Don’t know your LISA from your LTV? Our simple jargon buster explains the key terms you need to know when buying your new home.

Buildings insurance

Buildings insurance covers the cost of repairing damage to the structure of your property. When you’re buying a new home, you will need to arrange to have buildings insurance in place from the date that you complete on the property.

Capital & interest

These are both mortgage terms. Capital is the money you borrow, and the interest is the amount – according to the interest rate – that you pay on top of your mortgage. This rate changes from lender to lender, so it’s worth shopping around for a good rate.

Cashback mortgage

Cashback mortgages give you a cash incentive for taking out a mortgage. There are many different types and each one will have different rules and conditions about how much you get and when you receive the cashback.

Chain

A chain is the series of buyers and sellers who will all be exchanging contracts at the same time. A first-time buyer is usually the start of the chain (buying only) and those within the chain tend to be buying and selling at the same time.

Completion

Completion is when you assume ownership of your new home. It’s also when your mortgage lender releases the money to pay for your new home and when you pay other outstanding costs such as stamp duty and solicitors fees.

Concluding missives

Under Scottish law, missives are the series of solicitors’ letters that constitute the contract for the sale of property from seller to buyer. Your contract will only be legally binding once missives are concluded.

Conveyancing

Conveyancing covers everything involved in legally transferring ownership of a property – such as drafting contracts and conducting property and local authority searches – from one person to another. You will pay a conveyancer or a solicitor to do this for you.

Deposit

A deposit is the amount in cash that you pay upfront when buying your new home. You’ll likely need to pay at least 5% of a property’s total value but many mortgage lenders ask for more than this.

Deeds

Deeds are the collection of documents showing who has owned a property before, and who owns it now.

Equity

This is the amount of your property that you actually own. This is worked out by the difference between the value of your home and the amount of mortgage you still owe.

Exchange of contracts

In England, exchanging contracts (known as concluding missives in Scotland) is the final step in the buying process and the point at which the sale/purchase contract becomes legally binding. The actual exchange of contracts is carried out by your solicitor or conveyancer.

Interest-only mortgage

With an interest-only mortgage you just pay the interest so at the end of the loan term you don’t actually own the property – this type of mortgage is mostly used for buy-to-let mortgages.

Help to Buy

In England, the government’s Help to Buy scheme is a way for first-time buyers to get a foot onto the property ladder with just a 5% deposit. The UK government loans you 20% of the value of your home and your mortgage is effectively 75%, making you much more attractive to lenders.

Home demonstration

A new home demonstration introduces you to your new home. Your sales executive will show you important things such as how to operate the central heating and other appliances, and give you lots of advice on keeping your new home in tip-top condition.

Independent Financial Adviser (IFA)

An Independent Financial Adviser provides specialist advice on how to manage your money. In terms of finding a mortgage, they will research the marketplace and recommend the most appropriate products based on your individual needs.

Land and Buildings Transaction Tax (LBTT)

Equivalent to stamp duty, LBTT is the tax payable when you buy a residential property in Scotland. Currently, first-time buyers can claim a tax relief of up to £600, which means you start to pay LBTT at a higher-than-normal threshold – on homes priced over £175,000.

Land Registry/Land Registers of Scotland

This is the government office that registers property in England and Wales. The Scottish equivalent is the Land Registers of Scotland. The fees for registering are paid through your conveyancer or solicitor.

Loan to value ratio (LTV)

LTV is the percentage of your home that you actually own versus the percentage that is covered by your mortgage loan.

Lifetime ISA (LISA)

The LISA scheme allows first-time buyers to save up to £4,000 a year towards buying a home, with the UK government contributing an additional 25% of whatever you pay in.

Local Authority Search (LEA)

This is when your solicitor or conveyancer carries out checks with the local council to see if there are any issues that may affect your new home.

Mortgage

A mortgage is a type of loan designed to help you buy a house. When you apply for a mortgage, you need to put down a percentage of the cost of the property value as a deposit. The rest of the money you'll need to buy your new home is covered by a mortgage.

Mortgage broker

A mortgage broker is a person or company that can arrange a mortgage between you (the borrower) and a mortgage lender.

Mortgage fees

These are mortgage-related charges, which can include arrangement fees, valuation fees, mortgage broker fees, higher lending charges and exit fees.

Mortgage in principle

Also known as a ‘decision in principle’ or an ‘agreement in principle', this is a provisional statement from a lender saying that they agree to lend you a certain amount of mortgage money. A mortgage in principle usually lasts between 30 and 90 days.

Mortgage lender

A mortgage lender is a bank or financial company that lends money to borrowers to purchase a home.

Mortgage offer

A mortgage offer is confirmation that your application for a mortgage has been checked and approved. Most mortgage offers are usually only valid for six months.

Mortgage rate

A mortgage rate is the rate of interest charged on a mortgage. Mortgage rates are determined by the lender and can be either fixed, staying the same for a specified term, or variable, fluctuating with a benchmark interest rate.

Mortgage term

A mortgage term is the complete lifespan of the mortgage, and the number of years you'll be set to make payments to the mortgage lender until it's paid off.

No-fee mortgage

A no-fee mortgage is a mortgage without an arrangement fee.

Repayment mortgage

A repayment mortgage is when your monthly payments go towards paying off not just the interest but your property as well. As a new homeowner, you’re far more likely to have a repayment mortgage.

Searches

These are carried out during the conveyancing process. Your conveyancer or solicitor will search local records to look for factors that might affect the value of your house.

Shared Equity

If you’re buying in Scotland, Shared Equity is a scheme whereby you fund between 60% and 80% of the property price and the Scottish Government loan you the remainder.

Shared Ownership

If you can't afford the full purchase price of your home straight away, shared ownership in England allows you to purchase a share of your home. This is usually between 25% and 75% of the property’s value and you then pay rent on the remaining share.

Stamp duty

This is the tax that buyers must pay when purchasing a property. First-time buyers don’t pay stamp duty on homes priced up to £300,000 – and for homes priced up to £500,000, stamp duty is just 5% of the amount over £300,000.

Subject to contract (STC)

This term applies to any non-binding, provisional agreement.

Reservation fee

A reservation fee or 'buyers fee' is the part-payment towards the purchase price of a property in order to secure your new home.

Transfer document

This document is filled in by your solicitor or conveyancer, which transfers ownership of the property to you.

Now that you know what the key house-buying terms mean, maybe you're ready to take the first step towards buying your own brand-new home...

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Whether it's a one-bedroom city apartment on a historic site in central Edinburgh, or a large family home in the peaceful Wiltshire countryside, we have a fantastic range of homes to choose from.

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Our developments

At Places for People we create homes to meet your needs.

Whether it's a one-bedroom city apartment on a historic site in central Edinburgh, or a large family home in the peaceful Wiltshire countryside, we have a fantastic range of homes to choose from.

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