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Advance
The amount of money you need to borrow from the lender for the mortgage.

Additional borrowing

Also referred to as a 'further advance'. An additional loan which may be offered by the mortgage lender, for a different purpose other than buying the original house.

Agreement in principle
A document from a mortgage lender to show that you can borrow a certain amount. You can use this when putting an offer in on a house to show you are serious and can afford to buy the property. The Family Building Society do not offer an agreement in principle.

Annual equivalent rate (AER)
The rate of interest that you would receive if you deposited your money for a whole year. The AER on an account paying a six-month introductory bonus would be considerably lower than the headline rate for the first six months that included the bonus. 

Annual personal allowance 
An amount of income that you can earn each year without paying tax. Anything you earn above this amount is taxed.

Annuity

A term to mean the guaranteed income for life that you can buy with your pension savings, although there are other types of annuity.

Annual percentage rate (APR)

An interest rate that shows the true cost of borrowing in terms of interest and fees. It includes any arrangement fees or set-up costs, expressed as an annual figure, allowing easy comparison of loan products.

Annual percentage rate of charge (APRC) 
Used for mortgages, including second charge mortgages (secured homeowner loans). It shows how much your borrowing will cost over the period of an average year, over the term of your debt. It takes into account the introductory rate of interest you pay, rate you pay when you finish your initial rate, and fees required to get the mortgage.

Assured shorthold tenancy (AST)

A type of tenancy agreement, which usually lasts for six or twelve months.

Arrangement fee
A set-up fee for your mortgage. Most lenders will allow you to add this fee to your mortgage loan, but this will mean you pay interest on the fee for your whole mortgage term.

Arrears
A shortfall equivalent to two or more regular payments. If you think you are not going to be able to pay a mortgage payment and may go into arrears you should contact your mortgage lender as soon as possible.

Bank of England bank rate
Rate of interest set by the Bank of England each month.

Broker

An agent who can advise you about, and sell you, products like insurance or mortgages. Brokers may be independent or tied to a large network.

Buildings insurance

Covers the cost of damage to the structure of your property. This includes the roof, walls, ceilings, floors, doors and windows. Outdoor structures such as garages and fences may also be included.

Buy to Let

Buying a property to rent out as an investment.

Capital Gains Tax
A tax on the profit or gain you make when you sell or dispose of an asset. You can receive gains of up to the value of £11,300 (for the 2017–18 tax year) before you have to pay Capital Gains Tax.

Capped / ceiling rate
A variable rate mortgage with a guarantee that your interest rate will never go above a preset limit, the cap, during the product period.

CCJ
County Court Judgement. A court order that may be registered against you if you fail to repay money that you owe. This could effect your credit rating and your ability to get a mortgage.

Child Trust Fund (CTF)
A tax-free savings account for children, now replaced by Junior ISAs. The Government provided an initial payment of £250 at birth (£500 for low-income families) to all children born between 1 September 2002 and 2 January 2011.

Collar / floor rate
A variable rate mortgage with a guarantee that your interest rate will never go below a preset limit, during the product period.

Completion
Refers to the date your mortgage term begins, after your application has been accepted and the loan has been released.

Contents insurance

Insurance that covers damage to, or loss of, your belongings from fire, flood and theft, among other things.

Conveyancing

The legal process of buying a property.

Credit reference agency

Credit reference agencies keep financial details about your credit (or borrowing) history and share them with lenders.

Credit report

If you ask to see the information a credit reference agency holds on you it issues a credit report which is a snapshot of your borrowing history.

Credit score
Calculated by a lender to help assess the risk of lending to you (it’s also known as a credit rating).

Deed of consent
Used for anyone in the property who is not on the mortgage deed but is over the age of 17 when you take out a mortgage or remortgage. This prevents them from claiming squatter’s rights if the property may need to be repossessed.

Deposit
The amount of money you contribute towards the price of the house you are buying, usually referred to as a percentage of the total purchase price. Each bank or building society will have different products for different percentages of deposit people have. The minimum you need to have as a deposit can be as low at 5% of the purchase price. The more deposit you have, the cheaper the mortgage interest rates you can usually access.

Deposit Protection Scheme
Instead of a landlord keeping a tenant’s deposit it is held in a separate secure Government-backed scheme.

Discounted rate mortgage
A mortgage product where the rate is at a percentage discount from the lender’s standard variable rate. You will normally pay the discounted rate for a set period, often between two and five years. Discounted rate mortgages are variable, so your payments may go up as well as down. See 'Fixed rate mortgage' for comparison.

Downsizing
Selling and moving to a cheaper property to release some money to live on in retirement.

Early repayment charges (ERC)
A penalty fee you may have to pay if you repay your mortgage before the end of an agreed term. The fees usually only apply during a specified period.

Energy Performance Certificate (EPC)
An energy performance certificate gives a rating of how energy efficient a home is and also recommends how its efficiency could be improved.

Equity
The difference between the value of a property and any mortgage or other loans secured against it.

Equity release
Selling or mortgaging part of your home to release equity to live on in retirement.

Exchange of contracts
A term that refers to when both the buyer and the seller are legally bound to the sale and purchase of the property. At this point the buyer should arrange buildings insurance because if something happens to the property between exchange of contracts and completion, the buyer takes legal responsibility for the house.

Executors

The people you nominate in your will to organise your affairs when you die.

Fixed rate mortgage
A mortgage where the interest rate charged is fixed for a set period, usually between two and five years. This means you can be sure what your mortgage payments will be each month throughout the period.

Freehold
You own the building and the land it stands on. See 'Leasehold' for comparison.

Full structural survey
Also known as a builder’s survey. This is the most thorough type of survey and is used to uncover any structural issues with the property. It is often used in older properties.

Further advance
Also referred to as 'additional borrowing'. An additional loan which may be offered by the mortgage lender, for a purpose other than the purchase of the house it is secured against.

Gazumping
When a seller accepts a higher offer from another buyer despite having already accepted one offer. This may occur before the exchange of contracts.

Gazundering
When a buyer puts in a lower offer during the purchase process, after they have already made a higher offer. This is sometimes done when the seller is already committed to buying another property and it would take a long time to find another buyer.

Ground rent
A charge you may have to pay to the freeholder if you own a leasehold property.

Guarantor
A person who guarantees to pay back someone’s debt if he or she is unable to repay it.

Headline rate

The advertised interest rate before distorting factors have been removed.

Help to Buy

A Government-backed scheme to help buyers who are struggling to save a large enough deposit. They work like standard mortgages but the Government guarantees some of the mortgage.

HM Revenue and Customs (HMRC)
A Government department that is responsible for collecting taxes to make sure that money is available to fund the UK’s public services. It also administers National Insurance and State benefits.

Homebuyer’s Report
A survey done on the property by a registered surveyor. This is instructed by the buyer as a way of confirming if the property value is in line with current market prices, and if there are any signs of work that are needed. They are usually less thorough than a full structural survey, or building survey.

Housing Benefit
A regular payment from your council towards some or all of your rent should you be on a low income.

Income multiplier (mortgages)
A way of calculating how much a mortgage lender will lend expressed as a figure. For example, a lender may lend three times your income.

Individual Savings Account (ISA)
A type of savings account that allows you to save money without paying Income Tax or Capital Gains Tax on it.

Inheritance Tax (IHT)

A tax paid on the estate – the money and property – of a deceased person.

Interest only mortgage
A mortgage where you only pay back the amount you are being charged in interest each month. The amount of money you borrow does not decrease over the term of the mortgage and you will need to find another way to repay the original loan at the end of the mortgage term. See 'Repayment vehicle' for more information.

Intestacy rules
The rules that apply if someone dies without a will.

Investing / investment

Paying money into shares, property, commercial ventures or other financial schemes, with the hope of making a profit.

Joint tenants
Where the property is owned in equal rights by two or more people. If one person on the mortgage dies, the mortgage automatically transfers into the other person, or people’s names.

Jointly and severally liable
The responsibility of all mortgage borrowers to repay the mortgage. This means that if there are two people named on the mortgage and one person misses the payments, the other person is still legally responsible to pay the mortgage each month.

Junior Individual Savings Account (Junior ISA)
A tax-free savings account for children.

Leasehold
Often found with flats, you own the property for the length of time on the lease. The land the property is on is owned by the landlord, also known as the ‘freeholder’. When the lease is up the property it returns to the ownership of the freeholder. Properties that have fewer than 80 years on the lease can be difficult to get a mortgage on, and the lease can sometime be expensive to extend. It is important to check this before buying a leasehold property.

Land Registry
Keeps information about the ownership of land and property in England and Wales.

Life insurance

A contract between you and an insurer which will pay out a cash sum if you die during the term of the policy.

Loan to Value (LTV)
The size of your mortgage loan compared with the value of your property.

Mortgage
A loan provided by a bank or building society (the “lender”) to a person buying a property (the “borrower”).

Mortgage valuation
A check made by mortgage lenders to see if the property is worth the money they are lending – not the same as a survey.

National Insurance
The State insurance system comprising contributions by employers and workers to fund health services, income and other welfare benefits for the sick, unemployed and elderly.

Negative equity
When the value of your home is less than the amount remaining to repay on your mortgage.

Offset mortgage
A mortgage that links your mortgage with your savings. Your monthly repayments will be calculated from the amount outstanding on your mortgage less the amount held in the savings account. This means you can either lower your monthly repayments or you can pay your mortgage off quicker by keeping your repayments the same.

Overdraft
A banking facility that allows you to withdraw more money than you have in your account. The bank temporarily lets you borrow extra funds.

Payday lender

A loan company that specialises in short-term unsecured lending.

Payment holiday
An arrangement between yourself and the lender to allow you to stop or reduce your monthly payments for an agreed period.

Personal pension
A retirement savings scheme that you set up for yourself and pay money into to create a fund of money to be used in later life.

Personal Savings Allowance (PSA)
Excluding ISAs, the amount of interest each year you can earn on your savings tax-free. For basic-rate (20%) tax payers, the allowance is £1,000, for higher-rate (40%) tax payers, the allowance is £500 and for additional-rate (45%) tax payers, there is no allowance.

Product switch
During your mortgage term, if a more attractive or suitable mortgage product becomes available, you may be able to switch your product to this one. However, this may incur extra charges, especially if you are still within your fixed / discount rate period.

Property searches
Checks made before buying a property could include: a Local Authority search (to see if there are any planned developments, roadworks or disputes that could affect the property) and water, drainage, environmental or flooding searches.

Property survey
An expert check of a property to highlight repairs or structural problems.

Reflection period
Once you receive your offer you will have a ‘reflection period’, where you can check that the mortgage meets your needs and query anything with your solicitor. The reflection period will be at least seven days from the date of your offer. If you decide to accept the offer before then, you will waive your rights to a full reflection period.

Remortgage
Switching an existing mortgage with a new lender without moving home.

Repayment mortgage
Also known as a capital and interest mortgage. A mortgage where your repayments each month cover the interest on the mortgage and pay back some of the capital borrowed. Eventually at the end of the mortgage term you should have no money left to pay, unlike an interest only mortgage where you will still need to pay back the capital borrowed.

Repayment vehicle
This is needed for interest only mortgages. It is the means that you plan to use to repay the capital for the mortgage at the end of the term.

Representative APR
The interest rate that at least 51% of those who obtain a loan or credit card would be charged if they were to borrow £1,200 over a year.

Representative example
An example of the costs associated with a mortgage based on the mortgage lenders typical borrowers. This will show the monthly repayments, the total amount to repay, including the amount of interest to pay, and any fees there are to pay.

Repossession
If the borrower defaults on payments, the mortgage lender may retake possession of the property. This is the last resort for mortgage lenders and they will usually try to come to an arrangement to have the mortgage paid back if the borrower is experiencing financial difficulties.

Retail Prices Index (RPI)
A measure of UK inflation that compares the price of goods and services each month. Published by the Office for National Statistics.

Right to Buy scheme
Offered to people living in council houses or housing association tenants, this allows eligible tenants the right to buy the home they live in with a discount.

Searches
A legal process that solicitors or conveyancers must undertake when buying a property. This ensures the property has no restrictions or hidden legal problems, or is at risk from problems such as flooding.

Security
The property and / or the funds used by the lender to ensure the repayments of a loan are met.

Self-assessment

A system which HMRC uses to collect Income Tax. Tax is usually deducted automatically from your pay, pensions and savings, but if you have other income, it is your responsibility to report it in a self-assessment tax return.

Stakeholder pension

A type of low-cost personal pension.

Stamp Duty Land Tax (SDLT)
Stamp Duty is a tax, paid by the buyer, on land and property transactions in England, Wales and Northern Ireland worth over £125,000. The rate at which it is paid depends on the purchase price of the property.

Standard Variable Rate (SVR)
The rate your mortgage will go onto once you have finished your initial product with your lender. This is not always the most competitive rate, so it can be worth reviewing your options at this point, either with the same or another lender, to ensure you are getting a good deal.

Starter Homes
Government scheme aimed at first time buyers under 40, enabling them to purchase a newly built home at a 20% discount.

Stocks and shares
Investments in companies, whose value may go up and down depending on how the companies’ business performs and the sentiment of other investors. When you buy a stock or share, you become a part-owner of the company, along with all the other investors.

Sub-letting

Renting out part or all of a property that you are yourself renting. This should only be done with permission from your landlord.

Tax year

The period over which taxes and benefits are calculated. The year used by the Government for calculating personal taxes is April 6–April 5. Other entities, such as companies, may use different periods for their tax year.

Tax relief

A deduction in the amount of tax a person or company has to pay.

Tenancy agreement

A contract between a landlord and someone who rents their property which sets out the legal rights and obligations of both parties.

Tenancy period

The length of your tenancy, as specified by the tenancy agreement.

Tenants in common
Different to joint tenants, each mortgage borrower will own a set percentage of the property. This is sometimes used when one person has put down more of a deposit than the other person, and protects their amount they have put into the house in the case that the property has to be sold. If one of the borrowers dies in a tenants in common mortgage, the mortgage will not automatically pass onto the other borrower(s), and could be transferred to their next of kin, such as other family members.
Term

Title deeds / title documents

A document that officially states who owns the property, as well as information about the property and the land it is built on.

Tracker mortgage
A variable type of mortgage that tracks an external interest rate and is usually a set percentage above or below this. Tracker mortgages usually follow the Bank of England bank rate.

Transfer of equity
When you transfer a proportion of the ownership of the property to someone. This can be as a result of a marriage or divorce, where a person is added or taken off the mortgage.

Universal Credit
A new single payment for people who are looking for work or on a low income (introduced in 2013). It replaced a range of benefits, such as Income Support and Housing Benefit.

Vendor
The person selling a property.

Yield
The yield on a Buy-to-Let property is calculated by dividing the annual rent you expect to receive by the purchase price of the property. It is a measure of the return for renting out the property.

Family Building Society
Ebbisham House
30 Church Street
Epsom
Surrey KT17 4NL
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