When it comes to buying your first property, it’s really easy to get confused. There is a lot to understand, a lot of big processes going on and a lot of excitement at every stage. But there’s also an awful lot of terms to learn when you’re buying or selling a house. Whether that’s what a conveyancer does to what type of mortgage you’re going for, buyers are expected to understand a lot of language that they won’t need at any other time in their lives. So today, we wanted to give all of our lovely buyers (and sellers) a hand and do some jargon-busting in the world of house-buying.
Conveyancing: The legal process of transferring ownership of a property from one person to another. You can either use an independent conveyancer or a solicitor to handle this process for you.
Affordable Housing: Houses that have been built by Housing Associations or Registered Providers. These homes are only available for people deemed to be on a median household income or below, and receive subsidies from the Government.
Decision In Principle: Also known as an ‘agreement in principle’ this is a provisional statement from a lender saying that they have agreed to lend you a certain amount of money for a mortgage. Using this you can go and find a property in the knowledge that you can actually afford it.
Completion: The final stage of the mortgage process. This is when your funds will be released and sent to the relevant person. If you have a solicitor, then the funds will be released to them to transfer to the seller’s solicitor. The term completion is also used when the remortgaging process is finalised and the funds transferred to the new lender.
APR: Stands for Annual Percentage Rate, and this represents the amount of interest you’ll pay on your mortgage (or other relevant borrowing product) over the course of 1 year. It takes into account things like your mortgage fees and other account charges, so it’s a more global interest rate than the individual ones.
Early Repayment Charge: The fee you have to pay if you pay off all or part of your mortgage early (as in, before the agreed end date). Pretty much all mortgages have this, sometimes for an initial period of time, so it’s worth checking what your fee would be. Some lenders will also put a limit on the amount you can overpay your mortgage by every year so that you can still cut it down quicker, but if you go over this limit you will incur an early repayment charge there as well.
Buy-To-Let: The term for a property that has been bought specifically to turn into a rental property. All landlords will have bought their rental properties on a buy-to-let basis, and this affects the amount of tax, stamp duty and type of mortgage available.
Chain: This is the name for the multiple people involved in buying properties at different levels. A property chain is created when there are multiple transactions that need to occur at the same time for each sale and purchase to work. For example, if you already own a property, then you will need to sell your current one in order to purchase your new one, preferably at the same time. This means that all three transactions – your sale, your purchase and the upper seller’s purchase – all need to happen at the same time. This creates a chain of transactions that can go on for a long time. First-time buyers are really attractive here because there is no chain to work with, so it speeds up the process considerably.
Disbursements: The fees paid by the buyers solicitor, which are then reimbursed by the buyer at a later date.
First Charge: The mortgage company you use will have the ‘first charge’ against your property. This essentially means that in the event that something happens, their debt is paid before any other debt secured on the property.
Freeholder: The person who owns a property outright, including the land it’s built on.
Home-Buyers Report: When you buy a property, you will be advised to get reports and surveys done on it. The home-buyers report is the most common, as it is a mid-level property condition report suitable for most conventional properties. However, it doesn’t come with a full structural survey, so you may need to have this done separately. Remember that if the mortgage company commissions a survey prior to the mortgage being approved, this is for their benefit, not yours, so do make sure you have your own survey done if you are at all concerned about any aspects of the property.
Housing Association: A blanket term for any not-for-profit organisation with the aim of making homes available and affordable for all. This includes things like the managing of shared ownership schemes. There will usually be one housing association per area or county.
Joint Tenants: this is a form of ownership used when two or more people own a property. For example, a husband and wife who jointly own a property would be considered joint tenants. If one of them were to die, their share of the property automatically passes to the other owners, regardless of what it says in the deceased’s will.
That’s all we’ve got room for today, but don’t worry, we’ll be back! We’re going to keep running through the entire A-Z of home-buying terms until you’re as knowledgeable as an estate agent, and can go through the process effortlessly. In the meantime, if you would like to know more about any of the terms we’ve talked about today, or if you want some advice on buying your first home, we’d love to help. Just get in touch with us today and book your free consultation visit.