Jargon busting for first time buyers

Buying a property can be a daunting process, with so much you need to know and understand. I have attempted to explain some of the terms you may have come across or are hearing throughout your journey as a first time buyer. If you would like an explanation of any term that I have not listed below, or would like further clarification or information about anything I have mentioned, please do not hesitate to contact me at sarah.wilkins@mablaw.co.uk.

Annual Percentage Rate (APR)

This is the rate that represents the cost of borrowing, as opposed to the interest rate. The APR, for example, will include certain charges in addition to the interest rate; this allows you to make comparisons between different forms of borrowing.

Completion Date

The date that you pay for the property and can move into it. The completion date is agreed at the time of exchange of contracts (if the property is structurally finished). I will telephone you on the day of completion to confirm you can collect your keys from the site office or estate agents, once the seller’s solicitors have received the purchase price monies from me.

Contract

This is the legal document that I ask you to sign and which confirms your details, your seller’s details and the property details, including the price. Your seller will sign a copy of the same document and I have to hold a signed contract on your file before I can exchange contracts for you.

Deposit

The usual deposit amount is 10% of the purchase price. This much is not always available, depending on the level of funding (mortgage) you are obtaining. You should let me know as early as possible what deposit you have available, so that I can check with the seller’s solicitors if less than 10% will be accepted (in the case of a FTBI – see below – no deposit may be required). I must hold the deposit monies in cleared funds in order to exchange contracts for you.

Exchange of Contracts

Once I hold your signed contract and cleared deposit, I can exchange contracts for you, from which point you (and the seller) are legally bound to proceed with the purchase. This involves me speaking to your seller’s solicitors on the telephone to formalise the terms of the contract and the completion date. I will always take your instructions before I exchange contracts to ensure you are happy with the completion date and happy to proceed.

Financial advisers

These are people who provide advice on a range of financial products. If they only advise on mortgage products, they are often called mortgage brokers.

Financial Services Authority (FSA)

The Financial Services Authority is the UK’s financial watchdog set up by the Government to regulate financial services in the UK and protect your rights.

HomeBuy and First Time Buyer Initiative (FTBI)

Government-funded schemes which offer people assistance in owning their own home.

HomeBuy Agent

HomeBuy Agents are appointed housing associations or housing corporations, who are providing a “one-stop-shop” and point of contact for affordable housing options in a given area in England and will handle the entire application process for many FTBIs .

Homebuyer’s survey

A surveyor’s report carried out on the property you intend to buy, which typically includes a property valuation.

Housing associations

Housing Trusts, Housing Societies and Registered Social Landlords who provide their local community with high quality and affordable homes in areas of greatest need.

Housing Corporation

The Housing Corporation is funded by the Government and provides the money or grants for affordable housing.

Interest-only mortgage

An interest-only mortgage is a type of mortgage where the monthly payments consist only of interest and do not include any capital repayments. The capital is normally repaid by other means at the end of the mortgage term.

Key workers

Those working in the public sector in health, education or community safety – such as teachers, nurses and police officers – in areas where high house prices are affecting recruitment and retention of key workers.

Legal Charge Document

A legal charge is the document which enables the mortgage lender to collect mortgage repayments (and repossess the property in certain circumstances such as non-payment.) Sometimes referred to as a Mortgage Deed, the document is signed by you and sent to the land registry at the time of registration of your purchase to secure the mortgage or mortgages you have on the property.

Mortgage offer

The formal paperwork which sets out the terms upon which the lender will grant a mortgage.

Mortgage Term

Length of the repayment period of the mortgage offered to you in years.

Registered Social Landlord (RSL)

This is the technical name for social landlords who are registered with the Housing Corporation.

Repayment mortgage

A type of mortgage where the monthly payments consist of interest and capital. If payments are maintained, then the mortgage is repaid by the end of the mortgage term.

Valuation

An assessment of the current market value of a property, carried out for the benefit of the mortgage lender.