Property jargon explained – a guide for first-time buyers
Buying a first home can be the most important milestone in someone’s life and knowing the lingo can help the house-hunting process to go as smoothly as possible.
That’s why the mortgage experts at www.onlinemortgageadvisor.co.uk have come up with a handy guide to explain some of the most important property terms a new buyer needs to know.
Agreement in Principle (AIP)
An Agreement in Principle is the document you will receive from your mortgage lender, confirming it will lend you a certain amount and what terms they will provisionally approve you for. This is usually valid for 30 or 90 days depending on the lender, but it by no means guarantees that you'll be approved for a mortgage.
Once you’ve found the property you’re looking for, you’ll still need to make a full mortgage application, but this will help sellers to see you as a serious buyer.
Congratulations! This means that the sale of the property is finalised and you’re officially the owner, time to pop the champagne. You can move in straight away but be sure to keep in touch with your conveyancer so that everything goes smoothly.
This covers all the legal elements of house selling and buying. A conveyancer is the person responsible for sorting all the legal and administrative work and is usually a property solicitor. Conveyancing fees usually cost between £1,000 and £1,500, plus disbursements which are extra payments or even taxes your conveyancer needs to make as part of the house buying process.
Equity is the difference between the value of a property and how much of your mortgage is left to pay off. It can be used to see how much of your property that you actually own, as your mortgage lender will technically own the percentage of the property that you have left to repay. If the value of your home increases, that’s great as your equity will also go up.
Freehold vs Leasehold
The difference between these two terms all comes down to ownership of the land a property sits upon. If you own the property and the land, you’re a freeholder, and if you don’t own the land, you’re a leaseholder. Leasehold purchases can be more complicated, so you should expect higher conveyancing costs.
Stamp duty land tax
This is the tax buyers usually need to pay to the government on the purchase of a property. Rates vary depending on the purchase price, but first-time buyers get the first £300,000 of their property value tax-free if the total value is less than £500,000. You can use HM Revenue and Customs’ Stamp Duty Land Tax calculator to figure out how much tax you’ll have to pay.