A first-time buyer’s A-Z property jargon-buster
Navigating the property market can be like being dropped in a far-flung destination without a phrasebook. And then snapping up the most expensive thing you’ll probably ever purchase.
“Buying your first home is a big decision – it’s incredibly exciting, but at times can also be a little overwhelming,” says James Wallace, Group Head of Digital and Marketing at Barratt Homes. “Having an understanding of the different terms and phrases can give you the confidence you need to sit back and enjoy the process, rather than be daunted by it.”
Luckily, OnTheMarket is here to decode some of the jargon you’ll come across at different stages of the process including the finances, the property search and that all-important sale. But before we do, here are Barratt Homes’ top tips for first-time buyers:
– Fill out a budget planner – make sure you know what you can afford and decide which parts of your spending you are prepared to cut back on and what’s essential.
– Check your credit record – make sure that the information recorded about you is accurate.
– Consider the benefits of gaining independent advice – from someone who will evaluate products from all of the market when it comes to mortgages.
Getting your money in order is a vital part of buying a property. In our bumper guide on that very topic, sorting out your finances was top of the list. Here are some of the terms you might come across…
Affordability assessment – When your broker/lender goes through your income and outgoings to work out what you can afford to pay for a mortgage each month.
Annual Percentage Rate (APR) – This percentage indicates the cost of a loan, including the interest rate and other fees such as arrangement fees.
Arrangement fee – A mortgage lender or broker might charge borrowers a fee to set up a loan.
Arrears – If you’re struggling to pay your mortgage repayments, what you owe might back up. The unpaid payments are called “arrears”.
Bank Rate – Also sometimes known as the “Bank of England base rate” or simply “the interest rate”, this impacts the interest rates banking institutions charge borrowers.
Borrower – The person who borrows money from a lender, often with interest.
Bridging loan – A short-term loan that means a person can buy a property without being reliant on the sale of their current home.
Buy-to-let mortgage – Allows you to buy a property that you can let to tenants. Here’s our article sharing top tips on becoming a landlord.
Capital – This is the amount of your money invested in a property and is also known as “equity”.
Cash buyer – While it sounds like suitcases stuffed full of notes, this is where the buyer pays for the property in its entirety, without the need for a mortgage.
Credit check – Where a lender checks your financial history.
Credit score – This is a rating that indicates how likely you are to be able to borrow money. According to the government’s website, “the higher the number, the more likely you are to be offered a range of good mortgage deals.” It’s a good idea to check what your score is before you start looking for a property, and know how to keep it in good shape. Check your credit score.
Decision in Principle (DIP) – A lender’s estimate of the amount you’re likely to be able to borrow. Also known as an Agreement in Principle (AIP) and a Mortgage in Principle (MIP).
Deposit – The amount of money buyers put down for a property purchase, paid on exchange of contracts, and a percentage of the purchase price. Read our tips on making your deposit go further.
Early Repayment Charge (ERC) – This is a charge if you pay your mortgage off before the term is finished. It can also be triggered in other circumstances, such as overpayment. Read our piece on whether overpaying can save you money.
First-time buyer – That’s you! For a more official definition, the Government says that to qualify as a first time buyer… “a purchaser must not, either alone or with others have previously acquired a major interest in a dwelling or an equivalent interest in land situated anywhere in the world.” There you go.
Fixed rate mortgage – One of two main types (also see variable rate). A fixed rate mortgage is where the amount of interest you pay is fixed for a specified period of time. Read more here.
Full mortgage application – What you’ll have to go through once your offer has been accepted.
Gifted deposit form – This is an official document that needs to be filled in if someone, for example a family member, is helping you buy the property.
Guarantor mortgage – Where someone else, such as a parent, guarantees that they’ll pay your mortgage if you can’t. It is legally binding. If you’d like to explore getting some help from the bank of mum and dad, read our parents’ guide to helping their children get on the property ladder!
Help to Buy – There are a number of government schemes for England, Scotland, Wales and Northern Ireland to help people get a foot on the property ladder.
– Help to Buy in England is where first-time buyers (and current homeowners) can borrow up to 20 per cent of the purchase price of a new-build property from the government. The loan is interest-free for five years. But there are conditions – the purchase price should not be more than £250,000 (£450,000 in London)
– There are also schemes helping people to buy a property in Wales, Scotland and Northern Ireland.
ID checks – These are needed at different points of the process whether an estate agent or solicitor and include proof of identity and proof of address.
Independent Financial Adviser (IFA) – Professionals who provide advice on financial products from the whole market based on your circumstances. You may have to pay a fee for this service.
Interest-only mortgage – This is where you pay only the loan interest off each month and the balance at the end of the mortgage term.
Interest rate – The amount of money paid by a borrower to a lender for a loan. It can also refer to the Bank of England’s Bank Rate.
Lender – The institution (for example, a bank or building society) that lends the buyer the money to purchase the property. Also sometimes called the mortgage provider.
Loan-to-income ratio – Lenders will typically let you borrow a multiple of the money you bring in, capped at four-and-a-half times. This is called a “loan-to-income ratio”.
Money Advice Service – An organisation set up by the government billed as offering “free and impartial money advice”.
Mortgage – A legal agreement where a lender loans money to a buyer so that they can purchase a property. They will need to pay back the money with interest over a specified period of time, most commonly 25 years. Read our top tips for financing a property purchase.
Mortgage adviser or broker – Professional who can recommend a mortgage that most suits your situation and requirements.
Mortgage affordability calculator – This will help you work out what you might be able to borrow.
Mortgage booking fee – Once you’ve secured a Mortgage in Principle (a statement from a lender which states they’ll lend a certain amount), you may have to pay a fee to reserve the mortgage you want.
Mortgage overpayments – An amount you’re allowed to pay off your mortgage above and beyond your agreed payments.
Mortgage payments – The amount you’ll pay off your loan each month.
Mortgage term – The time period over which the mortgage will be paid off.
Mortgage valuation survey – The lender carries out a survey to check that the property is worth what you’re paying before they lend you the money.
Price comparison websites – Sites that aggregate content from multiple suppliers so that you can see the difference between their products. Read more here.
Repayment mortgage – This is where you pay the amount you’ve borrowed and the interest off each month.
Repossession – If you can’t pay your mortgage, a lender can “repossess” your property and sell it to get as much of their investment back as they can.
Right to Buy – The scheme where the majority of council tenants can buy their home at a lower price than the market value. Read more here.
Shared Ownership – Part of the Help to Buy scheme, this is where you can purchase between 25 per cent and 75 per cent of a home and pay rent on the rest. The idea is to enable people to buy a property, even if they can’t afford the whole thing. Homeowners then have the chance to buy a greater share later on. As ever, there are conditions. Read our guide to shared ownership.
Variable rate mortgage – One of two main mortgage types (also see fixed rate). With this kind of mortgage, the interest you pay might change. Within this category, there are different types of mortgage, for example tracker and standard variable rate (SVR). Find out more here.
The property search
Got to grips with the finances? Now it’s time to wear out some shoe leather and look for your dream property.
Your first stop should always be your local estate agent. They are better positioned than anyone else to help you navigate the entire buying process. Armed with the terms below, you’ll be ready for the buyers’ battle ahead. And, if you’re looking in Scotland, read our guide to buying a property north of the border.
Accepted – When the seller is happy with the amount of money you’d like to pay for the property, your offer is said to be “accepted”.
Asking price – The price the seller would like the property to be sold for. Here’s our guide on why it’s important to set the right asking price. You’ll also see “offers in the region of”, “offers over”, “guide price” and “offers in excess of” in marketing materials, which give more information about the asking price but can mean similar things. And there’s nothing to say you can’t make an offer anyway!
Auction – Where a property is offered for sale with the highest bidder winning. Here’s our guide on buying a home at auction.
Blind bidding (Scotland only) – This is where the seller asks for offers around a certain amount, or offers over a minimum price the vendor expects to get. Read more about Scotland’s property purchasing process here.
Chain – This is where your property purchase is linked to others – the progress of one often affects the next. So, for example, the person you are buying from is also buying another property. It’s at this point that an estate agent comes into their own. They will help manage the transaction process from beginning to end. “No forward chain” means that your seller is not reliant on buying another property for your sale to go through.
Closing date (Scotland only) – Sellers can set a closing time and date by which written offers must be sent to their solicitor.
Commission – The fee an estate agent charges to sell your home.
Conservation area – An area of significant historical or architectural importance with rules and regulations for homeowners to protect it.
Conversion – A property or part of a property that has been changed from one thing to another. For example, a barn conversion.
Developer – The builder of new homes. Search OnTheMarket’s new homes listings.
Edwardian – Houses built during the reign of King Edward VII (1901 – 1910).
Estate agent – A professional who represents a seller, markets the property and takes the transaction through to completion. They have a wealth of local knowledge and understand the market better than anyone in a particular area. They can help guide you throught the entire buying process. Also referred to as the “agent”. Estate agent fees do not apply to the buyer. Properties may be sold by one estate agent or more than one. You can find an agent in your area at OnTheMarket.
Estate facility charges – A yearly charge on an estate, used to fund the upkeep of public areas, for example.
Flat – Usually a portion of a building you can call home, and almost always leasehold.
Floorplan – A diagram showing the layout of the property.
Flying freehold – When a bit of a freehold property hangs over, or is situated, on another freehold property.
Freehold – One of the two most common forms of property ownership in the country. Where the land and property on it is owned only by the owner. Read more about what that means, and the difference between freehold and leasehold.
Georgian – Refers to houses built during the reign of the King Georges – George I, George II, George III and George IV – in a period spanning 1714 – 1830.
Grade I (one) – Appears in property descriptions and gives “listed” buildings of “exceptional interest” protections.
Grade II (two) – The next level of listed status signifies that buildings are “of special interest, warranting every effort to preserve them.”
Ground rent – This is the annual fee you must pay to the owner of the land (freeholder) your property is located on. Applies to many leasehold properties.
Joint agency – Where two agents are appointed to sell the property and share the commission.
Leasehold – One of the two most common forms of property ownership in the country. Most flats are leasehold but it also applies to houses too. With leasehold, the land your property is built on is not owned by you. Instead, you’ll have a lease – or an agreement – with the landlord, also known as a “freeholder”, typically for 99, 125 or 999 years. It’s important you clarify the period of the lease and understand any terms and conditions such as sevices charges. Read more at OnTheMarket here. Northern Ireland has different rules when it comes to leasehold.
Listed building – If a building is registered as being architecturally or historically important, it is said to be listed. In England and Wales, properties could be Grade I or Grade II-listed depending on their protected status. Here’s everything you need to know.
Location – A much-used word to refer to where a property is situated. Often repeated three times (location, location, location) to indicate the importance of where a property is. Read our top tips on easing the moving process if you’re moving somewhere new.
Maisonette – A home with its own entrance, usually as part of a larger building.
Memorandum of sale – A document drawn up by an estate agent when your offer on a property has been accepted.
Multiple agency – More than two agents are appointed and only the agent who sells the property gets the commission.
NAEA Propertymark – Association of estate agents who operate by a code of practice.
Note of interest (Scotland only) – This is when your solicitor registers your interest in a property you’d like to buy. You’ll be told of any developments but you are not obligated to buy.
Offer – The amount of money you offer the vendor to buy the house. Read our article on how to make a competitive offer as a first-time buyer. A buyer can verbally make an offer or make one in writing.
Off-plan – When you buy a property “off-plan”, it means it hasn’t been built yet and house-hunters only have the plans to view.
Open house – Where a seller allows more than one potential buyer to view the property at once during a specified timeframe.
Open market value – The price a property might be reasonably expected to sell for on the open market. Assumes publicity and marketing time and no particularly unusual circumstances.
Particulars – The details used by estate agents in their marketing to describe a property.
Peppercorn rent – A nominal amount of rent.
Period property – Definitions vary but, according to Savills estate agent, the term describes a building that dates from before the First World War.
Planning permission – The official go-ahead when a homeowner wants to make changes to their home, or something is being proposed to be built. Read more here.
Property alert – A notification you can set up to let you know of suitable properties that come onto the market in a specific area chosen by you. Don’t forget to set one up at OnTheMarket today. Be first to see new & exclusive properties for sale and rent.
Purchase price – The amount you end up paying for the property.
Renegotiation – Once you’ve put in an offer, you may want to change the price you’re willing to pay as the result of the survey, for example.
Renovation property – A property that needs work. Read our advice here.
Reservation fee – Sometimes required with new builds to reserve a property.
Sealed bids – If there is competition for a property, a vendor could ask house-hunters to put in “sealed bids”, or an offer in a sealed envelope.
Seller – The person or people selling the property. Also known as the “vendor”. Read our guide on selling your property.
Semi-detached – Where a property is attached to just one other property, with a wall dividing the two. A detached house is a property standing alone.
Service charge – Relating to leasehold properties, this is a fee paid to landlords, for example for general upkeep and insurance in a building. Also called a “maintenance charge”. Read our guide on 10 tips to avoid being ‘stung’ by service charges.
Share of freehold – When you own part of the freehold, for example with other owners in a building of flats.
Sitting tenant – A property with a tenant on a lease.
Snagging – Refers to work that still needs to be finished in a new build.
Sold prices – Buyers can look at the amount properties in an area have sold for to get a sense of the market. You can check these at OnTheMarket.
Sole agency – Where just one estate agent is contracted to market the property for sale but if you yourself find a buyer, you won’t have to pay commission.
Sold Subject to Contract (SSTC) or Subject to Contract (STC) – Lets other buyers know that a property sale is progressing although contracts have not been exchanged and the sale is not yet legally binding. Also known as under offer. Read more about the difference here.
Studio – Property with sleeping, living and cooking quarters all in one room.
Tenant – The occupier of a property under a tenancy agreement or lease.
Terraced – Describes a property that is one of a row of houses. If a property is described as “end of terrace”, it is the last one in the row.
Under offer – the phrase ‘under offer’ only generally becomes applicable when an offer has been accepted, whether or not at the full asking price, by the owner. Thereafter, the property is deemed to be under offer and legally can be described as such, whether on the estate agent’s board or on websites. Read more here.
Valuation – An estate agent’s professional opinion in regards to the value of a property on behalf of the seller. Also known as a “market appraisal”. You can arrange a valuation with an agent in your area at OnTheMarket.
Vendor – The person or people selling the property. Also known as the “seller”.
Victorian – Refers to properties built in the reign of Queen Victoria (1837 – 1901).
Viewings – The appointment system by which a house-hunter can go and look at the property. Read our top tips on making the most of your viewings.
You’re almost there! Now the jargon gets really thick as you navigate an onslaught of legal terms…
Assign – This refers to the transference of the interest or right in a property between two people.
Buildings insurance – Needed to be in place on exchange of contracts, this protects the property in case of anything structurally going wrong.
Completion – When the property sale has been completed and the buyer finally gets the keys. This is followed by a “completion statement” from the solicitor or conveyancer, and sets out the details of the transaction.
Contents insurance – Does what it says on the tin! Insurance to cover the contents of your house.
Contract – This is the legal document that sets out the agreement between buyer and seller. When the house sale comes to the point of exchange of contracts, the sale is legally binding.
Contract race – This is where more than one potential buyer has a draft contract and the one who is able to exchange contracts the quickest is the buyer.
Conveyancer – The person who carries out the legal process to buy the property. They could be a licensed conveyancer, legal executive or solicitor. A buyer and seller will usually each have their own conveyancer. Here’s our advice on choosing the right solicitor.
Conveyancing – The legal process which transfers a property’s ownership from the seller to the buyer. Read more on conveyancing at OnTheMarket.
Date of entry (Scotland only) – When you officially own your property and are able to move in.
Deeds – Legal document setting out the details of the property’s ownership. Also called “title deeds”.
Deed of trust – Legally-binding document setting out the financial agreement between joint property owners. For example, if one owner has put more money into the property.
Disbursements – These are fees paid during the conveyancing process and can include things like Stamp Duty.
Disposition (Scotland only) – The document that transfers ownership from vendor to purchaser.
Domestic Energy Assessor – A person who can carry out the Energy Performance Certificate.
Easement – This refers to something that someone else can do in relation to your property, such as another homeowner having a right of way over your land, for example.
Energy Performance Certificate (EPC) – The seller must provide an EPC, which details the property’s typical energy costs, its energy efficiency and how you can boost it. Grades go from A (most efficient) to G (least efficient). Read our guide.
Enquiries – This is a list of questions about the property that the buyer’s conveyancer sends to the seller’s.
Exchange – Formally known as “exchange of contracts”, this is where the buyer and seller swap contracts and the sale becomes legally binding.
Fixed price (Scotland only) – The amount of money a vendor should accept for their home although this is not guaranteed.
Fixtures and fittings – Fixtures are things in your property such as boilers and plug sockets that are attached to the wall or floor, and are part of the sale. Fittings are by contrast not fixed down, including fridges, freezers and carpets, and not necessarily part of the purchase price. A fixtures and fittings form outlines what is and isn’t included. But you might be able to negotiate to buy some items not included.
Gazumping – Where a seller accepts an offer from one buyer and then accepts a higher offer from another.
Gazundering – Where a buyer lowers their offer at the point of exchanging contracts.
Home Report (Scotland only) – Information about the property given to potential buyers in the form of a three-part report. Contains a questionnaire about the property, a survey about its condition and an energy performance report.
Instruct – To engage the services of a professional such as an estate agent or a conveyancer.
Joint property ownership – Relevant when you buy a property with someone else. The property can be owned as “joint tenants” or “tenants in common”. Read more about joint ownership at OnTheMarket.
Land and Buildings Transaction Tax (LBTT) (Scotland only) – Tax on property purchases over £145,000, but this threshold goes up to £175,000 for first-time buyers.
Land Registry – Government body that registers land and property ownership in England and Wales. It tracks sold prices, which can be searched at OnTheMarket.
Land Registry fee – Land Registry charge to register a property’s ownership.
Land Transaction Tax (Wales only) – Tax paid on residential properties above £180,000.
Lease – Legal document setting out the terms of a tenant’s occupancy.
Legal fees – The money you’ll pay for the conveyancing.
Letter of engagement – What you should be sent by the professional doing the conveyancing that outlines the terms of your agreement.
Life insurance – A lender may require you to take out life insurance as a condition of your mortgage. This means that your mortgage loan is covered in the event of sickness and death.
Missives (Scotland only) – After the nitty gritty details of the sale contract have been worked out, your solicitor and the seller’s solicitor exchange letters called “conclusion of missives”. You are both now bound by the terms of the contract.
No Move, No Fee – This goes by different names but is essentially a fee a buyer can pay to the conveyancer that caps the legal fees of the purchase if it falls through for any reason.
Outlays (Scotland only) – Other costs associated with your house purchase such as Land and Buildings Transaction Tax.
Registration (Scotland only) – Details of the sale will be entered on the Land Register.
Searches – During conveyancing, a professional will “raise searches” to discover whether there’s anything such as tree preservation orders or listed status that may impact the value of a property now or in the future. A local authority search is mandatory before contracts can be exchanged.
Settlement (Scotland only) – When you can move into your property, typically on the date of entry.
Stamp Duty – Stamp Duty Land Tax (SDLT) as it’s formally known is a tax on residential property purchases over £125,000 in England and Northern Ireland. For first-time buyers, there’s a discount if the purchase price is £500,000 or less. Find out more in our guide for first-time buyers here.
Survey – The two main surveys recognised by the Royal Institution of Chartered Surveyors (RICS) are a HomeBuyer Report and Building Survey. The first, the Money Advice Service says, is “suitable for conventional properties in reasonable condition”. The report looks to see if there are structural problems or other areas that need attention. A Building Survey is suitable for larger or older properties, and provides more depth than the HomeBuyer Report. Read our guide to choosing the right survey for you. There’s also something called a RICS Condition Report, which is the most basic of the three.
The Property Ombudsman – A scheme providing a “free, impartial and independent” service to resolve disagreements between property agents and buyers, and sellers of property. There’s also the Property Redress Scheme for disputes.
Utilities – Bills such as water, electricity and gas.
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