Jargon Simplifier

ASU

Accident, Sickness and Unemployment insurance.  Provides for regular payments for up to 12 months in the event that the policy holder is unable to work as a result of accident, sickness or unemployment.

Buildings and Contents Insurance

Buildings insurance is compulsory for mortgaged properties. Except in limited circumstances, lenders do not insist on borrowers using their insurance products, leaving you free to choose your own cover.  Why not get a quote from us now and see if you can save?

Capital Raising

Releasing some of the proceeds of the growth in a property's value to free up funds for other purposes.  This is usually associated with remortgaging.

Chain 

A situation in which buyer and seller depend on each other to complete simultaneously.

CML

Council of Mortgage Lenders.  The trade association for mortgage lenders in the UK.

Completion Date

Date on which all transactions concerning the sale of a property are concluded.

Completion Statement

A statement prepared by the buyer or his solicitor detailing exactly how much the buyer should pay, including the sale price, deposit, and other costs.

Conditions of Sale

The details, which determine the rights and duties of the buyer and seller. These may be national, statutory, or the Law Society's conditions.

Contract

Legal and binding agreement containing all the essential details of the sale. The contract commits both buyer and seller to the transaction.

Conveyance

A legal document that officially transfers the rights to land or property.

Conveyancer

Handles all matters arising from the sale or purchase of property. Usually a solicitor but may also be a licensed conveyancer.

Conveyancing

The transfer from one person to another of the legal ownership of property or land.

Critical Illness Insurance

Insurance policy that will pay out the sum assured in the event of the policyholder contracting one of the illnesses covered under the plan, typically conditions such as cancer, heart attack, stroke, multiple sclerosis, kidney failure and so on.  See also term assurance.

Deeds 

Legal title documents providing ownership. The deeds will be held by the mortgage lender and are only released on full repayment of the loan.

Detail Sheet

Document giving interested parties details.

Disbursements

Fees paid by the solicitor on the buyer's behalf, such as stamp duty, land registry and search fees.

Draft Contract

Preliminary, unconfirmed version of the contract.

Early Repayment Charge

Fee payable to the lender if the mortgage is repaid early.

Easement

A right given to the owner of one property over an adjoining property, such as a right of way.

Equity

The difference in value between the market price of a property and how much is owed on it by means of mortgage and/or other secured loans.  This can be the deposit put down by the purchasers and/or the growth in value since purchase.  See also Negative Equity.

Exchange of Contracts

The signing of contracts by vendor and buyer. At this point both parties are committed to the transaction.

Freehold

Ownership of the land on which the property is built.

FSA

Financial Services Authority. An independent non-governmental body that regulates the financial services industry in the UK. The FSA became responsible for the regulation of mortgage business from the end of October 2004 and for non-investment general insurance business from January 2005. 

Gazumping

When the vendor accepts a higher offer from another buyer after a sale has been agreed.

Gazundering

When a buyer lowers his offer after a sale has been agreed.

Higher Lending Charge

A one off insurance charge that is paid by the borrower to cover the lender in the event that they have to repossess the property and sell it for less than the amount owing on the mortgage.  Formerly known as Mortgage Indemnity Guarantee.

Home Buyer's Report

An intermediate level of property survey, between a valuation for mortgage purposes and a full structural survey.

Key Facts

All companies authorised by the FSA are required to give you documents (eg mortgage illustrations) showing this logo.

Land Registry

The official body responsible for recording the ownership of land.

Land Registry fees

Fees paid by a solicitor on the buyer's behalf to register ownership of property with the Land Registry.

Leasehold

The ownership of property for a fixed period in return for a rental payment and subject to terms and conditions.

MIG

Mortgage Indemnity Guarantee.  See Higher Lending Charge.

MPPI

Mortgage Payment Protection Insurance.  Another name for ASU.

Negative Equity

In times of falling property values, where there is a greater sum borrowed against a property than it is worth in the open market place. 

Remortgage

Arranging a new loan with a lender different from that currently providing the mortgage.  May coincide with capital raising.

Scale Fee

A fee based on the price being paid or the amount being borrowed, rather than the amount of legal work being done.

Searches

The method of checking with the local council and other bodies for any planning applications or other matters that might affect the status of the property.

Stamp Duty Land Tax

A government tax payable by every purchaser of a property over £120,000. Duty is charged at one per cent for homes priced between £120,000 and £250,000. The rate is three per cent for homes over £250,000 but not more than £500,000. For homes over £500,000 the rate is four per cent. Check at the Inland Revenue website for a charging rate table (Since 30 November 2001, the purchase of property costing up to £150,000 in certain local areas has been exempt from stamp duty. Check which areas in England may be eligible for exemption from stamp duty through the Disadvantaged Areas Relief scheme. (Source: Inland Revenue, Crown Copyright 2001) or search the postcode for the property you have in mind.

Structural Survey

A survey, usually of older properties, giving details about the property's structure. See also valuation for mortgage purposes and home buyer's report

"Subject to Contract "

A provisional agreement between buyer and seller that is not yet legally binding.

Term Assurance

Life assurance policy that provides cover for the policyholder in the event of death during the term of the policy.  Cover may be on a level term basis, where the same amount of cover is guaranteed throughout the duration of the policy, or decreasing term, typically used for repayment mortgages, where the amount of cover diminishes during the policy term to mirror the decrease in the mortgage sum outstanding.  Decreasing term cover is less expensive than level term.  See also critical illness insurance.

Transfer Document

The final document transferring the property from the seller to the buyer.

Transfer of Equity

A change in the title deeds to show the ownership as having been altered from joint names to single ownership or vice versa.

Valuation for Mortgage Purposes

A survey done to allow a property value to be determined for mortgage purposes. This may not reflect the market value of the property.  See also home buyer's report and structural survey.