With the seemingly endless list of mortgage jargon, it can appear like there’s a lot to take in! If you’re getting your first mortgage, or if it’s been a while since you last applied for a mortgage, the numerous terms can be confusing. We’ve written a complete list of all the mortgage jargon and what it means, so that you can apply for a mortgage with confidence.



Agreement in Principle

Lenders can provide you with an Agreement in Principle which states how much you’d be likely to be able to borrow to buy a property. They’ll run a credit check to assess how much you’d be able to borrow.

Annual Percentage Rate of Charge (APRC)

The overall cost of the whole mortgage term including the interest and fees.

Arrangement fee

The main fee charged by your mortgage lender when you take out a mortgage. You can usually choose whether to pay upfront or add to your mortgage, in which case you’ll have to pay interest on it.

Bank of England

The central bank of the United Kingdom that controls the base rate.

Base rate

The rate of interest set by the Bank of England that moves up and down depending on the state of the economy. Tracker and variable rate mortgages usually follow the base rate.


A property bought with the sole intention of renting it out, often as an investment. Lenders usually offer specialist buy-to-let mortgages for this purpose.

Capped rate

A type of variable rate mortgage that caps the amount your lender can charge, regardless of base rate changes.


The amount of money you borrow to buy a property.

Cashback mortgage

A mortgage deal that offers cashback upon completion.


The legalities involved with buying a home, namely the transfer of property ownership from one party to another.

Credit rating

Lenders use your credit rating to work out whether you’d be a reliable borrower. Your credit rating is based on your ability to make payments, and can be negatively affected by missed payments or hefty debt.


The lump sum you’re required to put down when buying a property. Usually you’ll need a deposit of at least 5%, but the higher your deposit, the more competitive deals you’ll have access to.

Discounted rate mortgage

A variable rate mortgage that follows the lender’s Standard Variable Rate (SVR), but at a discount. If the SVR is 3.79%, at a discounted rate of 1%, the interest rate of a discounted rate mortgage would be 2.79%.

Early Repayment Charge (ERC)

The fees some lenders charge for overpaying your mortgage and therefore paying off your mortgage more quickly. Some mortgages don’t allow overpayments and the fees for doing so can be hefty.


The amount of the property that you own outright. Your capital is your deposit plus the money you’ve paid off on your mortgage.

Fixed rate mortgage

A fixed rate mortgage stays the same each month regardless of changes to the Base Rate, so you know exactly what you’re paying each month.

Flexible mortgage

A flexible mortgage gives you greater flexibility when it comes to payment, such as allowing overpayments, underpayments, payment breaks, and having interest calculated daily - the least expensive way of calculating mortgage interest.


Owning the property outright, as well as the land it stands on. As the freeholder, you’re responsible for the upkeep of the property. If you’re the freeholder of a group of flats, it falls on you to cover the costs of any structural damage. Read more about freehold mortgages.


When an offer is accepted by a seller, but then another buyer comes in with a higher offer and succeeds in buying the property.

Higher lending charge

You’ll often pay a higher lending charge if you have a high loan to value (LTV) ratio.

Help to Buy

Government schemes to help first-time buyers get on the housing ladder.

Note: We’re working towards supporting government schemes including Help to Buy, but are unable to provide this service just yet. For now, we’re focusing on one thing at a time in our effort to deliver the best possible mortgage experience for everyone. Follow us on Facebook, LinkedIn, or Twitter to be the first to know when we support this service.

Initial term

Most mortgages have an initial term, or introductory period, of between 1 and 5 years. You’re usually moved onto your lender’s SVR after your initial term, at which point it’s a good idea to remortgage to avoid paying an unnecessary higher rate.

Interest-only mortgage

With an interest-only mortgage, you don’t pay back the money you borrowed to buy the property until the end of the mortgage term. Instead, you only pay back the interest each month, making your monthly payments much lower than with a repayment mortgage.

Interest rate

The percentage of interest you pay on top of your mortgage repayments. Interest rates are also based on the base rate.


You own the property and the land for the length of the lease when you own your home as a leasehold. Leases usually range from 80 to 155 years, but in rare cases they can drop to 0 years. While you own the property for the length of the lease, the communal areas and the ground it stands on are owned by the freeholder.


The bank or building society lending you the money required to purchase a property.

Loan to value (LTV)

The percentage of the property price you borrow from the lender. If you have a deposit of 5%, your LTVis 95%. If your deposit is 20%, your LTV is 80%.

Mortgage broker

A third party that compares different mortgages from different lenders to find you a suitable mortgage deal. Some mortgage brokers cover the whole of the market, while some only search part of the market.

Mortgage in Principle

A document from a lender or mortgage broker giving you an indication of how much you could afford to borrow to buy a home. Also known as a Decision in Principle or an Agreement in Principle.

We won’t run a credit check when you get a Mortgage in Principle from Trussle. Lenders will run a credit check when you get an Agreement in Principle directly from them.

Mortgage term

The amount of time that you’ll take to pay off your mortgage. Most mortgage terms are between 20 - 30 years, but some mortgages allow for overpayments which reduce the mortgage term.

Negative equity

If the value of your home falls below the amount of money remaining on your mortgage, you’ll be in negative equity.


Some mortgages charge fees for overpaying a mortgage, while others allow more than the agreed amount to be paid.

Shared equity

With a shared equity mortgage, your lender will agree to give you a loan to form part of your deposit. Your specialist shared equity mortgage then covers the remainder of the property’s value. Your lender will then receive a share of any profits when you either sell the property or repay the loan.

Shared ownership

Shared ownership gives you the opportunity to own a part of your home. You buy a share of the property and pay reduced rent on the remainder at a discounted rate. Shared ownership is most popular with first time buyers.

Note: We’re working towards supporting government schemes including Shared Ownership, but are unable to provide this service just yet. For now, we’re focusing on one thing at a time in our effort to deliver the best possible mortgage experience for everyone. Follow us on Facebook, LinkedIn, or Twitter to be the first to know when we support this service.

Standard Variable Rate (SVR)

Every lender has an SVR, which usually tracks above the base rate.

Right to buy

Right to buy allows most council tenants to buy their home at a discount.

Note: We’re working towards supporting government schemes including Right to Buy, but are unable to provide this service just yet. For now, we’re focusing on one thing at a time in our effort to deliver the best possible mortgage experience for everyone. Follow us on Facebook, LinkedIn, or Twitter to be the first to know when we support this service.

Tracker mortgage

A kind of variable rate mortgage. A tracker mortgage tracks a rate - usually the Bank of England’s base rate, meaning your monthly payments will change with changes to the base rate.


Switching from one mortgage to another, usually to get a better deal once your initial term comes to an end.

Repayment mortgage

The majority of mortgages in the UK are repayment mortgages. With a repayment mortgage, you’ll pay back a portion of the money you borrowed to buy the property, plus interest. You’ll have paid back the entire amount borrowed and you’ll own your home outright by the end of your mortgage term.

Valuation survey

When you apply for a mortgage, the lender seeks an independent opinion on how much the property is worth. The property valuation generally involves a review of market values and a quick check of the property. This helps the lender decide whether they’re willing to go ahead with the mortgage.

Variable rate mortgage

A mortgage rate that changes depending on another rate, usually the Bank of England’s base rate. Tracker mortgages and the SVR are both types of variable rate mortgage.