Mortgage Jargon Buster – 25 Common Mortgage Terms – Mortgage Fundamentals
Understanding the mortgage process can be daunting, especially with all the industry-specific jargon. This guide aims to simplify common mortgage terms, helping you make informed decisions about your mortgage. A-Z of Common Mortgage Terms Below we have listed the 25 most common mortgage terms which you may have heard or read but not quite understood, if we have missed any, let us know. Agreement in Principle (AIP) An AIP is a statement from a lender indicating how much they might lend you based on your financial situation. While not a guarantee, it shows sellers you’re serious about buying and can speed up the mortgage application process. APR (Annual Percentage Rate) APR measures the total cost of borrowing over a year, including interest and fees. It provides a true comparison of mortgage costs, beyond just interest rates. Arrangement Fee This fee is charged by lenders for setting up your mortgage. It can be paid upfront or added to your mortgage balance, where it will accrue interest. Bank Rate / Base Rate Set by the Bank of England, this rate influences the interest rates lenders charge. If the Bank Rate rises, your mortgage payments might increase if you have a variable rate, discount, or tracker mortgage. Capital and Interest Also known as a repayment mortgage, this loan requires monthly payments of both interest and part of the capital, ensuring the loan is fully paid off by the end of the term. Completion The final stage of the homebuying process, where the property