASTs.

Auction finance

A type of bridging finance used to buy properties at auction, typically intended for shorter timescales.

---

B

Base rate

The Bank of England’s benchmark interest rate. Some mortgage products move in line with it (for example, tracker mortgages).

Break clause

A clause in a contract (often a tenancy) allowing either party to end the agreement early after a specified period.

Bridging loan

A short-term loan used to bridge the gap between buying and arranging longer-term finance, or between purchase and sale.

Building inspection

A surveyor’s inspection and report to identify issues or faults that could affect safety or value.

Buy to let

A property purchased with the intention of renting it out.

Buy to let mortgage

A mortgage designed specifically for landlords, typically structured differently from residential mortgages.

Buy to sell mortgage

A short-term mortgage for property investors/developers who plan to sell after improving or refurbishing.

---

C

Capital and interest mortgage

A repayment mortgage where monthly payments cover both the interest and a repayment of the capital balance.

Capped rate mortgage

A variable-rate mortgage where the interest rate has an upper limit (a “cap”).

Chain

A sequence of linked property sales where each transaction depends on the others completing.

Completion

The point at which a property sale finishes legally and the buyer receives the keys.

Completion statement

A record of the financial transactions and transfers that take place at completion.

Conditions of sale

Contract terms setting out responsibilities and requirements for the parties involved in the sale.

Contract

The legally binding agreement between buyer and seller (and associated documents) for a property transaction.

Conveyancer / conveyancing

The legal professional(s) who handle the legal process of buying or selling property.

County Court Judgement (CCJ)

A court decision recorded against a debtor, usually where a debt has not been paid. It can affect affordability and lender decisions.

Credit reference agency

An organisation that holds credit information and provides it to lenders for credit checks.

Credit search

A check carried out by a lender to review your credit history and how you’ve managed credit.

Credit score

A numerical assessment produced using credit data. Lenders may use their own scoring models, so a score from a credit reference agency doesn’t always match a lender’s view.

---

D

Debenture

A form of security sometimes used by companies borrowing money, placing a charge on company assets.

Decision in principle (DIP)

An early indication from a lender that they may lend, subject to full underwriting.

Deeds

Legal documents that evidence ownership and charges over a property.

Deposit

The amount you pay upfront towards the purchase price (or, in some cases, the amount you contribute when remortgaging).

Dilapidations

Costs relating to repairs or reinstatement that may be required at the end of a tenancy.

Disbursements

Costs paid during conveyancing, such as search fees and stamp duty.

Discounted rate mortgage

A mortgage where the interest rate is set below a lender’s standard variable rate (SVR) for an initial period.

Draft contract

An early version of the contract that may be updated before contracts are exchanged.

---

E

Early repayment charges (ERC)

Fees that may apply if you repay your mortgage early, or overpay beyond the lender’s permitted limits.

Easement

A right affecting land, such as a right of access or a right to use part of a property.

Endowment mortgage

A mortgage where the capital is intended to be repaid using an investment plan (endowment). These are generally not widely available today.

Energy Performance Certificate (EPC)

A document showing a property’s energy efficiency rating, required for sales and lettings.

Equity

The difference between the property’s value and the amount you still owe on it.

Exchange of contracts

The stage where both parties sign the contract and it becomes legally binding.

Exit strategy

How a borrower plans to repay a bridging or development loan.

---

F

First charge

The mortgage secured as the highest-priority charge on a property.

First-time buyer

A buyer who has not previously owned property.

Fittings

Items that may be included in a property sale depending on what is agreed and what is considered part of the property.

Fixtures

Items attached to the property that are generally included in the sale.

Freehold

A type of ownership where the owner owns both the property and the land it stands on.

---

G

Gas safety record

A document showing that gas appliances have been checked by a qualified engineer.

Gazumping

When a seller accepts a higher offer from another buyer after agreeing a sale.

Gazundering

When a buyer reduces their offer at a late stage, typically before exchange.

Green mortgages

Mortgage products designed to support energy efficiency improvements or purchase of greener properties.

Ground rent

Rent payable by a leaseholder to a freeholder under a lease.

Gross Development Value (GDV)

The expected value of a development project once completed.

---

H

Higher lending charge

A fee that may apply if the mortgage loan-to-value (LTV) is above a certain threshold.

Homebuyer report

A type of survey report aimed at identifying issues that could affect safety or value.

House in Multiple Occupation (HMO)

A property rented to multiple occupants who are not from the same household and share facilities.

---

I

Interest-only mortgage

A mortgage where monthly payments cover interest only, with the capital intended to be repaid separately at the end of the term.

Initial rate / term

The introductory period during which a mortgage has a specific interest rate before it moves to the lender’s standard rate or another arrangement.

Inventory

A document listing the contents and condition of a rental property at the start and end of a tenancy.

---

J

Joint applicants / mortgage

Where two or more people apply for the mortgage and hold the property interest jointly.

---

L

Land Registry

The official register for ownership of land and property in the UK.

Leasehold

Ownership of the right to occupy a property for a fixed period under a lease, while the land/building is owned by a freeholder.

Listed building

A building with special architectural or historic interest, protected by law.

Loan to value (LTV)

The size of the mortgage compared to the property’s value, expressed as a percentage.

Loan to Gross Development Value (LTGDV)

A development finance measure comparing the loan amount to the expected completed value (GDV).

---

M

Market value

The estimated price a property would achieve if sold on the open market at a given time.

Mortgage adviser / mortgage broker

A professional who helps clients understand mortgage options and, where permitted, provide advice on regulated mortgage contracts.

Mortgagee

The lender.

Mortgagor

The borrower.

Mortgage valuation

A valuation carried out for the lender to assess the property’s value and any issues that may affect lending.

Multi-unit freehold block (MUFB)

A single freehold title containing multiple self-contained units.

Multi-unit freehold complex

A freehold title covering multiple buildings or units, often used in certain holiday or complex arrangements.

Mundic

A material associated with certain structural issues in some older properties. Specialist assessment may be required.

Negative equity

When the outstanding mortgage balance is higher than the property’s value.

---

O

Offset mortgage

A mortgage linked to a savings or current account where balances can reduce the interest charged on the mortgage.

Open bridging loan

Bridging finance where the repayment date is not fixed at the outset, which can affect pricing compared with closed bridging.

---

P

Part and part

A mortgage structure combining repayment and interest-only elements.

Personal guarantees (PG)

Where an individual (often connected to a company) agrees to be responsible for repayments if the borrowing entity cannot meet them.

Portability / porting

Moving an existing mortgage deal to a new property, subject to the lender’s requirements and a fresh underwriting process.

---

R

Redemption

Repaying the mortgage balance.

Reflection period

A period given by the lender for you to consider the mortgage offer.

Regulated bridging loan

A bridging loan may be regulated depending on how and why the property is used (for example, where the borrower occupies or intends to occupy the property).

Remortgage

Replacing your existing mortgage with a new one, often to change the deal, release equity, or reduce costs.

Residential mortgage

A mortgage for buying or remortgaging a home you live in.

Reverting / reversion rate

The interest rate that applies after an initial deal period ends.

Retention

Where the lender withholds part of the funds until certain conditions are met.

Repossession

A lender’s legal process to take control of a property if the borrower breaches the mortgage agreement or fails to make repayments.

Repayment mortgage

A mortgage where monthly payments are intended to repay both interest and capital over the term.

---

S

SA302 tax calculation

A document provided by HMRC showing evidence of earnings for a tax year.

Searches

Checks carried out during conveyancing, such as local authority and property-related searches.

Section 106 agreement

A planning agreement used by local authorities to control how land or buildings can be used.

Share of freehold

A structure where multiple owners hold interests in a freehold property through a company.

Sole agent instruction

A property marketing arrangement where only one agent is instructed to sell or let.

Special Purpose Vehicle (SPV)

A company set up for a specific purpose, often used in property investment structures.

Stamp Duty Land Tax (SDLT)

A tax paid when buying property in England and Northern Ireland above certain thresholds.

Standard Variable Rate (SVR)

The lender’s default interest rate after any fixed or discounted period ends.

Subject to contract

A stage in a property transaction before contracts are exchanged, meaning the sale is not yet legally binding.

Survey

A property inspection and report carried out by a surveyor to identify issues affecting safety or value.

---

T

Tax year overview

A statement showing tax paid, tax due, and any outstanding amounts.

Tenancy / tenant

A rental arrangement giving a tenant the right to occupy a property under a tenancy agreement.

Term

The length of time the mortgage is set up for.

Top slicing

A method sometimes used in affordability calculations, often where rental income or other income is considered alongside personal income.

Tracker mortgage

A variable-rate mortgage where the interest rate moves in line with the Bank of England base rate plus or minus a margin.

Transfer document

The legal document that transfers ownership rights in a property.

Transfer of equity (TOE)

A process for changing who is named on the title deeds, often involving a remortgage or lender consent.

Title deeds

The legal record of ownership and charges over a property.

---

U

Under offer

A property that has accepted an offer but has not yet completed.

Unencumbered property

A property with no existing loans or charges secured against it.

---

V

Valuation

An assessment of a property’s market value, often carried out for the lender’s purposes.

Valuation fee

The fee charged by the lender for carrying out a valuation.

Variable rate mortgage

A mortgage where the interest rate can change over time.

Vendor

The person selling the property.

---

W, X, Y, Z

If you don’t see a term you’re looking for, it may be because it’s used only in specific mortgage types or in particular legal documents. In those cases, the term is often explained within the paperwork you receive during the mortgage and conveyancing process.

---

This page is for general information only and does not constitute regulated mortgage advice. If you’re unsure about any term in your documents, speak to a qualified adviser.