Glossary / Jargon Buster

Adjustable-Rate Mortgage (ARM)

An ARM will have interest rates and payments that change from time-to-time over the life of the loan. Depending on the type of ARM you have, your interest rate may increase gradually every few years until it reaches a pre-set ceiling. When you apply for an ARM, you’ll be told how, when, and why the rates may change.


An agent is a person who legally represents another, called a principal, and from whom they derive express or implied authority. For example, real estate agent acts on behalf of the homeowner or homebuyer. We currently don't work with agents or brokers or intermediaries.


Amortization is the process of paying off a loan through a series of periodic payments to a lender. The payments include two items: interest, which is what it costs you to borrow the money, and principal, which is the amount of money you borrowed.

Amortization Schedule

A timeline, provided by one’s mortgage lender, that illustrates the increase in principal and decrease in interest.

Annual Percentage Rate (APR)

The APR, shown on your mortgage papers, is a standardized way of showing you the total cost of borrowing money. The APR is a combination of the interest rate charged by the creditor along with any fees they might charge. The fees are expressed in percentages and added to the actual interest rate to come up with the total APR.

Application Fee

The cost to apply for a mortgage loan, which is charged by the lender and includes processing fees.


An appraisal is a written estimate of the value of something. In real estate, it is a professional opinion of the market value of property (such as a home) as of a given date.


The professional who conducts the appraisal of a home.


A rise in a property’s market value, usually due to property improvements or market conditions.


The process through which disputes between parties (two individuals or an individual and an institution/business) are resolved with the help of an objective and unbiased third party. This typically involves a hearing where both parties can voice their side of the story.


A material once used to fireproof and insulate homes that has been found to be toxic and is linked to several diseases. It can still be found in some older homes.


An assessment is a value assigned to real property (your house and land) that is used to determine real property taxes. Assessment can also refer to the process of reaching an assessed value of real property. Additionally, it can be an add-on tax to raise money for a special purpose. In other words, an assessment is the way governments determine how much property tax you must pay.


All valuable items that an individual owns. These include stocks, bonds, mutual funds, Treasury Bills and Brokerage accounts, and checking and savings accounts. Prospective homebuyers are typically required to have their assets verified to confirm their capacity to handle a mortgage loan.

Assumable Loan

An assumable loan is one where the buyer assumes responsibility for repaying the unpaid balance of the original loan.


When a property buyer agrees to become responsible for paying the mortgage loan instead of the property seller.


If you’re looking for a speedy sale and certainty that a buyer won’t pull out of the purchase, then property auctions are a good way to go. Once the hammer falls, the buyer has to put down a 10% deposit, then they have a month to give you the remaining 90%.

Back-End Debt-to-Income Ratio

Your debt-to-income ratio compares your monthly debt payments to your monthly income and is a widely used measure of your creditworthiness. You compute your debt-to-income ratio by dividing your monthly minimum debt payments, excluding your rent or mortgage, by your monthly take-home pay.

Balance outstanding

The total amount of the loan outstanding after a certain period of time.

Balloon Mortgage

This is a mortgage with a low interest rate that stays level for a short time (typically five to seven years), with a large, final “balloon payment” that you will either refinance or pay off in full.

Balloon Payment

This is a scheduled payment (usually the last payment) on a secured loan that is larger than any of the previous payments. Lenders do this to make the regular monthly payments more affordable. Carefully check any lending agreement to ensure you can afford to pay any balloon payments.


A financial state that is declared when an individual is legally declared unable to repay debts, and can affect both one’s credit and approval for future financing needs.

Bridging loan

A short-term funding solution enabling you to ‘bridge’ two situations, for example a bridging loan might be used if you were purchasing a new build property but had yet to complete the sale of your current property.


If you are buying a property to let out to tenants, or you plan to let your current home, you will need a buy-to-let mortgage, as well as checking you have the correct buildings and contents insurance cover.

Buyer’s Agent

A buyer’s agent is someone who acts on behalf of, and represents a buyer is a real estate transaction. If you plan to buy a house, it may be wise for you to contact a real estate agent to act as your buyer’s agent who will have your best interests in mind and to ensure you are treated fairly throughout the home buying process. We currently don't work or deal with agents or brokers or intermediaries.

Cap (Interest)

An interest cap is a consumer safeguard on an ARM that limits the amount the interest rate can change per year and over the life of the loan.

Cap (Payment)

A payment cap is a consumer safeguard on an ARM that limits the amount monthly payments can change.


A homeowner’s ability to make timely loan payments. This can be influenced by several factors, including current and future income, savings, and assets.

Capital Gains Tax CGT

You may have to pay Capital Gains Tax if you make a profit when you sell property that’s not your home, for example a buy to let, business property or inherited property.

Cash Reserve

A lender’s requirement that the borrower have, after settlement, at least two month’s mortgage payment saved.


A very common situation where other people are involved in selling their home at the same time as you, and therefore you’re all reliant on one another (called the chain) to complete the transaction. It would take just one of the party not to sell and another not buy, for the whole chain to collapse.

Closed-Ended Credit

This is a loan of a specific amount of money for a specific period of time. You repay this type of loan in a set number of equal payments, which are usually made monthly. A mortgage and a home equity loan are examples of closed-ended credit.


In real estate, closing is the delivery of a deed, financial adjustments, the signing of a note, and the disbursement of the funds necessary to consummate, or close, the sale or loan transaction. “Settlement” is another term for closing.

Closing Agent

A professional who handles all processes related to the closing of a home sale, including recording documents and disbursing funds.

Closing Costs

These are costs outside a property’s sales price that must be paid to cover the cost of the transaction, such as a loan origination fee, discount points, insurance fees, survey fees, and attorney’s fees. Closing costs vary from location to location, but must be described to you when you submit your mortgage loan application.

Closing Disclosure

A document that includes all of the details of a mortgage loan, including terms, fees, and costs, and must be delivered to the borrower by the lender at least three days before closing takes place.


Any property that’s used as a form of security for debts or other obligations — for a mortgage, the house would be considered the collateral.

Commitment Letter

A letter from a lender to a homeowner that confirms the amount of a mortgage loan, the loan’s term, interest rate, loan origination fee, annual percentage rate (APR), and any monthly charges.

Comparable Market Analysis

This is an analysis done during the appraisal process. Properties with similar characteristics are compared to the property you want to buy to determine how much the home you want to buy is worth.


An agreement or compromise made by the seller during the sale of a home and typically requested by the buyer in the written offer. Common concessions include partial payment of closing costs or appraisal fees.


A form of homeownership in which the home buyer receives exclusive title to the interior space of a multi-unit structure (usually an apartment building or a townhouse), and shares title to the common areas of the residential property (for example, parking lots or a swimming pool).

Contents insurance

This is cover insuring all the movable contents inside your home against accidental damage and theft. Buildings insurance is taken out to cover the actual property.


A backup plan for a hypothetical event prior to a home sale. For example, a buyer’s offer may be contingent upon the home passing inspection.


A Legal Agreement setting out contractual terms between the buyer and seller; it is drafted by a solicitor or conveyancer.

Contract of Sale

A contract of sale is a contract between a buyer and seller of real property to convey title after certain conditions have been met and payments have been made.


An alternative to a solicitor, qualified to act in the sale or purchase of a property.


Refers to the legal process involved in property transactions.


A response — in the form of a second offer — from the seller of a home to the buyer. If the seller thinks the buyer hasn’t offered enough for the home, they may present a counter-offer at a higher price.


A condition contained with the lease that the buyer must comply with. Such a condition is normally passed on to subsequent owners for the duration of the lease period, subject to its wording. A restrictive covenant prohibits the owner from doing something.


An individual’s capacity to borrow money and pay it back over time. One’s credit limit (or maximum) can be increased by their lender based on their positive financial standing and reliable record of repayment.

Credit Bureau

A credit bureau or credit reporting agency is an organization that compiles the data contained in a consumer’s credit report based on information provided by creditors, financial institutions, public records, and businesses.

Credit Bureau Scoring

Your credit score is a numerical index used by credit grantors to decide if you are a good credit risk. The information is based solely on your past credit performance and not on your race, gender, or other factors. When you get your credit report, you won’t receive this rating. Remember, the credit bureaus don’t extend credit; they provide credit information to prospective lenders.

Credit History

The complete record of an individual’s credit use. This list includes individual debts and their payment statuses.

Credit Inquiry

A request from an individual or institution for a copy of one’s credit report. Over time, several inquiries can negatively affect an individual’s credit score.

Credit Limit

Your credit limit is the maximum amount of money that can be loaned to you or the maximum amount of credit you can use in an open-ended credit account.

Credit Report

A credit report is a record of your personal credit history. It is compiled by credit bureaus/credit reporting agencies based on information submitted by lenders and contained in public records. It contains very extensive information on your credit history and is probably the single most important document creditors use when deciding whether to grant you credit.

Credit Score

A number, expressed in the hundreds, that is generated by a computer and provides a summary of your creditworthiness based on past payment history.


A lender’s assessment of your ability to qualify for credit products and your capacity to repay debt.


The money that an individual (or organization) owes to another individual or organization.

Debt-to-Income Ratio (DTI)

The percentage of an individual’s gross monthly income that is used to cover monthly housing expenses, car payments, and other debts.


This document shows that an owner of a piece of real property has title to that property. Once a deed is filed and recorded by your local government, the deed becomes a public record.

Deed of Trust

A deed of trust is a document showing that a borrower conveys title to real property to a third party (trustee) to be held as security for a lender, with the provision that the trustee will return the title once the debt is paid. The trustee will sell the property and pay the debt if the borrower defaults. In other words, when you buy a house, a trustee will hold your Deed of Trust for your lender until you pay off your mortgage or default on the loan.

Deed-in-Lieu of Foreclosure

The cancellation of a mortgage loan when a homeowner voluntarily transfers the title of their property to the mortgage company. This typically happens when the homeowner is unable to sell the home for fair market value after 90 days.


Default is the failure to make payments on a timely basis or in accordance with the terms of your promissory note. Default may also result from failure to submit requests for deferment or cancellation on time. The consequences of default are severe.


This is the failure of a borrower to make timely payments under a loan agreement.


The sum of money initially put down by a buyer when purchasing a property.


The decrease of a home’s value, usually caused by conditions in the market or failure to maintain the home.

Discount Point

A discount point is an amount of money a borrower pays to a lender, or seller pays to a lender, to increase the lender’s effective yield. One point is equal to one percent of the loan. What a discount point effectively does is pay the lender up front in exchange for a reduced interest rate.

Down Payment

A down payment is a portion of the sales price you pay to the seller to close a sale, with the understanding that the balance will be paid at settlement. It is also the difference between the sale price of real estate and the mortgage amount.

Down valuation

When the surveyor acting for a mortgage company values the property for less than the price the buyer has agreed to pay.

Draft contract

This refers to an initial contract which is then edited to include the necessary information as required.


Due-on-sale is a clause in a mortgage contract that states that if the mortgagor sells, transfers, or in any other way encumbers the property, then the mortgagee has the right to implement an acceleration clause making the balance of the mortgage due. In other words, if you sell your home, you must pay off the mortgage immediately. Any money that’s left over you can use any way you choose.

Early repayment charge ERC

This refers to a charge made by a lender should you decide to pay a mortgage off earlier than the agreed repayment period. This could be either a flat percentage of the total loan or a fixed fee.

Earnest Money

Earnest money is a deposit you pay to the seller of real property to show your good faith and intentions of getting a mortgage to buy the property. Depending on circumstances, you may or may not be able to get this money back, if you decide not to complete the purchase.


An encumbrance is anything that affects or limits the fee simple title to property, such as mortgages, leases, easements, or restrictions.


Equity is net ownership. In other words, it’s the difference between how much your property is worth and how much you still owe on your mortgage (Market value – Mortgage balance = Equity). Equity is also sometimes called owner’s interest.


Escrow is money placed with a third party for “safekeeping.” During a real estate purchase, the buyer is typically required to place a portion of their down payment in an escrow account where it is held until the closing. After the home is purchased, a portion of each mortgage payment is typically held in an “escrow” account to pay for the property’s taxes and insurance.

First Mortgage

A first mortgage gives the lender a security right over all other mortgages on the mortgaged property.

Fixed Interest Rate

A fixed interest rate is one that never changes over the life of a loan. For example, if you have a fixed rate, 30-year mortgage, you will pay the same interest rate for the entire 30-year repayment schedule.

Fixed-Rate Mortgage

A mortgage loan which has a set interest rate that doesn’t fluctuate during the life of the loan.

Fixtures and fittings

A description referring to non structural items that are included in a sale such as carpets and curtains.


Forbearance is a lender’s act of not taking legal action despite the fact that a loan is delinquent. It is usually granted only when a borrower makes satisfactory arrangements to pay the amount owed at a future date.


A foreclosure is a legal proceeding that allows your creditor to sell your house to pay off your unpaid mortgage. Your house can be foreclosed on if you don’t make your required house payments.

Free and Clear Title

A property title that does not have any liens or other hindrances like easements or boundary disputes. Also known as simply a “clear title,” the owner of the title is easily identifiable.


When you buy a property to own it and the land it is on, outright. Houses are more likely to be sold on a freehold basis.


When you buy a property to own it and the land it is on, outright. Houses are more likely to be sold on a freehold basis.

Front End Debt-to-Income Ratio

Your debt-to-income ratio compares your monthly debt payments to your monthly income and is a widely used measure of your creditworthiness. You compute your debt-to-income ratio by dividing your monthly minimum debt payments, including your rent or mortgage, by your monthly take-home pay.


For Sale By Owner is a term used to describe a home that is being sold by the owner, without assistance from a real estate agent or a broker. The seller is attempting to save money by avoiding agent’s and broker’s fees, but the buyer should be careful to make sure that the terms of sale comply with all applicable regulations.


A situation where a buyer decides to lower their offer just before exchange of contracts.

Gift Letter

A letter from a homeowner’s family member that confirms their donation of a specific amount of money that does not need to be repaid — the gift is typically used toward a down payment.

Gifted deposit

Money given to a homebuyer to help them buy a property.

Graduated-Payment Mortgage

A type of flexible payment mortgage where the payments increase for a specified period of time, then level off. This usually results in negative amortization.

Green mortgage

Green mortgages reward you for saving energy in your property. Some lenders will give you lower interest rates or cashback and larger loans if your home meets a minimum energy-efficiency level. Other lenders will offer lower rates or cashback if you make energy-efficiency improvements. Or if you take out additional borrowing to pay for measures to improve your home’s energy efficiency.

Gross Income

This is your total income before any deductions such as taxes, at source deductions, or Social Security contributions. The amount that hits your salary bank account.

Gross Income Multiplier

An approximate estimate of an investment property’s value that is calculated by dividing a property’s sale price by its annual gross rental income.

Ground rent

The annual fee received by a freeholder where the property is leasehold.

Guide price

A guide price is a general indication of the minimum the seller wants to achieve for the sale of their property.

Hazard Insurance

Insurance coverage that provides compensation to the insured in case of property loss or damage.

Home Inspection

A close physical examination of a home to evaluate its plumbing, electrical, and heating and cooling systems, as well as its appliances, roof, foundation, and structural stability. The inspection should be completed before you purchase a home and your offer contract should state that purchase would be contingent on the home inspection results.

Home-Equity Line of Credit

A home-equity line of credit is a revolving loan where your home is used as collateral. You are given a credit limit and can borrow as much or as little as you want against the limit. This type of loan acts much like a checking account. Your lender provides you with checks and you can draw on the account any time you like as long as you don’t exceed your credit limit.

Home-Equity Loan

A home-equity loan, also known as a second mortgage, is a closed-ended, secured loan with your home used as collateral. It can have fixed or adjustable (ones that fluctuate based on a key index) terms, interest rates, and payments. You usually borrow a prearranged amount from your lender and pay it back in installments (usually monthly).

Homeowners Insurance

An insurance policy that covers disasters, like floods or fires, that cause damage to homes or pieces of personal property, as well as injuries to visitors at the home.

Housing Expense Ratio

The portion of a homeowner’s gross monthly income that is allotted to their mortgage loan — typically expressed as a percentage.


Independent Financial Adviser.

Imputed Interest

The interest that a lender is assumed to have been paid — and which they report as income on their taxes — regardless of whether or not the amount was actually received.

Indemnity insurance

A protection policy sometimes purchased during the conveyancing process. For a one-off payment, you get a policy that covers the cost implications of a third party making a claim against any defects with the property you are about to buy.


A published collection of interest rates that are used to calculate the interest rate for an adjustable-rate mortgage loan.


A widespread price increase driven by market conditions.

Inspection Certificate

An inspection certificate is a document that verifies that a property is as described. The inspection is usually performed by a designated agent and may be accepted in place of a survey.


1) Interest is the cost of money. It is usually stated as an annual percentage (e.g. 4.5 %). You either pay interest when you borrow money or are paid interest when you save and invest money. 2) Interest is a right, share, or title in property.

Interest only mortgage

A mortgage where only the interest on the loan is paid each month. You will need to arrange a savings scheme so that you can pay back the capital amount borrowed at the end of the loan term.

Interest Rate

An interest rate is the percentage of the outstanding balance of a loan that you are charged for borrowing money, usually expressed as an annual percentage rate.

Judgment Lien

A lien that is attached to a homeowner’s property without their agreement and is created when another party wins a lawsuit against the homeowner.

Junior Mortgage

A second mortgage loan that is subordinate to your first mortgage loan.


This is a method of purchasing property by making gradual payments over the required rent for a set period. At the end of this period, the renter uses a mortgage loan to finance the purchase of the property.


A leaseholder owns the property and its land for the length of the lease agreement with the freeholder. Flats are more likely to be sold on a leasehold basis. During the period of ownership, they’ll pay ground rent and possibly also service charges for the maintenance of the building and land.


When the lease ends, ownership returns to the freeholder unless the lease is extended. Leases are normally granted for 99 years, but you may want to extend it at the point of purchase if there is a shorter amount of time remaining on the lease.


A lender is a financial institution or agency that loans you money.


Any financial obligations or debts you have.


A lien is a legal hold or claim of a creditor on the property of another as security for a debt. Liens are always against property, usually real property.

Lien Waiver

An agreement between a payer and counterparty in which the counterparty relinquishes their right to place a lien on the payer’s property or possessions.

Life Estate

The ownership of property for the duration of an individual’s life.

Loan Estimate

A document provided to a homeowner by a lender that lists the total projected costs and fees associated with a mortgage loan. The lender must provide this estimate to the homeowner within three business days of receiving the loan application.

Loan Modification

An official adjustment made to the original terms of a homeowner’s mortgage loan by the lender to make payments more affordable.

Loan Origination Fee

This is a fee charged by lenders to prepare documents, make credit checks, inspect, and sometimes appraise property. It is usually stated as a percentage of the face value of the loan.

Loan Servicing

Loan servicing, simply stated, is the management of a loan. It includes collection of loan payments, management of escrow accounts, and disbursements from escrow accounts.

Loan-to-Value Ratio (LTV)

LTV is the ratio of the amount borrowed compared to the appraised value or sales price of real property. LTVs are expressed as percentages.

Lock-In Period

The number of days during which a lender guarantees a borrower a specific interest rate and terms on a mortgage.

Lock-In Rate

An agreement that guarantees a designated mortgage loan interest rate for a specific period of time.

Loss Payee

The party with legally secured insurable interest in a property — this is typically a lender in the case of a mortgage loan.

Low-Down-Payment Feature

An option with some fixed-rate mortgage loans that allow homeowners to put as little as 3% down to purchase a home.


The percentage that is added to the index for an adjustable-rate mortgage loan in order to determine the interest rate for each adjustment period.

Market Value

The highest price that a buyer—ready, willing, and able, but not compelled to buy—would pay, and the lowest price a seller—ready, willing, and able but not compelled to sell—would accept. Market value is the basis for the “listing price” or the “asking price” of a home.


This is a legal document that pledges real property (such as a home) to the lender as security for the repayment of a debt.

Mortgage Banker

An individual, firm, or corporation that originates, sells, and/or services loans secured by mortgages on real property.

Mortgage Broker

A firm or individual who, for a commission, matches borrowers and lenders. A mortgage broker takes applications and sometimes processes loans, but generally doesn’t use its own funds for closing.

Mortgage deed

A legal document relating to and acknowledging, the Mortgage lender’s interest in the property.

Mortgage guarantor

Someone – typically a parent – who takes on some of the risk of the mortgage by acting as a guarantor.

Mortgage Lender

The financial institution that funds a mortgage loan and facilitates the process from application through closing.

Mortgage Loan

A loan which uses an individual’s home as collateral. This term can also refer to the amount of money a homebuyer borrows, with interest, to purchase the property, or the actual document the buyer signs to allow the lender to place a lien on the home.

Mortgage offer

Aa formal written offer to you from a direct mortgage provider to lend an approved amount against a property.

Mortgage Rate

The interest rate attached to the mortgage loan a buyer takes out to purchase the home.

Mortgage Term

The number of years a homeowner makes mortgage loan payments on a home before they fully own it. Terms usually range from 15 to 30 years.

Mortgage valuation survey

When you apply for a mortgage your lender will commission a mortgage valuation, also known as a valuation survey, to assess whether the house is worth what you’re planning to pay for it.


The mortgage loan lender.


The mortgage loan borrower who pledges property as a security for a debt.

Mutual Funds

A fund that contains money pooled by investors, which is used to purchase various securities.

Net Income

Your net income is your after-tax pay. It is the money you receive after all tax withholdings, including Social Security, have been made from your gross income. (See Disposable Income).

Net Monthly Income

A homeowner’s take-home pay each month after taxes.

Normal Wear and Tear

The damage to property from ordinary exposure to elements and use over time.


A legally-binding agreement between a lender and homebuyer in which the buyer promises to repay the loan with specific terms. Also known as a promissory note.

Notice of Default

A notification sent to a homeowner if they’ve failed to fulfill their legal obligations. In the context of a mortgage loan, a notice of default from a lender alerts the homeowner that their delinquent mortgage loan payments have exceeded the amount or time limit set forth in their loan contract.

Notice of Nonresponsibility

A legal document that protects property owners from liability for nonpayment of property improvement services that they themselves did not directly commission, like construction.


An official bid from a potential homebuyer to a home seller to purchase a home.


An offer made by a prospective buyer to purchase a property. At this point the offer is not legally binding.

Offers over

Offers over the price advertised are invited.

Offset mortgage

A mortgage which is linked to a savings account. The balance on these savings are then used to reduce the interest charged against the mortgage (thereby saving money).

Offsite Costs

Construction costs that are incurred in a location away from the construction site, like utilities and sewer lines.

Open House

An event held by a home seller’s real estate agent that opens the house up to the public.

Open-End Mortgage

A type of home loan in which the amount of the loan is accessed on an as-needed basis instead of advanced at one time.

Origination Fee

A fee a borrower pays to a lender to process a loan application.

Package Mortgage

A mortgage loan that’s used to finance both the purchase of real estate property and personal property, like appliances and furniture.

Participation Mortgage

A specific type of mortgage loan that lets two or more parties share the proceeds from a piece of property.

Personal Property

An individual’s property that can be moved from one location to another.

Piggyback Loan

A term used by mortgage lenders when a borrower takes out a first and second mortgage loan simultaneously. This is often done to bypass high interest rates or private mortgage insurance (PMI).


PITI is an acronym for principal, interest, taxes, and insurance. Most monthly residential mortgage payments include these items.


Transferring a mortgage from one property to another.


A written agreement from a mortgage lender to grant a loan for a home purchase. The pre-qualification is based on the lender’s careful investigation and evaluation of the potential homebuyer’s income, credit history, employment history, personal assets, and debts. Pre-approval assures the seller that a buyer’s offer is valid. It also speeds up the buying process because, once an offer is made, there is no need to wait while the buyer finds a loan.

Pre-Approval/Pre-Approval Letter

A letter to a prospective homebuyer from a lender that notifies them that they are preliminarily approved for a mortgage loan for a set amount. Pre-approvals differ from pre-qualifications in that they typically are more involved and involve asset and income verification.


An informal calculation to estimate the approximate amount of money a homebuyer can afford to spend on a home purchase. The pre-qualification, performed by a realtor or a potential homebuyer, compares the potential buyer’s income and assets to the buyer’s debts. A pre-qualification helps the realtor focus the home search on homes within a certain price range.


An evaluation of a potential borrower’s financial status to determine the size and type of mortgage available to him/her.

Pre-Qualification Letter

A letter to a prospective homebuyer from a lender that notifies them that they qualify for a mortgage loan, but does not specify an amount.

Predatory Lending

A type of lending practice in which lenders give mortgage loans to individuals who are unable to repay their balance, or add exorbitantly high fees and costs to loans.

Prepaid Items

Costs paid at closing for taxes, interest, and insurance. Because prepaid items are recurring costs that don’t relate to the acquisition of the property itself, they can’t be financed.

Prepayment Penalty

A fee that’s charged to a homeowner by some lenders for paying off all or some of their mortgage loan early.

Prime Rate

The lowest rate at which money can be borrowed commercially.


1) Principal is the original amount of a loan, excluding interest. Interest is charged based on the unpaid principal of a loan or credit account. 2) The remaining balance of a loan, excluding interest.

Private Mortgage Insurance (PMI)

Insurance written by a private company protecting the mortgage lender against financial loss occasioned by a borrower defaulting on the mortgage.


Either your home, the property you’re looking to purchase or another dwelling.

Property Tax

Property tax is the money you pay to your local and government for the pleasure of owning property within their jurisdiction.

Qualifying Ratios

Calculations that are used in determining whether a borrower can qualify for a mortgage. They consist of two separate calculations: a housing expense as a percent of income ratio, and total debt obligations as a percent of income ratio.

Quick sale firm

A company that buys your house for cash, at a discount from the full market value but guarantees a quicker sale.


A toxic gas that can lead to cancer and other illnesses, often located in the soil below the house and detected in basements.

Rate Cap

The maximum amount of interest rate increase or decrease on an adjustable-rate mortgage loan during an adjustment period.

Ratified Sales Contract

An official — but not final — contract that demonstrates agreement between both the seller and buyer of a home.

Real Estate Agent

A person who offers home buying and selling services and receives a percentage of the home sale price from the seller.

Real Property

Land and objects permanently attached to it, such as buildings and fences. In some countries, this term is synonymous with the term “real estate.”


The process of filing a deed, mortgage, or other document with a county. The document is dated and time stamped. When closing on a home, the deed and any mortgage loan documents will be recorded. The homeowner pays a fee for recording.

Reduction Certificate

A document provided and signed by a lender that shows the loan balance, its maturity rate, and interest rate.


Refinancing is defined as repaying a debt with the proceeds of a new loan, using the same property as collateral. For example, you pay off your original mortgage with a new one. Most of the time, people refinance to take advantage of a lower interest rate to lower their monthly payments.


A method of repayment on delinquent mortgage loan payments in which the lender agrees to let the homeowner pay the total amount they owe in one lump sum by a designated date.

Repayment mortgage

A mortgage where the monthly repayments consist of repaying the capital amount borrowed as well as the accrued interest. The amount borrowed decreases throughout the term and by the end of the loan term has been fully repaid.

Repayment Plan

An agreement between a homeowner and lender that gives the homeowner a set period of time to make up for delinquent mortgage loan payments. This plan usually combines the overdue payment amount and regular monthly payment.

Replacement Cost

The amount of money required to cover damaged property, not including a deduction for depreciation.

Rescission/Rescission Period

The cancellation of a loan by a consumer. The consumer’s rescission period lasts three days after closing, during which time they have the right to rescind the contract.


Where the lender holds part of the mortgage advance back until specified repair works to the property have been completed.

Reverse Mortgage

A type of mortgage loan for homeowners ages 62 and older in which the lender pays the homeowner based on a percentage of the home’s value.

Sale agreed

The seller has verbally agreed to the offer made.

Sealed bids

Potential buyers are invited to submit their offer in a sealed envelope by a particular date and time. No bidder knows how much the other participants have bid. All bids are placed at the same time and the highest bidder is usually the winner.


these are checks on local authority records to show up planning applications, highways, restrictions and land charges. Further searches may be requested by a solicitor such as chancel (a legal obligation to pay for repairs to the parish church), utilities, drainage etc. if they feel this is appropriate. Your lawyer may ask for payment for searches in advance.

Second Mortgage

A second mortgage is a mortgage that has rights subordinate to a first mortgage. A home-equity loan is an example of a second mortgage.

Secured Debt

A secured debt is one that is tied to a specific piece of property, such as a house. The property, called collateral, guarantees repayment of the debt. If you don’t pay, the creditor can take the property back (see Foreclosure).

Seller’s Agent

An agent who acts on behalf of the seller of real property.

Short Payoff

A condition a mortgage lender may agree to if an individual sells their house but the proceeds are less than the total loan balance. The lender then writes off the amount of the loan balance that exceeds the sale profits.

Short Sale

A sale that occurs when a homeowner defaults on a mortgage loan or otherwise finds themself in financial trouble and sells the property for less than the amount they owe. All proceeds from the short sale go to the seller’s lender.

Simple Interest

The interest calculated on the principal of a loan (typically an auto or short-term personal loan). To determine simple interest, multiply the daily interest rate by the principal by the number of days in between payments.

Site-Built Housing

Housing that is built on the construction site. Although some of the house may be prefabricated off-site, the house is assembled on-site.

Spending Plan

A spending plan is a tool you can use to help you manage your money. It lists your monthly expenses and monthly income, and is often referred to as a budget. Your spending plan shows you where to make adjustments to keep you expenses below – or in line with – your income. You should monitor your spending plan often to see if you are staying within your spending goals.

Spot Loan

A personal or business installment loan that’s issued rapidly (“on the spot”) to help individuals or businesses cover unexpected expenses that arise.

Stamp duty

Tax paid to the government on the purchase of a property. The fee that’s actually paid can vary as it’s based on a percentage of the purchase value of the property. It is payable at the point of completion.

Subordination Agreement

A document that determines the priority of lien repayment (which may include mortgages, home equity loans, or home equity investments) through a rank that assigns a lien position to each.


Also referred to as the “right of survivorship,” a legal privilege provided to an individual that grants them ownership of a property when the previous owner dies.

Tax Lien

A government-issued legal claim against a property owner who fails to pay taxes. If the tax lien is not handled, a tax levy that seizes property could follow.


People living in a property owned by someone else.


Written evidence of the right to or ownership in property. In the case of real estate, the documentary evidence of ownership is the title deed that specifies in whom the legal estate is vested and the history of ownership and transfers. Title may be acquired through purchase, inheritance, devise, gift, or through foreclosure of a mortgage.

Title Insurance Policy

A contract by which the insurer agrees to pay the insured a specific amount for any loss caused by defects of title to real estate, wherein the insured has an interest. Homebuyers usually must purchase lender’s title insurance to protect the lender’s interest and may choose to purchase buyer’s title insurance to protect their own interest.


A two- or three-story house that shares a common wall with at least one other house. Rows of townhouses that are clustered in urban or suburban areas may also be called “rowhouses.”


A fiduciary relationship whereby legal title to a property is transferred to a trustee with the intention that such property be administered by the trustee for the benefit of another, the beneficiary, who holds equitable title to such property.

Under offer

When a seller has accepted an offer, but contracts are yet to be exchanged.

Underwater Mortgage Loan

A home purchase loan for which the principal exceeds the value of the home in the free market, leading to negative equity.


Mortgage underwriting is the analysis of the risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender. Underwriting involves the evaluation of the property as outlined in the appraisal report, and the borrower’s ability and willingness to repay the loan.

Uniform Residential Loan Application

The industry standard application your lender will request when you apply for a mortgage loan. It includes fields for income, assets, liabilities, and more.

Upfront Costs

Upfront costs are fees and other costs that a buyer must pay before closing on a home. These fees can include an appraisal fee, credit report fee, hazard insurance, flood insurance, and other inspection fees.

Variable Interest Rate

A variable interest rate is one that is adjusted, usually quarterly, based on an economic indicator. They are commonly based on an economic index such as the prime interest rate, Treasury Bill rate, or the Ghana Reference Rate.


Another name to describe the seller.


Documentation that guarantees a product’s quality and provides a promise to fix or replace it in the event of breakage or malfunction.

Wrap-around Mortgage

A specific type of home loan that lets a home seller keep their loan while the buyer pays them a monthly amount directly, usually at a higher interest rate than that of the original loan.