Home Buyer 
Jargon Buster

The UK Home Buyer’s Jargon Buster

 

The property market is full of legal and financial terms that can sound like a foreign language. To help you navigate your journey with Better Mortgages, we’ve broken down the most common "jargon" you’ll encounter.

 

1. Agreement in Principle (AIP) / Decision in Principle (DIP)

 

This is a document from a lender showing how much they are "prepared to lend" you based on a preliminary check of your income and credit score.Why it matters: It proves to estate agents and sellers that you are a serious buyer who can afford the property.

 

2. Conveyancing

 

This is the legal process of transferring the ownership of a property from the seller to the buyer.Who does it: A Solicitor or a Licensed Conveyancer.

 

3. Stamp Duty Land Tax (SDLT)

 

Often just called "Stamp Duty," this is a tax you pay to the government when you buy a property or land over a certain price in England and Northern Ireland.Note: First-time buyers often get a relief or exemption up to a specific property value.

 

4. Freehold vs. Leasehold

 

Freehold: You own the building and the land it stands on indefinitely.Leasehold: You own the right to live in the property for a set number of years (the "lease"), but someone else (the Freeholder) owns the land. You may have to pay "Ground Rent" or "Service Charges."

 

5. Equity

 

This is the difference between the value of your home and the amount you owe on your mortgage.Example: If your house is worth £300,000 and your mortgage is £200,000, you have £100,000 in equity.

 

6. Exchange of Contracts

 

The point at which signed contracts are physically swapped between the buyer’s and seller’s solicitors.Why it matters: Once this happens, the sale is legally binding. If you pull out after this, you will likely lose your deposit.

 

7. Completion

 

This is the final stage of the process. The money is transferred, the keys are handed over, and you officially move in.

 

8. Loan to Value (LTV)

 

This is the ratio of the mortgage amount to the total value of the property, expressed as a percentage.Example: If you have a £25,000 deposit for a £250,000 house, you need a mortgage of £225,000. Your LTV is 90%. Usually, the lower the LTV, the better the interest rate you can get.

 

9. Survey

 

An inspection of the property’s condition carried out by a qualified expert. This is separate from the "Lender's Valuation," which only checks if the house is worth the money they are lending you.Pro Tip: A survey helps you spot "red flag" issues like damp or structural cracks before you commit to buying.

 

10. Chain

 

A "chain" is a sequence of buyers and sellers linked together. For example, the person buying your house is selling theirs, and the person you are buying from is buying another house. If one person in the chain pulls out, the whole thing can collapse.