Base Rate
The UK’s core interest rate, set by the Bank of England. The lender’s Standard Variable Rate (SVR) is higher than the Base Rate but is often adjusted by reference to it.
LTV
The Loan to Value represents the amount you are looking to borrow (or the remaining amount of your existing mortgage) as a percentage of the value of the property. For example, if a property is valued at £100,000 and you have a £80,000 loan, the LTV is 80% (80,000/100,000 x 100 = 80%).
SVR
A Standard Variable Rate is a type of mortgage interest rate that you are most likely to go onto after finishing an introductory fixed, tracker or discounted deal.
Bridging Loan
This is a short-term loan that ‘bridges’ the time period between two property transactions. It is used to cover shortfalls between buying one property and selling another.
Fixed Rate Mortgage
A fixed rate mortgage is where your mortgage payments stay exactly the same for an initial period. They’re great if you have a tight budget and want to know what you’ll be paying, or if you’re worried about interest rates going up.
Tracker Mortgage
A tracker mortgage is a type of variable rate that follows (or tracks) the movements of another rate – most commonly the Bank of England Base Rate.
Interest Only Mortgage
An interest-only mortgage is where you pay the lender the minimum amount to cover the interest on your loan and invest enough each month in an investment vehicle to build up a large enough fund to pay off the capital part of the mortgage when it becomes due at the end of the agreed term.
Buy-To-Let Mortgage
A Buy-To-Let mortgage is a loan designed specifically for landlords to purchase a property to rent. There are stringent rental affordability tests carried out to make sure the rental income will be sufficient to cover the mortgage interest payments.
Mortgage Lender
A bank, building society or other financial institution that offer mortgages.
Mortgage Valuation
A mortgage valuation is the most basic form of survey undertaken by a surveyor. Some mortgage lenders will not even physically visit a property to perform a valuation for low loan-to-value mortgage applications, relying on an automated system or a “drive-by” valuation instead. The basic mortgage valuation will value your property as well as giving a rebuild value (the amount your home would need to be insured for to cover if it needed to be completely rebuilt). The valuation will uncover any obvious defects with the property, although it is not as thorough as a homebuyers or full structural survey. A valuer may require that a more detailed survey is carried out before a valuation can be completed.
Conveyancing
Normally carried out by a solicitor or licensed conveyancer on your behalf, conveyancing includes proving the property is owned by the seller, making sure that all the loans secured on it are discharged, establishing legal boundaries and searching local planning information for upcoming developments which could affect the value of the property.
Exchange of Contracts
The terms of a purchase become legally binding for both parties when contracts are exchanged. The buyer is then committed to buying, and the seller to selling. As a buyer, you should make sure that you are covered by building insurance from this date, because even if the property were damaged, you would still have to buy it.
Completion
This is the final stage of the property-buying process that takes place after exchange of contracts. The sale must proceed after Exchange, but Completion follows when the agreed sale price (less any deposit already paid) reaches the seller’s bank account.
Stamp Duty
Stamp duty is the tax levied by the government on house purchases. The amount of stamp duty you’ll pay depends on if you are a first-time buyer and whether you’re buying a main, secondary residential property or a buy to let investment. For the latest stamp duty rates use our stamp duty calculator.