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BUYING AND SELLING GLOSSARY

Reeds Rains has nearly 150 years of experience in successfully helping people buy and sell property. Here's our glossary of terms you'll come across when buying and selling a home.

YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.

Our initial mortgage consultation is free. We will charge a fee between £349 and £699 on application. The amount we will charge is dependent on the amount of research and administration required.

A

Agreement in Principle Certificate (AIP)

A document provided by a lender indicating how much a lender will consider a mortgage application for based on the applicant's monthly income and outgoings. 

Application Fee

Fee charged by a lender to cover the initial costs of processing a loan application. 

APR

Annual Percentage Rate. This shows the overall cost of a loan, taking into account the term, interest rate and other costs, that you’ll pay in one year.

Auctions

Property sale. If you win the bid, you are legally bound to buy the house.
Tip: Have a survey carried out before the auction. 

B

Bailiff

Official who repossess your possessions or house if you cannot keep up on your mortgage repayments.

Bridging Loan

A short-term loan which can be used to bridge the period between you buying a new property and selling your previous home. Not all bridging finance is regulated by the Financial Conduct Authority. Should you have a need for a bridging loan you will be referred to a third party provider. Neither Reeds Rains Ltd nor First Complete Ltd is responsible for any advice provided by a third party.

Building Survey

An extensive survey, carried out by a qualified surveyor, to spot faults and potential problems in the property you are buying.

Buildings Insurance

Pays the cost of repairing or rebuilding your home if it is damaged by unforeseen events (as detailed in the insurance policy). 

C

Capital

The total amount of money borrowed to buy a property.

Chain

This occurs when the seller needs the sale of their house to occur before they can complete the purchase of another property. The same situation may exist for others in the chain. As a result, the whole chain can collapse if one link breaks. 

Closing Date

The date set for submission of offers when more than one party show interest in the property.

Communal Areas

The parts of the building and grounds, which are used by some or all of the residents. These can include hallways, gardens and parking areas. 

Completion

The point when ownership of the property legally passes to the buyer. 

Contents Insurance

Covers the cost of replacing possessions lost or damaged due to unforeseen events (as detailed in the insurance policy). 

Contracts

The legal documents needed to transfer the ownership of property.

Conveyancing

The legal work that your solicitor will do to enable you to buy and/or sell a house.

Council Tax

Levied by local councils to cover the cost of local amenities and services.

Covenant

A condition, contained within the Title Deeds or lease, that the buyer must comply with, which is usually applied to all future owners of the property. A restrictive covenant is one that prohibits the owner from doing something.

D

Deeds

Legal documents assigning ownership of a property and/or land.

Deposit

Sum of money that represents the personal capital that the buyer is putting toward the purchase of the property.

Disbursements

Expenses paid by the solicitor on behalf of the purchaser

Draft Contract

Unconfirmed version of the contract.

Dwelling

The 2001 census defines a dwelling as a self-contained unit of accommodation. It is self-contained where all the rooms (in particular the basic facilities such as kitchen and bathroom) are behind a door that only the household can use. A dwelling can consist of one household space (self-contained) or more than one household space (shared).

E

Early repayment charges (ERCs)

This is a fee payable if you repay your mortgage, either in full or in part, before the end of the penalty period. These fees typically range from 1 to 5% of the loan amount typically. The penalty normally applies for the same time that you fix your interest rate or enjoy the benefit of a tracker or discount, however are not limited to just these events.

Energy Performance Certificate (EPC)

The EPC shows the current energy rating of a property as well as ways that the rating could be improved

Environmental search

This is a search of current and historic records to find out whether a property is built on, or near, contaminated land.

Equity

If the house was sold this would be the money you would have left after the mortgage was repaid.

Estate Agent

Property agents who link up buyers and sellers. Estate Agents advertise houses & arrange viewings. 

Excess

The initial sum you have to pay on an insurance claim. 

Exchange of Contracts

The point at which buyer and seller are legally bound to the sale and purchase of the property.

F

Fixtures and Fittings

All non-structural items included in the purchase of a property.

Flying freehold

This is a freehold property which overhangs or underlies another freehold property.

Freehold

This type of tenure means that you own both the property and the land it stands on and there is no time limit to the period of ownership.

G

Gazumping

A practice whereby the seller, having already accepted an offer from Party A, accepts a higher offer from Party B. 

Gazundering

When the buyer gives the seller a lower offer just before contracts are about to be exchanged.

Ground rent

A yearly fee leaseholders have to pay to the freeholder or landlord who owns the land the leasehold property is on.The annual fee which a leaseholder pays to a freeholder.

H

Home Buyers Report

The homebuyer's report comments on the structural condition of most parts of the property that are readily accessible, but is less comprehensive that a full building or structural survey

Home Condition Report

An objective report on the condition of a property designed to be used by home buyers, sellers and mortgage lenders. A description of the general condition of a home taking into account its age and location. A Home Buyer Report would also include a valuation and insurance figure.

Housing Association

Also known as Registered Social Landlords (RSLs). A not-for-profit organisation providing social housing and run by a voluntary committee registered with the Housing Corporation. They improve properties and build new homes mainly for rent. Any surplus is ploughed back into the organisation to maintain existing homes and to help finance new ones. They exist to provide affordable housing including providing access to affordable or low cost home ownership schemes.A non-profit making body which lets you buy a percentage of the property and pay rent on the rest.

I

Instruction

When a seller instructs an estate agent to market a property.

Interest

The money you are charged for borrowing.

J

Joint Agents

When the seller commissions two Estate Agents to sell their house

Joint Mortgage

A mortgage where there is more than one individual named legally responsible for the repayment mortgage.

L

Land Registry

Carried out by the solicitor to register buyer as the new owner of the house. 

Lease

Document in which the owner of a freehold property lets out their premises to a named party at a certain price and for a specified time. 

Leasehold

This means that you own the property for as long as is specified in the lease; you are granted the right to live there by the freeholder. At the end of the lease the property again becomes the possession of the freeholder. The majority of leasehold properties are flats, although some houses are leasehold.

Legal charge

The term used for the security that the lender relies on when granting a mortgage. 

Lender

An organisation or person that lends money. For instance the bank or building society with whom you have your mortgage. 

Lender's Arrangement Fee

Charge passed on to the buyer by lender for arranging a loan. 

Lender's Legal Fees

The legal fees incurred by the lender when arranging a mortgage. These costs are generally passed on to the buyer. 

Lender's Valuation

A brief inspection, for the benefit of your lender, of the home you hope to buy. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want to arrange your own survey. 

Life insurance

Life insurance can also be know as 'term insurance' because it is an insurance policy only taken out for a set period of time and will only pay out if the life assured dies during this term. 

Loan-to-Value

A percentage expressing size of mortgage:value of house. For example, House Value=£100,000, Mortgage Size=£90,000. Loan-to-Value=90%. 

Local Authority search

A search carried out by your solicitor to find out if there are any Local Authority Notices or Plans with respect to the building itself and the surrounding area (for example, have plans gone through to build a motorway next to the house?).

M

Maintenance Charge

A charge made towards the upkeep of a leasehold property.

Management Fee

You will pay a fee as part of your rent to cover the administration costs involved in calculation, collection and record keeping of your rent. 

Market Value

The highest price which a buyer, ready, willing and able but not compelled to buy, would pay, and the lowest price a seller, ready, willing and able but, not compelled to sell, would accept.

Mortgage

A loan which is secured against your property.

Mortgage deed

A legal document that formally secures the mortgage loan against your property.

Mortgage Offer

A formal document issued by the lender to you confirming that your mortgage loan has been agreed, and setting out all of the details of the mortgage, including the terms and conditions. 

Mortgage term

Period over which mortgage is to be repaid.The length of time you agree to take your mortgage over. This is typically 25 years, but can be shorter or go up to retirement age and beyond (subject to lender's underwriting criteria and affordability). 

Mortgagee

The lender of a mortgage.

Mortgagor

The house buyer who takes out a mortgage (also known as the borrower).

Multi-Agency

The selection of two or more estate agents to act on the seller's behalf, usually incurring a higher fee than if the sale is completed by a sole agency.

N

Negative equity

When the value of your house falls to less than your mortgage. 

O

Offer

A bid made by a prospective buyer, this is not legally binding.

Ombudsman

Independent professional bodies who investigate complaints on behalf of customers against an organisation such as estate agents, solicitors and insurance companies.

P

Premium

The amount your insurer requires you to pay for insurance.

Principal

The sum of the loan on which interest is calculated. 

Private Treaty

The way in which most house sales are completed in England and Wales.

R

Redemption of a mortgage

When a mortgage is fully repaid.

Repayment mortgage

A mortgage that pays off both the home loan and the interest at the same time. Make all the payments, and the mortgage will be fully repaid. 

Repossession

When the mortgage lender takes away or repossesses your home because you have fallen too far behind on your mortgage repayments in order to sell to recover their losses.

Retention

Holding back part of a mortgage loan until repairs to the property are satisfactorily completed.

S

Sale Agreed

A verbal agreement from the seller.

Searches

Checks of local council records for planning applications and restrictions, etc.

Sole Agent

When a seller chooses only one Estate Agent to sell their home. 

Solicitor

Legal Professional who acts on behalf of the buyer in the purchase of a house. The solicitor will check the legal position of the house, carry out a Local Authority Search, Land Registry and oversee the exchange of contracts between the two parties. 

Stamp Duty Land Tax

A tax paid to the Government by the buyer upon completion.

Subject to Contract

Words used to indicate that an agreement is not yet legally Binding.

T

Tenants

People living in a property owned by someone else.

Tender

The process whereby the seller asks for written offers on a property usually with a set closing date.

Term

The period over which a mortgage is taken out. 

Title

The legal right to ownership of a property.

Title deeds

The legal document which shows the ownership of land and property.

U

Under Offer

When the seller has accepted an offer on the property but contracts have not yet been exchanged.

V

Valuation Survey

A brief inspection, for the benefit of your lender, of the home you hope to buy. This is to make sure they are not lending more than the property is worth and that the property is suitable security for the mortgage, but this will not tell you if it is a good or bad buy. For your own peace of mind, you may want to obtain your own survey

Variable Interest Rate

Rate of interest payment that fluctuates over time in line with general interest rates.

Vendor

The legal name sometimes used to describe the seller of the property.

Verbal Offer

Offer from prospective purchaser, not legally binding on either party.

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