Buying your first home in the UK can feel daunting—but knowing the mortgage lingo helps you make informed decisions. Here are 20 key terms every first-time buyer should understand:
- Mortgage Principal – The amount you borrow from the lender.
- Interest Rate – The cost of borrowing money, expressed as a percentage.
- APR (Annual Percentage Rate) – Total cost of the mortgage including fees.
- Fixed-Rate Mortgage – Interest rate stays the same for a set period.
- Variable Rate Mortgage – Interest rate can change, usually linked to the Bank of England base rate.
- Deposit – Upfront money paid toward the property (usually 5–20%).
- Leasehold/Freehold – Property Tenure
- Stamp Duty Land Tax (SDLT) – Tax on property purchases above a threshold.
- Mortgage Fees / Arrangement Fees – Charges for setting up the mortgage.
- Mortgage Term – The length of the mortgage, often 25 years.
- Repayment Mortgage – Monthly payments cover both interest and principal.
- Interest-Only Mortgage – Monthly payments cover only interest; principal is repaid at the end.
- Mortgage in Principle (MIP/AIP/DIP) – Estimate of how much a lender will lend you.
- Mortgage Broker – Professional who helps you find the best mortgage deal.
- Home Equity – The portion of your home you own outright.
- Remortgaging – Replacing your current mortgage with a new deal, often to save money.
- Loan-to-Value (LTV) – Percentage of the property value borrowed.
- Early Repayment Charge (ERC) – Fee for paying off your mortgage early.
- Conveyancing – Legal process of transferring property ownership.
- Underwriting / Mortgage Approval – Lender’s assessment of your application.
Understanding these terms will make the buying process smoother and help you feel confident when securing your first home in the UK.
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