Glossary of Terms An alphabetical list of words and explanations relating to estate agency.

A

APR (Annual Percentage Rate) - The annual rate charged for borrowing. For example, if a credit card charges 1% a month, its APR is 12% (1% x 12 months).

AIP (Agreement in Principle) - an agreement from a mortgage provider to lend money based on an initial assessment of your circumstances.

B

Bridging loan - a sum of money lent by a bank to cover an interval between two transactions, typically the buying of one house and the selling of another.

C

Chain - a sequence of linked house purchases. Exchange of contracts must take place at the same time.

Completion date - the day the money is transferred, you get the keys to your new home and ownership is officially transferred.

Contract - the formal agreement between the buyer and seller, prepared for by the solicitor and is enforceable by law.

Conveyancing - the branch of law concerned with the preparation of documents for the conveyance of property.

Conveyancing disbursements - miscellaneous expenses such as searches, land registry copies, land registry fees and stampy duty fees.

D

Deposit - a sum of money that the buyer pays towards the cost of the property on exchange.

DIP (decision in principle) - a decision from from a lender to say that ‘in principle’ they would lend a certain amount to a particular prospective borrower subject to conditions.

Draft contract - the first revision of the contract used to define terms of sale. subject to enquiries and amendments.

E

ERC (early repayment charge) - if you repay your mortgage early or make an overpayment that's more than your overpayment allowance, an erc may be payable.

Equity - the amount that the property owner would receive after selling a property and paying off the mortgage.

Exchange of contracts - the draft contract is formally signed by the buyer and the seller. The contract is then exchanged between the legal teams and the sale becomes legally binding. Neither party can withdraw without financial penalties.

F

Fixed price - offers will be considered for the exact price shown only.

Fixtures and fittings - a fixture is an item that is fixed to the floor or walls (plug sockets, kitchen units) and a fitting is any item that isn't fixed to the floor or walls (curtains, coffee table).

Freehold - any estate (property) which is "free from hold" of any entity besides the owner. When you own the freehold you also own the land.

G

Gazumping - when an offer is accepted from one buyer, and the owner later accepts an improved offer from another buyer.

Gazundering - a buyer reduces their offer closely before the exchange of contracts.

Ground rent - an annual sum paid by the property leaseholder to the freeholder.

Guide price - an approximate figure of what the property is worth.

H

Homebuyer report - a basic report detailing the condition of a property.

Home information pack - a set of documents that provides the buyer with key information on the property and must be provided by the seller or the seller's agent.

I

IFA (independent financial advisor) - an advisor offering independent advice on financial matters.

Instruction - when a seller officially asks an estate agent to market a property.

Interest-only mortgage - a loan in which monthly repayments only pay off the interest of the loan over a fixed period, and not the actual capital.

J

Joint mortgage - where one or more people are responsible for the mortgage repayments.

L

Legal team - a conveyancing solicitor or a licensed conveyancer.

Landlord - a person or company that rents out land, a building, or accommodation.

Land registry - a department of the government of the United Kingdom to register the ownership of land and property in England and Wales.

Lease - a contract outlining the terms under which one party agrees to rent property owned by another party.

Leasehold - the type of ownership where an individual owns a property, but not the land on which it is built. instead you lease the land from the freeholder to use the property for a number of years.

Local authority search - a search initated by your legal team the details if your property is listed, if its situated in a conservation area, if there's a tree preservation order, proposals for new roads, planning decisions and more.

LTV (loan to value) - the ratio of a loan to the value of a property, often expressed as a percentage. A 60% LTV means a loan of 60% of the property's value.

M

Mortgage deed - a legal document that formally secures money against the property you are purchasing.

Mortgage offer - a formal document issued by a mortgage lender to a borrower that confirms that the lender is happy to advance them the money, subject to conditions.

MIP (mortgage in principle) - an agreement from a mortgage provider to lend money based on an initial assessment of your circumstances.

Mortgage broker - a person or company that arranges mortgages between borrowers and lenders.

N

Negative equity - when the market value of a property falls below the outstanding amount of a mortgage secured on it.

O

Offer - an informal bid on a property. This is not legally binding.

OIEO (offers in excess of) - only offers above this price will be considered.

OIRO (offers in region of) - only offers slightly above or below this price will be considered.

R

Repayment mortgage - a loan in which monthly repayments pay off the capital and the interest of the loan over a fixed period.

Repossession - the mortgage lender can repossess a property if a buyer defaults on mortgage payments.

S

Searches - enquiries submitted to various authorities which provide you with more information about the property you plan to purchase.

Sealed bids - when there is significant interest in a property, the agent will invite those interested in purchasing the property to submit a sealed bid. The best offer is then considered, taking into account the bid amount, the chain situation and other factors.

Shared ownership - a cross between buying and renting; aimed mainly at first-time buyers. You own a share and then rent the part you don't own at a reduced rate.

Sole agent - where the agent expects to be the only one with the right to sell your property. This means you may have to pay the agent even if another agent finds you a buyer.

SSTC (sold subject to contract) - a term associated with an agreement to purchase a property before the exchange of contracts.

SDLT (stamp duty land tax) - a tax on properties bought in England and Northern Ireland.

Survey - the most comprehensive property report providing an in-depth analysis of the property's condition and includes advice on defects, repairs and maintenance options.

T

Title deeds - paper documents showing the chain of ownership for land and property.

V

Vendor - this is also known as the seller or the person that owns the property.