Navigating The First-Time Buyer Jargon
Buying your first home can feel like stepping into a maze, especially with all the first-time buyer jargon flying around. As a first-time buyer, you’re faced with the daunting prospect of saving for a deposit, and future mortgage payments, while at the same time possibly paying ever-higher rent. It’s no wonder the experience feels overwhelming! And just when you’re ready to make a move, a blizzard of confusing buzzwords makes things even trickier!
So, where to start? A good first port of call is the estate agent selling the property. These pros have ‘been there, done that’ and can break down each stage of the process especially when it comes to aspects of the transaction process. Younger agents especially might empathise.
They know the feeling of being a first-timer in the property market. Agents can explain anything unclear and if necessary, direct you to the other professionals as required – people like solicitors and mortgage advisers.
Remember, while it can feel intimidating, everyone involved wants to make your path to homeownership as smooth as possible, even if it is sometimes long-winded.
Below, we’ll walk you through the different stages of buying your first home, translating the jargon and highlighting who to speak to for expert advice. Estate agents can put you in touch with their recommended experts in each field, or you can choose your specialists to help guide you.
Financial first-time buyer jargon
If you’ve never owned a home before, it’s likely, that some financial words and phrases are completely alien to you. After all, the more you know, the easier the house-buying journey will be. Here’s a quick guide to help decode the essentials. If you want to know more about these terms, it’s best to speak to a mortgage adviser as they are the go-to experts.
Agreement in principle
A mortgage in principle (MIP), also known as a (mortgage) agreement in principle, provides you with an estimate of how much you can borrow to purchase a home. It is subject to the lender’s approval of the specific property you want to buy. While this isn’t a guarantee of the loan amount, it offers a useful insight into what you can afford.
Mortgage
This is a loan from a mortgage provider, for the rest of the property’s cost not covered by the deposit. This can typically be as much as 95% for most first-time buyers.
Repayment mortgage
You pay a monthly amount towards paying off the amount you borrow and some of the interest charged on that loan by the mortgage company.
Interest-only mortgage
What it says on the tin – each month you pay just the interest on the loan, with nothing of the so-called ‘principle’ sum you borrowed.
Loan to value
This is the proportion of the property’s value you borrow as a mortgage. So, if the property is £200,000 and you borrow £180,000 that is 90% loan to value.
Deposit
This is the lump sum (which you may have saved or perhaps been given by family) typically, 5% or more of the cost of the property you want to buy.
Legal property jargon
The legal side of property buying could seem like a different language, especially for first-timers. These terms are often explained best by solicitors and can make your purchase far less daunting. Here are the key terms to know.
Conveyancing solicitor
A qualified legal professional experienced with the documents required for buying and selling homes.
Exchange of contracts
Copies of signed contracts are exchanged between the buyer’s and seller’s solicitors. Once exchanged, you’re both legally committed to the sale or purchase.
Fixtures and fittings
A list drawn up by the seller, itemising exactly what will be left with the property when it’s sold.
Deeds
These are the original documents detailing who owns the property.
Leasehold
This is where you buy the right to live for a fixed number of years: it typically applies to flats. You may have to consult the freeholder (landowner) to make changes.
Length of lease
This is the duration of the lease shown in years. Anything below 80 years is known as a ‘short lease’ and may deter mortgage firms from lending to buyers.
Freehold
This is when you buy the property and the land it’s built on. It gives you almost complete freedom, legally, to do what you wish with your property.
Ground rent
This is a payment (usually annual) made by a leaseholder to a freeholder.
Service charges
These are paid by a leaseholder to a freeholder or management firm (quarterly or annually) to care for communal parts of a shared building.
What first-time buyer jargon do you need to know?
For the property terms below, estate agents are your go-to source and trusted experts to help make sense of it all. Here’s a breakdown of key jargon every first-time buyer should know.
Asking price
This is the amount the property is listed for online and with the estate agent marketing the property.
Make an offer
This is when you submit an offer for the property you want, based on all or most of the asking price.
Under offer
Your buyer has accepted your offer, and an exchange of contracts is awaited. Sometimes agents refer to this as “Sold Subject to Contract”.
Gazumping & gazundering
Gazumping is when the seller, having already accepted an offer, decides to accept a higher offer from another buyer. However, this can only be done before an exchange of contracts. Gazundering on the other hand is when a buyer reduces their offer just before the contracts are exchanged to force the seller to accept less, this can only be done before an exchange of contracts.
Chain
When multiple transactions all need to be completed at the same time to release funds for each subsequent sale.
Building survey
An examination of the property by a qualified expert to identify possible issues to guide you on whether to pursue the purchase or modify the offer you make.
Valuation survey
This is a check made by the mortgage lender, to assess the value and condition of the property.
Energy performance certificate (EPC)
A rating of the property’s energy efficiency (the best is A; the worst is G). It will also give recommendations for improving efficiency.
When you complete the purchase
Following the completion of your purchase there are other things you need to do, and your agent and solicitor are your go-to sources and trusted experts to guide you through. Here’s a quick explanation of key terms you’ll need to understand.
Completion statement
A document showing all the costs and monies due to complete the purchase.
Stamp Duty Land Tax
A tax payable by purchasers on property above a certain price in England or Northern Ireland. SDLT in Wales and Scotland has different names.
First-time buyer jargon made easy
Do you feel like you have a better understanding of the property world now? Our mission is to guide you every step of the way. From house viewings to completion day, we’ve got everything you need for a successful move. Find all our first-time buyer advice here in one place and don’t forget to sign up for the newsletter to keep up to date on all things property.
Last Updated: November 19th, 2024
