Mortgages come with a lot of jargon, which can be confusing when you are trying to make a big decision. This guide explains common mortgage jargon: the key terms you will meet when getting a mortgage, grouped by topic, so you can understand your options and the process with confidence.
Getting-started terms
Some terms appear early on. A deposit is the money you put towards the purchase, with the rest borrowed. Loan-to-value (LTV) is the size of your mortgage as a percentage of the property's value, as our guide to loan-to-value explains. A mortgage (or agreement) in principle is an early indication of what a lender might lend, and equity is the share of your home you own outright, the value minus any mortgage.
Rate and product terms
Several terms describe how your rate works. A fixed rate stays the same for a set period, while variable rates can change. A tracker follows the Bank of England base rate plus a margin, and a standard variable rate (SVR) is the lender's default rate you revert to when a deal ends, as our guide to how mortgages work explains. The APRC shows the overall cost including fees, helping you compare deals fairly.
Repayment terms
How you repay has its own vocabulary. A repayment (capital and interest) mortgage pays off both the loan and interest, so it clears by the end of the term, while an interest-only mortgage pays just the interest, leaving the capital to repay separately. The term is the total length of the mortgage, and an overpayment is extra money paid to reduce the balance faster, as our guide to the APRC and comparing mortgages relates.
Application and process terms
The process brings more terms. Underwriting is the lender's detailed assessment of your application, a valuation is the lender's check of the property's worth, and conveyancing is the legal work of transferring ownership. A mortgage offer is the lender's formal commitment to lend, and completion is when the purchase finalises and the keys change hands. These steps make up the journey from application to owning your home.
Cost and charge terms
Costs come with their own labels. An arrangement or product fee is charged by the lender for the deal, a valuation fee covers the property check, and an early repayment charge (ERC) may apply if you repay or leave a deal early, as our guide to early repayment charges explains. Stamp duty is the tax on property purchases above certain thresholds, another cost to budget for when buying.
Moving and later terms
Some terms appear later. Porting means moving your existing mortgage to a new property, a product transfer is taking a new deal with your current lender, and remortgaging is switching to a new deal, often with a different lender. Gazumping is when a seller accepts a higher offer after agreeing to sell to you. Knowing these helps you navigate moving home and changing your mortgage.
Deposit and equity in detail
Two foundational terms are deposit and equity. Your deposit is the cash you contribute upfront, reducing the amount you borrow, while equity is the portion of your home you own outright, growing as you repay the mortgage and if the home rises in value, as our guide to releasing equity explains. Both matter throughout ownership, from buying with a deposit to building and using equity later.
Affordability and assessment terms
Several terms relate to whether you can borrow. Affordability is whether you can sustainably afford the repayments, an income multiple is the loan as a multiple of your income, and a stress test checks you could cope if rates rose, as our guide to affordability explains. Loan-to-income (LTI) compares the loan to your earnings. These terms describe how lenders decide how much they will lend you.
Insurance and protection terms
You will meet insurance terms too. Buildings insurance covers the structure of your home and is usually required by lenders, contents insurance covers your belongings, and life or income protection can help keep up payments if something happens to you, as our guide to protection relates. Knowing these helps you arrange the cover you need alongside your mortgage, protecting your home and your ability to pay.
Negative equity
A term worth understanding is negative equity, which is when your home is worth less than the mortgage owed on it, possible if prices fall, particularly with a small deposit. It can make moving or remortgaging harder until values recover or the balance falls. So negative equity is a risk to be aware of, especially when borrowing at a high loan-to-value, and a reason a larger deposit adds security.
Buy-to-let and tax terms
If you let property, more terms apply. Buy-to-let is a mortgage for a rental property, rental cover or the interest cover ratio measures whether the rent covers the mortgage by the required margin, and stamp duty includes a surcharge on additional properties, as our guide to buy-to-let explains. These terms are central to understanding the finances of letting property.
Later life terms
Later life borrowing has its own vocabulary. Equity release lets older homeowners access cash from their home, a lifetime mortgage is the main type with rolled-up interest, and a retirement interest-only (RIO) mortgage keeps the loan fixed by paying interest, as our guide to equity release explains. Understanding these helps you make sense of the options for borrowing in later life.
Application and offer terms
The application stage adds more vocabulary. A decision (or agreement) in principle is an early indication of what you might borrow, an application is your formal request, underwriting is the lender's detailed assessment, and a mortgage offer is their formal commitment to lend, as our guide to the application process explains. Knowing these helps you follow your application's progress from first enquiry through to a firm offer.
Scheme and ownership terms
Home-buying schemes bring their own terms. Shared ownership means buying a share and renting the rest, staircasing is buying further shares, and a guarantor or family-assist arrangement uses family support to help you borrow, as our guide to shared ownership explains. Leasehold and freehold describe how you own a property. These terms matter when using schemes or buying certain types of home.
Using this glossary
This glossary covers the terms you are most likely to meet, but you will not need them all at once; they tend to come up at the relevant stage of buying or remortgaging. So treat it as a reference to return to as you go. And if a term ever puzzles you, a broker or your solicitor can explain it, as our guide to using a mortgage broker relates, so you are never left confused.
In short
Mortgage jargon covers getting-started terms like deposit, LTV and equity; rate terms like fixed, tracker and SVR; repayment terms like repayment, interest-only and term; process terms like underwriting, valuation, conveyancing and completion; cost terms like arrangement fee, ERC and stamp duty; and moving terms like porting, product transfer and remortgaging. Understanding these helps you make sense of your options and the process with confidence.
Where to get help and next steps
Read our guides to mortgage basics, loan-to-value (LTV), and comparing mortgages. Our guide to common mortgage myths is also worth a read. This is general information, not mortgage or financial advice.