Mortgage jargon can make an already stressful process feel harder than it needs to be. Here's every term you're likely to come across, explained in plain English — with links through to a full guide wherever one exists.
A written statement from a lender saying they'd lend you a specific amount, subject to a full application. Also called a Decision in Principle (DIP) or Mortgage in Principle. It's not a guarantee, but shows sellers and estate agents you're a serious buyer. Read more →
A general term covering any negative marks on your credit file — CCJs, defaults, missed payments, IVAs, DMPs or bankruptcy. Also called "bad credit" or "poor credit." Read more →
Annual Percentage Rate of Charge — the true cost of your mortgage per year, including interest and most fees, expressed as a percentage. Useful for comparing deals fairly.
A fee charged by the lender (not the broker) for setting up your mortgage, sometimes called a product fee. Can often be added to the loan rather than paid upfront.
Missed or overdue mortgage payments. Falling into arrears can lead to a default being registered and, eventually, repossession if not resolved.
A formal legal process for people who cannot repay their debts. It's recorded on your credit file for 6 years, but a mortgage is still possible after discharge, sometimes within 1–3 years. Read more →
A short-term loan used to "bridge" a gap — for example, buying a new property before your current one has sold.
A mortgage for a property you intend to rent out rather than live in. Lending criteria and rates differ from residential mortgages.
A court order made against you for an unpaid debt. Stays on your credit file for 6 years regardless of whether it's later paid (satisfied). Read more →
A mortgage where your monthly payments reduce both the interest and the amount you originally borrowed, so the mortgage is fully paid off by the end of the term.
The day the property purchase legally finishes, funds transfer, and you get the keys.
A company — Experian, Equifax and TransUnion are the main three in the UK — that holds and shares your credit history with lenders.
A number reflecting how you've managed credit in the past. Different lenders use different scoring systems, so a score from one agency doesn't guarantee the same view from a lender.
An informal, non-legally-binding agreement to repay unsecured debts at a reduced monthly amount. Mortgages are possible during or after a DMP, depending on the lender. Read more →
A formal debt solution for people with low income, low assets and debts under £50,000. Stays on your credit file for 6 years. Read more →
A formal marker showing you failed to keep up with payments on a credit agreement, and the lender has closed the account. Stays on file for 6 years. Read more →
The amount you put toward a property purchase yourself, with the mortgage covering the rest. Usually expressed as a percentage of the property value.
The point at which bankruptcy formally ends, typically after 12 months, though the record remains on your credit file for 6 years from the start date.
A fee for paying off your mortgage, or a lump sum of it, before the end of a fixed or discounted deal.
The difference between your property's value and the amount left on your mortgage — effectively the portion of the property you actually own.
The point at which a property purchase becomes legally binding in England and Wales. In Scotland, the equivalent is the conclusion of missives, which happens earlier in the process.
The UK regulator for financial services firms, including mortgage brokers and lenders. Always check a broker's FCA number on the Financial Services Register.
The primary mortgage on a property — the lender with first charge gets repaid first if the property is sold or repossessed.
A mortgage rate that stays the same for a set period, regardless of what happens to the Bank of England base rate.
When a seller accepts a higher offer from another buyer after already agreeing a sale with you, before contracts are exchanged. Not possible in Scotland once missives are concluded.
A mortgage where a family member agrees to cover the payments if you can't, often used to support a smaller deposit or weaker credit history. Read more →
A credit check that leaves a visible mark on your file and can slightly lower your score, especially if several happen in a short period. Full mortgage applications require one; initial reviews shouldn't.
A now-rare fee some lenders charged for lending above a certain loan-to-value — largely phased out but worth knowing if you see it mentioned in older mortgage documents.
A mortgage where your monthly payments cover only the interest, not the capital — meaning you still owe the full amount at the end of the term unless you repay it separately.
A formal, legally binding agreement to repay debts over a set period, usually 5–6 years. A mortgage is possible during or after an IVA, depending on the lender. Read more →
A mortgage where a second person (often a parent) is named on the mortgage to boost affordability, without being named on the property title.
A mortgage taken out by two or more people together, all jointly responsible for the full repayment.
The mortgage amount expressed as a percentage of the property's value. A £180,000 mortgage on a £200,000 property is 90% LTV.
Scotland's equivalent of Stamp Duty, with its own rates and first-time buyer relief. Read more →
Mortgage in Principle / Decision in Principle — other names for an Agreement in Principle. Read more →
A single late or unpaid instalment on a credit agreement. Less serious than a default if it's a one-off, but repeated missed payments can lead to one being registered.
The formal, written commitment from a lender to provide the mortgage, issued after underwriting is complete. This is the point most brokers' fees become payable.
When your outstanding mortgage balance is higher than the current value of your property.
A mortgage requiring 0% deposit, usually relying on a guarantor or specific scheme rather than your own savings. Read more →
A mortgage linked to a savings account, where your savings balance reduces the interest charged on your mortgage.
Paying more than your required monthly mortgage payment to reduce the balance faster, usually subject to annual limits before an ERC applies.
The commission a lender pays a broker once a mortgage completes, typically 0.35–0.5% of the loan. This is separate from any fee a broker charges you directly. Read more →
A formal Scottish debt solution, broadly equivalent to an IVA but under separate legislation. Available only to Scottish residents. Read more →
Switching to a new mortgage deal with your existing lender, rather than moving to a new lender (which would be a remortgage).
Replacing your current mortgage with a new one, either with the same lender or a different one, often to get a better rate.
When a lender takes back a property because the mortgage hasn't been kept up with. A voluntary repossession is when the borrower hands the property back rather than waiting for court action. Read more →
A County Court Judgment that has been fully paid off. Still visible on your credit file for 6 years from registration, but viewed more favourably by lenders than an unsatisfied one. Read more →
A credit check that doesn't leave a visible mark and doesn't affect your score — used for an initial review before a full application.
The rate a mortgage automatically moves to once a fixed, tracker or discounted deal ends, usually higher than the deals available by remortgaging.
The tax paid on property purchases in England and Northern Ireland, with different rates and thresholds for first-time buyers. Read more →
A variable rate mortgage that moves directly in line with the Bank of England base rate, plus a fixed margin.
The length of time over which a mortgage is scheduled to be repaid, commonly 25 years but can be shorter or longer.
The lender's process of assessing whether to approve your mortgage application, based on your income, credit history and the property.
A County Court Judgment that hasn't been paid off. Viewed less favourably by lenders than a satisfied one, and fewer lenders will consider it.
An assessment of a property's value carried out on behalf of the lender, to confirm it's suitable security for the mortgage.
A mortgage rate that can change over time, unlike a fixed rate which stays the same for a set period.
A broker with access to the full range of lenders across the market, rather than being restricted to a limited panel or a single provider.
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Lender criteria, rates and deposit requirements quoted on this page are indicative and subject to change without notice. Individual circumstances vary. This page provides general information only and does not constitute regulated financial advice. The Mortgage Geezer is a trading style of Access Financial Services Ltd who are authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is 301173. Registered in England No. 04427489. Registered office address Access Financial Services Ltd, Unit 1 Furtho Court, Towcester Road, Old Stratford, Milton Keynes, MK19 6AN. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP YOUR REPAYMENTS ON YOUR MORTGAGE OR ANY OTHER LOAN SECURED AGAINST IT.