Finance - Housing
Anyone considering a home loan needs to understand the housing jargon. Most terms have reference to a
charge or a fee that will be required. Home loans are not limited or restricted to just formal mortgages.
Housing jargon covers quite a large area of terms and phrases that often relate to financial products
which are various ways of borrowing and paying back the money.
Failure to understand the full implications of the housing jargon can lead to obligations and
commitments on the side of the home owner that they are unable to service that could result in the loss of your
Capital Gains Tax (CGT)
Tax that's payable on profits from the sale of certain assets such as property, Any profit from the sale of your
main residence is likely to be exempt from CGT, but you may pay CGT if you sell a second home or a home that you've
The day when the seller receives the money from the sale and the legal ownership passes to the buyer.
Sets out the terms on which the property is sold, including the price. The buyer and seller each sign a copy and
these are exchanged to form a binding contract.
Early redemption or repayment charge
If you repay your mortgage during the period of, for example, a fixed or discounted rate, or switch mortgage
providers when you have one of these rates, your lender may make an early redemption or repayment charge. This can
be substantial; you should read and understand the terms and conditions before you sign up for one of these
The contracts signed by the buyer and the seller are physically exchanged and a date is set for completion. On
exchange, the buyer pays the deposit, usually around 10 per cent of the price.
The ownership of a property and the land it stands on.
The buyer's nightmare. After you've agreed a price for the property, the seller accepts a higher offer from
If you own a leasehold property you'll normally have to pay a small annual ground rent to a freeholder.
The government body that records land ownership in England and Wales and transfers ownership from one person to
Where there is more than one property on the same piece of land (eg in a block of flats), the title of the
property is held under a lease which sets out the rights and responsibilities of the person owning it. In these
circumstances, the property is sold leasehold.
The amount of a mortgage as a percentage of the lower of the purchase price or bank's valuation. For example, if
your mortgage is £100,000, the purchase value is £149,000 and the bank's valuation is £150,000, the Loan-to-Value
is 100,000 dived by 149,000, then multiplied by 100=67.1 per cent.
Mortgage Indemnity Guarantee (MIG) or Higher Percentage Advance Fee
An insurance a lender takes out for their own benefit which you may be required to pay for when you ask for a
mortgage above a set Loan-to-Value (LTV), usually 75 per cent or 80 per cent. If you default on your mortgage and
are unable to repay it from other money or assets or from the sales proceeds, the lender may subsequently claim on
the insurer. Some lenders will pay the MIG on your behalf, usually up to a maximum LTV of 90 per cent.
A Government tax the buyer pays. A one per cent tax is levied on properties costing over £60,000 rising to three
per cent for properties above £250,000 and four per cent above £500,000.
These show who owns the property and give general details of any other legal matters, such a restrictions in use
of the property and rights of way.
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