First Time Buyer Jargon Buster

You’re on the journey to owning your own home; you may be saving for your first house, in the process of applying for a mortgage or almost ready to complete, but there’s a lot of jargon along the way. Conveyancing? Decision in principle (DIP)? Valuation? What does it all mean? Our Jargon Buster will help make those jargon words simple to understand.

I’m saving for my first home – what key terms might I come across?

Affordability Calculator - A mortgage calculator that gives you an idea of how much you may be able to borrow and what kind of deposit you may need by assessing your incomings and outgoings.  

Building Society - That’s us! A mutual organisation which is owned by its members.

Credit Score - Your credit score, also known as your credit rating, is a number that reflects the likelihood of you paying credit back. The higher your credit score, the better your chances are of being accepted for credit.

Deposit - An amount of money paid on exchange of contract as part of your initial contribution on the purchase of your home. The bigger your deposit the better.

Direct Debit - A Direct Debit is an agreement between you and a company you want to pay on a regular basis. The agreement you make authorises the company to collect varying amounts from your account. Because you’re covered by the Direct Debit guarantee, the company should always tell you what these amounts are - and when they’ll be collected.

First Time Buyer - An individual who has not previously owned a property. Our First Time Buyer Guide provides a step by step guide to buying your first home.


I’m applying for my first mortgage – What does it all mean?

APRC (Annual Percentage Rate of Charge) - Is the total cost of the mortgage expressed as a percentage.  It will help you to compare the cost of different mortgage deals available from different lenders.

Bank of England Base Rate - This is the rate which is set by the Monetary Policy Committee (MPC) of the Bank of England and is the rate that it charges for its borrowing.

Base Rate Tracker - The interest rate is linked to, but may not be equivalent to, the Bank of England base rate.  When there is a change to the Bank of England base rate your mortgage payment rate will reflect this.

Cashback mortgage - A type of mortgage product which offers you a cash lump sum when you complete - this may be a fixed lump sum or a percentage of your mortgage amount.

Conveyancing - The process of transferring ownership from one person to another.

Credit Report - A credit report is a document issued by a credit reverence agency and are usually free.  They highlight your past purchase behaviour and credit score.

Credit Search - A credit search is when we carry out a search on your name and address with a credit reference agency to help us understand more about your credit history. Each time a search is done it is noted on your credit record to let other organisations know that we have asked for information about you.

Decision in Principle (DIP) - Before you make an application for your mortgage you can submit a DIP which tells you how much we would lend you based on your income and commitments.

Financial Conduct Authority (FCA) - The Financial Conduct Authority is responsible for the regulation of firms' conduct and ensures the appropriate level of protection for consumers.

Fixed Rate Mortgage - This type of mortgage means that the interest is fixed for a specified period of time which means that the monthly repayments will remain the same until the product period ends.

Freehold - Where the borrower owns both the property and the land the property stands on.

Gazumping - This occurs when a seller accepts an offer on the property, but before the sale is completed the seller accepts a better offer from another buyer.

Higher Lending Charge (or Mortgage Indemnity Guarantee (MIG)) - This is a fee that sometimes needs to be paid by the borrower, but often the lender, to insure the lender against potential loss if a home has to be repossessed or sold.

Home Buyers Report - A survey on a property, carried out by professional surveyors on your behalf. You will receive a report on the condition of the property, stating any repairs or defects that need attention. A more comprehensive survey is called a full structural survey, which you might decide to carry out on older properties.

Income Assessment - An assessment of how much you can borrow which is calculated through a combination of your income, regular commitments and household / lifestyle expenditure.  Our Affordability Calculator can help to give you an idea of your potential borrowing.

Initial Disclosure Document - This document explains the level of service the lender will provide and if there are any costs relating to this service.

Interest Only Mortgage - This is a type of mortgage where you only pay interest throughout the mortgage term, meaning your mortgage balance doesn't reduce. At the same time, you must have plans in place to repay the full remaining balance at the end of your mortgage term, this may be through a savings plan, pension plan, property sale etc. You will still owe capital at the end of the mortgage term, so it’s extremely important that you have a plan in place so you can repay your loan.

Leasehold - This means that you do not own the land that the property is built on and you essentially rent the property from the freeholder. You’ll have a legal agreement with the landlord (sometimes known as the ‘freeholder’) called a ‘lease’ which will tell you how many years you can rent the land on which your property is on. Most flats are leasehold and some houses can be too.

Lessee - The person who the lease is granted to - the tenant.

Lessor - The person who grants a lease - the landlord.

Licensed Conveyancer - Someone who specialises in property ownership transfer. They are an alternative to using a solicitor.

Loan to Value (LTV) - The amount of mortgage expressed as a percentage of the value of the property or purchase price, whichever is lower. For example, a mortgage of £80,000 on a purchase price of £100,000 would be 80% LTV. You can usually borrow up to 95% LTV although this may vary on certain products.

Mortgage - A mortgage is a loan secured against a property.

Mortgage Advance - The actual amount of money we lend as a mortgage.

Mortgage Deed - The legal document by which the lender secures the loan against the borrower's property.

Mortgage Term - The length of time over which you agree to repay your mortgage.

Repayments - These are the monthly payments on your mortgage, they are determined by the amount you have borrowed, the interest rate and the number of years you have decided to pay your mortgage over. You can get an idea of your monthly repayments by using our repayment calculator.

Repayment Mortgage - Where you repay some of the capital, which is the amount you initially borrowed, along with some interest each month. With a repayment mortgage, as long as you meet all your monthly payments you're guaranteed to have repaid your entire loan by the end of your mortgage term.

Standard Variable Rate (SVR) - This variable rate means your payments can go up or down. Unlike base rate tracker mortgages, SVRs do not track above the Bank of England Base Rate, instead the rate you pay on an SVR mortgage will be determined by your mortgage lender. A SVR mortgage is the rate you will likely go on after finishing an introductory fixed, or tracker deal.

Tie in period - The period of time you would need to remain on certain mortgage products to avoid an early repayment charge.

I’ve made an offer on a property - Is there anything else I need to know?


Accidental Damage - Optional insurance cover for your buildings and/or contents which provides protection for accidents that might damage the permanent structure of your home or your belongings.

Arrears - Arrears generally refers to any amount that is overdue after the payment due date. If you were to miss a mortgage payment you would be in arrears.

Building Insurance - An insurance policy which is taken to protect your property against hazards such as fire, flood and subsidence. Building insurance is required as part of the mortgage terms and it is the borrower’s responsibility to ensure the property is adequately insured for the duration of the mortgage.

Capital - The amount of money you still owe on your mortgage.

Completion - After you exchange contracts on a property, you will agree a date for completion with all the parties involved. This is the date at which property ownership is legally passed to the buyer, and when the seller must move out and the buyer may move in.

Contents Insurance - This is an insurance policy which is used to cover your personal possessions in your household, in case they are stolen or damaged.

Contracts - The legal documents under which the buyer and seller of the property agree terms.

Equity - The difference between the value of your property and the total amount of mortgage secured against it.

Exchange of Contracts - The date at which you agree to exchange contracts to commit to buying a property. Once contracts have been exchanged, you are legally obligated to buy the property. After exchange, a date for the completion of the property purchase can be set.

First Charge - Mortgage lenders will register the mortgage as a first charge on the property. This means that the lender has first call on any funds available from the sale of the property to clear the outstanding mortgage debt.

Income protection - This can give you a regular monthly income if you are off work for a prolonged period because of an accident or illness.

Land registry fee - A fee charged to register your details in the Land Registry records once you have bought a property or changed lenders.

Life Assurance - Type of insurance that will pay an amount to your estate when you die. This can be arranged to pay out a set lump sum or a decreasing amount that reduces in line with a mortgage.

Local Authority Search - Part of the conveyancing process when you buy a property. It gives details of any matters which, from the local council's point of view, affect the property. It reveals any proposed changes to the local area, such as road improvements, and details any planning permission given for the property.

NHBC Guarantee - A 10-year guarantee provided by the National House Building Council, that the builder will put right serious defects on a newly-built property.

Overpayments - When you pay more than your contractual monthly mortgage repayment – overpayments made to your mortgage allows you to pay off your mortgage earlier.

Repossessed - This is where a property is taken by the lender if the borrower fails to make the mortgage repayments. The property is then sold so the lender can get their money back.

Reservation Fee / Application Fee - This fee is a non-refundable fee which covers the processing of your mortgage application and setting up of your account.

Stamp Duty  - You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England and Northern Ireland. If you’re a first-time buyer in England, Northern Ireland, you will pay no Stamp Duty on properties worth up to £300,000.  In Scotland Stamp Duty is referred to as Land and Buildings Transaction Tax (LBTT). If you’re a first time buyer in Scotland you don’t pay duty on properties under £175,000.  In Ireland stamp duty is paid at the current rate of 1% for properties under one million euros.

Structural Survey - A comprehensive survey carried out by a professional surveyor on your behalf, to thoroughly examine the condition of a property.

Subject to Contract - The phrase used before exchange of contracts which allows either party to withdraw without incurring a penalty.

Surveyor/Valuer - The person qualified by the Royal Institution of Chartered Surveyors (RICS) who  carry out valuations and surveys of properties.

Title Deeds/ Title Documents - The documents which show proof of ownership.

Underpayments - On some mortgages you can arrange to pay less than your normal monthly subscriptions for a limited period, up to your agreed borrowing limit.

Valuation - This is done for the benefit of the lender to help them decide whether the property is safe to lend on and up to what amount. The valuation is very basic and we would always recommend that you have a more thorough survey done on the property, such as a Home Buyers Report.

Valuation Fee - The charge for obtaining a valuation report of a property. The fee often increases with the value of the property and is payable upon application. 


Your mortgage will be secured on your home. Your home may be repossessed if you do not keep up repayments on your mortgage.

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