Mortgage Mumbo Jumbo



Because there is a lot of mortgage terminology used in the industry that people don’t understand it can make the property market quite confusing. Hopefully our overview will put some of the most commonly used terms and phrases into an easy to understand language.

 

APR

Annual Percentage Rate is the overall cost of the mortgage including fees and interest.

 

Bridging loan

This is a short-term loan that is used to cover any shortfalls in the time period between buying a property and selling one.

 

CHAPS fee

On completion of the mortgage this is the amount you pay which covers the cost of your mortgage lender sending the funds to your solicitor.

 

Consent to let

If you want to rent your property out but have a mortgage on it you will need to get a ‘consent to let’ from your mortgage provider. They will charge you a fee for this and your interest rate could change but failure to do this will put you in breach of the conditions on your mortgage.

 

Deed of Consent

If a mortgage lender had to repossess a property they could be faced with people claiming ‘squatter’s rights’. These would be anyone other than yourself aged over 17 who lives at the property. In order to protect against this lenders will ask anyone over the age of 17, your children for example, to sign a ‘Deed of Consent’ which means they won’t be able to claim squatter’s rights if a repossession were to happen.

 

EPC

An EPC is an Energy Performance Certificate and all homes being sold need to have one. It informs buyers how energy efficient a home is and what can be done to improve the efficiency in the future.

 

Freehold

This means you own both the property and the land it is on.

 

Land Registry

This is the official body who are responsible for keeping details of the ownership of properties

 

Leasehold

You own the property but not the land it is on.

 

Mortgage Deed

This is the formal contract between a lender and a borrower which details the legal obligations of the borrower and what rights the lender has should the borrower default.

 

Offset mortgages

This type of mortgage allows you to use savings to reduce the amount of interest you pay on your mortgage. This can result in lower monthly mortgage repayments or having a shorter term mortgage.

 

Tie-in period

This is the period where you are ‘tied in’ to your mortgage deal and where an early repayment charge would need to be paid if you were to move your mortgage to another lender.

 

Transfer of Equity

If you wanted to add or remove your partner from your mortgage a transfer of equity is the legal document that confirms the transfer of property ownership has been done.

 

We would advise anyone who is looking to buy or sell a property to take professional advice and if you don’t understand anything ask for it to be explained in detail.