A
- Agreement in Principle (AIP / DIP)
- A lender's initial indication of how much they might lend you, based on a soft credit check and self-declared income. Usually valid 30–90 days. Estate agents often require one before putting an offer to the seller. An AIP is not a formal mortgage offer — that comes later after valuation and underwriting.
- APRC (Annual Percentage Rate of Charge)
- The total cost of borrowing expressed as a single annual percentage, including the initial rate, the lender's SVR after the fix ends, and most fees. The APRC assumes you stay on the mortgage for the full term, which most borrowers don't — so it can overstate the real-world cost.
- Arrangement fee (product fee)
- A fee charged by the lender for setting up the mortgage product — typically £499 to £1,999. Often added to the loan (you pay interest on it) or paid upfront. A lower rate with a high fee can be more expensive than a slightly higher rate with no fee on smaller loans.
- Arrears
- Missed mortgage payments. Even a single month in arrears can affect your ability to remortgage. Lenders are required by the FCA to treat customers in arrears fairly and offer forbearance options before repossession.
B
- Bank of England base rate
- The interest rate set by the Bank of England's Monetary Policy Committee. Tracker mortgages move with it directly. SVRs are influenced by it. Fixed-rate mortgages are unaffected during the fixed period but will reset when you remortgage.
- Buy-to-let (BTL)
- A mortgage for a property you intend to rent out. Most BTL mortgages are interest-only, and lender stress tests focus on rental income covering 125–145% of mortgage interest at a stressed rate rather than your personal income.
C
- Capital and interest (repayment)
- The default residential mortgage type — each monthly payment covers interest plus a slice of capital, so the balance reduces over the term. At the end of the term the loan is fully repaid.
- CIS (Construction Industry Scheme)
- A UK tax scheme for contractors and subcontractors in construction. Specialist lenders use gross CIS day-rate × 5 days × 46–48 weeks for mortgage affordability, which often gives a much higher figure than the net profit on your SA302.
- Completion
- The legal moment the property changes hands. Funds transfer from the lender via your solicitor to the seller's solicitor, you collect the keys, and the mortgage starts. Typically 4–6 weeks after exchange of contracts.
- Conveyancer / solicitor
- The legal professional who handles the property transaction — searches, checking title, drawing up contracts, transferring funds. Most remortgages with free legals use a lender-appointed conveyancer; purchases usually use your own.
- Credit search
- A check against your credit file. A soft search is invisible to other lenders and used for AIPs. A hard search leaves a footprint and is used at full application. Too many hard searches in a short window flag as risk.
D
- Daily interest
- Most UK lenders calculate mortgage interest daily on the outstanding balance. This means overpayments take effect immediately — you don't need to wait for month-end.
- Deposit
- The cash contribution you put down toward the property price. The remainder becomes the mortgage. Larger deposits (lower LTV) unlock significantly better rates.
- Discharged bankruptcy
- A bankruptcy that has formally ended (usually 12 months after the bankruptcy order). Some specialist mortgage lenders consider applicants who have been discharged for 3+ years.
E
- Early Repayment Charge (ERC)
- A penalty fee — typically a tapering percentage (5% in year 1, down to 1% in year 5) — for repaying or remortgaging away from your lender during the fixed/incentive period. Most lenders allow up to 10% overpayment per year without triggering ERC.
- EPC (Energy Performance Certificate)
- A rating of a property's energy efficiency (A to G). Required to sell or let a property in England, Wales, and Northern Ireland. Buy-to-let landlords currently need an EPC of at least E to rent legally.
- Equity
- The portion of your property you own outright (property value minus mortgage balance). Equity grows as you repay capital and/or the property appreciates. You can release equity via remortgage or equity release products.
- Equity release
- A later-life mortgage where homeowners (usually 55+) borrow against their property without monthly payments. Interest typically rolls up and the loan is repaid when the property is sold, downsized, or the borrower passes away. Requires specialist equity release advice.
F
- First-time buyer (FTB)
- Someone who has never owned a residential property. FTBs get SDLT relief (no tax to £300k, 5% to £500k) and can use the Lifetime ISA. Many lenders also have FTB-specific products at higher LTV bands.
- Fixed-rate mortgage
- The interest rate is locked for an agreed period — usually 2, 3, 5 or 10 years. Monthly payments don't move during the fix. After the fix ends you drop onto the SVR unless you remortgage. The most common UK mortgage type.
G
- Gifted deposit
- Cash provided by family (most commonly parents) toward the buyer's deposit. Most lenders accept this with a signed gift letter confirming the funds are non-refundable and the gifter has no claim on the property.
H
- Help to Buy
- A range of government schemes for first-time buyers. The original equity loan scheme closed to new applicants in October 2022. The Help to Buy ISA also closed. Shared Ownership and the Mortgage Guarantee Scheme remain available.
- HMO (House in Multiple Occupation)
- A property let to 3+ tenants forming 2+ households who share facilities. HMOs need specialist BTL mortgages and may require landlord licensing depending on the local authority.
I
- Interest-only mortgage
- Monthly payments cover only the interest, leaving the loan balance unchanged. The loan must be repaid in full at the end of the term, usually via savings, investments, or sale. Common for buy-to-let; restricted for residential.
J
- Joint Borrower Sole Proprietor (JBSP)
- A mortgage where up to 4 people's incomes are used for affordability but only one (usually the buyer) is on the property deeds. Common for parents helping adult children buy without becoming legal owners.
L
- LTV (Loan-to-Value)
- The mortgage as a percentage of the property value. 75% LTV typically unlocks the best mainstream rates; 60% LTV the very best. Each 5–10% step usually opens a new rate tier.
M
- Mortgage broker
- A regulated intermediary who recommends mortgages from across the market (whole-of-market) or a panel of lenders. Brokers may charge a fee, take lender commission, or both. They handle the application and chase the lender.
- Mortgage offer
- The formal commitment from the lender to provide a specific loan on specific terms after underwriting and valuation. Usually valid 3–6 months. Distinct from an Agreement in Principle.
O
- Overpayment
- Paying more than your contractual monthly amount. Most lenders allow 10% of the outstanding balance per year during a fixed deal without ERC. Outside the fixed period, unlimited overpayment is usually allowed.
P
- Porting
- Transferring your existing mortgage product to a new property (often when moving home) without triggering ERCs. Subject to a new affordability check and the lender approving the new property.
- Product transfer
- Switching to a new mortgage product with your existing lender at the end of a fixed period. Usually doesn't require a new affordability check, valuation, or legal work — fast and low-cost but limited to that lender's products.
R
- Retirement Interest-Only (RIO)
- A mortgage for older borrowers where monthly interest is paid and the loan is repaid on sale, downsizing, or death. Underwritten on income (including pension) rather than future repayment plans.
- Remortgage
- Replacing your existing mortgage with a new one — either with your current lender (a product transfer) or by switching to a new lender. Usually done when your fixed deal ends or when you want to release equity.
- Right to Buy
- The government scheme allowing eligible council tenants in England to buy their home at a discount of up to £102,400 (£136,400 in London). Some lenders specialise in Right to Buy mortgages.
- Rental yield
- The annual rent expressed as a percentage of the property value. Gross yield = annual rent ÷ value. Net yield deducts management, maintenance, and mortgage interest. See our BTL yield calculator.
S
- Standard Variable Rate (SVR)
- The lender's default rate that you drop onto when your fixed/tracker deal ends. Usually much higher than competitive product rates. Most borrowers remortgage before this happens.
- SA302 (Tax Calculation)
- HMRC's annual statement showing your self-employed income and tax for a given tax year. Most lenders want 2 years of SA302s alongside the matching Tax Year Overviews for self-employed mortgage applications.
- Self-build mortgage
- A mortgage that releases funds in stages as the build progresses, secured against the land and the completed value. Specialist lenders only. Different LTV and survey approach to standard mortgages.
- Stamp Duty (SDLT)
- The tax paid on property purchases in England and Northern Ireland. Banded by price. First-time buyers get relief on properties up to £500,000. Additional properties attract a 3% surcharge. See our SDLT calculator.
- Stress test
- An affordability calculation lenders run that assumes a higher interest rate (often the SVR + 1–3%) — to check you could still afford payments if rates rose. Tightening since 2022 has reduced borrowing capacity for many applicants.
T
- Tracker mortgage
- A mortgage where the rate moves with the Bank of England base rate plus a fixed margin (e.g. base + 0.79%). Payments rise and fall with the base rate. Many trackers have no ERCs, giving flexibility.
U
- Underwriting
- The lender's detailed review of your application — checking documents, credit history, affordability, and property valuation. Some lenders use automated underwriting; others have human underwriters who can use judgement on edge cases.
V
- Valuation
- The lender's assessment of the property's market value, used to confirm the LTV. Most are desktop or drive-by valuations; some lenders use a full surveyor visit. Distinct from a buyer's survey (Homebuyer Report or full structural).
- Variable rate
- Any mortgage where the interest rate can change during the deal — including trackers (linked to base rate), discount rates (linked to the lender's SVR), and the SVR itself.