UK Mortgage Glossary (2026)

AER: Annual Equivalent Rate. The standardised way of quoting savings interest. Not the same as APR (used for borrowing). Shows what you'd earn if the interest were compounded annually.
AIP: Agreement in Principle. A soft credit check with a lender that returns an indicative borrowing limit. Not a binding offer. Estate agents often ask for one before letting you view.
AML: Anti-Money Laundering. The legal framework solicitors and estate agents work under. Why you're asked for ID and proof of funds — it's a legal requirement, not optional.
APR / APRC: Annual Percentage Rate (or APRC for mortgages specifically). The total cost of borrowing expressed as a single annual rate, including fees. APRC assumes you stay on the product and includes the reversion-to-SVR effect, so can look higher than the headline rate.
Buy-to-let (BTL): A mortgage for a property you'll rent out, not live in. Typically requires a 25%+ deposit, uses rental income (not personal income) for affordability, and attracts the 5% additional-property SDLT surcharge.
Capital-and-interest: A 'repayment' mortgage where each monthly payment covers interest plus a slice of capital. Loan clears at the end of the term. The UK default.
Completion: The day funds transfer, ownership changes, and you get the keys. Typically 2-4 weeks after exchange.
Conveyancing: The legal process of transferring property ownership. Done by a solicitor or licensed conveyancer. Includes searches, Land Registry work, and SDLT submission.
Equity: The portion of your home you own outright (property value minus outstanding mortgage). Rises as you repay capital and as house prices rise.
ERC: Early Repayment Charge. A penalty (usually 1-5% of the outstanding balance) for leaving a fixed or tracker deal before the fix period ends.
Exchange: The legal moment at which contracts are signed and both sides are committed. Deposit is paid to solicitor. Buildings insurance required from this point. Completion follows 2-4 weeks later.
Fixed-rate: A mortgage where the rate is fixed for a set period (2-10 years typical). After that, reverts to the lender's SVR unless you remortgage.
FTB: First-Time Buyer. Someone who has never owned or part-owned residential property anywhere in the world. Qualifies for SDLT relief up to £500k price and for specific schemes.
Gazumping: When a seller accepts a higher offer from a new buyer after already accepting yours, before exchange. Legal in England and Wales (contracts aren't binding until exchange). Infuriating and unfortunately common.
JBSP: Joint Borrower Sole Proprietor. Up to 4 people on the mortgage, only 1 on the title. Used when parents want to boost a child's affordability without incurring additional-property SDLT. All named borrowers are jointly liable.
Leasehold: You own the property for a fixed number of years (typically 99-999). The freeholder owns the land. Common for flats. Service charges and ground rent apply. Lease length under 80 years is a major issue — it affects mortgage eligibility and extension costs.
LTV: Loan-to-Value. The mortgage as a percentage of the property price. £180,000 loan on a £200,000 house = 90% LTV. Rates are tiered by LTV band — lower LTV gets better rates.
MCOB: Mortgages and Home Finance: Conduct of Business sourcebook. The FCA rule book governing how UK mortgages are sold, including affordability and advice requirements.
MMR: Mortgage Market Review. 2014 FCA rule change that ended self-certification mortgages, introduced stricter affordability tests and stress-tests. The reason affordability assessments are so detailed today.
Mortgage offer: A formal, written commitment from the lender to fund your specific mortgage. Typically valid for 3-6 months. Different from an AIP — this is binding.
MPC: Monetary Policy Committee. The Bank of England's nine-member committee that sets Bank Rate 8 times a year. Their decisions directly drive tracker rates and indirectly drive fixed rates (via swap rates).
Overpayment: Paying more than your contractual monthly mortgage payment. Most fixes allow 10% of balance per calendar year without penalty; above that, ERC applies.
Portability: The ability to take your mortgage product with you when you move house, avoiding ERCs. Useful for transient careers; most lenders offer some form of portability but conditions vary.
Product transfer: Switching to a new deal with your existing lender. No new solicitor, often no new affordability check, usually done online. Faster and simpler than a full remortgage but limited to your lender's range.
Remortgage: Moving to a different lender. Requires a full application, valuation, and (often free) conveyancing. Lets you access the whole market.
SDLT: Stamp Duty Land Tax. Tax on property purchases in England and Northern Ireland. Charged on the portion in each band. See the SDLT guide and calculator.
Searches: Legal checks done during conveyancing — local authority, water, environmental, chancel repair. Cost £200-£400 in aggregate. Identify issues like planning constraints, flooding risk, or outstanding enforcement notices.
Shared Ownership: Scheme where you buy 10-75% of a home (5% on new AHP-funded homes) and pay rent on the rest. 'Staircase' to increase your share over time.
Staircasing: Buying additional shares of a Shared Ownership property over time. New 2021 model lets you staircase in 1% tranches with reduced fees.
SVR: Standard Variable Rate. Your lender's default rate after fix/tracker deals end. Typically 7-9% in 2026. You want to avoid landing on it.
Tracker: A mortgage where the rate = Bank Rate + a fixed margin. Moves with every MPC decision.
Valuation: The lender's check that the property is worth at least the loan amount. Free on many products. A basic valuation is not a survey — it tells you nothing useful about condition.