House buying jargon explained
If you’re a first-time buyer or it’s been a while since you first bought a home, some of the language used throughout the home-buying process can be a little confusing. We’re here to help you understand house buying, financial and legal jargon – which will prove invaluable during your home-buying journey.
Completion – When you have the legal right to the property after the sale has been finalised.
Contract – Entered into by the seller and buyer of a property which only becomes binding on exchange of contracts.
Exchange of Contract – When the two legal firms representing the seller and buyer swap signed contracts. After-which the buyer then pays a deposit.
Conveyancing – When the property legally transfers from one owner to another.
Deeds – The legal documents which assign the ownership and boundary of property and land.
APR – Which stands for Annual Percentage rate, is the total cost, including arrangement and interest charges, of your mortgage loan. Shown as a percentage rate, it makes it easier for you to compare it like for like with other rates.
Reservation Fee – If you’re buying a new build home, most developers will ask you for a pre-contract reservation fee to secure your plot. If your sale goes through, this amount is then deducted from your purchase cost. If the sale falls through, you may not get the full amount back as it may be used to cover administration costs.
Deposit – The part payment of the agreed purchase price you’ll make on exchange of contracts.
Agreement in Principle – This is usually the first step to getting a mortgage. Also known as a Mortgage Promise or a Decision in Principle, it outlines how much you could borrow before applying. Your bank can provide this through an online process.
Early Repayment Charge – If you decide to pay your mortgage off earlier than the agreed repayment period, you’ll incur a charge. It could be a flat percentage of the loan total or a fixed fee.
Stamp duty – When you purchase a property, you have to pay tax to the Government at the point of completion. The fee varies as it’s based on a percentage of the purchase value of the property.
Mortgage offer – The formal written offer you’ll receive from a bank or building society to lend an approved amount against a property.
Offer – An offer you make as a prospective buyer to purchase a property. It’s not legally binding at this point.
House buying jargon
Building Survey – A detailed evaluation of the structural condition of the property, highlighting any issues in detail. If you’re buying an older property as opposed to a new build, it’s one of the more expensive survey options. However, it is recommended for your peace of mind.
Chain – If you’re buying an older property, you’re likely buying from someone who is selling their home at the same time as you. Therefore, all parties become reliant on each other to complete the transaction. The entire chain can collapse if just one of the party pulls out. Buying a new build home is a good way of avoiding ending up in a chain – so you can get moving sooner.
Energy Performance Certificate – Your seller, whether that’s the current homeowner or a developer, will provide you with a value Energy Performance Certificate (EPC). This gives you details about the energy efficiency of the property. You can also find the report of your new home, by searching on the EPC Register.
Fixtures and fittings – This refers to non-structural items – such as curtains and carpets – that could be included in a sale.
Gazumping – This is when you’ve had an offer accepted, but the seller accepts a higher offer from another buyer before the sale of the property. Although sometimes unfair, this is a legal process in both England and Wales.
Searches – These are checks on local authority records that show up planning applications, highways, restrictions and land charges. Your solicitor may request further searches and ask for payment for these in advance.
Under offer – When you haven’t exchanged contracts yet but your offer has been accepted by the seller.
Now you’ve got to grips with all the complicated home buying terminology, it’s the perfect time to find your new home.