First Time Buyer Mortgage Glossary

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From AIP to LTV, the jargon can make a straightforward process feel more complicated than it is. This glossary explains the terms you are most likely to come across, in plain English.

Use the A to Z below to jump to a term, or just scroll. And if anything still is not clear, that is what we are here for. We pride ourselves on explaining things simply, so ask us anything.

A B C D E F G H I J L M N O P R S T V
A
Adverse Credit
A credit history that includes issues such as missed payments, defaults or CCJs. It does not automatically prevent you getting a mortgage, as some lenders specialise in adverse credit cases.
Affordability Assessment
A lender's detailed check of whether you can afford a mortgage, looking at your income, outgoings and credit commitments, and stress-testing whether you could still pay if rates rose.
Agreement in Principle (AIP)
A written estimate from a lender of how much they may be prepared to lend you, based on a soft review of your circumstances. Also called a Decision in Principle or Mortgage in Principle. Most estate agents want to see one before accepting an offer.
APRC
The Annual Percentage Rate of Charge. It shows the overall yearly cost of a mortgage including fees, spread across the full term, to help compare deals on a like-for-like basis.
Arrangement Fee
A fee some lenders charge to set up a mortgage product. It can sometimes be added to the loan, though that means paying interest on it. Some deals are fee-free.
Arrears
Missed or overdue mortgage payments. Falling into arrears can affect your credit file and, in serious cases, put your home at risk.
B
Bank of England Base Rate
The interest rate set by the Bank of England. It influences the rates lenders charge, and directly affects tracker mortgages.
Buy-to-Let
A mortgage for a property you intend to rent out rather than live in. Assessed differently from a residential mortgage.
C
Capped Rate
A variable rate mortgage with an upper limit, so your rate can fall but will not rise above the cap during the capped period.
CCJ (County Court Judgment)
A court order recording that you owe money you have not repaid. It appears on your credit file and can affect your mortgage options.
Completion
The final stage of buying, when the money is transferred, ownership passes to you and you get the keys.
Concessionary Purchase
Buying a property below its market value, usually from a family member or a landlord selling to a sitting tenant. The discount can count as some or all of your deposit.
Conveyancing
The legal process of transferring property ownership. Handled by a solicitor or licensed conveyancer, it includes searches, contracts and registration.
Credit Score
A rating based on your credit history that lenders use to help assess risk. A stronger score widens your lender choice. See our guide to credit scores and mortgages.
D
Deposit
The money you put towards the purchase price upfront, with the mortgage covering the rest. Usually a minimum of 5%. See our guide to how much deposit you need.
Disbursements
Third-party costs your conveyancer pays on your behalf, such as local searches and Land Registry fees, added to their legal fee.
Discount Rate
A mortgage with a rate set at a discount below the lender's standard variable rate for a period. The rate moves if the SVR moves.
E
Early Repayment Charge (ERC)
A fee for repaying, overpaying beyond a set limit, or exiting a mortgage deal early, common during a fixed or discounted period.
Equity
The share of your property you own outright, being its value minus any outstanding mortgage.
Exchange of Contracts
The point where contracts are swapped and the sale becomes legally binding. Your deposit is paid and neither side can pull out without penalty.
F
First Time Buyer
Someone buying their first home who has never owned property before. First time buyers often qualify for schemes and Stamp Duty relief.
Fixed Rate
A mortgage where the interest rate stays the same for a set period, usually 2 to 5 years, giving certainty over your payments. See mortgage rates explained.
Freehold
Owning both the property and the land it stands on outright, with no ground rent or lease to worry about.
G
Gifted Deposit
Deposit money given by a family member. Lenders accept this but usually require a letter confirming it is a gift, not a loan, with no stake in the property.
Guarantor Mortgage
A mortgage where a family member agrees to cover the payments if you cannot, helping you borrow when your own income falls short.
H
Help to Buy
A former government equity loan scheme for new-build homes. Closed to new applicants, but the term is still widely searched. Other schemes now fill its place.
I
Income Multiple
How lenders set a borrowing ceiling, typically 4 to 4.5 times your annual income, with some going to 5 times or more. See how much can I borrow.
J
Joint Borrower Sole Proprietor (JBSP)
A mortgage where a family member's income helps you borrow more, without them owning a share of the property or going on the deeds.
Joint Mortgage
A mortgage in two or more names, combining incomes. Common for couples, friends or family buying together.
L
Leasehold
Owning the property but not the land, for a fixed number of years under a lease. Common for flats, and usually involves ground rent and service charges.
Lifetime ISA (LISA)
A savings account for first time buyers. You can save up to £4,000 a year and the government adds a 25% bonus. See our Lifetime ISA guide.
Loan-to-Value (LTV)
The size of your mortgage as a percentage of the property value. A 10% deposit means a 90% LTV. Lower LTV usually means better rates.
M
Mortgage Guarantee Scheme
A government-backed scheme supporting 95% mortgages, helping buyers with a 5% deposit access lending from participating banks.
Mortgage Term
The total length of time over which you repay your mortgage, often 25 to 40 years. A longer term lowers monthly payments but costs more overall.
N
Negative Equity
When your property is worth less than the mortgage owed on it. More of a risk with very high LTV borrowing if prices fall.
O
Offset Mortgage
A mortgage linked to a savings account, where your savings reduce the balance you pay interest on, while staying accessible.
Overpayment
Paying more than your required monthly amount to clear the mortgage faster and cut total interest. Many deals allow up to 10% a year without penalty.
P
Porting
Transferring your existing mortgage deal to a new property when you move, keeping the same rate and terms if the lender allows.
Product Transfer
Switching to a new deal with your existing lender when your current one ends, without moving lender.
R
Remortgage
Taking out a new mortgage on a property you already own, either with a new lender or your current one, often to get a better rate or release equity.
Repayment Mortgage
The standard mortgage type, where each monthly payment covers interest and part of the capital, so the balance clears by the end of the term.
S
Shared Ownership
A scheme where you buy a share of a property, typically 25% to 75%, and pay rent on the rest. You can buy more shares later, called staircasing.
Staircasing
Buying additional shares in a shared ownership property over time, increasing the portion you own.
Stamp Duty (SDLT)
A tax on property purchases in England and Northern Ireland. First time buyers get relief and many pay nothing. Use our Stamp Duty calculator.
Standard Variable Rate (SVR)
A lender's default interest rate, which your mortgage usually moves to when a fixed or discounted deal ends. Often higher than deal rates.
Stress Test
A lender's check of whether you could still afford your mortgage if interest rates rose, part of the affordability assessment.
T
Tracker Mortgage
A variable rate mortgage that follows the Bank of England base rate plus a set margin, so your payments move up or down with it. See mortgage rates explained.
V
Valuation
A lender's check that a property is worth what you are paying, to confirm it provides adequate security for the loan. Less detailed than a survey.
Variable Rate
Any mortgage rate that can change over time, including tracker, discount and standard variable rate mortgages.
Vendor
The person selling the property you are buying.
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There will be a fee for mortgage advice. The precise amount will depend upon your circumstances but we estimate that it will be £495 for a residential/buy to let mortgage or £1,495 for an equity release/retirement mortgage.

Aspect Mortgages Limited is authorised and regulated by the Financial Conduct Authority and is entered on the Financial Services Register (https://register.fca.org.uk/s/) under FCA reference 305352. The FCA do not regulate Business Buy to Let Mortgages.

As independent advisers we have access to the whole market, except for deals that you can only obtain by going direct to a lender. Registered in England and Wales No: 05103801. 16 St Thomas' Road, Chorley, PR7 1HR.

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