Mortgage Jargon Explained

If you’re new to mortgages, you’ll be forgiven for feeling a little bit overwhelmed. There’s a lot to sort out before applying for one and there are so many different types – it’s hard to know what to go for.

Mortgage Jargon Explained
If you’re new to mortgages, you’ll be forgiven for feeling a little bit overwhelmed. There’s a lot to sort out before applying for one and there are so many different types – it’s hard to know what to go for.
 
Whether you choose a high street lender or a more specialist one, it’s always worth talking to a mortgage broker to understand what you can afford to borrow and how much you’ll be repaying monthly.
 
When looking for a mortgage, you’ll need to provide certain information to the lender such as payslips or proof of income, photo ID and proof of address. You may also need to show them account details of where the mortgage payments will be made from, details of any other mortgages or debt and proof of funds.
 
In this quick read, we demystify mortgages and explain some of the jargon you might come across.
 
Common terms

Loan to Value (LTV) – this is the percentage of loan you’ll be taking against the value of the property. So, if you’re buying a property worth £100,000 (chance would be a fine thing in the current market!) and you’ve got a deposit of £30,000, you’d have an LTV of 70%.
 
Agreement in Principle – this is when the mortgage company confirms they’ll be lending you a certain amount. Sellers often require this as proof that a buyer can go ahead with the purchase.
 
Guarantor – this is required if a buyer is on a low income or cannot show how they’ll make future payments. The guarantor is someone that agrees to make repayments on the buyer’s behalf if they’re unable to.
 
Early Repayment Charges – these are penalty charges that are incurred if you pay off your mortgage early. The lender often specifies a timeframe in which these apply.
 
Standard Variable Rate – most mortgages offer a fixed interest rate for a specified period. Once this fixed rate ends, the standard variable rate kicks in. This rate can change monthly and could be higher than the fixed rate.
 
Types of mortgages

Repayment – this refers to the sum of interest plus part of the capital you’ll repay every month.
 
Interest-only – where you pay the monthly interest but none of the actual amount borrowed. While this means you’ll pay less every month, at the end of the mortgage term, you’ll still owe the initial amount borrowed.
 
Buy-to-let – a mortgage taken out by landlords who intend to rent out their property rather than live there themselves.
 
Tracker – the payments change monthly as the interest charged follows the Bank of England rate and is not fixed.
 
If you’re looking for a new home, we can help you find it.
 
Optional, additional CTA: And if you would like to be put in touch with an independent mortgage adviser, get in contact with us and we’ll share their details with you.

Contact Allen Residential on 01761 412300
 


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Meet Our Founding Director James

Meet Our Founding Director James

James Allen is the founding director and owner of Allen Residential. James started in estate agency back in 1997 and after working for a couple of strong independent estate agencies he established Allen Residential in 2005 Keen to invest back into his team, James is dedicated to ensuring that each team member at Allen Residential is a key part of the business, emphasizing the importance of their contributions. His leadership style highlights the significance of a cohesive and dedicated team, fostering a supportive and growth-oriented environment. The business has flourished in recent years, thanks to the staff's commitment to excellence and the implementation of effective systems. James' appreciation for his team’s hard work and dedication is evident, making Allen Residential a thriving and dynamic company.

Why choose Allen Residential?

Why choose Allen Residential?

With an owner who has 35 number of years experience in the industry and 20 years of company history, we bring knowledge, reliability, and expertise to every property transaction.

Our approach is casual and professional, aiming to form personal connections with the people we work with instead of treating them as a number.

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