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Mortgage Jargon Buster

Helping you understand mortgage terms

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Mortgages are not simple. Neither is the jargon that comes with it. Don’t worry. Read our guide to everything you might come across when applying for a mortgage.

The information on this page applies across the UK. Be aware that property laws are different in Scotland.


Adverse Credit

Issues with a your credit can impact lending.

These can be caused by:

Annual Percentage Rate (APR)

The total cost of your borrowing for a year. This includes:

  • The standard fees, and
  • Interest you will have to pay


Beneficial Interest

An interest in land that gives a person:

  • A financial share in a property, and/or
  • A right to occupy a property

Buy To Let Property

A property that has bought with the intention of being rented out.


Capital Repayment/Cap Rep

A type of mortgage that requires a person to:

  • Make monthly repayments to the capital balance borrowed
  • For an agreed period of time (known as term)
  • Until you have paid back both the capital and the interest in full


Debt Consolidation

Various debts are rolled into one loan or one monthly payment.

Discounted Variable

This sets your interest rate at an amount below the lender's SVR. For a time.

The rate is not fixed. It will rise or fall when and if the lender changes their SVR.

The discounted rate will remain the same during that agreed period.

Let's say you agreed 2.74% below the SVR of 5.74%. The discounted rate changes in relation to the new rate.


Early Repayment Charge (ERC)

A fee your lender could ask you to pay if:

  • You exit a fixed rate deal early
  • You wish to change your existing mortgage in any way. During the fixed rate period


The difference between:

  • The value of the property, and
  • The outstanding secured mortgage balance remaining on the property

household bills iconWorried about money and your mortgage?

Maybe it is a strain to keep on top of monthly spending. Or you don't know what to do when your fixed rate mortgage ends.

Together, we can look at your situation and unlock your options.

Read our homeowner guides.


Financial Consent Order

Legally binding financial agreement between parties.

Flying Freehold

When part of your property overlaps with your neighbours. 


When a client owns:

  • The building, and
  • The ground the property stands on

Further Advance

Releasing available equity from your property in the form of:

  • A mortgage or
  • Secured loan

In addition to existing mortgage or secured borrowing held on your property.


Grade Listed

Buildings that:

  • Are of exceptional or special interest
  • Must be preserved

There are different levels of grade listed buildings. Grade I, Grade II and Grade II*.


Interest Only

A type of mortgage that requires a person to:

  • Make payments to cover the monthly interest
  • On the total mortgage balance over an agreed term

At the end of the term, the full capital will need to be repaid.


Japanese Knotweed

A destructive weed that can grow as high as 7ft. It can:

  • Push its way through concrete, cavity walls and bricks
  • Cause structural damage



When a client:

  • Owns their property, but
  • Does not own the ground or land or building the property is on. Such as, a flat

Loan to Valuation (LTV)

The balance of your mortgage, compared to the value of your property. Expressed as a %.

Let's say you have a £60,000 mortgage. If the property value was £100,000, this would equal a 60% LTV.

Lenders offer rates based on LTV. Generally, the lower the LTV, the lower the rate.


Negative Equity

When the amount secured against the property is higher than the value of the property.


Part Interest Part Repayment

When you pay off some of your mortgage as you go, but not all of it.

When the mortgage comes to an end, there will still be some money left to pay off. 

Peppercorn Rent

A token or nominal rent (often £1).

Paid by way of consideration, in order to:

  • Form a legally binding contract, and
  • Create a legal relationship between landlord and tenant


The ability to move your:

  • Current mortgage balance, and
  • Deal

To a different property with the same lender.

There are no charges or restrictions.

Power of Attorney

Allows one or more person, known as an attorney, to make financial decisions on a clients behalf.


Right To Buy (RTB)

A council or local government scheme that allows council tenants to buy their home at a lower price.


Shared Equity Scheme (SES)

A government scheme that:

  • Gives a borrower a loan
  • Which will form part of the deposit to purchase a property

The borrower would then take out a residential mortgage on the remaining part of the property value.

The borrowed part of the loan will need to be paid back:

  • On sale of the property, or
  • After a set period of time (commonly five years)

Shared Ownership

A scheme where a person can buy a certain share of a property.

This can be done:

  • Outright, or
  • By getting a mortgage and paying rent to a landlord for the rest
  •  The landlord is usually a building/management company, or local authority

The scheme offers the person the opportunity over time to:

  • Increase their share within the property (known as staircasing) and
  • Eventually own the property in full

This offers an affordable way to get on the property ladder.

Standard Variable Rate (SVR)  

The interest rate that is charged by the bank or building society.

This is after the initial fixed or tracker rate period comes to an end.


Tenants In Common (TIC)

This is where owners of a property have different shares in it. Shares are shown as a %.

Upon passing of either party, their share will pass to their estate. Instead of going to the remaining owner.

Tracker Rate

A type of variable rate that tracks a base rate. Such as the bank of England base rate, below a certain %. This can be either for a set period, or open period of time.

If the base rate goes up, so will the tracker rate. This could make the rate being paid higher or lower.

True Cost

This is the overall amount you will pay in:

  • Capital borrowed
  • Interest paid

This is over a set period of time. Usually the period of a fixed rate deal. It includes any fees and costs attached to a mortgage deal.

Signposting Hub


The UK’s largest housing organisation. Fighting the fight for housing justice.

Shelter can help clients who are at risk of:

  • Repossession
  • Homelessness

Civil Legal Advice (CLA)

You could get free, confidential advice from CLA as part of legal aid. If you are in England or Wales.

If you are eligible, you can get help from CLA for problems such as:

  • Debt, if your home is at risk
  • Housing, if you are homeless or at risk of being evicted

Citizens Advice Bureau (CAB)

CAB can help clients who need extra support for financial services. They offer:

  • Face to face advice
  • Local appointments
  • A range of services such as:
  •  Financial help
  •  Legal help

Charis Grants

An organisation that helps clients get:

  • Trust funds
  • Grants

If they are struggling with utilities.

StepChange Financial Solutions is a registered trading name of Consumer Credit Counselling Service (Equity Release) Ltd. Authorised and regulated by the Financial Conduct Authority. FCA reg. no. 517674.