Buying a home is exciting, but the mortgage process can feel overwhelming if you’re faced with unfamiliar terminology. From LTV to early repayment charges, mortgage jargon often leaves buyers confused and unsure if they’re making the right decisions.
As an independent mortgage adviser supporting buyers across Hull and the East Riding, I’ve put together this simple, jargon-free mortgage glossary explaining every key term you’re likely to encounter on your buying journey.
Bookmark this guide, you’ll probably come back to it more than once.
Mortgage Jargon Explained (A–Z)
Agreement in Principle (AIP) / Mortgage in Principle (MIP)
A document from a lender confirming how much they may lend you, based on an initial affordability and credit check. It’s not a full mortgage offer, but it shows estate agents you’re a serious buyer.
Affordability Assessment
A lender’s calculation to decide how much you can borrow based on income, outgoings, debts, lifestyle spending and future interest rate rises.
Annual Percentage Rate of Charge (APRC)
Shows the total cost of a mortgage over its full term, including interest and fees. Useful for comparing long-term costs between mortgages.
Arrears
When you’ve missed one or more payments on a line of credit.
Base Rate
The Bank of England interest rate, which influences tracker and variable mortgage rates. This is the rate in which they lend money to the lenders.
Booking Fee
A non-refundable fee paid to reserve a mortgage product. Also known as an admin fee.
Broker / Mortgage Adviser
A qualified professional who searches the mortgage market for you, advises on suitable lenders, and manages the application process from start to finish. This is the charge they charge you for acting as your adviser.
Buy-to-Let (BTL)
A mortgage used to purchase a property that will be rented out rather than lived in by the owner.
Capital
The amount you borrow from the lender (not including interest).
Completion
The day you legally become the owner of the property and receive the keys.
Credit Score / Credit File
A record of your borrowing history, showing lenders how you’ve managed credit in the past.
Deposit
The amount of money you contribute towards the property purchase. Typically expressed as a percentage (e.g. 10% deposit).
Early Repayment Charge (ERC)
A fee charged if you repay or leave your mortgage early during a fixed or discounted period.
Equity
The portion of the property you own outright:
Property value – mortgage balance = equity
Fixed-Rate Mortgage
A mortgage where the interest rate stays the same for a set period (e.g. 2, 3 or 5 years).
Freehold
You own the property and the land it’s built on outright. You have absolute ownership.
Gazumping
When a seller accepts a higher offer after already agreeing to sell to you.
Gross Income
Your income before tax and deductions used by lenders when calculating affordability.
Guarantor Mortgage
A mortgage where another person agrees to support the loan, usually a parent helping a first-time buyer.
Interest-Only Mortgage
You only pay the interest each month. The original loan must be repaid in full at the end using a separate repayment vehicle.
Joint Mortgage
A mortgage taken out by two or more people together.
Leasehold
You own the property for a fixed number of years but not the land. Common with flats.
Loan to Value (LTV)
The percentage of the property value you’re borrowing.
Example:
£180,000 mortgage on a £200,000 home = 90% LTV
Mortgage Deed
The legal document confirming your agreement with the lender.
Mortgage Offer
Formal confirmation from the lender that they will provide the mortgage, subject to conditions.
Mortgage Term
The length of time you’ll repay the mortgage over (e.g. 25 or 30 years).
Negative Equity
When your mortgage balance is higher than your property’s value.
Overpayments
Extra payments made on top of your monthly mortgage amount to reduce the balance faster.
Product Fee
A fee charged for a specific mortgage deal, sometimes added to the loan.
Redemption Statement
A document showing how much is required to fully repay your mortgage, including any charges.
Remortgage
Switching your mortgage to a new deal, either with your current lender or a new one.
Repayment Mortgage
Each monthly payment reduces both the interest and the loan balance, meaning the mortgage is fully paid off by the end of the term.
Standard Variable Rate (SVR)
The lender’s default interest rate, which usually applies after an initial deal ends.
Stamp Duty Land Tax (SDLT)
A tax paid when buying a property above certain price thresholds.
Survey
A professional inspection of the property to identify structural or maintenance issues.
Tracker Mortgage
A mortgage that tracks the Bank of England base rate plus a set margin.
Underwriting
The lender’s detailed assessment of your application, documents and risk profile.
Valuation
A lender’s assessment of how much the property is worth (not the same as a survey).
Working with an independent mortgage adviser in Hull means you don’t need to memorise this list everything is explained clearly, in plain English, with advice tailored to your situation.
Need Help with Your Mortgage? Whether you’re a first-time buyer, moving home, or remortgaging in Hull or the East Riding, I’ll guide you through every step without the jargon.
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