Mortgage Terms Explained Simply
Clear and simple explanations of common mortgage terms, designed to help first-time buyers, homeowners, landlords and property investors make more confident mortgage decisions.
Understanding Mortgage Language
Mortgage documents and lender conversations can include technical words such as APRC, LTV, SVR, early repayment charge, remortgage and product fee. This glossary explains these terms in plain English so you can better understand your options.
Common Mortgage Terms
Browse key mortgage definitions below. These explanations are for general information and should not replace personalised mortgage advice.
Mortgage
A mortgage is a loan used to buy or refinance a property. It is usually secured against the property.
Capital
Capital is the amount of money you borrow from the lender. Your payments may reduce this balance over time.
Interest
Interest is the cost charged by the lender for borrowing money, usually shown as a percentage rate.
Repayment Mortgage
With a repayment mortgage, your monthly payments go towards both the original loan amount and the interest charged.
Interest-Only Mortgage
With an interest-only mortgage, your monthly payments cover only the interest. The loan amount must be repaid at the end of the term.
Mortgage Term
The mortgage term is the total period agreed to repay the mortgage, often 20, 25 or 30 years.
Fixed Rate Mortgage
A fixed rate mortgage has an interest rate that stays the same for a set period, helping make monthly payments more predictable.
Variable Rate Mortgage
A variable rate mortgage has an interest rate that can go up or down, which means your monthly payment may change.
Tracker Mortgage
A tracker mortgage follows another rate, often the Bank of England base rate, plus or minus a set percentage.
Standard Variable Rate
Standard Variable Rate, or SVR, is the lender’s variable rate that may apply after your initial mortgage deal ends.
APRC
APRC stands for Annual Percentage Rate of Charge. It shows the overall yearly cost of a mortgage, including certain fees and interest.
Loan to Value
Loan to Value, or LTV, compares the mortgage amount with the property value and is shown as a percentage.
Deposit
A deposit is the amount you pay upfront towards the property purchase. A larger deposit may provide access to more mortgage options.
Equity
Equity is the part of the property you own, calculated by subtracting the outstanding mortgage from the current property value.
Negative Equity
Negative equity happens when the outstanding mortgage balance is higher than the current value of the property.
Decision in Principle
A Decision in Principle gives an indication of how much a lender may be willing to lend, based on initial information.
Product Fee
A product fee is charged on some mortgage deals. It may be paid upfront or added to the mortgage balance, depending on the lender.
Valuation
A valuation is an assessment of the property’s value, usually carried out for the lender before a mortgage offer is confirmed.
Conveyancing
Conveyancing is the legal process of buying, selling or transferring property ownership.
Buildings Insurance
Buildings insurance protects the structure of the property. Lenders often require it to be in place when a mortgage completes.
Arrears
Arrears happen when mortgage payments are missed. This can affect your credit history and may place your home at risk.
Early Repayment Charge
An early repayment charge may apply if you repay your mortgage early, overpay above the allowed limit or switch deals too soon.
Overpayment
An overpayment is when you pay more than your required monthly mortgage payment. Some lenders allow limited overpayments without charges.
Remortgage
Remortgaging means switching your mortgage to a new deal, usually with a different lender.
Existing Borrower Transfer
An existing borrower transfer is when you switch to a new mortgage deal with your current lender.
Porting
Porting means moving your existing mortgage deal from one property to another, subject to lender approval and eligibility.
Redemption
Redemption means paying off your mortgage in full, either at the end of the term or earlier.
Mortgage Exit Fee
A mortgage exit fee may be charged when a mortgage is fully repaid, transferred or closed, depending on the lender’s terms.
Stamp Duty
Stamp duty is a property tax that may be payable when buying property. Rules and rates depend on location and circumstances.
Title Deeds
Title deeds are records showing ownership of a property or land. Many ownership records are now held digitally.
Frequently Asked Questions
Quick answers to common mortgage questions.
What is a mortgage?
A mortgage is a loan used to buy or refinance a property. It is usually secured against the property.
What does LTV mean?
LTV means Loan to Value. It compares the amount of mortgage borrowing with the value of the property.
What is the difference between fixed and variable rates?
A fixed rate stays the same for a set period. A variable rate can go up or down, which may change your monthly payments.
What is remortgaging?
Remortgaging means switching your mortgage to a new deal, usually with another lender.
Speak to Ace Mortgage
Whether you are buying your first home, remortgaging, investing in property or reviewing your current deal, Ace Mortgage can help you understand your options clearly.
Disclaimer
This page is provided by Ace Mortgage for general information only. Mortgage products, fees, rates and eligibility depend on lender criteria and your personal circumstances. This content does not replace professional mortgage, financial, legal or tax advice.
Your home may be repossessed if you do not keep up repayments on your mortgage.