ValuQ Property Glossary
Mortgages and lending
Lenders and brokers speak in abbreviations, and the money at stake makes guessing expensive. Every mortgage term you will meet while buying, selling or remortgaging.
72 terms · Last reviewed 24 July 2026.
Mortgage
A mortgage is a loan secured against a property, giving the lender the right to repossess and sell it if the borrower stops paying.
Secured is the operative word: the house itself is the lender's safety net, which is why mortgage rates are far cheaper than unsecured borrowing.
Related: Legal charge, Repayment mortgage
Agreement in principle (AIP)
Also known as: decision in principle, DIP, mortgage in principle, MIP
An agreement in principle is a lender's conditional indication of how much it would lend you, based on basic details and a credit check.
It is not a mortgage offer and can still fall away at full application. Sellers and agents treat it as the entry ticket to being a serious buyer.
Related: Mortgage offer, Hard search vs soft search
Loan-to-value (LTV)
Loan-to-value is the mortgage as a percentage of the property's value, so a £180,000 loan on a £200,000 home is 90% LTV.
Rates are priced in LTV bands; crossing below thresholds like 90%, 85% or 75% unlocks cheaper deals. A down valuation pushes LTV up and can reprice the whole loan.
Related: Down valuation, Deposit (mortgage deposit)
Loan-to-income (LTI)
Loan-to-income is the mortgage as a multiple of the borrower's annual income, the measure regulators use to cap risky lending.
Most lending sits at or below around four and a half times income, with lenders allowed only a limited share of loans above it.
Related: Income multiples, Affordability assessment
Income multiples
Income multiples are the rule-of-thumb version of loan-to-income: how many times your salary a lender will lend.
The multiple flexes with your outgoings, credit and deposit. It is the fastest rough answer to what can I borrow, and the affordability assessment is the real one.
Related: Loan-to-income (LTI), Affordability assessment
Deposit (mortgage deposit)
A mortgage deposit is the slice of the purchase price you pay from your own money, with the mortgage covering the rest.
A bigger deposit means lower LTV and cheaper rates. It is a different thing from the exchange deposit paid to the seller's solicitor, though the same pot of money usually serves both.
Related: Exchange deposit vs mortgage deposit, Loan-to-value (LTV)
Equity
Equity is the part of your home's value you actually own: the market value minus the mortgage balance.
It grows as prices rise and the loan shrinks, and it is what funds the next deposit when you move.
Related: Negative equity, Redemption figure
Negative equity
Negative equity is owing more on the mortgage than the home is currently worth.
A problem mainly when you need to sell or remortgage, because the sale cannot repay the loan. Sitting tight and repaying usually closes the gap over time.
Related: Equity, Loan-to-value (LTV)
Fixed-rate mortgage
A fixed-rate mortgage locks your interest rate and monthly payment for a set period, commonly two or five years.
Certainty is the product. The trade-offs are early repayment charges during the fix and rolling onto the lender's standard variable rate when it ends.
Related: Early repayment charge (ERC), Standard variable rate (SVR), Product transfer
Tracker mortgage
A tracker mortgage charges interest at a set margin above the Bank of England base rate, moving whenever the base rate moves.
Payments fall when rates fall and rise when they rise. Many trackers carry no early repayment charge, which buys flexibility.
Related: Base rate, Standard variable rate (SVR)
Standard variable rate (SVR)
The standard variable rate is a lender's default rate, which your mortgage rolls onto when a fixed or tracker deal ends.
Set at the lender's discretion and almost always the most expensive way to hold a mortgage. Months drifting on SVR are the quiet cost of not diarising your deal's end date.
Related: Product transfer, Remortgage
Discount rate mortgage
A discount rate mortgage charges a set amount below the lender's standard variable rate for an introductory period.
The discount is fixed; the SVR underneath is not. Your payments can rise even during the deal if the lender raises its SVR.
Related: Standard variable rate (SVR)
Offset mortgage
An offset mortgage links your savings to your mortgage so interest is charged only on the difference.
Savings of £20,000 against a £200,000 loan means paying interest on £180,000. Strongest for higher-rate taxpayers with real cash reserves.
Interest-only mortgage
An interest-only mortgage pays just the interest each month, leaving the full loan to repay at the end of the term.
Lower monthly cost, but the debt never shrinks and lenders require a credible repayment plan. Common in buy-to-let, rarer for residential borrowers now.
Related: Repayment mortgage, Buy-to-let mortgage
Repayment mortgage
Also known as: capital and interest
A repayment mortgage pays interest and a slice of the loan every month, clearing the whole debt by the end of the term.
The standard residential structure. Early payments are mostly interest; the balance shifts toward capital as years pass.
Related: Interest-only mortgage, Mortgage term
Mortgage term
The mortgage term is the number of years over which the loan is scheduled to be repaid, commonly 25 to 40.
Longer terms cut the monthly payment and raise the total interest bill. Terms stretching past retirement age get extra lender scrutiny.
Base rate
Also known as: Bank rate, Bank of England base rate
The base rate is the interest rate the Bank of England sets, which flows through to mortgage pricing across the market.
Trackers move with it mechanically; fixed-rate pricing moves with expectations of where it is heading. Its decisions are scheduled and public.
Related: Tracker mortgage · House price and rate tracker →
APRC
The APRC is the annual percentage rate of charge: the total cost of a mortgage, fees included, expressed as one yearly rate over the full term.
Built for comparison between deals. Since most people switch deals long before the term ends, treat it as a comparison tool rather than a forecast of what you will pay.
Related: Product fee
Initial rate
The initial rate is the interest rate charged during a deal's introductory period, before the loan reverts to the standard variable rate.
The headline number in every mortgage advert. Always read it alongside the fee and the length of the deal.
Related: Standard variable rate (SVR), Product fee
Green mortgage
A green mortgage offers a better rate or cashback for buying an energy-efficient home, typically EPC band A or B.
One more way an EPC rating now touches real money, alongside running costs and buyer demand.
Related: Energy Performance Certificate (EPC)
Cashback mortgage
A cashback mortgage pays a lump sum on completion, offered as an incentive alongside the rate.
Useful for moving costs. Price the whole package: a cashback deal with a higher rate often loses to a plain deal within a couple of years.
Product fee
Also known as: arrangement fee
A product fee is the charge for taking a particular mortgage deal, often added to the loan rather than paid upfront.
Low-rate deals often carry the biggest fees. Adding the fee to the loan means paying interest on it for decades; the best deal depends on your loan size, not the headline rate.
Related: Initial rate, APRC
Booking fee
A booking fee is a small non-refundable charge some lenders take to reserve a mortgage deal when you apply.
Paid upfront and not returned if the purchase falls through. Many lenders have folded it into the product fee.
Related: Product fee
Valuation fee
A valuation fee is what the buyer pays for the lender's mortgage valuation of the property.
Many lenders now include a basic valuation free. It buys the lender's check, not yours: it is not a survey of the property's condition.
Related: Mortgage valuation, Survey vs valuation
Mortgage illustration (ESIS)
Also known as: European Standardised Information Sheet, KFI
A mortgage illustration is the standardised document setting out a deal's rate, fees, monthly payments and risks in a fixed format.
Every lender must present the same information the same way, which makes deals directly comparable. Read the early repayment charge section first.
Related: Early repayment charge (ERC), APRC
Mortgage valuation
A mortgage valuation is the lender's check that the property is adequate security for the loan, not an inspection for the buyer's benefit.
Often done remotely from comparable sales data without a visit. It tells the buyer almost nothing about condition; that is what surveys are for.
Related: Down valuation, Survey vs valuation
Down valuation
A down valuation is the lender's surveyor valuing a property below the agreed sale price, shrinking the mortgage the lender will offer.
The buyer must fund the gap, renegotiate, challenge the valuation with comparable evidence, or try another lender. One of the most common reasons agreed sales wobble.
Related: Loan-to-value (LTV), Renegotiation · When the valuation comes in low →
Retention (mortgage)
A retention is a lender holding back part of the mortgage until specified repairs are done, releasing it only on proof of completion.
Triggered by survey findings like damp or electrics. The buyer must bridge the held-back amount at completion, which often lands as a renegotiation with the seller.
Related: Down valuation, Renegotiation
Mortgage offer
A mortgage offer is the lender's formal, binding commitment to lend, issued after full underwriting and valuation.
The milestone that turns a buyer from probably-fine to actually-funded. Offers are time-limited, commonly around six months.
Related: Offer expiry and extension, Underwriting
Offer expiry and extension
Offer expiry is the date a mortgage offer lapses if the purchase has not completed, after which the lender must agree an extension or a fresh application.
Slow chains and new builds hit this constantly. Extensions are usually possible but not automatic, and rates can be repriced.
Related: Mortgage offer, Long-stop date · Mortgage offer about to expire? →
Porting
Porting is taking your existing mortgage deal with you to a new property when you move, avoiding early repayment charges.
The deal ports, but the lending is re-underwritten: the lender reassesses you and the new property, and extra borrowing is priced separately.
Related: Early repayment charge (ERC) · Porting your mortgage when you sell →
Early repayment charge (ERC)
An early repayment charge is the penalty for paying off or leaving a mortgage deal before its tie-in ends, usually a percentage of the loan.
Often several thousand pounds, and the single biggest hidden cost when a sale forces a mortgage to end early. Check yours before you list, not after you accept an offer.
Related: Porting, Redemption figure
Overpayment allowance
An overpayment allowance is how much extra you can repay each year without triggering early repayment charges, commonly around 10% of the balance.
Overpaying shortens the term and cuts total interest. The allowance resets annually, and the exact rule is in your mortgage offer.
Related: Early repayment charge (ERC)
Payment holiday
A payment holiday is a lender-agreed pause in mortgage payments, with interest still accruing and the balance growing.
A breathing space, not a saving. It can also mark your credit file, so it is a conversation with the lender first, never a unilateral stop.
Exit fee
Also known as: redemption administration fee, deeds release fee
An exit fee is a fixed administration charge for closing a mortgage account, separate from any early repayment charge.
Modest, standard, and it appears on the redemption statement when you sell or remortgage away.
Related: Redemption statement
Remortgage
Remortgaging is replacing your current mortgage with a new one from a different lender, usually to get a better rate at the end of a deal.
Involves a full application and legal work, which the new lender often covers with free legals. Staying put with your own lender instead is a product transfer.
Related: Product transfer, Free legals
Product transfer
Also known as: rate switch
A product transfer is switching to a new deal with your existing lender when the current one ends, with no new affordability check in most cases.
Fast and paperwork-light. The convenience is priced in: always compare the transfer rate against the open market before accepting it.
Related: Remortgage, Standard variable rate (SVR)
Free legals
Also known as: fees-assisted remortgage
Free legals is a lender paying the standard legal work on a remortgage as part of the deal.
The appointed solicitors work the lender's timetable, not yours. On a deadline, paying for your own conveyancer can be the faster route.
Related: Remortgage
Further advance
A further advance is extra borrowing from your existing mortgage lender, secured on the same property.
Priced at current rates rather than your original deal. Common for home improvements, and assessed like any new lending.
Related: Second charge mortgage
Second charge mortgage
A second charge mortgage is a separate loan secured on a home that already has a mortgage, ranking behind the first lender for repayment.
Both charges must be repaid when you sell. The first lender's consent and higher rates come as standard, reflecting the second lender's weaker position.
Related: Legal charge
Legal charge
Also known as: first charge
A legal charge is the lender's registered security over a property, recorded at the Land Registry, giving it first claim on the sale proceeds.
It is why your solicitor repays the mortgage before you see a penny of the sale money, and why the charge must be discharged before the buyer takes clean title.
Related: DS1 (mortgage discharge), Redemption figure
Guarantor mortgage
A guarantor mortgage has a third party, usually a parent, legally committing to cover the payments if the borrower cannot.
The guarantee is real: the guarantor's savings or home can be on the line. Largely replaced by joint borrower sole proprietor arrangements.
Joint borrower sole proprietor (JBSP)
A JBSP mortgage puts a helper on the mortgage but not on the property's title, boosting affordability without sharing ownership.
Because the helper never owns the home, their stamp duty position is unaffected. The liability for payments, though, is fully shared.
Joint mortgage
A joint mortgage is a home loan in two or more names, with every borrower fully liable for the whole debt, not just their share.
Joint and several liability is the phrase: if one stops paying, the lender can pursue any of the others for everything.
Related: Joint tenants, Tenants in common
Gifted deposit
A gifted deposit is deposit money given, not lent, to a buyer, usually by family, with the giver signing away any claim to it.
Lenders require a signed gift letter and anti-money-laundering checks on the giver. A gift dressed up as a loan discovered late can sink an application.
Related: Source of funds
Concessionary purchase
Also known as: purchase at undervalue
A concessionary purchase is buying a property below its market value, typically from family, with the discount acting as the buyer's deposit.
Some lenders lend against the full value rather than the price paid. The seller's own solicitor will flag insolvency and care-fee implications of gifting value away.
Related: Deed of gift, Gifted deposit
Affordability assessment
An affordability assessment is the lender's detailed check of income against outgoings to decide how much you can safely borrow.
Bank statements do the talking: commitments, childcare, car finance and spending patterns all move the number. It is the real answer behind every income multiple.
Related: Loan-to-income (LTI), Stress test
Stress test
A stress test checks a borrower could still afford payments if interest rates rose, by assessing the loan at a higher rate than the one applied for.
It is why the amount you can borrow is lower than the arithmetic of your salary suggests. The buffer is the lender planning for bad weather.
Related: Affordability assessment
Debt-to-income ratio
Debt-to-income ratio is a borrower's total monthly debt payments as a share of monthly income.
Car finance, loans and card balances all count against mortgage capacity. Clearing debt before applying often raises borrowing power more than saving a slightly bigger deposit.
Related: Affordability assessment
Credit file and credit score
A credit file is your borrowing history held by credit reference agencies, and the score is a summary of how lenders read it.
Electoral roll registration, on-time payments and low card balances help; recent applications and missed payments hurt. Check your file months before applying, not days.
Related: Adverse credit, Hard search vs soft search
Adverse credit
Adverse credit is a history of missed payments, defaults, CCJs or insolvency on a credit file.
It narrows the lender pool rather than closing it: specialist lenders price for it. Severity and age matter, and a broker earns their fee here.
Related: Credit file and credit score, Mortgage broker
Hard search vs soft search
Also known as: hard check, soft check
A hard search is a full credit check visible to other lenders on your file, while a soft search is a preliminary check only you can see.
Several hard searches in quick succession can itself dent a score. Most agreements in principle now run on soft searches; ask before anyone presses the button.
Related: Agreement in principle (AIP), Credit file and credit score
SA302
Also known as: tax calculation, tax year overview
An SA302 is HMRC's summary of a self-employed person's declared income for a tax year, the standard proof of earnings for a mortgage.
Lenders usually want two years of them with matching tax year overviews, downloadable from HMRC. Minimising declared income minimises borrowing power with it.
Related: Affordability assessment
Mortgage broker
Also known as: mortgage adviser, intermediary
A mortgage broker is a regulated adviser who finds and arranges a mortgage on your behalf from the lenders they can access.
Paid by fee, by lender commission, or both, and must tell you which. Beyond rate-hunting, their value is knowing which lender's criteria fit awkward cases.
Related: Whole of market, Procuration fee
Whole of market
A whole of market broker can recommend from across the mortgage market rather than a restricted panel of lenders.
Even so, some deals are direct-only from lenders. The phrase to ask about is which lenders they cannot see.
Related: Mortgage broker
Broker fee
A broker fee is what a mortgage broker charges the client for arranging a loan, alongside or instead of lender commission.
Fee-free brokers earn from procuration fees alone. Neither model is automatically better; the recommendation quality is what you are buying.
Related: Procuration fee
Procuration fee
A procuration fee is the commission a lender pays a broker for introducing a completed mortgage.
Disclosed on your mortgage illustration. It is how fee-free broking is funded.
Related: Broker fee, Mortgage illustration (ESIS)
Underwriting
Underwriting is the lender's full assessment of an application: income, credit, deposit source and the property itself.
The stage between application and offer where questions arrive. Fast, complete, honest paperwork is the only lever an applicant controls.
Related: Mortgage offer, Lender criteria
Lender criteria
Lender criteria are the rules deciding what each lender will and will not lend on: property types, incomes, visas, construction methods and more.
Criteria, not rates, are why identical applicants get different answers from different banks. Unusual property or income makes criteria-matching the whole game.
Related: Non-standard construction, Mortgage broker
Mortgage prisoner
A mortgage prisoner is a borrower stuck on an expensive rate because they cannot pass current affordability tests to switch, often through no fault of their own.
A legacy of pre-2008 lending and collapsed lenders whose loan books were sold on. Regulatory easing has helped some; many remain stuck.
Islamic mortgage
Also known as: home purchase plan, HPP, Sharia-compliant mortgage
An Islamic mortgage is a Sharia-compliant home purchase plan where the bank buys the property and the customer pays rent plus purchase instalments instead of interest.
Regulated like any mortgage and open to anyone. The economics feel similar month to month; the legal structure underneath is genuinely different.
Buy-to-let mortgage
Also known as: BTL
A buy-to-let mortgage funds a property to rent out, assessed mainly on the expected rent rather than the landlord's salary.
Usually interest-only with bigger deposits than residential loans. Letting a home on a residential mortgage without consent breaches its terms.
Related: Consent to let, Interest-only mortgage
Consent to let
Consent to let is a residential lender's permission to rent out your home temporarily without switching to a buy-to-let mortgage.
The honest route for accidental landlords, often with a rate loading or fee. Letting without it risks the lender calling in the loan.
Related: Buy-to-let mortgage, Let-to-buy
Let-to-buy
Let-to-buy is keeping your current home to rent out while buying a new one to live in, running two mortgages at once.
The old home moves to a buy-to-let loan and the new one gets a residential loan. The additional-property stamp duty surcharge applies to the purchase.
Bridging loan
A bridging loan is short-term, high-cost secured lending that covers a gap, classically buying before your sale has completed.
Priced monthly, not annually, with fees on top. It needs a clear exit, usually the sale, and it is the standard rescue when a chain breaks under a committed buyer.
Related: Chain, Fall-through
Staircasing
Staircasing is buying additional shares of a shared ownership home, reducing the rent and moving toward full ownership.
Each purchase is at current market value, set by a fresh valuation, with legal costs each time. Newer leases allow gradual staircasing in small steps.
Related: Shared ownership
Lifetime ISA (LISA)
A Lifetime ISA is a savings account where the government adds 25% to up to £4,000 saved a year, usable toward a first home costing £450,000 or less.
Withdrawing for any other reason before 60 costs a 25% charge, which claws back more than the bonus. The £450,000 cap has not moved since launch, which bites in expensive areas.
Related: First-time buyer, First-time buyer relief
Right to Buy
Right to Buy is the scheme letting qualifying council tenants purchase their home at a discount.
Sell within five years and some or all of the discount must be repaid, and early resale can carry a right of first refusal back to the landlord. Discount rules have tightened in recent years.
Equity release
Also known as: lifetime mortgage
Equity release is borrowing against your home in later life with no monthly repayments, the loan and rolled-up interest repaid when the home is finally sold.
Regulated products carry a no-negative-equity guarantee, so the debt cannot exceed the sale price. Compound interest makes the debt grow fast; family and advice first.
What to watch: An outstanding equity release loan is repaid from the sale before anything passes to the estate. Anyone selling an inherited home should get the redemption figure early.
Related: Redemption figure
Completion funds
Completion funds are the full purchase money the buyer's solicitor must hold cleared before completion day: mortgage advance plus deposit and costs.
The lender releases the advance a day or so ahead on request. Late funds are the classic cause of a completion slipping to the next day.
Related: Completion, CHAPS payment
Know the language. Keep the control.
ValuQ gives UK homeowners free, side-by-side property valuations from competing local estate agents. Your details stay private until you choose who to speak to.
Get your free valuations