February 11, 2019
Home moving jargon buster – what are the terms you need to know?
When buying or selling a home, you will probably be faced with a fair bit of jargon. And those confusing terms and phrases can leave you stumped.
With this in mind, here’s our jargon buster. So you’ll soon know your freeholds from your leaseholds. And your ERCs from your EPCs.
Agreement in principle
Also known as a mortgage in principle. This is essentially where a lender confirms they are willing to lend to you.
This is based on some basic information such as financial history and credit checks. In principle, having a mortgage should help buyers to be taken seriously by sellers.
The point when the home legally becomes a buyer’s. All financial and legal aspects have been dealt with; the sale is complete. And plans for moving into a home can begin.
An absolutely crucial part of any house sale. Conveyancing is the process of legally transferring ownership of a property from seller to buyer.
As a consequence, both sides will need to instruct a solicitor/conveyancer to carry out the process.
Or early repayment charge to give it its full name. Your lender may choose to apply this if you opt to repay all or part of your mortgage early.
Your lender may set a limit on the amount you can overpay each year. You could be charged if you go over this limit.
A borrower paying back some or all of their loan sooner than expected costs the lender. So they set ERCs to compensate themselves.
Another much-used acronym, EPC stands for Energy Performance Certificate. This gives homes an energy efficiency rating from A- to G-. A- is the most efficient, G- the least efficient.
The EPC is valid for 10 years. It highlights a property’s energy use and how it could be reduced.
The term used when buyers and sellers exchange contracts. After this point, the transaction becomes legally binding. And both parties are unable to pull out. So if one does, they face financial penalties.
A freehold home is one you own in its entirety, forever. This includes the home and the land it sits on.
Most houses are freehold, although more have been sold as leasehold in recent years. Freeholders must maintain their own property and land, but don’t face costs such as service charges or ground rents.
This is when a seller accepts a higher off from one buyer, having already agreed to sell to another. It’s something the seller is legally entitled to do. However, calls have been made to ban what is an unpopular practice.
The opposite to gazumping. This is when a buyer lowers their offer just before the exchange of contracts. The aim is to force the seller to sell for a lower asking price by effectively backing them into a corner.
Once more, it’s legally fine until exchange of contracts has taken place.
Owners of leasehold homes own their home (and the land it sits on) for the length of a lease agreement with a freeholder. Extra costs are required. For instance, this includes ground rents, service charges, maintenance fees and buildings insurance.
It is good to know that nearly all flats and apartments are leasehold. Some houses – including all shared ownership ones – are too.
This is an acronym you’ll hear frequently. LTV (or loan-to-value) outlines the ratio of mortgage you have in relation to your property’s worth.
This is when a home’s value falls below the remaining mortgage. For instance, a sharp drop in house prices – such as after the 2008 global financial crisis – can cause this. In essence, a property is worth less than the mortgage owed on it.
Sometimes known as SDLT. It’s a tax paid on homes worth more than £125,000. What you pay depends on the price and type of property.
First-time buyers of homes worth less than £300,000 are exempt from paying stamp duty. Relief was also recently extended to shared ownership homeowners.
The seller has accepted an offer from a buyer. As a consequence, the next stage – the exchange of contracts – is in the offing.
A survey for lenders. This assesses the value and condition of a property a buyer is trying to buy.
Issues could be flagged up. If they are, buyers could renegotiate on the asking price. Or pull out completely.
Simply the legal name for a seller. So if you hear talk of vendors and buyers, it really means sellers and buyers in non-jargon speak.
Hopefully that has made some of the words a little easier to decipher. When buying or selling a home, there is a lot to consider. But working with an experienced agent can help.
To find out how much your home could be worth in the current market, why not request a free and instant online valuation?