Plain-English definitions of the mortgage and home-buying terms you'll meet in the UK, from agreement in principle and APRC to LTV, product transfer, Stamp Duty, and the survey types.
Buying a home or remortgaging comes with a lot of jargon. This A to Z explains the terms you're most likely to see, in plain English.
A–C
Agreement in principle (AIP): a lender's indication of how much it might lend, based on basic checks. Also called a decision or mortgage in principle. It isn't a guaranteed offer.
APRC: annual percentage rate of charge. The total cost of the mortgage over its full term, including fees, expressed as a yearly rate. It assumes you move to the lender's standard variable rate after any deal, so it's most useful for comparing like-for-like products.
Arrangement fee: a fee charged by the lender for setting up the mortgage. It can often be added to the loan, but you then pay interest on it.
Base rate: the Bank of England's interest rate, which influences tracker and variable mortgage rates.
Buildings insurance: covers the structure of the property. Lenders require it from exchange of contracts.
Completion: the day the money is transferred, the property becomes yours and you get the keys.
Conveyancing: the legal work of transferring ownership, done by a solicitor or licensed conveyancer.
D–F
Deposit: the part of the price you pay yourself. Commonly at least 5% to 10%.
Early repayment charge (ERC): a fee for repaying all or part of the mortgage, beyond any allowance, during a deal period.
Equity: the share of the property you own outright: its value minus the mortgage.
Exchange of contracts: when the sale becomes legally binding in England, Wales and Northern Ireland. Pulling out after this is costly. Scotland's process differs.
Fixed rate: an interest rate that stays the same for a set period.
Freehold / leasehold: with freehold, you own the building and land. With leasehold, you own the right to occupy for a set number of years, and may pay ground rent and service charges.
G–L
Gazumping: when a seller accepts a higher offer after accepting yours, before contracts are exchanged.
Ground rent: a charge paid by some leaseholders to the freeholder. For most new residential leases in England and Wales since 30 June 2022, it is set at zero.
Interest-only: you pay only interest each month, and repay the loan at the end from another source.
Land Registry: HM Land Registry records ownership of land and property in England and Wales.
Lifetime ISA: a savings account for people aged 18 to 39 to open, with a 25% government bonus, usable for a first home costing up to £450,000.
Loan to value (LTV): the mortgage as a percentage of the property's value. Lower LTVs usually get better rates.
M–P
Mortgage broker: an adviser who searches for mortgages for you. Some cover the whole market; others a panel of lenders. Ask how they're paid.
Mortgage offer: the lender's formal offer after full checks and a valuation, usually valid for a set number of months.
Negative equity: when the mortgage is bigger than the property's value.
Overpayment: paying more than your monthly payment to reduce the balance. Many deals allow up to 10% a year without charges.
Porting: moving your existing mortgage deal to a new property, subject to the lender's approval.
Product transfer: switching to a new deal with your existing lender, often with fewer checks.
R–S
Remortgage: moving your mortgage to a new deal, often with a different lender.
Repayment mortgage: each payment covers interest and part of the loan, so it's repaid by the end of the term.
Searches: checks by your conveyancer with local authorities and others, covering planning, roads, drainage and environmental issues.
Standard variable rate (SVR): the lender's default rate after a deal ends. It's usually higher, which is why many people remortgage.
Stamp Duty Land Tax (SDLT): tax on property purchases in England and Northern Ireland. In England, standard rates are 0% up to £125,000, 2% to £250,000, 5% to £925,000, 10% to £1.5 million, and 12% above. First-time buyers pay nothing on the first £300,000 of homes up to £500,000. Wales has Land Transaction Tax and Scotland has LBTT.
Stress test: a lender's check that you could still afford payments if rates rose.
Survey: an inspection of the property's condition. RICS Home Survey Levels 1, 2 and 3 offer increasing detail. A lender's valuation isn't a survey.
T–V
Term: how long you have to repay the mortgage, often 25 to 35 years.
Tracker: a variable rate set at a margin above the Bank of England base rate.
Valuation: the lender's assessment of what the property is worth as security for the loan.
Frequently asked questions
Is APRC the best way to compare mortgages?
It helps, but compare the total cost over the deal period too, as most people remortgage when a deal ends.
Do I need a survey?
It's not required, but it can reveal costly problems before you commit.
Sources and further reading
- GOV.UK: Stamp Duty Land Tax residential rates
- HM Land Registry
- RICS
- legislation.gov.uk: Leasehold Reform (Ground Rent) Act 2022
- GOV.UK: Lifetime ISA
Facts checked on 20 October 2026. Spotted an error? Tell us and we will correct it.