Mortgage terms explained

The Swansea Building Society sets out key mortgage terms below with a brief explanation.

APR
Annual Percentage Rate, a figure which all lenders must quote when referring to mortgages. It is designed to show the total yearly cost of a mortgage stated as a percentage of the loan. It includes items such as the interest rate paid at the start of the mortgage, valuation fee and other charges commonly paid at the end of a mortgage.

Arrears
The term "in arrears" is used to describe a mortgage account if a borrower has failed to keep up the monthly mortgage payments.

Completion
This is used in two ways:

(1)It means the legal transfer of a property so that you own it and are able to move in.

(2) (whether you are buying or remortgaging), it is the time when we actually pay over the money we are lending to you.

Conveyancing
Another word for the legal term for transferring ownership of a property from one person to another.

Daily interest
All of our regulated mortgage products charge interest on a daily basis.

Early Repayment Charge
If you pay off part or all of your loan before the end of your mortgage term, you may have to pay an Early Repayment Charge. This usually applies in the early years of a mortgage and details of the charge will be given in your mortgage offer. The period during which the charge is known as the Early Repayment Period.

Equity
If your house is worth more than the mortgage on it, the difference is known as the 'equity'.

Freehold
A freehold gives a purchaser complete ownership of land.

Leasehold
Leasehold properties have been leased from the freeholder for a specified period of time.

Loan
The full amount of the money which we lend you

Loan to value (LTV)
The amount of your loan compared to the valuation or purchase price of your property (whichever is the lower), shown as a percentage. For example, a loan of £80,000 on a property valued at £100,000 would have an LTV of 80%.

Mortgage
The whole arrangement between us including the loan and all terms and conditions. It is also a legal document under which the owner of a property agrees that the property will be security for repayment of a loan which a lender makes.

Mortgage term
The period over which the loan is to be repaid.

Mortgagee
Another name for the lender (us)

Mortgagor
Another name for the borrower.

Offer
If we approve your mortgage application, we will make you an 'offer' of a loan. Remember that the offer will be subject to conditions.

Overpayments
These are repayments over and above the monthly mortgage payments.

Redemption
You redeem - or repay - a mortgage when you have paid back all of the loan and all interest, costs or other charges which are due on it. The mortgage is brought to an end.

Regulated mortgages
A loan provided to an individual who gives the lender a first charge on his/her home as security for the repayment of the loan.

Re-Mortgage
Repaying one mortgage by taking out another with a new lender which is secured on the same property.

Society's base rate
This is a variable rate of interest set by the Swansea Building Society.

Stamp duty
A government tax payable if the purchase price of property is more than £125,000. The tax is charged at a marginal rate on each slice. The previous 'slab' system where the top rate was applied to the whole purchase price has been abolished. The current rates are:

  • Nil if the property is £125,000 or less.
  • 2% on any amount over £125,000 up up to £250,000
  • 5% on any amount over £250,000 and up to £925,000
  • 10% on any amount over £925,000 and up to £1,500,000
  • 12% on any amount over £1,500,000


*The above rates apply to residential property only.

*Please refer to www.gov.uk/stamp-duty-land-tax-rates for Stamp Duty Land  Tax rates for non-residential and mixed-use properties.

Standard variable rate
This is our standard mortgage rate which may be changed by us from time to time.

Property release fee
A fee charged by us for releasing property following repayment of your mortgage.