Mortgage glossary
The terms you will see in mortgage, property finance and protection documents, in plain English.
Agreement in principle
An initial indication of possible borrowing based on preliminary information. It is not a mortgage offer.
APRC
Annual Percentage Rate of Charge: a standardised measure intended to show the overall annual cost, including specified fees and rate assumptions.
Capital repayment
Payments cover interest and reduce the mortgage balance over the agreed term.
Conveyancing
The legal work involved in transferring ownership or registering a mortgage.
Deferred period
The waiting period before an eligible income-protection claim begins paying benefits.
Early repayment charge
A charge that can apply when repaying or changing a mortgage during a specified period.
Equity
The property value less borrowing secured on it, before selling costs.
Fixed rate
A mortgage interest rate set for a defined product period.
Freehold
Ownership of a property and the land it stands on, subject to any rights or restrictions on the title.
Gross facility
The stated loan facility before retained interest, fees or other deductions.
Interest-only
Payments cover interest while the capital remains due for repayment under an agreed strategy.
Leasehold
A right to occupy or use property for the remaining lease term, subject to the lease conditions.
Loan-to-value (LTV)
The mortgage amount as a percentage of the property value used by the lender.
Net advance
The funds actually available after deductions from the loan.
Porting
Applying to take an existing mortgage product to another property, subject to the lender’s requirements.
Product transfer
A switch to another mortgage product with the existing lender.
Remortgage
Replacing an existing mortgage with a new loan, usually with a different lender.
Rental stress test
A lender assessment of whether rental income supports the borrowing under specified assumptions.
Second charge
An additional loan secured behind the first mortgage on the same property.
Special purpose vehicle (SPV)
A company established for a defined activity, often property ownership. Lenders set their own acceptable activity and ownership requirements.
Standard variable rate (SVR)
A lender-set variable rate that a mortgage may move onto after the initial product ends.
Term
The agreed length of the mortgage or insurance contract; separate from an initial mortgage product period.
Tracker
A rate linked to a stated reference rate and margin under the product conditions.
Valuation
A lender’s assessment of property value and suitability as security; not a substitute for a condition survey.
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