Mortgage jargon explained: glossary of mortgage-related terms

Mortgage jargon explained: glossary of mortgage-related terms

Buying a home (or changing your mortgage) often comes with a whole new set of words. Some are lender-specific, others are used across the UK mortgage market, and a few are terms you’ll hear from solicitors and surveyors.

This glossary brings together many of the most common mortgage-related terms you’re likely to come across—so you can read documents, compare deals and follow the process with more confidence.

Glossary of mortgage terms

APR (Annual Percentage Rate)

APR is the Annual Percentage Rate. It’s designed to show the overall cost of borrowing over a year, taking into account the interest rate and certain fees.

APR is commonly used to compare mortgages, but your personal costs can differ depending on the product and your circumstances.

Arrangement fee

An arrangement fee is a charge made for setting up a mortgage. It may be paid upfront or added to the mortgage balance.

If it’s added to the loan, you may pay interest on it over the term.

Automated Valuation Model (AVM)

An AVM is an automated method some lenders use to estimate a property’s value using data such as recent sales and property trends.

Depending on the lender and the property, an AVM may be used alongside (or instead of) a more detailed valuation.

Bank of England base rate

The Bank of England base rate is the interest rate set by the Bank of England. Some mortgage rates move in relation to it—particularly certain variable-rate products.

Base rate tracker / tracker rate

A tracker mortgage is linked to an external rate (often the Bank of England base rate). When the reference rate changes, the mortgage rate typically follows.

Capped rate

A capped rate is a variable mortgage where the interest rate is limited to a maximum level for a set period.

Discounted rate

A discounted rate is a variable mortgage where the lender’s standard variable rate is reduced by a set percentage for an initial period.

Cashback

Cashback is money paid by a lender as an incentive when you take out a mortgage. It may be paid at the start of the deal or in line with the lender’s product terms.

Completion

Completion is the final stage of the property purchase. It’s when the remaining funds are transferred and ownership moves to the buyer.

Conveyancing

Conveyancing is the legal process of transferring property ownership. Your solicitor or conveyancer typically handles checks, searches and the preparation of legal documents.

Decision in Principle (DIP)

A Decision in Principle is an early indication from a lender that they may be willing to lend, based on the information provided.

A DIP is not the same as a full mortgage offer, and the final decision depends on the full application, property valuation and verification.

Early Repayment Charge (ERC)

An ERC is a fee that may apply if you repay or redeem your mortgage during a deal’s fixed/initial period.

The amount and rules vary by product and lender.

Exchange of contracts

Exchange of contracts is the point at which both buyer and seller become legally committed to the transaction.

After exchange, the timeline moves towards completion.

Fixed-rate mortgage

A fixed-rate mortgage has an interest rate that stays the same for an agreed period (commonly for a number of years).

Once the fixed period ends, the mortgage typically moves to a different rate type unless you remortgage.

LTV (Loan-to-Value)

LTV is the loan amount compared to the property value, expressed as a percentage.

For example, a 90% LTV means the loan is 90% of the property value and the deposit is 10%.

In general, a lower LTV can make it easier to find suitable options, though availability depends on lender criteria.

Mortgage holiday

A mortgage holiday is a temporary pause or reduction in mortgage payments that some lenders may offer in certain circumstances.

Whether it’s available, and what it means for your overall balance and interest, depends on the lender and your situation.

Mortgage illustration (Key Facts / ESIS)

A mortgage illustration is a document that sets out key features of a mortgage, including how payments may look and what costs could be involved.

It’s designed to help you understand the product you’re considering.

Offset mortgage

An offset mortgage links your mortgage to savings (and sometimes current account balances). The savings can be used to reduce the amount of interest you pay, depending on the product rules.

Porting (porting a mortgage)

Porting means moving your existing mortgage deal to a new property.

This usually isn’t automatic: lenders may require a new application and the terms may change depending on the new property and your circumstances.

Remortgaging

Remortgaging is changing your mortgage deal without moving home.

People remortgage for different reasons, such as switching to a new rate, changing the term, or releasing equity (subject to lender rules).

Stamp Duty Land Tax (SDLT)

SDLT is the tax paid when buying property in England and Northern Ireland. Different rules apply in Scotland and Wales.

Standard Variable Rate (SVR)

SVR is the interest rate set by the lender for variable-rate mortgages.

After a fixed or discounted period ends, your mortgage may revert to the lender’s SVR unless you switch products.

Survey (valuation)

A survey is an assessment of the property’s condition and value. Different survey types exist, and lenders may require a specific level.

A survey can help highlight issues that may affect the property’s value or the cost of repairs.

Variable-rate mortgage

A variable-rate mortgage is one where the interest rate can change over time, often in line with the lender’s SVR or a tracker arrangement.

Whole of market

A whole of market broker typically considers mortgages from a wide range of lenders available through intermediary channels.

“Whole of market” does not mean every lender in existence, as some lenders may be direct-only.

Why understanding the terms matters

Mortgage documents and conversations can be easier to navigate when you know what the words mean. A glossary helps you:

• interpret lender and broker terminology
• understand what’s included in costs (like fees and interest)
• follow the buying process steps (like exchange and completion)
• make more informed comparisons between different mortgage types

Common terms you may see across the process

You might encounter these words at different stages:

• Before applying: DIP, LTV, product types (fixed/variable)
• During application: arrangement fees, valuation approach (AVM/survey)
• During the purchase: exchange of contracts, completion, conveyancing
• After deal start: ERC, cashback terms, how rates change (SVR/tracker/discount)

If you’d like, you can also use this glossary alongside our other home-buyer guides to build a clearer picture of how the mortgage process fits together for first-time buyers and remortgagers.