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HOUSE BUYING IN ENGLAND & WALES
- GLOSSARY OF LEGAL TERMS

Freehold: Outright ownership of the property and the land it stands on.

Leasehold: The right to possession, but not ownership, of a property for an agreed period of time. Ultimate ownership remains with the freeholder.

Leesee/ Leesor: The lessee is the person to whom a lease is granted - the tenant. The lessor is the person who grants a lease - the landlord.

Ground Rent: An annual charge payable by the leaseholders to the freeholder.

Land Registry: A Government Office that records land ownership in England and Wales and records any transfers of ownership.

The Deposit: This can be either a "reservation charge" given as a sign of good faith, or the amount payable on exchange of contracts.

Subject to Contract: The phrase used before exchange of contracts which allows either party to withdraw without incurring a penalty.

The Vendor: The person(s) you are buying the property from.

A Guarantor: A person who promises they will pay the borrower's debt, usually if the borrower fails to.

Lender: The bank or building society where you have your mortgage.

The Advance: The mortgage loan.

High PercentageLoan Fee or Mortgage Indemnity Guarantee (MIG): Usually added to your loan if you borrow more than 90%

Capital: The amount owing to the lender, excluding costs and interest outstanding.

Gazumping: After you have agreed the price for a property, the buyer accepts a higher offer from another buyer.

The Contract: This sets out the terms of sale including the price. The buyer and the seller each sign a copy and these are exchanged to form a binding contract.

Exchange of Contract: In England and Wales (not Scotland), this is the point when both buyer and seller are legally bound to the transaction. The buyer pays the deposit and a date is set for completion. The buyer should now take out buildings insurance on the new property.

Completion (Date of Entry in Scotland): This is when the seller receives the money from the sale and the legal ownership passes to the buyer.

Early Redemption or repayment charge: If you repay your mortgage during the period of a fixed or discounted rate, or switch mortgage providers when you have one of these rates, your lender may make an early redemption or repayment charge.

Stamp Duty: A Government tax the buyer pays over a certain value.

Collateral/ Security: The property which the lender can sell to repay the loan if the borrower does not keep up the mortgage payments.

Title Deeds: These show who owns a property and other legal matters including any restrictions in use of the property and rights of way.

THERE ARE TWO MAIN TYPES OF MORTGAGE

Repayment and interest only:
  • A repayment mortgage allows you to repay, on a monthly basis, both the interest and capital over the course of the mortgage term.
  • An interest only mortgage relies on a separate savings plan to repay the capital borrowed. This can be either an endowment, ISA or pension plan. Normally it is then repaid at the end of the term of the mortgage, whilst the interest is paid on a monthly basis.
INTEREST RATES

There are six main ways in which a lender can levy interest. These include:

Variable: the interest rate will vary according to interest rates generally

Fixed: the interest rate is fixed for a set period of time and cannot vary during this period

Capped: interest rates are variable but cannot exceed an upper limit

Collared: interest rates are variable but cannot reduce below a lower limit

Discounted: the interest rate is discounted by a set amount below the variable rate for a set period of time and

LIBOR: the interest rate is linked to the money markets which can differ slightly from the variable rate.
    CHECKLIST FOR HOUSE MOVING

    Have you let everyone know your new address?
          • Bank Pensions
          • Building Society Library
          • Catalogue companies
          • Loan providers
          • Clubs
          • Motoring organisations
          • Credit Card
          • National Savings
          • Store Card
          • Optician
          • Dentist
          • Premium Bonds
          • Doctor
          • Schools
          • Hospital Colleges
          • Clinics
          • Subscriptions
          • DVLA (driving licence)
          • Magazines
          • Cable/Satellite
          • TV/Internet
          • DVLC (vehicle licence)
          • Electoral Register
          • Telephone (Mobile)
          • Council tax
          • Trade Unions
          • Electricity (professional bodies)
          • Employer
          • TV licence
          • Gas
          • Vet
          • Inland Revenue
          • Water company
          • Insurance