What does it mean?

✔  Loan to Value (LTV)
LTV is the percentage of the property’s value that you’re borrowing as a mortgage. It’s calculated by dividing the mortgage amount by the property’s value and multiplying by 100.

Example: If you’re buying a £200,000 home with a £40,000 deposit, you’d need a £160,000 mortgage. Your LTV would be 80% (because £160,000 is 80% of £200,000). A lower LTV often means better mortgage rates.

✔  Deposit
The deposit is the upfront amount you pay toward the cost of the property. It’s usually a percentage of the property price, and a higher deposit generally allows access to better mortgage deals.

✔  Initial Benefit Period
When you take out a mortgage you get to choose from a competitive set of rates. These will come in many different forms such as fixed, tracker, discount, etc. This is known as an initial benefit period as the rate is much lower than the lenders standard variable rate. Your mortgage term is usually over many years, but your initial benefit period will only last a limited number of years (typically 2, 3, 5, 7 or 10 years); after which the mortgage would revert to the lender’s standard variable rate (SVR).

✔  Standard Variable Rate (SVR)
The SVR is the default interest rate set by the lender that applies after the initial benefit period. This rate can go up or down depending on the lender’s decision, often in response to changes in the Bank of England’s base rate.

✔  Early Repayment Charge (ERC)
An ERC is a fee charged by the lender if you pay off your mortgage or make significant overpayments within the initial benefit period. ERCs vary by lender and are often a percentage of the loan balance.

✔  Porting
Porting means transferring your existing mortgage deal to a new property. Many lenders allow this if you’re moving home and want to keep your current mortgage terms, though it may involve a new application process. This can be an effective way to move property whilst remaining on your current product & avoiding a lenders early repayment charge.

✔  Remortgage
Remortgaging is the process of switching your current mortgage to a new lender or a different deal with your existing lender. It’s often done to secure a better interest rate, access additional funds, or avoid moving to the Standard Variable Rate.

✔  Product Transfer
A product transfer is when you switch to a different mortgage deal with your existing lender, usually at the end of your current deal’s initial benefit period. Unlike remortgaging, there’s no need to change lenders.

✔  Agreement in Principle (AIP)
An AIP (also known as a Decision in Principle) is a conditional approval from a lender that estimates how much they’re likely to lend based on your financial information. It’s often the first step toward getting a mortgage and can help show estate agents & sellers you’re serious about buying.

✔  Exchange
Exchange of contracts is a key stage in the home-buying process, where the buyer and seller sign contracts, making the sale legally binding. At this point, the buyer usually pays the deposit.

✔  Completion
Completion is the final stage in buying a property when ownership officially transfers to the buyer. Once payment is received by the seller’s solicitor, you’ll receive the keys and can move in.

✔  Chain
A chain refers to a sequence of linked property sales, where each purchase depends on the preceding sale completing. Chains can sometimes delay transactions since multiple parties are involved, and any issue in one part of the chain can impact the rest.

Example: If Buyer A is selling their property to Buyer B, and Buyer B is selling their property to Buyer C, all transactions are linked in a chain. If Buyer C faces a delay in financing, it could prevent Buyer B from completing their purchase, which in turn affects Buyer A.

✔  No Chain
When a property sale is described as "no chain," it means there are no other property sales dependent on this transaction. This often results in a quicker, simpler buying process.

✔  Stamp Duty Land Tax (SDLT)
SDLT is a tax paid to the government on property purchases in England and Northern Ireland. The rate depends on the property price and whether you’re a first-time buyer, buying an additional property, or moving home.

✔  Conveyancing
Conveyancing is the legal process of transferring property ownership from the seller to the buyer. This process is handled by a conveyancer or solicitor and includes searches, checks, and drafting contracts.

✔  Repossession
Repossession occurs if a homeowner fails to keep up with their mortgage payments, leading the lender to take ownership of the property. This is usually a last resort and can be avoided by contacting your lender if you face payment difficulties.