There are certain standard phrases and terms used every time someone buys a house. We set out below what each of these means:
Bridging Loan
A loan to “bridge” the difference in funding between the proceeds from the sale of your present property and the purchase of your new home. This may happen, for example, where the sale of your current home takes place after the purchase of your new one.
Completion
The completion of the transaction whereby the buyer pays the outstanding purchase price to the seller and the legal title to the property transfers to the buyer.
Contract
The document entered into by both the seller and the buyer relating to the transfer of a property which becomes binding on the exchange of that contract between the two parties i.e. when both parties have signed the contract and the buyer has handed over the agreed deposit to the seller or his representative.
Conveyancing
The legal transfer of a property from one owner to another.
Covenant
A restriction or condition affecting the property, which must be complied with.
Deeds
The legal document relating to the title of the property.
Deposit
An initial part payment of the agreed purchase price paid by the buyer to the seller on exchange of contracts (typically 10%).
Energy Performance Certificate (EPC)
A certificate prepared by a qualified surveyor which sets out the energy efficiency of the property.
Exchange of Contracts
The point in the home buying process whereby the buyer and the seller each sign a copy of an identical contract and this is exchanged between the parties or their representatives. Once the contracts are exchanged both sides are legally bound to complete the transaction.
Freehold
The full ownership of both the property and the land on which it stands.
Land Registry Fees
Fees paid to the Land Registry to register your ownership of the property. The scale of fees is fixed by the Government.
Leasehold
Land or property held under a lease for a number of years, upon expiry of which it reverts back to the original owner.
Local Authority Search
A search, usually undertaken by a solicitor, which searches for any planning decisions or other matters affecting the property.
Mortgage
A loan from a lender to a buyer used in connection with the purchase of a property, which is secured on that property. If the buyer fails to repay the loan, the lender can take re-possession of the property and sell the property in order to repay the loan.
Mortgagee
The lender.
Mortgagor
The buyer of the property ie the borrower whose property is secured for the loan.
Mortgage Indemnity Insurance / Guarantee
An additional insurance policy required by a lender if the loan is in excess of a certain percentage, usually above 70% of the purchase price. This involves the payment of a one-off premium which can normally be added to the mortgage and covers repayment of a certain amount to the lender in the event of default by the borrower. The amount of the payment varies with the amount borrowed and the term of the loan.
Mortgage Protection Policy
An insurance policy often arranged in conjunction with a repayment mortgage, which is taken out to ensure that the loan will be paid off should the borrower die before the end of the mortgage term.
Mortgage Valuation
A valuation of the property by a qualified valuer in order to ensure that the value of the property supports the amount that the lender is proposing to lend.
Registered land
Land (including buildings on it) the title to which is registered at the Land Registry and legal ownership of which has been determined.
Stamp Duty
A Government tax on the purchase price of a property. This varies according to the purchase price of the property, with the more expensive properties attracting a higher rate of tax.
Sold Subject To Contract (“SSTC”)
The term used to denote that the seller and the buyer have agreed a price for the purchase and are proceeding with the sale and going through the legal process.
Title
The rights, obligations and covenants that attach to the property.
Title Deeds
The legal documents describing the rights, obligations and covenants that attach to the property and prove ownership of property.