Glossary

An additional property is when you buy a residential property while owning another. In England/NI this can trigger higher SDLT rates.

An Agreement in Principle (AIP) is an initial lender indication of how much you might be able to borrow. It is not a mortgage offer.

Amortisation is the process of paying down a loan over time through scheduled payments. For mortgages it explains the interest/capital split.

APRC is a standardised percentage showing the overall cost of a mortgage, including interest and certain fees, to help compare products.

An arrangement fee (product fee) is a mortgage fee charged by a lender for a specific deal. It may be paid upfront or added to the loan.

Conveyancing is the legal process of transferring property ownership in the UK. A solicitor or conveyancer handles checks, contracts and completion.

A deposit gap is the shortfall that can appear when a lender values a property below the agreed price and lends against the lower valuation.

In conveyancing, disbursements are third-party costs paid on your behalf (for example searches or Land Registry fees). They’re separate from your conveyancer’s fee.

A downvaluation is when a lender’s valuation comes back lower than the agreed purchase price. The lender may base the mortgage on the lower value, creating a shortfall.

An EPC rates a property’s energy efficiency from A to G and includes typical energy costs plus recommended improvements. It’s often required when selling or letting.

Gross yield is rental income as a percentage of property value, before costs. It’s useful for screening but not a measure of profit.

Ground rent is a charge sometimes paid by leaseholders to the freeholder. It is separate from service charges and depends on lease terms.

ICR is a buy-to-let lender metric comparing rent to stressed mortgage interest. It helps lenders test whether rent covers borrowing costs.

An interest-only mortgage means your monthly payments cover interest but not the capital balance. You need a separate plan to repay the loan.

Leasehold means you own a property for the length of a lease, not the land outright. Flats are commonly leasehold and may have service charges.

Loan-to-value (LTV) is the percentage of a property’s value that you borrow as a mortgage. Lower LTV often means better rates.

MEES rules set minimum energy efficiency standards for many rented properties. In England and Wales, domestic PRS guidance links MEES to EPC ratings and exemptions.

Net yield is rental income as a percentage of property value after subtracting annual costs. It’s more realistic than gross yield if costs are included.

A mortgage overpayment is an extra payment beyond the required monthly amount. It can reduce the balance faster and cut total interest.

A repayment mortgage is the standard mortgage type where each monthly payment covers interest plus some capital, reducing the balance over time.

A service charge is an ongoing charge (common on leasehold flats) covering building management and maintenance costs. It can change over time.

Staircasing is the process of buying more shares in a shared ownership home. As your share rises, rent on the landlord’s share usually falls.

SDLT is a UK property transaction tax for England and Northern Ireland. It can apply when you buy property above certain thresholds.

SVR is a lender’s standard variable mortgage rate. After a fixed or tracker deal ends, your mortgage may move onto the SVR.

A stress rate is a higher assumed interest rate used by lenders to test affordability. It helps assess whether payments remain affordable if rates rise.

A void period is time when a rental property is empty and not producing rent. Void risk affects landlord cashflow and net yield.