House Buying Jargon

1. Finding a property 

Estimated time: 10 – 12 weeks

• Freehold – You own the property and the land it’s on indefinitely. Most houses in the UK are freehold, meaning you’re responsible for maintaining both the property and the land.
• Leasehold – Common in flats and maisonettes, leasehold means you own the property within a building but not the land or structure it sits on. However, the government is planning to abolish leasehold agreements before 2029, meaning they may not be around for too much longer.

• Chain – A series of property transactions that rely on one another to be completed. Chain transactions become increasingly difficult to finalise with the involvement of more parties, as there are additional moving parts that could potentially go wrong.    
• EPC (Energy Performance Certificate) – A rating system showing how energy efficient a property is. Most new homes in the UK achieve a B rating or above, which means that buyers can take advantage of green mortgage deals that offer discounted rates for energy-efficient homes.  

2. Preparing to buy

Estimated time: 2- 6 weeks

• Agreement in principle (AIP) – A conditional mortgage offer from a lender stating how much they might lend you. There are many different options to choose from when it comes to mortgages, which include: 
• Fixed-rate mortgage – A fixed-rate mortgage ensures you pay the same amount each month. The monthly payments remain the same for a set period, usually between two and five years, regardless of the lender or the Bank of England’s rate.
• Variable-rate mortgage – Determined by the lender’s standard variable rate and affected by the Bank of England’s base rate. If the base rate falls, your rate decreases; if it rises, your rate increases. Variable rates typically range between 1.5% and 3.5% above the Bank of England’s base rate.
• Tracker mortgage – This move in line with the Bank of England's base rate, meaning any change will affect your rate. This mortgage could be ideal if you can adapt your payments according to interest rate fluctuations.
• Standard-variable rate mortgage – The standard variable rate (SVR) is set by the mortgage lender. After your tracker, fixed, or discount mortgage deal ends, you may switch to an SVR mortgage unless you remortgage.

• Credit Score – Your credit score is among the first elements lenders look at when assessing your mortgage affordability. This helps them understand how you handle your finances.
• Loan-to-Value (LTV) – Lenders consider your loan-to-value ratio (LTV) – the amount you want to borrow compared to the overall loan. The higher your deposit, the lower the LTV and the interest rate. For example, if your new home costs £250,000 and you have a 10% deposit (£25,000), your LTV will be 90%.
• Deposit – The size of your deposit can significantly affect how much you can borrow. Generally, the higher the deposit, the more competitive your rate and the smaller your monthly repayments.

3. Making an Offer 

Estimated time: 1 week

• Subject to Contract (STC) – Sold subject to contract is something you may come across once you have submitted an offer. It indicates that while the seller has accepted an offer, the contractual process has not yet been completed
• Memorandum of Sale – A document issued when an offer is accepted, confirming the sale details. A memorandum of sale is necessary when a property transitions from being under offer to being sold subject to contract. 
• Survey Contingency – A clause allowing the buyer to renegotiate or withdraw the offer if serious issues are found in the survey.
• Gazumping – When a seller accepts a higher offer from another buyer after agreeing to yours. You can be gazumped even when your offer has been accepted by the seller, and this would usually occur if the new bid offers more money or if the sale could be completed quicker with another buyer. 
• Gazundering – When a buyer lowers their offer just before exchanging contracts, which could occur for several reasons, including unexpected survey results, being part of a property chain or simply a change of heart from the buyer. 

4. Legal and Financial Process

 Estimated time: 8-12 weeks

• Conveyancing – The legal process of transferring home ownership from the current owner or homebuilder to the new buyer. Hiring a conveyancing solicitor as soon as you have made an offer on a house can help speed up the process
• Searches – The solicitor will conduct searches to check for local plans or issues. These include Land Registry, local authority, environmental, and drainage searches, as well as flood risk, mining searches, and chancel repair liability.
• Survey – The lender conducts a valuation survey to estimate the property’s value. Buyers may also arrange an independent house survey to check for structural issues. There are three main types of survey you may encounter when buying a home:

A property survey is a key part of the conveyancing process, as the results will help you understand more about the property you are buying. There are three main surveys that you may come across when buying a home:

• Valuation Property Survey: Organised by your lender, a Valuation Property Survey is a survey that allows a potential mortgage provider to confirm the value of the property before agreeing to lend you the money. This survey will not tell you about any issues with the property, so you will need to organise a second survey for this.
• RICS Home Buyer Report (HBR): If the property appears to be in good condition, you may opt for an HBR, which costs around £400. This report identifies any potential issues and provides expert advice on how to address them.
• RICS Building Survey: If you’re buying an older or larger property, a RICS building survey may be the best option for you. Depending on the size of the property, they can range anywhere from £500 - £1000, and they offer an extensive analysis of the condition of the home.  

5. Exchange of Contract

Estimated time: 1-3 weeks

• Exchange of Contracts (Missives Conclusion in Scotland) – The point at which the sale becomes legally binding, which occurs when all investigations and surveys have been concluded along with singing the contracts to make the sale official.
• Indemnity Insurance – A policy that protects you from the potential costs of fixing problems in the property. For example, you could take out indemnity insurance if the seller can’t provide a building regulation certificate. This protects you from future fees if your local authority pursues a claim because you don’t have the certificate.
• Covenants – Commonly found on new-build homes, covenants are legal conditions or restrictions attached to property deeds. They can regulate everything from building an extension to installing a satellite dish or even keeping chickens in your garden. Your solicitor should explain any restrictive covenants during the buying process, as developers often use them to maintain a uniform and tidy living environment.
• Completion Statement – A document outlining all costs and payments due before completion.

6. Completion and Moving In

Estimated time: 1 week

• Stamp Duty Land Tax (SDLT) – Government tax on the purchase price of a property. If you are a first-time buyer, you will pay this tax if you purchase a home over the cost of £300,000, while current homeowners start paying on any property over £125,000. Your solicitor should handle organising SDLT if it needs to be paid. 
• Land Registry – The government body that records ownership of land and property. You should receive registry documents for your new home to prove that you own the property and any surrounding land that was involved in the deal.
• Title Deeds – Legal documents describing the rights and liabilities that attach to the property and prove ownership of the property.