E – H
Early Redemption Fee/Charge
Lenders charge this fee when borrowers pay off their mortgage before the agreed date, often because they are moving their mortgage to another lender. These fees almost always apply to fixed and discounted rate mortgages.
A popular savings vehicle designed to generate a sum sufficient to pay off an interest-only mortgage at the end of its term. As a rule, endowments invest in a mixture of equities, cash, and (Government) bonds.
Very simply, the amount of value in a property that isn’t covered by a mortgage. To work it out, simply subtract the amount of the mortgage from the valuation of the property.
Equity release is a way for homeowners to convert a proportion of the value of their homes into cash without having to sell up and move out. This could be a lump sum, a regular extra income or a combination of the two. It’s often used to carry out home improvements, to fund a holiday or to improve the quality of a person’s retirement.
Exchange of Contracts
The exchange of contracts is the point at which the buyer signs the contract for sale and sends it to the seller who also signs it. Both buyer and seller are then legally bound to complete the transfer. Once the contract has been signed, the contract becomes legally binding, meaning that if the buyer or seller pulls out prior to completion, they may have to pay compensation.
Fixed Rate Mortgage
The interest rate on a fixed rate mortgage is set at an agreed rate for an agreed period, often two or five years but sometimes 25 years. It is especially favoured by people who want to know exactly what they are paying each month as it is not vulnerable to changes in the base rate. The downside is that fixed rate mortgages often come with heavy penalties if they are redeemed early. And if interest rates are lowered, you run the risk of being locked into a higher rate.
Any item that is deemed to be ‘attached’ to a property and therefore legally part of that property.
A mortgage that allows you to vary your monthly repayments and, for a certain number of months, even take a payment ‘holiday’. Because of the ability to overpay, people can pay off their mortgage early and therefore reduce the interest payable. However, as a result of all this flexibility, flexible mortgages usually charge a higher interest rate.
If you own your property’s freehold, you not only own the property itself but also the land that it is on.
Nobody likes to be gazumped. This is when the person selling a property accepts an initial offer and then accepts a second, higher offer from a different buyer prior to the exchange of contracts. Tends to happen in strong housing markets.
The seller’s nightmare. This is the situation where a buyer makes a reduced offer to a seller just prior to the exchange of contracts.
The fee payable by a leaseholder to the freeholder. Tends to be paid annually or six monthly.
A Guarantor is the person liable for the repayment of a mortgage if, for whatever reason, the borrower fails to keep up their mortgage repayments. Guarantors are usually parents or close family members.
Home Buyer’s Report
A property survey, or report half way between a mortgage valuation and a full survey, and which is intended to satisfy the buyer that the property they are purchasing is in a good condition.