UK Mortgage Glossary — Every Term Explained

Every UK mortgage term explained in plain English, with links to the full guide on each topic. Use Ctrl+F (Cmd+F on Mac) to find a specific term.

A | B | C | D | E | F | G | H | I | J | L | M | N | O | P | R | S | T | U | V | Y

A

AIP — Agreement in Principle A short statement from a lender confirming, in principle, how much they would lend you, based on a soft credit check. Required by most estate agents before they let you make an offer. → How does a mortgage in principle work?

Affordability check The lender's calculation of whether you can afford the mortgage payments now and at higher stress-test interest rates. → How much can I borrow?

APR — Annual Percentage Rate The total cost of borrowing including fees, expressed as a yearly rate. Useful for comparing mortgage products on a like-for-like basis.

APRC — Annual Percentage Rate of Charge The mortgage equivalent of APR — includes the interest rate, fees, and what the rate becomes after the fixed period ends. The headline rate plus the SVR follow-on, expressed as one number.

Arrangement fee A fee the lender charges to set up the mortgage. Typically £0–£1,995. Often higher on the lowest-rate products. → Mortgage arrangement fee

B

Base rate The Bank of England's official interest rate, set by the Monetary Policy Committee 8 times a year. Tracker mortgages move with it. → Base rate and your mortgage

Bridging loan A short-term, high-interest loan used to "bridge" the gap between buying a new property and selling the old one. → Bridging loan vs mortgage

BTL — Buy-to-let A mortgage on a property you intend to rent out, not live in. Bigger deposits required (usually 25%+). → Buy-to-let mortgages for beginners

C

Capital The amount of money you've borrowed (vs. the interest you pay on top).

Capped rate mortgage A variable-rate mortgage with an upper limit (cap) that the rate cannot exceed during the deal period.

CCJ — County Court Judgment A court ruling that you owe money. Stays on your credit file for 6 years. Materially affects mortgage eligibility. → Bad credit mortgages

Cladding survey An inspection of the external cladding of a flat, often required by lenders post-Grenfell. EWS1 is the most common form.

Completion The day the property legally becomes yours and you collect the keys. → What happens at mortgage completion day?

Conveyancer A solicitor or licensed conveyancer who handles the legal transfer of property. → Conveyancing UK cost guide

Credit file Your borrowing and repayment history, held by Experian, Equifax and TransUnion. Lenders pull a copy when you apply. → What credit score do you need?

D

Deposit The cash you put down toward the property purchase. Minimum 5%, ideally 10–15% for better rates. → How much deposit do I need?

Disbursements Third-party fees your conveyancer pays on your behalf — searches, Land Registry, bankruptcy checks. Usually £300–£500.

Discount mortgage A variable-rate mortgage at a discount to the lender's SVR for a fixed period.

Drawdown With Help to Buy equity loans and lifetime mortgages: when you take additional funds from a pre-agreed limit.

E

EPC — Energy Performance Certificate A document rating the property's energy efficiency from A (best) to G. Required to sell or let. Minimum band E for letting; rising to band C from 2028 for new tenancies.

Equity The portion of the property you own outright (property value minus mortgage balance).

ERC — Early Repayment Charge A fee the lender charges if you repay or remortgage before the end of your fixed/tracker deal. Typically 1–5% of the outstanding balance. → Remortgage early repayment charges

Exchange of contracts The legally binding moment in a property purchase. After exchange you can't back out without losing your deposit. → Exchange vs completion

F

Fixed-rate mortgage A mortgage where the interest rate is locked for a set period (typically 2, 3, 5 or 10 years). → Fixed vs tracker mortgage

Freehold You own the property and the land it sits on, indefinitely.

FTB — First-time buyer Someone who has never owned (or part-owned) a property anywhere in the world.

G

Gazumping When a seller accepts a higher offer after already accepting yours. Legal in England, Wales and NI. Not legal in Scotland post-acceptance.

Gazundering When a buyer reduces their offer just before exchange. Legal but unethical.

Gifted deposit A deposit gifted (not loaned) by a family member. Requires a signed gifted deposit letter for the lender.

H

HMO — House in Multiple Occupation A rental property let to 3+ tenants from 2+ households sharing facilities. Subject to specific licensing rules.

Help to Buy ISA A government-backed savings account closed to new applicants in 2019. Existing holders can save until November 2029. → Help to Buy ISA explained

Help to Buy Equity Loan A government equity loan scheme for new builds, closed to new applicants March 2023. → Help to Buy equity loan repayment

I

Indemnity insurance A one-off insurance policy your conveyancer arranges to protect against specific legal risks (e.g. missing planning permission, chancel repair).

Interest-only mortgage A mortgage where you only pay interest each month — the capital balance never reduces. The full loan is repaid at the end via sale of the property or another vehicle. → Interest-only mortgage explained

J

JBSP — Joint Borrower Sole Proprietor A mortgage where multiple people are on the loan but only one owns the property. Often used by parents helping children buy. → JBSP mortgage explained

Joint tenants A form of joint property ownership where each owner owns 100% jointly — on death the share automatically passes to the surviving owner(s). → Joint mortgages explained

L

Land Registry The government body that records property ownership in England and Wales (separate registers for Scotland and NI).

Lease / Leasehold You own the property for a fixed period (usually 99–999 years) but not the land it sits on. The freeholder owns the land. Most flats are leasehold.

LBTT — Land and Buildings Transaction Tax Scotland's equivalent of stamp duty. → LBTT in Scotland

Lifetime ISA / LISA A savings account with a 25% government bonus for first-time buyers (or retirement). → Lifetime ISA guide

Lifetime mortgage A type of equity release where interest rolls up rather than being paid monthly. Repaid from the sale of the property after death or move into care. → Lifetime mortgage and equity release

LTV — Loan-to-value The percentage of the property price you're borrowing. Lower LTV = better rate. → What is LTV?

LTI — Loan-to-income The size of your mortgage relative to your annual income. Capped at ~4.5× by most lenders.

LTT — Land Transaction Tax Wales's equivalent of stamp duty. → LTT in Wales

M

MIP — Mortgage In Principle See AIP — the same thing.

Mortgage offer The formal binding letter from a lender confirming they will lend you the full amount on the agreed terms. Usually valid 6 months.

N

Negative equity When the mortgage balance exceeds the property value. Typically caused by house price falls.

Non-standard construction Properties built with materials other than brick / block / stone (e.g. concrete, timber-frame, prefab). Many lenders won't lend on them.

O

Offset mortgage A mortgage where linked savings reduce the interest charged. → Offset mortgage explained

Overpayment A payment toward your mortgage in excess of the scheduled amount. Most lenders allow 10% per year penalty-free. → Overpaying your mortgage

P

PAYE — Pay As You Earn The standard UK employment tax system. PAYE income is the most straightforward for mortgage applications.

Porting Taking your existing mortgage with you to a new property. Saves on early repayment charges. → Porting a mortgage

Product transfer A new mortgage deal with your existing lender, without moving lender. No legal work required. → Product transfer vs remortgage

R

Remortgage Switching your mortgage to a new lender (vs. a product transfer where you stay with the existing lender). → How to remortgage

Repayment mortgage A mortgage where each monthly payment includes both interest and capital. Loan balance reduces over time, reaching zero at the end of the term. → Repayment vs interest-only

Retention Lender holding back part of the mortgage funds until specific repairs or works are completed.

RICS — Royal Institution of Chartered Surveyors The UK professional body for surveyors. RICS surveys come in 3 levels — Mortgage Valuation, Homebuyer (Level 2), Building Survey (Level 3). → Mortgage valuation vs survey

S

SDLT — Stamp Duty Land Tax The tax paid on property purchases in England and Northern Ireland. → UK stamp duty for first-time buyers

Searches The legal checks your conveyancer performs — local authority, water/drainage, environmental.

Service charge Annual fee paid to the freeholder of a leasehold property for maintenance of communal areas. £200–£4,000+ depending on the property.

Shared ownership Buy 25–75% of a property, rent the rest from a housing association. → Shared ownership explained

SPV — Special Purpose Vehicle A limited company set up to hold property investments. Common in BTL portfolios. → Limited company BTL

Stress test The lender's simulation of whether you could still afford the mortgage at significantly higher rates (typically 6–8%).

SVR — Standard Variable Rate The lender's "default" interest rate. What you roll onto when your fixed/tracker deal ends. Typically 6.5–8.5% in 2026 — much higher than active deals. → SVR mortgages explained

T

Tenants in common A form of joint ownership where each owner owns a defined share. On death, the share passes by will, not automatically to other owners.

Term The length of the mortgage in years (typically 25–35).

Tracker mortgage A variable-rate mortgage that moves with the Bank of England base rate. → Fixed vs tracker mortgage

Transfer of equity A change in the legal owners of a property (e.g. adding or removing a partner). Often paired with a remortgage.

U

Underwriter The lender's employee who assesses your full mortgage application.

V

Valuation The lender's surveyor's assessment of what the property is worth. Determines your final LTV. May be desktop (no visit) or physical.

Y

Yield For BTL properties — the annual rent as a percentage of the property price.

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This glossary is reviewed quarterly. Last reviewed: April 2026. If you spot a missing term, email hello@mortgagemadeclear.co.uk.