Mortgage Glossary
The most common mortgage terms - explained
Mortgages come with a lot of jargon, keeping up to date on all the terms and acronyms can be tricky.
Our mortgage glossary explains the most common mortgage terms in plain English — from LTV and SVR to stress tests and stamp duty — so you can feel confident about your decisions.
Whether you’re buying your first home, refinancing, investing in buy-to-let, or looking at commercial finance, you’ll find simple explanations here.
Affordability Check
An assessment by the lender to see how much you can borrow, based on your income, outgoings and debts.
Agreement in Principle (AIP)
A conditional offer from a lender confirming how much they may be willing to lend, subject to full checks.
Arrangement Fee
A fee charged by the lender for setting up the mortgage. Sometimes called a product fee.
Base Rate
The interest rate set by the Bank of England, which influences mortgage rates across the market.
Buy-to-let Mortgage
A mortgage designed for landlords buying property to rent out, assessed mainly on rental income. Learn more on our Buy-to-Let Mortgages page.
Commercial Mortgage
Finance for shops, offices, warehouses and other business premises. Find examples on our Commercial Mortgage Success Stories page.
Capital Repayment Mortgage
A mortgage where you pay back both the loan (capital) and the interest each month, so the balance reduces over time.
Conveyancing
The legal process of transferring ownership of a property, carried out by a solicitor or licensed conveyancer.
Deposit
The amount of money you put towards the purchase price of a property, usually at least 5% for residential mortgages and 25% for buy-to-let.
Early Repayment Charge (ERC)
A fee charged if you repay your mortgage, or switch deals, before the end of your fixed or discounted period.
Equity
The difference between your property’s value and the amount you still owe on the mortgage.
Fixed-rate Mortgage
A mortgage where the interest rate stays the same for a set period, usually 2, 3, 5 or 10 years.
Interest-only Mortgage
A mortgage where you only pay the interest each month. The loan balance must be repaid in full at the end of the term.
Loan-to-value (LTV)
The percentage of the property’s value that you are borrowing, compared to the deposit you’ve put down. See our Residential Mortgage Calculator to estimate your LTV.
Mortgage Term
The length of time over which the mortgage is taken, typically 25–35 years.
Overpayment
Paying more than your agreed monthly mortgage amount. Some lenders allow this within limits without charging fees.
Remortgage
Switching your mortgage to a new deal, either with your current lender or a new one, usually to save money or release equity.
Stamp Duty Land Tax (SDLT)
A government tax paid when buying property over a certain value in England and Northern Ireland. Different rules apply in Scotland and Wales.
Standard Variable Rate (SVR)
The lender’s default rate, which you usually move onto after your initial fixed or discounted deal ends. It can go up or down.
Stress Test
A lender’s check to ensure you can still afford repayments if interest rates rise. Especially important for buy-to-let mortgages. See our Buy-to-Let Calculator for an example.
Tracker Mortgage
A mortgage where the interest rate follows (or “tracks”) the Bank of England base rate, plus a set percentage.
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