Mortgage Glossary
Plain-English explanations of common mortgage terms. No jargon, no waffle — just clear definitions to help you understand the process.
A
Adverse Credit
Negative marks on your credit file such as CCJs, defaults, or missed payments that affect your mortgage options.
Affordability Assessment
The detailed checks lenders carry out beyond income multiples to decide how much you can borrow.
Agreement in Principle (AIP)
A lender's indication of how much they would be willing to lend you, before a full application.
Agreement in Principle
A lender's preliminary indication of how much they may be willing to lend you, based on a soft credit check and basic income details. Same concept as a DIP — different lenders use either name.
C
Chancel Repair Liability
A historical liability where landowners must contribute to church chancel repairs. Solicitors run a chancel-repair search and recommend insurance if the property sits in an at-risk parish.
Completion Day
The day funds are transferred from your lender to the seller's solicitor and you legally take ownership of the property. The day you get the keys.
Completion Statement
The final breakdown your solicitor sends a few days before completion showing exactly what funds need to be transferred and where. Includes purchase price, legal fees, stamp duty, Land Registry fees, etc.
Conveyancing
The legal process of transferring property ownership from seller to buyer. Handled by a solicitor or licensed conveyancer; covers searches, contract review, and Land Registry filings.
E
Equity
The portion of your property that you own outright — the difference between its value and your mortgage balance.
Exchange of Contracts
The point at which the property purchase becomes legally binding. Both parties' solicitors swap signed contracts and a deposit is transferred. Pulling out after this point usually means losing the deposit.
F
G
Gazumping
When a seller accepts your offer, then accepts a higher offer from someone else before contracts are exchanged. Legal in England and Wales but considered bad practice.
Gazundering
When a buyer reduces their offer at the last minute, just before exchange of contracts. Common in falling markets and forces sellers to either accept the lower price or restart the sales process.
M
Memorandum of Sale
The document the estate agent issues once an offer is accepted, confirming sale details and the parties' solicitors. Triggers the formal conveyancing process.
Mortgage Deed
The legal document that grants the lender a charge over your property as security for the loan. Signed at the application stage and registered at the Land Registry.
R
Remortgage
Switching your existing mortgage to a new deal, either with the same lender or a different one.
Repayment vs Interest Only
The two ways to structure mortgage payments — repaying the capital over time, or only paying interest each month.
Restrictive Covenant
A condition written into a property's title that limits what the owner can do — e.g. no commercial use, no extensions over a certain size, no caravans on the driveway.
Retention
When a lender holds back part of the mortgage funds until specified work (e.g. repairs flagged in the survey) is completed. Released once evidence of the work is provided.
S
Stamp Duty Land Tax (SDLT)
The tax you pay when buying a property in England or Northern Ireland above certain price thresholds.
Stress Test
The higher interest rate lenders use to check you could still afford your mortgage if rates rise.
Standard Variable Rate (SVR)
The lender's default interest rate that your mortgage reverts to after a fixed or tracker deal ends.
Sold Subject to Contract (SSTC)
An offer has been accepted but contracts haven't been exchanged yet. The sale isn't legally binding and either party can still pull out without penalty.
