Mortgage language can feel like its own dialect — familiar words used in unfamiliar ways.
This glossary cuts out the noise and focuses on the terms that genuinely help you make decisions.
If you understand these, you’ll understand most of what advisers, lenders, and solicitors talk about.
Loan-to-Value (LTV)
How much you’re borrowing compared to the property price.
A property purchase with 10% deposit = 90% LTV.
Why it matters: Lower LTV often means lower rates.
Affordability Check
How lenders work out what you can realistically afford to borrow.
They look at your income, regular spending, debts, and dependants.
Why it matters: This sets your maximum loan amount — even if you feel you could pay more.
Stress Test
A check on whether you could still afford your mortgage if rates rise.
Why it matters: It can reduce how much you’re allowed to borrow.
Equity (Home Equity)
The difference between what your property is worth and what you still owe.
Why it matters: More equity usually means better remortgage options and more flexibility when moving.
Fixed Rate
Your interest rate stays the same for a set period (2, 3, 5, 10 years, or longer).
Why it matters: Predictable payments.
Tracker Rate
A rate that follows the Bank of England base rate, usually with a margin added.
Why it matters: It can move up or down.
Standard Variable Rate (SVR)
The lender’s default rate you move onto when your deal ends.
Usually higher. Can change at any time.
Why it matters: Most people remortgage before reaching it.
APRC
The total cost of the mortgage over the full term, including fees and rate changes.
Why it matters: Useful for comparing long-term cost — but most people switch long before the APRC becomes reality.
Decision in Principle (DIP / AIP)
A lender’s early indication of how much they’re likely to lend.
Why it matters: Makes you a more credible buyer.
Mortgage Offer
The formal document confirming the lender will lend you the money.
Usually valid for 3–6 months.
Why it matters: You need it before you can exchange contracts.
Completion
The final stage of the purchase or remortgage process.
- If you’re buying, it’s the day you get the keys.
- If you’re remortgaging, it’s the day your old mortgage is paid off and the new one starts.
Why it matters: This is when the money moves — and when your new terms officially begin.
Remortgaging
Moving your mortgage from one lender to another without moving home.
Why it matters: Often done to avoid the SVR or get a lower rate.
Term
How long you’lltaketo repay the mortgage (e.g., 25 or 30 years).
Why it matters:Longer term = lower monthly payments but more interest overall.
Overpayment
Paying more than your usual monthly payment.
Many lenders allow up to 10% extra per year without penalty.
Why it matters: Cuts the interest you pay and can shorten the term.
Overpayment Allowance
How much extra you’re allowed to pay each year without triggering fees.
Why it matters: Useful for bonus months or salary increases.
Porting
Taking your current mortgage (and rate) with you when you move home.
Why it matters: Valuable if your current rate is better than what’s available.
Product Fee / Arrangement Fee
A one-off charge for accessing a specific mortgage deal.
Why it matters: Lower rates sometimes come with higher fees — the total cost matters.
Valuation
The lender’s check to ensure the property is worth what you’re paying.
Why it matters: A down valuation can affect your LTV and offer.
Leasehold
You own the property for a set number of years, but not the land it sits on.
Why it matters: The length of the lease affects mortgage options, resale value, and costs like ground rent.
Freehold
You own both the property and the land it’s on.
Why it matters: Fewer restrictions, fewer charges — generally simpler ownership.
Gifted Deposit
Money given to you (usually by family) to help with your deposit.
Lenders usually want a letter confirming it’s a gift, not a loan.
Why it matters: Helps with deposit evidence and anti–money laundering checks.
New Build
A property that’s recently built or hasn’t been lived in before.
Why it matters: Some lenders have stricter criteria, and incentives or warranties may apply.
Survey (Level 2 or 3)
A deeper inspection of the property’s condition.
Why it matters: Helps you spot costly issues before committing.
Conveyancing
The legal work required to transfer property ownership from one owner to another.
Why it matters: No one completes a purchase without it.
DSCR (Debt Service Coverage Ratio)
Used mainly for buy-to-let.
Measures whether rental income comfortably covers the mortgage payment.
Why it matters: A key factor in landlord lending decisions.
Final Thought
Mortgage jargon isn’t there to confuse you, it’s just the industry’s shortcut language. If a term feels unclear, your adviser should explain it in plain English. Remember to ask all the questions you need to feel well-informed.