An Agreement in Principle (AIP), also known as a mortgage in principle or decision in principle, gives you an understanding of how much you may be able to borrow towards the purchase or remortgage of a property. It’s a document that you can use with an estate agent, or those selling a property, to show that you may be in a financial position to purchase it.

If you fall behind on payments with providers, this could be someone providing a service, such as a utility or a financial contract you have with a lender.

Known as the Bank of England base rate. This is controlled by the Bank of England and is used to control inflation. Some mortgage rates work in conjunction with this rate and therefore, can vary up or down with this rate.

An independent adviser who can help you with mortgages and other financial matters.

Your monthly payment covers the interest and also reduces the total balance outstanding.

A fee to cover the cost of electronically transferring the mortgage funds to the borrower.

Is the legal process of buying and selling property. This can be done by a solicitor or specialist-licensed conveyancer.

The difference between the amount you borrow and the amount you’ll end up paying back taking into account interest and other charges.

A Decision in Principle is another term used for what we refer to as an ‘Agreement in Principle’.

Title deeds are the legal documents which record the ownership of a property and any accompanying land. 

The amount you need to pay towards the total purchase price of the property. This varies depending on the product and lender. Some lenders offer an as little as 5% deposit mortgage for first time buyers.

Some mortgages, such as a fixed rate mortgage, charge a fee if you pay back the loan early. This can vary, so check your original letter of approval or terms and conditions for the amount.  This is known as an Early Repayment Charge (ERC).

Is the difference between the current value of your home and the amount outstanding on your mortgage.

This is an administration fee payable to service providers when you fully repay your mortgage.

A mortgage where the interest rate stays the same for a specific period (e.g two or five years) even if the base rate changes in the meantime.

You own both the property and the land it stands on.

Gazumping occurs when a seller accepts an oral offer (a promise to purchase) on the property from one potential buyer, but then accepts a higher offer from someone else. It can also refer to the seller raising the asking price or asking for more money at the last minute, after previously orally agreeing to a lower one. In either case, the original buyer is left in a bad situation, and either has to offer a higher price or lose the purchase.

A gifted deposit is when someone else, perhaps a family member, provides the funds for some of, or all, your mortgage deposit.

A third party who agrees to meet the monthly mortgage repayment if you are unable to. This is more common with first-time buyers, with the guarantor likely to be their parent or guardian.

This is sometimes charged by your mortgage lender if you are borrowing more than 75% of the property’s value. It protects the lender against you defaulting on your mortgage.

This is where you hold property ownership rights equally with another person or persons. If one person dies, ownership reverts entirely to the surviving person or persons. This legal agreement supersedes any Will the deceased may have made.

The official body that holds the details of property ownership.

You own the property but not the land it is built on for a specific number of years. Flats are usually owned on a leasehold basis. You may find it hard to get a mortgage if there are fewer than 70 years left on the lease of the property you want to buy. Leases are renegotiable, but the shorter remaining terms, the more expensive it will usually be.

LTV means Loan to Value. The size of your mortgage as a percentage of the value of your property. for instance, if you have £50,000 mortgage and your home is worth £100,000, your LTV is 50%.

The date the mortgage must be repaid in full, or by which a new agreement needs to be taken out.

The amount you pay to your lender for your mortgage each month.

A Mortgage Illustration should be given to you before you make a mortgage application. It describes the key things you need to know about your mortgage such as payments and fees.

A Mortgage in Principle is another term used for what we refer to as an ‘Agreement in Principle’.

This is your guaranteed offer. Once your mortgage is approved you’ll get a formal offer setting out the terms and conditions.

The amount of time you are repaying your mortgage over (e.g. 30 years).

When the value of your home falls below the amount of your mortgage.



This is when you pay extra, over and above your monthly mortgage payment. You could choose to make a one-off lump sum overpayment or overpay a regular amount with your normal mortgage payment. Overpayments save you interest and will shorten your mortgage term.

Where an existing mortgage can be transferred between properties when you move house.

This is a period during which you make no payments on your mortgage. While you make no payments interest will continue to be charged. This feature is usually only available on a flexible mortgage.

This is a set-up fee for your mortgage. Lenders will charge different product fees so do shop around.

The amount it would cost to rebuild your home if it is destroyed (by fire for instance). this is needed for insurance purposes.

When a person transfers their mortgage from another lender.

This is a tax you pay when you buy a property.  As the price you pay for a new property increases, so might the rates of stamp duty.

The default mortgage interest rate your lender will charge you after your initial mortgage deal ends.

The mortgage interest rate is set at a fixed percentage above the Bank of England (BoE) base rate. The interest rate payable will rise and fall in line with changes to the BoE base rate.

Mortgage lenders require a valuation to prove that the property is worth the amount you want to borrow.

This means the interest rate can go up or down if your mortgage lender decides to change their standard variable rate.


We’re on hand to arrange a phone or video call with our qualified mortgage professional.

We can also help with any general queries about the process.

Call us on 01274 081144 


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