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JARGON BUSTER

 Here is a list of terms to help assist you with the buying process

Buy to Let Mortgage
A mortgage specifically structured where the intention is for the buyer to rent out the property such Mortgages are aimed at Landlords that may have at least one property where they currently reside and is either the first step in a portfolio of properties or the continuing expansion of a portfolio.   In such cases the predicted rental income must at least equal 150% of the mortgage payment and in the current financial climate the lenders are insisting on an additional deposit. 

Chain
This is the sequence of buyers and sellers – most people who sell their property are also buying at the same time.  Therefore there can be a chain of a number of sellers, which depend on each other for the sale and purchase of their new properties.  For example, if one buyer or seller drops out, the chain may collapse, whereby the paperwork for the properties within the chain is delayed or cancelled.  One end of the chain is a purchaser who is buying a property with no property to sell typically a first time buyer and the other end of the chain is a seller who is selling a property to realise cash or because the property is no longer occupied.  

Chain Free
This is when the owner of the property does not need to sell the property in order to buy another; therefore it is offered as chain free this may be the current resident is emigrating or moving back to a family home. 

Completion Date
The date when the transaction (either the sale or purchase of a property) is completed, i.e. the date you as a buyer become the owner or as a seller you are no longer responsible for the property. 

Completion Statement
A statement from the solicitor detailing all financial details of transactions, including all costs.


Conditions of Sale
The terms by which the buyer and seller agree to sell/buy the property.  The Law Society sets standard conditions.  The lawyer sets special conditions. 

Contract
The legally binding agreement specifying details of the house sale or house purchase.  The contract once signed legally commits both the buyer and the seller to the transaction.  The house seller's conveyancing lawyer draws up two copies of the same contract and each party signs their own copy.  When both parties are ready to legally commit to the transaction, the two contracts are exchanged. 

Conveyancer
A specialist property lawyer who manages all of the matters arising from the sale of a house or the purchase of a house.  This can be a solicitor or a licensed conveyancer. 

Conveyance or Transfer
The legally binding document that transfers the rights, burdens and the benefit of the land. 

Council for Licensed Conveyancers
A regulatory body for conveyancing with whom all conveyancers should be registered. 

CP12
Check and Certificate to show a Gas Safety Check has been completed. Having a CP12 is a compulsory requirement

Deeds
Legal title document which provides historical information about the property typically properties built before the 1960 should still have a paper document current property no longer has this sort of paper trail and ownership is tracked by the Land Registry.    

Deposit
The amount paid to exchange contracts which is only refundable in exceptional circumstances.  Contracts provide for 10% of the purchase/sale price but this can sometimes be negotiated to a lower level. 

Disbursements
Out-of-pocket expenses paid by the solicitor/licensed conveyancer on the buyer's behalf, such as stamp duty, land registry charges and search fees. 

Easement
A right given to the house owner over an adjoining property (e.g.   A right of way).  Think in terms of a neighbour being to use the path on your properties land between the two properties to access the rear of their property typically where no other access is possible

EPC
Energy performance certificate- part of a home information pack that specifies things like insulation and boiler efficiency. 

Equity
This is what you actually own – the difference between the market value of your property and the amount of the loan you still owe to your lender. 

Negative Equity
This is a situation where what you owe your lender exceeds the current value of your property this can arise from a change in the market or some change in the environment that lowers the value of the property. 

Exchange of Contract
The point in time where both parties are committed to the transaction. 

Fixtures and Fittings
A list of the items at the property, which are either included or excluded from the agreed price.  Be prepared for strange things to be included or excluded from this list. 

Flexible Mortgage
Mortgages that are flexible in terms of how you pay the loan back the flexibility can be tied to external factors like interest rates. 

Freehold
One of the two current tenures of land recognised by English law.  See Leasehold.  Freehold recognises the whole of the land not just a building.  All land has a freehold but this may be retained by a Landlord and the property will then be subject to Leasehold all property is subject to one or the other. 

FCA
The Financial Conduct Authority (FCA) is an independent body that oversees consumer protection in the financial market. 

Gazumping
When the house seller accepts a higher price offer from another house buyer after the initial offer has been accepted.  The word has its origins in a Yiddish word for stealing or cheating while strictly speaking it is not illegal it is not a fair and honest practice.

How to Rent Document
This is a publication produced by the Department for Communities and Local Govenment . an up to date version can be obtained Govenment PDF Document by following this link. 

Indemnity Insurance
An insurance taken out by conveyancing firms to pay clients arising from errors or fraud in dealing with their matters. 

Land Registry Fees
Fees paid by your conveyancing lawyer on the buyer's behalf to register the ownership of property with the Land Registry.  As mentioned elsewhere the Land Registry have taken over the role previously covered by the older legal instrument “Title Deeds”

Land Registry
A government office that stores records of land ownership and any charges, like a mortgage.  While a property may have an old fashioned “Title Deed” the records held by the Land Registry hold precedence. 

Leasehold
The second current tenure of land recognised by English law.  This is over a term of years and not unlimited.  If there is a Leasehold there will be a Landlord who will own the corresponding Freehold.  A Leasehold usually relates to a flat or apartment. 

Let to Buy Mortgage
This is where the owner of a property lets out their existing property to the facilitate the purchase of another such that the rental income will be the amount a Bank or Building society uses to determine the value of the loan.

Licensed Conveyancer
A licensed conveyancer is a specialist lawyer, someone who is trained and qualified in those aspects of the law that deal with property.  Licensed conveyancers are sufficient to secure adequate protection for consumers and that the conveyancing services provided by licensed conveyancers are provided both economically and efficiently. 

Mortgage
A loan specifically linked to the purchase of land or property such that the ownership of the land or property becomes security for the loan. 

Mortgage Deed
The legal agreement that gives the lender a legal right to property this sets out the circumstances should the borrower default on their repayment schedule. 

Mortgage Fees
The costs charged by your financial advisor, for acting on behalf of your bank or building society. 

Portfolio
A group of two or more properties owned by a Landlord of a holding company.  

Probate
The legal state arising out of a death usually where there is no existing “Last Will & Testament” or there are no clear heirs to a property or the estate of the deceased in such cases the “Probate Court” can order the sale of a property (See White Hot Property) to realise the assets of the deceased. 

Redemption Fee
An Early Repayment Charge which can be charged by your lender should you choose to pay off your mortgage early or even if you move to a different mortgage with the same lender. 

Searches
A method of checking matters that may affect the value of the property.  The only obligatory search is before exchange and is a Local Authority Search this covers items such as road maintenance and planning applications.  The search covers the property not the surrounding area. 

Stamp Duty
A government tax payable by every home buyer when purchasing a property over £125,000.  Duty is charged at 2% for homes priced between £125,001 and £250,000.  The rate is 5% for homes between £250,001 and £925,000.  The rate is 10% for homes between £925,001 and £1.5m.  On homes valued over £1,500,000 the rate is 12%.  If the property is being sold for less than £125,000, no stamp duty is payment is required.  Sometimes a location marked for re-generation for example may be exempt from Stamp Duty.

Survey
A report produced by a surveyor for the purpose of determining the value of the property and if it is structurally sound.  A survey may flag up issues that may stop the purchaser getting a mortgage.  See Valuation Survey.

Subject to Contract
A provisional agreement between the house buyer and the house seller that is not legally binding. 

Transfer Document
The final paperwork that transfers the property from the house seller to the house buyer. 

Vacant Possession
This signifies that a property that is currently empty with no sitting tenant. This would probably mean the existing owner has already moved on to another property. 

Valuation Survey
A survey to allow a property value to be determined for mortgage purposes.  This is not to be confused with a structural survey. 

White Hot Property
A property that has been acquired by a developer or financial institution as part of a part-exchange, repossession or probate transaction and is priced to achieve a quick sale.