Mortgage Jargon Buster: Common Mortgage Terms Explained

Mortgages come with a lot of jargon. This mortgage jargon buster explains the terms you are most likely to see, in plain English, from agreement in principle to underwriting. Where we have a fuller guide on a topic, we have linked to it.

Terms are grouped alphabetically. Definitions were checked in November 2026.

A to C

Agreement in principle (AIP)

An early indication from a lender of how much it may be willing to lend, based on basic details and usually a credit check. It is also called a decision in principle (DIP) or mortgage in principle (MIP). It is not a guarantee. See AIP vs mortgage offer.

Adverse credit

Negative information on your credit file, such as missed payments, defaults or county court judgments (CCJs). Some lenders specialise in helping people with adverse credit. See mortgages with bad credit.

Affordability assessment

The checks a lender carries out on your income, outgoings and commitments to decide how much you can borrow, including whether you could still afford payments if rates rose. See how much can I borrow?

APRC (annual percentage rate of charge)

The total cost of a mortgage over its full term, shown as a yearly percentage. It includes the initial rate, the rate you revert to afterwards and certain fees, so it helps compare deals on a like-for-like basis.

Arrangement fee

A fee charged by the lender for setting up a mortgage product, also called a product fee. It can often be paid upfront or added to the loan, although adding it means paying interest on it.

Arrears

Mortgage payments that are overdue. Arrears are recorded on your credit file and can affect your ability to borrow in future.

Bank Rate (base rate)

The interest rate set by the Bank of England. It directly affects tracker mortgages and often influences lenders' variable rates. See are mortgage rates going up?

Booking fee

A fee some lenders charge to reserve a mortgage product, usually paid when you apply and often non-refundable.

Bridging loan

A short-term loan, typically for up to 12 to 24 months, used to bridge a gap, for example buying a property before selling another, buying at auction or funding a refurbishment before refinancing.

Buildings insurance

Insurance that covers the structure of your home. Lenders require it from the date contracts are exchanged or completion, depending on the purchase.

Buy-to-let mortgage

A mortgage for a property you intend to rent out. Borrowing is usually based mainly on the expected rent. See buy-to-let rental stress tests.

Capital and interest (repayment) mortgage

A mortgage where each monthly payment covers the interest and repays part of the loan, so the debt is fully repaid by the end of the term if all payments are made.

Cashback

A sum some lenders pay you on completion. It can help with costs, but compare the overall deal, as a cashback product is not always the cheapest.

CCJ (county court judgment)

A court order to repay a debt. A CCJ stays on your credit file for six years and can limit which lenders will consider you.

Completion

The day the purchase or remortgage legally finishes, the funds are released and, for a purchase, you get the keys.

Conveyancer

A solicitor or licensed conveyancer who handles the legal work of buying, selling or remortgaging a property.

Credit file

The record held by credit reference agencies showing how you have managed credit. Lenders check it when you apply.

D to F

Debt consolidation

Combining existing debts, such as loans or credit cards, into your mortgage or a new loan. It can lower monthly payments, but you may pay more overall because the debt is spread over a longer term, and the debt becomes secured on your home.

Default

A record that a credit agreement has been formally closed because of missed payments. It stays on your credit file for six years.

Deposit

The part of the purchase price you pay yourself. The bigger your deposit, the lower your loan to value and often the better the rates available.

Development finance

Short-term funding to build new homes or carry out large conversions, usually released in stages as work progresses. See development finance terms explained.

Early repayment charge (ERC)

A charge for repaying all or part of your mortgage, or switching away, during a fixed, tracker or discount period. It is usually a percentage of the amount repaid. See can you remortgage early?

Equity

The part of your property you own outright: its value minus the mortgage and any other secured borrowing.

ESIS

The European Standardised Information Sheet, a standard document setting out the key features and costs of a mortgage, so you can compare offers.

Exchange of contracts

The point at which a purchase becomes legally binding. Your deposit is usually paid to the seller's solicitor at exchange.

Fixed rate

A mortgage rate that stays the same for a set period, commonly two, three, five or ten years, so your payments do not change during that time.

Freehold

Ownership of the property and the land it stands on, with no fixed time limit. Most houses are freehold.

Further advance

Extra borrowing from your existing mortgage lender, secured on the same property.

G to L

Gazumping

When a seller accepts a higher offer from another buyer after already accepting yours, before contracts are exchanged.

Gifted deposit

Money given towards your deposit, usually by family, that does not have to be repaid. Lenders need a signed gift letter. See gifted deposit letters.

Ground rent

A yearly charge paid by a leaseholder to the freeholder. Lenders check ground rent terms when lending on leasehold property.

Guarantor mortgage

A mortgage where a family member agrees to cover payments if you cannot, helping you borrow more or with a smaller deposit.

HMO (house in multiple occupation)

A property let to three or more people from more than one household who share facilities. HMOs need specialist mortgages and often a licence. See our HMO mortgage guide.

Income multiple

How many times your income a lender will lend, for example 4.5 times. Some professional mortgages go higher. See mortgages for doctors.

Income protection

Insurance that pays a monthly income if you cannot work because of illness or injury. See income protection explained.

Interest cover ratio (ICR)

The amount by which a buy-to-let property's rent must exceed the mortgage interest, calculated at a stressed rate. It determines how much a landlord can borrow.

Interest-only mortgage

A mortgage where monthly payments cover only the interest, so the full loan is still owed at the end of the term. You need a credible plan to repay it.

Joint borrower sole proprietor (JBSP)

A mortgage where someone, often a parent, joins the mortgage to help with affordability but is not named on the property's ownership.

Leasehold

Owning a property for a fixed number of years under a lease, while the freeholder owns the land. Most flats are leasehold. See buying a leasehold flat.

Life insurance

Cover that pays out if you die during the policy term, often used to clear a mortgage. See life insurance for a mortgage.

Loan to value (LTV)

Your mortgage as a percentage of the property's value. A £270,000 mortgage on a £300,000 home is 90% LTV. Lower LTVs usually get better rates.

Loan to cost (LTC)

In development finance, the loan as a percentage of the total project cost, including land and build costs.

M to R

Mortgage Capacity Report

A detailed report showing how much you could borrow and on what terms, often used in divorce and separation. See Mortgage Capacity Reports for divorce.

Mortgage offer

The formal, written offer from a lender after it has fully assessed your application and the property. See how long is a mortgage offer valid for?

Mortgage term

The length of time over which the mortgage is due to be repaid, for example 25 or 35 years. A longer term lowers monthly payments but increases the total interest paid.

Negative equity

When your mortgage is larger than your property's value. It can make remortgaging or moving more difficult.

New build

A newly built property being sold for the first time. Lenders may apply different deposit requirements and offer longer offer periods.

Offset mortgage

A mortgage linked to your savings. Your savings balance is offset against the loan, so you pay interest only on the difference, though you do not earn interest on those savings.

Overpayment

Paying more than your required monthly payment. Many lenders allow up to 10% of the balance each year without an early repayment charge.

Porting

Moving your existing mortgage deal to a new property when you move home, subject to the lender's approval. See moving home and porting.

Portfolio landlord

A landlord with four or more mortgaged buy-to-let properties. Lenders assess the whole portfolio, not just the new property. See portfolio landlord mortgages.

Product transfer

Switching to a new deal with your existing lender, usually without a new valuation or legal work. See product transfer or remortgage?

Professional mortgage

A mortgage for people in certain professions, such as doctors, dentists, solicitors and accountants, sometimes at higher income multiples. See mortgages for dentists.

Redemption statement

A statement from your lender showing exactly how much is needed to repay your mortgage on a given date, including any charges.

Remortgage

Moving your mortgage to a new lender, or borrowing against your home with a new lender, without moving house.

Repossession

When a lender takes possession of a property because the mortgage has not been repaid. It is a last resort, and lenders must treat customers in difficulty fairly.

S to V

SA302 and tax year overview

HMRC documents that show a self-employed person's income and the tax due. Lenders use them to assess income. See SA302s and tax year overviews.

Self-build mortgage

A mortgage for building your own home, released in stages as the build progresses. See self-build stage payments.

Service charge

A charge paid by leaseholders towards maintaining a building and its shared areas.

Shared ownership

Buying a share of a property, usually from a housing association, and paying rent on the rest, with the option to buy more shares later.

SPV (special purpose vehicle)

A limited company set up solely to hold rental property. Many landlords now buy through an SPV. See limited company or personal name?

Stamp Duty Land Tax (SDLT)

A tax paid when buying property in England and Northern Ireland above certain thresholds. Rates depend on the price, whether you are a first-time buyer and whether you own other property.

Standard variable rate (SVR)

The rate a lender charges once your initial deal ends. It can change at any time and is usually higher than the deals available, so it often pays to review before your deal ends.

Survey

An inspection of a property's condition that you arrange for your own benefit. It is different from the lender's valuation. See valuation vs survey.

Swap rates

The rates lenders pay to fund fixed-rate mortgages over a set period. Movements in swap rates are a major reason fixed mortgage rates rise and fall.

Tracker mortgage

A variable rate that follows Bank Rate at a set margin, so your payments change when Bank Rate changes.

Underwriting

The lender's detailed review of your application, documents and credit history before it issues a mortgage offer.

Unencumbered

A property with no mortgage or other borrowing secured on it.

Valuation

The lender's assessment of a property's value to confirm it is suitable security for the loan. It is not a full survey.

Still not sure what something means?

If you have come across a term that is not listed here, or want to know how it applies to you, get in touch. We are a whole-of-market mortgage broker, our mortgage advice is fee-free, and your first consultation is free and with no obligation.

Information in this article was checked in November 2026 and can change at any time.

Your home may be repossessed if you do not keep up repayments on your mortgage.