Mortgage jargon buster L to Z
Leasehold Ownership for a set period, which is most commonly applied to flats and other shared buildings.
Let to buy mortgage A loan for those who want to buy a new property and let out their existing one.
Libor Abbreviation for the London inter-bank offered rate, which is the interest rate at which banks borrow from each other.
Loan to value (LTV) The size of mortgage as a proportion of the property value. EG a £150,000 mortgage on a house worth £200,000 would be a loan-to-value of 75%.
Local searches Information on planning and environmental matters obtained from the local authority.
Mortgage A loan for which property is the collateral.
Mortgage Agreement in Principle (MAP) An outline agreement to provide a loan to a
specified person.
Mortgage payment protection policy (MPPI) Insurance taken out by the borrower to ensure their mortgage payments are still made if they’re unable to work due to accident, sickness or unemployment (although policies do vary).
Negative equity When your mortgage loan is higher on the property than the price you could sell it for.
Offset mortgage A mortgage that is combined with a savings or current account. The savings balance is subtracted from the loan, meaning that customers may pay less interest, while still maintaining access to their savings if necessary.
Part exchange An arrangement in which your current home is bought by a developer (or a company they outsource to) to free up your monies to purchase the property they are selling.
Planning permission The goahead from a local authority for large physical changes to a property, such as adding a porch or garage.
Remortgage Remortgaging is the process of setting up a new deal when your existing mortgage deal comes to an end.
Repayment mortgage Loan where you pay the interest and the sum borrowed off at the same time for an agreed period.
Restrictive covenant Legal restriction on what can be done on a property or on land.
Sealed bid Making an offer in a sealed envelope by a set date and time.
Searches See local searches.
Shared equity Usually available through builders/property developers where you buy a percentage of the property and they retain ownership of the rest for a pre-determined period of time when you will need to raise additional finance to buy out their proportion of the equity.
Shared ownership Scheme Where you purchase a percentage of the property and continue to pay rent on the rest. You will also have the option to purchase the remaining percentage at a later date. Most commonly but not exclusively available through Housing Associations
Stamp Duty Land Tax (SDLT) Tax paid when you buy property, calculated as a percentage of the price.
Subject to contract When a sale has been agreed but contracts have not been exchanged. Using the phrase prevents an offer being interpreted as a binding agreement.
Subject to survey An offer made with the proviso that it may be amended or withdrawn if the survey shows flaws in the property.
Tenants in common When more than one person owns a property but each person’s share forms part of their estate if they die.
Tracker mortgage A mortgage where the interest rate is usually pegged to movements in the Bank of England base rate (but can be pegged to other variable interest rates) – and rises and falls in line with it.
Under offer The stage between having an offer accepted and exchanging contracts.
Vacant possession When a property being sold has no one living in it.
Valuation The price a valuer appointed by the mortgage lender thinks a property will sell for. A mortgage valuation is also a check by the lender that the property is as described in your mortgage application and that if you default on payment and the property is taken into possession they should recover their debt in full.
Variable rate When the interest rate is not fixed and can go up or down.