admin No Comments

alphabetHave you ever been reading through something or listening to someone and what’s been said has gone completely over the top of your head? The answer is most likely a big yes, and we completely know how you feel on this one.

Selling your house can very much be one of those occasions where the jargon becomes overwhelming and confusing… definitely something that isn’t welcome in an already stressful situation.

Here we’re going to take a look at some of the most important but not necessarily very clear terms that you’ll come across when selling your house, and we’re going to explain what they mean. Hopefully we’ll be able to take away some of that confusion and make a stressful time just that little bit easier.

Annual Percentage Rate

This is the standard rate of interest that would be charged by a mortgage lender. They will take into consideration any economical conditions or changes and may increase or decrease this rate accordingly. The type of mortgage you choose will also affect this rate.

Basic Variable Mortgage Rate

This is the standard rate of interest that would be charged by a mortgage lender. They will take into consideration any economical conditions or changes and may increase or decrease this rate accordingly. The type of mortgage you choose will also affect this rate.

Bridging Finance

This is a type of finance specifically designed for those that want to buy a property before their own is sold. Effectively a temporary way to finance the purchase of a new house, most commonly used for a only a few days between moves or if the chain has been delayed in some way. Not all mortgage lenders will agree to bridging finance so it’s always best to check if this is something you’re considering.

Building Survey

This is an examination of the house you’re selling to determine the structural integrity of the property and the state of repair. The findings are then reported and provided to the mortgage company. The building survey is a legal requirement but can also prove to be useful for older houses, those in a state of disrepair or those that have had significant alterations.

Chain

This is a situation that occurs when a line of buyers and sellers are simultaneously involved in linked property transactions. You may have seen properties advertised with the tag line “no upward chain”, this means that the sale of that house isn’t reliant on the seller buying another house and so on. When a link in the chain has to pull out when for instance, the sale of their house falls through, the chain “breaks” and each sale can be held up or fail entirely.

Charge Certificate

This is a certificate that is issued by the land registry which gives evidence of mortgage companies or cash buyers charge of the property.

Commission of Fee

This is the amount of money that will be paid to any estate agent that you use when selling your house. The sum is usually paid upon completion of the sale although legally it’s payable when the contracts are exchanged. This fee is something that should be fully agreed before starting the selling process, this will allow you to shop around for the best deal.

Conditions of Sale

This is the detailed, standard terms associated with selling your house. It governs the rights of both the buyer and seller who are both bound by these terms when the contracts are signed.

Conveyancer

This is usually an independent third party, such as a solicitor or licensed professional who is hired by the buyer or seller to deal with all of the legal aspects of the sale and to help process the transfer of ownership.

Deeds

These are the legal title documents that transfer the ownership of the property. They’re usually held by the mortgage company if you have a mortgage on the property. Your conveyancer should be able to take care of all of this.

Disbursements

These are a set payments made by the buyer through their solicitor for fees such as stamp duty, land registry and search fees.

Engrossment

This is the final, formal version of a document which is prepared by a solicitor ready to be signed and sealed following agreement of the final draft by both the buyer and the seller.

Equity

This is the amount of value in monetary terms left in the house beyond how much is still owed on the mortgage. If your house is no longer worth what is outstanding on the mortgage, this is known as negative equity. Selling your house may not be possible if this is the case.

Fixtures and Fittings

This describes all of the items included in the sale that aren’t structural. So this could include things like lighting, carpets and sheds.

Guarantor

This is a person that would agree to cover any repayments of a mortgage if the borrower fails to pay. A mortgage lender may require a borrower to appoint a guarantor in order to approve the loan.

Interest Only Mortgage

This is one of two types of mortgage, the other being a capital repayment mortgage. The idea behind an interest only mortgage is that for the duration of the term, only the interest is paid and then at the end of the term the mortgage is to be paid off in full. Though this can mean cheaper monthly mortgage payments, it also means you’re responsible for finding the funds at the end of the mortgage. A capital repayment mortgage is offset against both the mortgage and the interest.

Land Certificate

This is a certificate provided by Land Registry as proof of ownership for a plot of land.

Leasehold

This applies to formal ownership of a property or plot of land subject to an annual payment of a ground rent to the owner of the freehold. Leasehold ownership is normally for a fixed period, usually 99 years.

Listed Building

This describes a property that has been included on the list of buildings that are of special architectural or historical interest. Listed buildings can’t be altered or demolished without consent from the local government.

Mortgage Term

This is the period of time over which a mortgage is to be repaid. Usually this is between 25 and 35 years depending on the size of the mortgage and the size the repayment you’re able to make each month.

Ombudsman

This is an independent third party professional body that deals with and investigates complaints on behalf of a customer. This could include complaints against the estate agent, insurance companies and solicitors. The Ombudsman will work together with both parties to advise and reach a resolution.

Payment Break

This is an option on some mortgages where the lender will allow the the borrower to take a break in making payments for a specific period, this is normally up to 6 months at a time.

Penalties

This is something that may occur if you want to make any changes to your mortgage, it could be that you wish to change lenders earlier than agreed initially. Each lender will have their own penalty charges, which should be highlighted when setting up the agreement.

Private Treaty

The sale of a property by private treaty is the method most often used by estate agents. It describes the process of the sale which would normally be: preparation of descriptive details, quoting a definitive asking price, details are circulated via post, web etc then potential buyers will view the property and will either agree to buy at the asking price or submit an offer to buy.

Redemption

This is the point in time when a mortgage has been fully repaid.

Remortgage

This is when a property is refinanced, usually when switching lenders or when a second mortgage is taken on top of the one you already have to draw down on any equity you may have developed due to an increase in the house value.

Repossession

This is when the mortgage lender will take control of the house due to non-payment of the agreed mortgage monthly payments.

Right of Way

Formal documentation of an individual’s legal right to use a particular part of the property to gain access to any particular of their own property. For example a shared driveway or walkway.

Searches

This is an official term which is used to represent the physical and written procedure that is carried out to determine any issues with the property and any possible effects they could have plus things like boundaries, planning constraints etc. These searches are carried out by your conveyancer.

Stamp Duty

This is the amount of tax paid by the buyer to the government if applicable. Currently, Stamp Duty only applies to properties over the value of £125,000.

Subject to Contract

This is a phrase that’s used mostly by estate agents to indicate that a provisional agreement has been reached before any contracts have been signed, either party can still pull out of the sale at this point.

Tender

If your house is for sale by tender, this means that there is no asking price but offers are invited. There is usually a closing date for offers to be put forward. The seller still has the right to refuse any offer and are not committed to sell. If an offer is accepted, this constitutes an immediate contract.

Title Deeds

These are the official legal documents that describe the rights and liabilities that are attached to the property. They also prove legal ownership which is needed to sell a property. Often title deeds remain with the mortgage lender until the mortgage is paid in full.

Unadopted Road

If a house that you’re buying or selling is situated on an unadopted road, this means that the local authority don’t take any responsibility for the road or its upkeep. If you’re looking to buy a property on an unadopted road, you should consider your liability for the road, what if any repairs are needed and what it might cost.

Variable Base Rate

This is the basic rate of interest that you can expect to pay on a mortgage. It may vary depending on the Bank of England’s base rate and relevant mortgage conditions.

Vendor

This is a term applied to the seller of the property.

Image credit: Diomari Madulara via Unsplash

Leave a Reply

Your email address will not be published. Required fields are marked *