Estate Agent Terms, Jargon and Vocabulary Explained
When it comes to buying a house, there can be a lot to get your head around; lengthy contracts, difficult to read paperwork, not to mention the confusing language – what does it all mean?
Here is a list of common housing terms that will help you beat the jargon.
Buyer: that’s you!
Seller: someone who is selling their property, usually through an estate agent.
Vendor: this is another term for the seller.
First Time Buyer: an individual who has never bought or owned a property before. Renting a property does not count as buying or owning.
Freehold: a type of occupancy which means you own the building and the land it sits on.
Leasehold: this is where you own the property but not the land it is built on – for example, you may own a flat, but not the building it sits in. Our guide to buying a leasehold property tells you everything you need to know before you sign on the dotted line.
Commonhold: an alternative system to leasehold usually in place in buildings or estates of multiple occupancy (such as a block of flats), whereby you own the freehold to your property, and all property owners collectively help manage the upkeep of the building or estate (such as all chipping in to repair part of the building).
Deposit: a set amount of money which acts to secure a purchase, usually at a low percentage of the full price. Paying this usually means you are committed to going through with a purchase and will pay the rest of the amount off later.
Mortgage: a loan of money used to pay for a property, which you pay back over time with interest to whoever lent you the money. The property itself is considered collateral, which means if you don’t keep up with your repayments, it can be seized and sold to make back the money.
Interest rates: a charge added to the amount you pay back on a loan, written as a percentage. For example: a mortgage with a 4% interest rate would mean you have to pay back the full amount of the loan plus 4% of its value.
Agreement in principle: also known as a decision in principle, mortgage in principle, approval in principle or mortgage promise. An estimate of how much money you can borrow from a money lender for a mortgage. Based on your income and credit history, this agreement can be used to help you get a mortgage or to have an offer accepted on a property.
Execution-only: when a consumer chooses a mortgage themselves, rather than taking advice from a lender or mortgage advisor.
ERC: Early Repayment Charge, a charge given when you overpay on a mortgage or transfer to a different mortgage product during a specified amount of time (known as the early repayment charge period). The charge covers potential lost interest to your lender.
SVR: Standard Variable Rate, the rate your lender charges after your initial mortgage deal finishes. This rate is set by your lender, not by the Bank of England, and your lender can change the rate at any time.
APRC: Annual Percentage Rate of Charge, the total rate of interest you’ll pay for a mortgage’s entire duration. This considers all the different rates your mortgage will be subject to and acts as an easy way of comparing mortgages. Lower rates usually mean a better deal.
LTV: Loan-to-Value, the ratio of how much your loan (usually a mortgage) will cover the price of your property, written as a percentage. For example: a mortgage that offers 60% LTV will cover 60% of the property’s price.
Bridging loan: a temporary short-term loan which enables a buyer to purchase a property before selling their existing property.
Equity: equity, or capital, represents the amount of money a homeowner has put into a property. This value is built up over time as the owner pays off the mortgage and the market value of the property appreciates.
Surveyor: in the context of property, they are a qualified expert who specialises in examining and highlighting any potential issues or benefits within a property, that may affect its price or need fixing in future.
Building survey: a report into the physical state of the property, this is also sometimes referred to as a full structural survey.
Covenant: a covenant is a provision or promise that has been written into a deed which may affect or limit the use of the property or land. There are two different types of covenant, positive and restrictive. A positive covenant is an obligation which requires some form of action (such as maintain a fence or wall), whereas a restrictive covenant limits or prevents the use of land in a specified way.
Easement: an easement is the right of one landowner to make use of another nearby piece of land for the benefit of their own land, for example, a private right of way.
Chain: a chain is formed when several property sales and purchases are inter-dependent. A chain can be complicated but a good estate agent will be able to help keep it moving.
EPC: an Energy Performance Certificate (EPC) shows the efficiency of a property and gives an indication of how much the energy bills will cost. It is displayed as two graphs – the energy efficiency, and the environmental impact of the property. Each is graded from A (the best) to G (the worst).
Under offer: if a property is under offer it means that the seller has accepted an offer from the buyer but the contracts have not yet been exchanged.
Gazumping: when a higher offer is made by another party and is accepted, sometimes even after the offer with the first buyer has been accepted.
Gazundering: when a buyer lowers their offer price, usually at the last minute, so the seller has to accept the lower price or reject and risk having to find another buyer.
Exchange of contracts: the point where both parties are committed to the transaction; both the buyer and seller can walk away at any point before the contracts have been exchanged.
Conveyancer: a solicitor who specialises in the transferring of homeownership. They are required if you are using a mortgage and will cover every legal aspect of the home purchasing process.
Solicitor: someone who deals professionally with legal matters, also known as a lawyer, and holds a recognised qualification or degree in law.
Title: the legal right of owning a property or land.
Deeds: Documents that show who owns the title of a property or land, along with any burdens (obligations/responsibilities) on the property e.g. what you can/cannot alter on the property, any access and rights of way on the property. Usually held by the mortgage lender until you pay off your property, where it can then be held by you or your solicitor.
Land Registry: the Government’s database of who owns what property and land. Be aware that there are separate registries for Scotland, Northern Ireland and the rest of the UK.
New Build: usually this refers to a property that hasn’t been purchased or lived in yet and has recently been built. However different banks and lenders have different definitions, which can vary from whether the property has been lived in, but not bought, whether it has been converted or refurbished, or whether it has been finished within a certain amount of years.
Completion date: when the transaction is complete and ownership of the property passes from the seller to the buyer. Normally, the vendor’s solicitor will ask the estate agent to release the keys to the buyer at this time.
Snagging: snagging is where the developer of new build properties touches up paintwork, adjusts appliances and fixes any other faults within the property. A snagging survey is usually completed prior to the buyer moving in, in order to spot minor cosmetic issues and check the quality of workmanship.
Stamp Duty: a lump-sum tax that anyone buying a property or land over a certain price in England, Northern Ireland and Wales must pay. The current threshold for residential properties is £125,000 and £150,000 for non-residential land and properties, however, the rate you pay will vary depending on the overall purchase price. Read our Stamp Duty guide for more information.
Land Transaction Tax: land tax replaced Stamp Duty in Wales from April 2018. Buyers looking to purchase in Wales will be charged land transaction tax on any residential purchase above £180,000 and above £150,000 for non-residential purchases, however, the price you pay varies depending on the overall cost of the property. Take a look at our guide to land tax for more information.
Land & Building Transaction Tax: the tax you pay when purchasing land or property in Scotland. The current threshold is £145,000 for residential properties and £150,000 for non-residential land and properties, however the rate payable is subject to the total purchase cost. Read our land tax guide for more information.
Base rate: the interest rate which is set by the Bank of England for lending to other banks. It is generally used as a benchmark for the interest rates banks charge when lending money to customers.
Fixed-rate mortgage: with a fixed-rate mortgage, you pay a set rate of interest on your mortgage for a fixed period, so you know exactly what you'll be paying each month.
Tracker mortgage: this is a mortgage with an interest rate linked to the Bank of England rate or another base rate. The interest rate will go up and down depending on this rate, irrespective of the mortgage lender.
Variable-rate mortgage: with a variable rate mortgage, the interest rate can change at any time. They are partly influenced by the Bank of England base rate but other factors come into play as well. The interest rate you pay on a variable rate mortgage can change even without base rate moving and similarly base rate might come down but your mortgage rate stays the same.
Offset mortgage: a mortgage that allows you to pay less interest if you link it to a bank account with savings in it.
Fixed-rate deal: a term used to describe a mortgage that has an interest rate that stays the same for a ‘fixed’ period. The interest rate will not change during this time.
Hopefully this will help translate some of those words that you hear solicitors say and put them into easier to understand terms!
If you have any questions, please ask!
Take care,
The Alexanders Team.