Mortgage Jargon Explained

Mortgage Glossary (A–Z)

It’s not just first-time buyers struggling to decode the array of acronyms used throughout the mortgage industry.

Next-time movers and buy-to-let investors who’ve purchased property before often come to us with questions about common mortgage terms.

We don’t expect you to know your LTVs from your DTIs — that’s our job. But understanding the basics can help you move through your application faster and with confidence.

We’ve created this handy A–Z mortgage glossary to help. If you still have questions, feel free to contact us anytime.

A

Additional Borrowing

When remortgaging, you may choose to borrow extra funds on top of your existing mortgage—for home improvements, gifting, or consolidating debt.

Affordability Check

A lender’s assessment of whether you can afford a mortgage. This includes your income, expenses, credit history, and existing debts.

Agreement in Principle (AIP)

A conditional offer from a lender stating how much you may be able to borrow. Also known as a DIP or MIP. Having an AIP strengthens your position when making an offer.

Annual Percentage Rate (APR)

The total yearly cost of your mortgage, including interest, fees, and charges. A lower APR means a cheaper overall loan.

Arrangement Fee

A fee charged by lenders to set up your mortgage. Sometimes this can be added to your loan instead of paid upfront.

Arrears

If you miss mortgage payments, you fall into arrears. Continued arrears can lead to repossession.

B

Bad Credit

A term for borrowers with financial issues like missed payments, CCJs, IVAs, or bankruptcy. This can limit mortgage options.

Base Rate

Set by the Bank of England, this influences mortgage interest rates. When it rises or falls, mortgage rates typically follow.

Booking Fee

Another name for an arrangement fee charged when setting up a mortgage.

Broker

A mortgage expert who helps you find the best deal, handles negotiations, and manages the process.

Buildings Insurance

Required by lenders to protect your property structure against damage.

Buy-to-Let Mortgage

A mortgage for rental properties. Typically requires a higher deposit (around 25%) and depends on rental income.

C

Capital

The amount you borrow to purchase a property (excluding interest).

Capped Rate

A variable mortgage with a maximum limit—your payments won’t exceed a set amount.

Cashback Mortgage

Offers a lump sum at the start, but may come with higher interest rates.

CCJ (County Court Judgment)

A legal ruling for unpaid debts that stays on your credit file for 6 years and can impact mortgage approval.

Completion Date

The final stage of buying a property when funds are transferred and keys are handed over.

Conveyancing

The legal process of transferring property ownership.

Credit Score

A number representing your financial reliability. Lower scores = higher risk to lenders.

D

Decision in Principle (DIP)

Same as an AIP—confirmation of how much you may borrow.

Deposit

The upfront payment toward a property (usually minimum 5%). Larger deposits unlock better rates.

Debt-to-Income Ratio (DTI)

Measures your debt against income. High DTI can reduce your chances of approval.

E

Early Repayment Charges (ERCs)

Fees for leaving your mortgage early during a fixed or deal period.

Equity

The portion of your property you own. Increases as you repay your mortgage or property value rises.

Equity Release

Allows homeowners (55+) to access property value without selling.

F

First-Time Buyer

Someone who has never owned property before.

Fixed-Rate Mortgage

An interest rate that stays the same for a set period.

Freehold

You own both the property and the land it stands on.

G

Guarantor

Someone (often a parent) who agrees to cover your mortgage if you can’t.

Ground Rent

A fee paid on leasehold properties to the landowner.

H

Help to Buy

Government schemes designed to help first-time buyers purchase homes.

Higher Lending Charge (HLC)

A fee for borrowing a high percentage of a property’s value.

I

Interest Rate

The cost of borrowing money.

Interest-Only Mortgage

You pay only interest monthly, with the full loan due at the end.

Intermediary

Another term for a mortgage broker.

IVA (Individual Voluntary Arrangement)

A formal agreement to repay debts over time.

J

Joint Mortgage

A mortgage shared between two or more people.

L

Leasehold

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

Loan-to-Value (LTV)

The percentage of a property’s value you borrow.

M

Mortgage Lender

The bank or institution providing your loan.

Mortgage Term

The length of time you repay your mortgage (commonly 25 years).

Monthly Repayment

Your regular payment covering loan + interest.

N

Negative Equity

When your mortgage is higher than your property’s value.

New Build

A newly constructed property, often with warranties.

O

Offset Mortgage

Links savings to your mortgage to reduce interest payments.

P

Part Buy / Part Rent (Shared Ownership)

Buy a share of a property and pay rent on the rest.

Porting a Mortgage

Transferring your mortgage to a new property.

R

Remortgage

Switching to a new mortgage deal on your current property.

Repayment Mortgage

Monthly payments cover both loan and interest.

S

Stamp Duty

Tax paid when buying property over a certain value.

Standard Variable Rate (SVR)

The lender’s default rate after your initial deal ends.

T

Tracker Mortgage

Follows the Bank of England base rate.

Tie-in Period

Time during which early exit fees apply.

V

Valuation Survey

A lender’s check to confirm property value.

Variable Rate Mortgage

Interest rate can go up or down over time.