JARGON BUSTER

BUILDING TERMS

BUILDINGS INSURANCE: You should cover your property for the sum recommended by your surveyor. Your mortgage lender will require details of your insurance policy and provider prior to transferring funds. Cover will tend to commence on exchange of contracts.

FIRST FIX: This phrase describes the initial work undertaken by plumbers and electricians etc. For example, all pipe work must be fitted prior to plasterboard/flooring being fitted.

FINAL FIX: During the final fix the finishing touches are added to the internals of the house. These include fitting your ironmongery such as door stops, door chains, vents to windows, window handles and mirror wardrobes.
NHBC: NHBC (the National House-Building Council), is the standard setting body and leading warranty and insurance provider for new and newly converted homes in the UK. Our role is to work with the house-building and wider construction industry to provide risk management services that raise the standards of new homes, and to provide consumer protection to new home buyers.
SNAGGING: Is a word used to describe the process of checking for faults or defects in a property and correcting them before and after the property is handed over to the new owner.

HOMEBUYERS SURVEY: (Scheme 1 survey) A homebuyers survey and valuations provides a report on the general state of repair of the property.

FULL STRUCTURAL SURVEY: (Scheme 2 survey) A thorough examination of the property by a qualified surveyor, where the surveyor covers all accessible parts of the property.

LEGAL TERMS

COMPLETION: Once the purchase of a property is complete and you are the new owner.

CONVEYANCING: Formal name for the process by which the ownership of land is transferred from one person to another.

DEED: This is a legal document that shows who legally owns the property.

DISBURSEMENTS: Fees that a solicitor has to pay on behalf of their client (e.g. searches, stamp duty, land registry charges etc) which are normally added to the client's bill.

MISSIVES: This is the process of buying a house in Scotland, similar to contracts being finalised in England. The two solicitors exchange letters and agree on the finer details that were not explicitly mentioned in the original. Once both parties are agreed on all of the details of the offer, the missives are said to be 'concluded'. Now both parties have entered into a legally biding contract from which withdrawal will undoubtedly incur a substantial compensation bill.

STAMP DUTY: This is a tax that is payable by the purchaser on the purchase of a property. The amount paid depends on how much the property is purchased for. For properties with a purchase price of up to £125,000, no stamp duty is charged. For properties between £125,001 and £250,000, 1% stamp duty is payable on the purchase price. For properties between £250,001 and £500,000 it is 3% and for properties over £500,000 it is 4%.

TITLE DEEDS: The documents which detail the property and indicate its current owners. They will also show details of any rights which the owners of the property have over any neighbouring property and any rights which any other persons have over this property. They also show whether there are any mortgages on the property, and if you have a mortgage the deeds will be kept by the mortgage lender.

FINANCIAL TERMS

AGREEMENT IN PRINCIPLE: Agreement from the lender that the mortgage has been approved, subject to the valuation report and satisfactory references.

BUY TO LET: A type of mortgage for a property that is bought as an investment and rented out to a tenant who pays the borrower a rental income.

CREDIT SEARCH: The use of a reporting system to check an individual's credit history. This could include searching against CCJs, credit card payments, outstanding debts or arrears.

DEPOSIT: Money the borrower is putting down towards the transaction, i.e. the difference between the purchase monies and the mortgage amount.

ENDOWMENT: A policy designed to give a maturity value at the end of the term sufficient to repay the initial loan (used in conjunction with an interest only mortgage). Whether there are sufficient funds to repay the mortgage at the end of the term depends on the financial performance of the endowment policy.

FIXED RATE MORTGAGE: This type of mortgage guarantees that you will pay a fixed rate of interest for a set period of time chosen by yourself.

FSA: This stands for the Financial Services Authority who regulates the UK financial services industry.

INTEREST ONLY MORTGAGE: this is a type of mortgage where only the interest payments on the loan are paid. No payments are made to reduce the capital balance outstanding.

LOAN TO VALUE: The ratio of the total loan amount measured against the valuation of the property. For example on a property valued at £100,000 a loan amount of £70,000 would make a LTV of 70%.

MORTGAGE: A loan made to a buyer to assist with the purchase price of a property. Contracts should never be exchanged until a satisfactory mortgage offer is received in writing.

MORTGAGE ADVANCE: The total amount your lender is prepared to lend.

MORTGAGE BROKER: A person who brings parties together and can assist in negotiating terms.

MORTGAGE QUOTATION: This is a quote which identifies the monthly repayment on a mortgage along with any other costs or charges that may apply.

REDEMPTION: When a mortgage loan is paid off in full.

REDEMPTION CHARGE: This is a fee that is set by the lender that the borrower must pay if they wish to repay their loan before a set agreed mortgage period had elapsed.

SELF CERTIFICATION: If it is difficult to provide substantiated confirmation of your income, you can choose to self certify your income by signing a declaration stating your income and that you can afford the loan repayments.

TERM: The period of time that a mortgage is taken out over.