Affordability Assessment
A lender’s check of how much you can reasonably afford to borrow and repay, based on income, outgoings and any debts.
Mortgage Jargon Buster (A–Z)
No jargon. No fluff. Just simple explanations of UK mortgage terms. Use the A–Z on the left (top on mobile), or search below.
A
Agreement in Principle (AIP)
An initial indication from a lender of how much they may lend you, following basic checks. Helpful before making an offer.
APRC (Annual Percentage Rate of Charge)
The total cost of a mortgage expressed as a yearly percentage, including interest and most fees (useful for comparing deals).
Arrangement Fee
A lender fee for setting up a specific mortgage deal. It can be paid upfront or added to your mortgage (you’ll pay interest if added).
B
Base Rate
The Bank of England’s interest rate that strongly influences mortgage pricing, especially tracker and variable rates.
Booking Fee
A non-refundable fee some lenders charge to reserve a particular mortgage product.
Broker (Mortgage Broker)
A qualified adviser who searches the market and recommends suitable mortgages for your situation.
Buildings Insurance
Insurance covering the structure of your home (walls, roof, fixtures). Typically required by lenders from exchange of contracts.
Buildings & Contents Insurance
A combined policy that covers your home’s structure and your belongings.
Buy-to-Let Mortgage
A mortgage for purchasing property to rent out. Often requires a larger deposit and has different affordability rules.
C
Capital
The amount of money you borrow (the loan itself), excluding interest.
Capital & Interest Payment
The standard repayment method. Each monthly payment reduces your loan (capital) and pays interest.
Cashback (Lender Incentive)
A cash sum paid by the lender when your mortgage starts. Can be appealing, but don’t pick a deal based on cashback alone.
Charge (on the Property)
The lender’s legal right over the property as security for the mortgage until it’s fully repaid.
CHAPS Fee
A bank fee (often £20–£30) for same-day electronic transfer of mortgage funds to your solicitor on completion.
Completion
The day funds are transferred and you legally become the owner. Keys are released after completion.
Contents Insurance
Insurance for your personal belongings in the home (furniture, electronics, clothing, etc.).
Credit Score
A measure of your borrowing history and reliability. Lenders consider this when assessing your application.
Critical Illness Cover
Insurance that pays a lump sum if you’re diagnosed with a specified serious illness.
D
Debt Consolidation Mortgage
Using a mortgage (often via remortgaging) to pay off other debts. It can lower monthly outgoings but may increase total interest over time.
Deeds
Legal documents proving ownership of the property. Held electronically by the Land Registry.
Decision in Principle (DIP)
Another name for an Agreement in Principle. Shows a lender may be willing to lend, subject to full checks.
Disbursements
Third-party costs paid by your solicitor during conveyancing (e.g., searches, Land Registry fees).
Deposit
The upfront amount you put toward a purchase price, typically 5–10% for residential purchases.
E
Early Repayment Charge (ERC)
A fee charged if you repay your mortgage early or switch deals during the tie-in/fixed period.
ESIS (European Standardised Information Sheet)
The official document outlining your mortgage details, costs and risks. It is not a mortgage offer, and does not guarantee a mortgage. Replaced the old Key Facts Illustration (KFI).
Equity
The portion of your property you own outright (property value minus your outstanding mortgage balance).
Equity Release
A product allowing homeowners aged 55+ to access the equity/cash tied up in the value of their home without having to move.
Exchange of Contracts
The point where buyer and seller become legally bound to the transaction. Pulling out after this usually means losing your deposit.
F
Family Income Benefit
A type of life cover that pays a regular income to your family if you die during the policy term.
Fixed-Rate Mortgage
Your interest rate is fixed for a set period, keeping monthly payments predictable.
First-Time Buyer
Someone buying a home for the first time. Often eligible for specific deals and Stamp Duty reliefs.
Full Structural Survey
The most detailed property survey (now often called a “Level 3” survey). Recommended for older or unusual properties.
G
Gazumping
When a seller accepts a higher offer from another buyer after accepting yours (before exchange).
Gifted Deposit
Money given to you, usually by family, to help with your deposit. Lenders normally need a letter confirming it’s a gift, not a loan.
Guarantor Mortgage
A mortgage where a third party (often a parent) agrees to cover repayments if you can’t.
H
Help to Buy
A government scheme (closed to new applications) that supported first-time buyers with equity loans for new builds.
Homebuyer’s Report
A mid-level survey (often “Level 2”) that checks the property’s condition. Less detailed than a full structural survey.
I
Income (for Affordability)
Your verified earnings used by lenders to assess what you can borrow. Self-employed applicants may need multiple years’ accounts.
Income Protection
Insurance that pays you a monthly income if you can’t work due to illness or injury.
Interest-Only Mortgage
You pay only the interest each month; the capital must be repaid by the end of the term from other funds.
Introductory Rate
A discounted or fixed rate applied for an initial period, after which the mortgage usually reverts to the lender’s SVR.
J
Joint Mortgage
A mortgage taken by two or more people who are jointly responsible for repayments.
Joint Borrower, Sole Proprietor (JBSP)
More than one borrower supports the mortgage, but only one person is on the property deeds (useful where affordability needs a boost).
K
Key Facts Illustration (KFI)
The former standard mortgage summary. Now replaced by the ESIS, but you may still hear KFI referenced.
L
Land Registry
The government body that records property ownership in England and Wales. Your ownership is registered after completion.
Leasehold
You own the property for a set term on a lease, but not the land it stands on. Ground rent and service charges may apply.
Let-to-Buy Mortgage
Keep and rent out your current home while buying a new one to live in. Involves a buy-to-let on the old property and a residential mortgage on the new one.
Life Insurance
Cover that pays out a lump sum if you die during the policy term, helping your family repay the mortgage or other costs.
Loan-to-Value (LTV)
The percentage of the property’s value you borrow. For example, a £180k mortgage on a £200k property is 90% LTV.
M
Monthly Repayment
Your monthly payment to the lender, usually made up of capital and interest (unless you’re on interest-only).
Mortgage Illustration
Another name for the ESIS - the document that lays out the details and costs of your proposed mortgage.
Mortgage in Principle
See Agreement in Principle /Decision in Principle - an initial borrowing indication from a lender.
Mortgage Offer
The formal confirmation from a lender that they’ll lend to you, subject to stated conditions.
Mortgage Term
The length of the mortgage (e.g., 25 years). Longer terms reduce monthly payments but increase total interest.
N
Negative Equity
When your mortgage balance is higher than your property’s current value - often due to price falls.
O
Overpayment
Paying more than your required monthly amount to reduce your balance faster. Many lenders allow a set % each year without ERCs.
P
Payment Holiday
A temporary, lender-agreed break from making mortgage payments. Interest normally continues to accrue.
Porting
Moving your existing mortgage to a new property when you move home, subject to lender approval.
Product Fee
A lender fee for a specific mortgage product.
Product Transfer
Switching to a new rate or deal with your current lender, typically as an existing customer when your initial deal ends.
R
Remortgage
Switching your mortgage to a new deal or different lender—often to save money or release equity.
Repayment Mortgage
You repay both capital and interest each month, gradually reducing the balance to zero by the end of the term.
S
Stamp Duty Land Tax (SDLT)
A tax payable when buying property above certain thresholds (with reliefs for first-time buyers).
Standard Variable Rate (SVR)
The lender’s default rate you usually move to after an initial deal ends. It can change at the lender’s discretion.
Self-Employed Mortgage
Mortgages for sole traders, company directors or contractors. Lenders typically assess recent years’ income and stability.
T
Tie-in Period
The period you’re locked into a deal. Leaving early can trigger an Early Repayment Charge.
Tracker Mortgage
A variable mortgage that follows (tracks) the Bank of England base rate, plus a set margin.
V
Valuation
The lender’s check of the property’s value for mortgage purposes. It is not a survey.
Variable Rate Mortgage
A mortgage with an interest rate that can move up or down, influenced by the lender’s SVR or the base rate.