Understanding house buying jargon

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Few purchases are as exciting as the brand-new home you’ve been dreaming of, especially if this is your first step onto the property ladder. But some of the house buying terminology can be confusing, even if you’ve been through the process before.

That’s why we’ve put together this easy-to-follow home buying jargon guide. It’s an A-Z glossary of the popular terms you’re likely to come across as you embark upon your homebuying journey, so you’re better prepared to make your dream move.

We hope you find it useful. If there’s anything we haven’t covered that you’d like to know more about, one of our sales executives will be happy to help.

Buildings insurance

Buildings insurance covers the cost of repairing damage to the structure of your property. When you’re buying a new home, you will need to arrange to have buildings insurance in place from the date that you complete on the property.

Capital & interest

These are both terms that refer to mortgages. Capital is the money you borrow, and the interest is the amount – according to the interest rate – that you pay on top of your mortgage. This rate changes from lender to lender, so it’s worth shopping around for a good rate. An Independent Financial Adviser (IFA) can help with this.

Cashback mortgage

Cashback mortgages give you a cash incentive for taking out a mortgage. There are many different types and each one will have different rules and conditions about how much you get and when you receive the cashback. 


A chain is the series of buyers and sellers who will all be exchanging contracts at the same time. A first-time buyer is usually the start of the chain (buying only) and those within the chain tend to be buying and selling at the same time.


Completion is when you assume ownership of your new home. It’s also when your mortgage lender releases the money to pay for your new home and when you pay other outstanding costs such as stamp duty and solicitors fees.

Concluding missives

Under Scottish law, missives are the series of solicitors’ letters that constitute the contract for the sale of property from seller to buyer. Your contract will only be legally binding once missives are concluded.


Conveyancing covers everything involved in legally transferring ownership of a property – such as drafting contracts and conducting property and local authority searches – from one person to another. You will pay a conveyancer or a solicitor to do this for you.


A deposit is the amount in cash that you pay upfront when buying your new home. You’ll likely need to pay at least 5% of a property’s total value (or 5% of your purchase share if you’re buying with Shared Ownership) but some mortgage lenders ask for more than this.


Deeds are the collection of documents showing who has owned a property before, and who owns it now.


This is the amount of your property that you actually own. This is worked out by the difference between the value of your home and the amount of mortgage you still owe.

Exchange of contracts

In England, exchanging contracts (known as concluding missives in Scotland) is the point at which the sale/purchase contract becomes legally binding. The actual exchange of contracts is carried out by your solicitor or conveyancer.

Fixtures and Fittings

These are all the non-structural items in a property that are included in the purchase price.

Freehold versus leasehold

Freehold is when you own your property and the land it’s built on indefinitely. With a leasehold, you own the property for a set amount of time but not the land that it’s built on. As a leaseholder, you will usually have to pay ground rent and service charges.

Ground rent

This is a regular payment that leaseholders must make annually to the freeholder.

Interest-only mortgage

With an interest-only mortgage, you just pay the interest so at the end of the loan term you don’t actually own the property – this type of mortgage is mostly used for buy-to-let mortgages

Home demonstration

A new home demonstration introduces you to your new home. Your sales executive will show you important things such as how to operate the central heating and other appliances, and give you lots of advice on keeping your new home in tip-top condition. 

Independent Financial Adviser (IFA)

An Independent Financial Adviser provides specialist advice on how to manage your money. In terms of finding a mortgage, they will research the marketplace and recommend the most appropriate products based on your individual needs. 

Land and Buildings Transaction Tax (LBTT)

Equivalent to stamp duty, LBTT is the tax payable when you buy a residential property in Scotland. Currently, first-time buyers can claim a tax relief of up to £600, which means you start to pay LBTT at a higher-than-normal threshold – on homes priced over £175,000. Find out more about LBTT rates and our LBTT Contribution scheme.

Land Registry/Land Registers of Scotland

This is the government office that registers property in England and Wales. The Scottish equivalent is the Land Registers of Scotland. The fees for registering are paid through your conveyancer or solicitor.


See Freehold versus leasehold.

Loan to value ratio (LTV)

LTV is the percentage of your home that you actually own versus the percentage that is covered by your mortgage loan.

Lifetime ISA (LISA)

The LISA scheme allows eligible first-time buyers to save up to £4,000 a year towards buying a home, with the UK government contributing an additional 25% of whatever you pay in.

Local Authority Search (LEA)

This is when your solicitor or conveyancer carries out checks with the local council to see if there are any issues that may affect your new home.


Mortgages are a type of loan designed to help you buy a house. When you apply for a mortgage, you need to put down a percentage of the cost of the property value as a deposit. The rest of the money you'll need to buy your new home is covered by a mortgage. Our beginner’s guide to mortgages tells you more about mortgages and how they work.

Mortgage advance

This is the actual amount of money that a lender loans to a borrower so that they can purchase a property.

Mortgage broker

A mortgage broker is a person or company that can arrange a mortgage between you (the borrower) and a mortgage lender.

Mortgage fees

These are mortgage-related charges, which can include arrangement fees, valuation fees, mortgage broker fees, higher lending charges and exit fees.

Mortgage in principle

Also known as a ‘decision in principle’ or an ‘agreement in principle', this is a provisional statement from a lender saying that they agree to lend you a certain amount of mortgage money. A mortgage in principle usually lasts between 30 and 90 days.

Mortgage lender

A mortgage lender is a bank or financial company that lends money to borrowers to purchase a home. 

Mortgage offer

A mortgage offer is confirmation that your application for a mortgage has been checked and approved. Most mortgage offers are usually only valid for six months.

Mortgage rate

A mortgage rate is the rate of interest charged on a mortgage. Mortgage rates are determined by the lender and can be either fixed, staying the same for a specified term, or variable, fluctuating with a benchmark interest rate. With our Mortgage Calculator, you can work out what your monthly payments are likely to be, based on applying different rates of interest. 

Mortgage term

A mortgage term is the complete lifespan of the mortgage, and the number of years you've agreed to make payments to the mortgage lender until it's paid off.

No-fee mortgage

A no-fee mortgage is a mortgage without an arrangement fee.

Part Exchange

Part Exchange works in a similar way to when you part-exchange a car. If you’re a homeowner planning to buy new, the developer will buy your existing property to save you from having to sell it on the open market.

Repayment mortgage

A repayment mortgage is when your monthly payments go towards paying off not just the interest but your property as well. As a new homeowner, you’re far more likely to have a repayment mortgage.


These are carried out during the conveyancing process. Your conveyancer or solicitor will search local records to look for factors that might affect the value of your house.

Service charges

These are payable by leaseholders to cover things such as maintenance and buildings insurance for shared areas of an apartment block for example, but freeholders of some newer properties might also have to contribute an amount towards maintaining communal facilities.

Shared Equity

If you’re buying in Scotland, Shared Equity is a scheme whereby you fund between 60% and 80% of the property price and the Scottish Government loan you the remainder. 

Shared Ownership

If you can't afford the full purchase price of your home straight away, Shared Ownership in England allows you to purchase a share of your home. This is usually between 25% and 75% of the property’s value and you then pay rent on the remaining share.

Stamp duty

This is the tax that buyers must pay when purchasing a property. First-time buyers don’t pay Stamp Duty on homes priced up to £425,000 – and for homes priced up to £625,000, Stamp Duty is just 5% of the amount over £425,000. Find out more about Stamp Duty rates and our Stamp Duty Contribution scheme.

Subject to contract (STC)

This term applies to any non-binding, provisional agreement.

Reservation fee

A reservation fee or 'buyers’ fee' is the part-payment towards the purchase price of a property in order to secure your new home.

Transfer document

This document is filled in by your solicitor or conveyancer, which transfers ownership of the property to you.

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We hope this glossary has helped you familiarise yourself with the main house buying terminology involved in buying new. 

At Places for People, we’re committed to making your home buying journey as easy and enjoyable as possible. When you’re ready to make your move, our team of friendly experts can walk you through the entire process, step-by-step. We can also recommend independent financial advisors, to help you find the best mortgage deals.

Why not start the journey towards securing your dream home at one of our sustainable, inclusive and thriving Communities? Find out more.

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