The world of mortgages and insurance can sometime involve terms that you may be unfamiliar with, please below for our handy guide on some of the common terms you may come across. Your adviser will always you clear and jargon free language with you and will be at hand to assist you as and when required.

• Additional Security Fee:

See Higher Lending Charge.

• Adverse Credit:

This is an umbrella term used of applicants with poor credit history. This may include mortgage arrears, defaults, County Court Judgements (CCJs), bankruptcy, Individual Voluntary Agreements (IVAs) and house repossession. Borrowers with elements of adverse credit are offered higher rates than standard Full Status applicants are, usually with terms and conditions relating to the extent of their adverse credit history. Often, adverse credit mortgage products come at higher costs than standard mortgage products.

• Agreement in Principle

An Agreement in Principle (AIP) is the first step to getting a mortgage. It’s sometimes called a Mortgage Promise or a Decision in Principle (DIP), and lets you know how much you could theoretically borrow before you fully apply for a mortgage with a lender.

• Annual Percentage Rate (APR): 

The APR is a rate calculated using a generic formula applicable to all Lenders, which includes all the costs associated with a mortgage. This allows for easy comparisons to be made between the different mortgage products offered by each lender.

• Arrangement / Booking Fee:

This fee may be charged by lender on specific products and can be either (depended on the lender) payable in advance, added to the loan, or deducted from the advance on completion. If added to the loan this will increase your borrowing and interest charged.

• Base Rate:

Every month the Monetary Policy Committee sets the Bank of England Base Rate, to which all mortgage rates are linked either directly, as Tracker mortgages, or indirectly, in all other cases.

• Booking Fee:

This fee may be charged by lender on specific products and can be either (depended on the lender) payable in advance, added to the loan, or deducted from the advance on completion. If added to the loan this will increase your borrowing and interest charged.

• Buildings and Contents Insurance:

This insurance covers damage to the mortgaged property and/or its contents in a variety of specified scenarios. Building insurance is compulsory for all Lenders, and if the Lender’s own insurance is not taken they will often charge an administration fee. Some Lenders attach mandatory insurance cover to their most attractive rates, although this is increasingly uncommon.

• Broker Fee:

The fee charged by your mortgage broker for arranging your mortgage.

• Buy-to-Let mortgage (BTL):

This is a mortgage for property that will be let by the borrower to other tenants. When Lenders calculate how large a loan the borrower can afford to repay on BTL they do so primarily on the basis of projected rental income, rather than salary income multiples. Drivers for ownership of Buy to Let property can be rental income, capital growth of the property, or both.

You should also seek separate legal and tax advice (income tax and capital gains) regarding your responsibilities of owning this type of property. 

You may wish to instruct a professional letting agent to source tenants and/or manage your property.

• Capital and Interest Mortgages:

With this method the monthly mortgage repayments pay off both the initial loan amount and the interest that is charged upon it. At the end of the loan term the entire debt will be repaid if all the payments have been correctly made over the entire life of the mortgage.. Also known as: Repayment mortgage.

• Capital Raising Mortgage:

A re-mortgage used for extra borrowing to fund items such (but not limited to) home improvements, deposits for further property, a gift for a family member. 

• Capital Rest Period:

This is the regularity with which a Lender calculates the outstanding balance on mortgages, and hence the size of monthly repayments. It is usually annually, monthly or daily. With Capital and Interest mortgages this can be important; an annual interest calculation means that the borrower will pay interest on capital repayments that have been made in the course of that year. In contrast a daily or monthly interest calculation means that the balance, and consequently the interest charged, will reduce with every capital repayment made.

• Capped / Collared Rate Mortgage:

This is a mortgage that is guaranteed not to rise above a specific rate (the ‘cap’) within a set period. Unless this is combined with another rate, such as a Discount or Tracker, the Lender’s SVR will be charged if it is lower than the capped rate; if it rises above this ceiling the rate charged will remain at the capped level. There are often early repayment charges applicable if the loan is repaid within the capped period.

If collared the rate will not drop below the set collar level. 

When the rate expires, the borrower will typically revert to the lenders Standard Variable rate if no action is taken.

• Cashback Mortgage:

This is a mortgage in which the Lender refunds a sum of money, either as a percentage of the loan or a flat figure, to the borrower upon completion. With this type of offer the borrower will typically be tied to the Lender’s SVR by early repayment charges necessitating repayment of the cashback if the loan is repaid within a set period.

• Completion:

This is the moment when a transfer of property has legally taken place, after all legal documentation has been completed and funds have been transferred from the buyer’s solicitor to the seller’s solicitor.

• Contents Insurance:

See Buildings and Contents Insurance.

• Conveyancing (Legal Fees):

This is process completed by your nominated solicitor:

When purchasing a property, conveyancing is the transfer of the legal title of a house from one person to another. There are two key stages to this – the first being the exchange of contracts, the point at which the terms of the deal are locked in, and the second being the completion, where the legal title passes and you take ownership of the property. You need to instruct and speak directly to your solicitor to understand these costs.

When re-mortgaging a property, conveyancing is the later part of the process that your nominated solicitor completes to close your existing mortgage account and then move your borrowing to your new mortgage lender. The lender for your re-mortgage may cover the basic legal costs using their nominated solicitor for this process, or you may need to instruct and pay for your own solicitor.

• Critical Illness Insurance:

What is critical illness cover?

Critical illness cover supports you financially if you’re diagnosed with one of the conditions included in the policy. The tax-free, one-off payment (which can be paid as a lump sum or regular instalments) helps pay for your treatment, mortgage, rent or changes to your home, such as wheelchair access, should you need it. 

Which illnesses does it cover?

Critical illness insurance will pay out if you get one of the specific medical conditions or injuries listed in the policy. It only pays out once, after which the policy ends.

The conditions and illnesses covered can vary significantly between different insurers. The most comprehensive policies cover 50 different conditions or more, but others are much more limited.

Examples of critical illnesses that might be covered include:

• Stroke
• Heart attack
• Certain types and stages of cancer
• Conditions such as multiple sclerosis
• Major organ transplant
• Parkinson’s disease
• Alzheimer’s disease
• Multiple sclerosis
• Traumatic head injury.
• Some policies at extra cost will also consider permanent disabilities as a result of injury or illness.

Some policies will make a smaller payment for less severe conditions, or if one of your children has one of the specified conditions.

But not all conditions are covered. Common exclusions include:

• Non-invasive cancers
• Hypertension – abnormally high blood pressure
• Injuries such as broken bones.

Most policies will also state how serious the condition must be to qualify for a pay-out.

When do you need it?

If you’re unable to work due to a serious illness, you might assume that your employer will continue to give you some level of income, or that you’ll be able to rely on benefit payments.

In reality, however, employees are usually moved onto Statutory Sick Pay within six months.

State benefits are likely not to be enough to replace your income if you’re no longer able to work.

Consider getting critical illness cover if:

• You and your family depend heavily on your income
• You don’t have enough savings to tide you over if you become seriously ill or disabled
• You don’t have an employee benefits package to cover a longer time off work due to sickness.

What affects the cost of critical illness cover?

Monthly payments (premiums) can vary widely, depending on the policy and your circumstances.

Critical illness policies cover a wide range of illnesses, conditions and situations. So it’s important to compare what different insurers can offer you.

Cost is affected by:

• Your age
• Whether you smoke or have smoked
• Health – your current health, weight and family medical history
• Job – some occupations are higher risk than others, making the premiums higher too
• Level of cover.
• If you’re considered at risk of a particular condition – perhaps because of existing health issues – that illness could be excluded from the policy. Or you might have to pay a higher premium.

The cost will also depend on whether you pay a reviewable or a guaranteed premium.

Reviewable premiums are usually reviewed after a certain period of time, usually every five years. At each review point, they’re likely to increase.

Guaranteed premiums remain fixed for as long as you have the policy. These can cost slightly more in the short-term. But many people like the security of knowing what they’ll be paying in future.

Term Critical Illness insurance policies:

These run for a fixed period of time, known as the ‘term’ of your policy, such as five, ten or 25 years. They only pay out if you die during the policy.

There are 5 kinds of main types of term Critical Illness policies.

• Lump Sum Level – pays as a lump sum if you suffer a critical illness within the agreed term. The level of cover stays the same throughout. 
• Lump Sum Decreasing – pays as a decreasing lump sum if you suffer a critical illness within the agreed term. reduces each year. It’s designed to be used with repayment mortgages, where the outstanding loan decreases over time.
• Lump Sum Increasing – pays as an increasing lump sum if you suffer a critical illness within the agreed term. over the term of the policy, to keep up with inflation.
• Income Level – pays as a level income if you suffer a critical illness within the agreed term. The level of cover stays the same throughout. 
• Income Increasing – pays as an increasing income if you suffer a critical illness within the agreed term. The level of cover increased to keep up with inflation.

• Current Account Mortgage:

This is a fully Flexible mortgage combined with a current account. Money in the current account is automatically set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are reduced.

• Decision in Principle (DIP)

See Agreement in Principle.

• Debt Consolidation Mortgage

A debt consolidation mortgage allows you to consolidate debts (secured and unsecured) in to one mortgage contract with a single monthly payment.

When considering a debt consolidation mortgage, you should review options outside of a debt consolidation re-mortgage such as 0% credit cards/credit cards/family loans and alternative unsecured debt options. 

Though the monthly payments for your unsecured debt may be initially lower with this re-mortgage, by consolidating your existing debts to your mortgage, it will take you longer to repay those debts.  As a result, the total amount you will pay will increase. You should note below that unlike your existing loans, should interest rates rise during the term of your mortgage, so will the amount you will eventually repay for consolidating these debts. 

The interest rate on your new mortgage could change in the future to a rate that is higher than your current unsecured debt.

Consolidating debts will increase your mortgage borrowing and the loan to value which can potentially impacts the interest rate you receive on future mortgage deals. 

By converting unsecured debts e.g. credit cards, to secure debt (adding it to your mortgage), your property may be repossessed if you do not maintain payments on the debt consolidation mortgage. 

• Deposit

The cash difference that makes up the difference between the property purchase price and the mortgage amount.

• Discounted Rate Mortgage:

This is a variable mortgage that is discounted from a Lender’s SVR by a set percentage within a set period. There are often early repayment charges applicable if the loan is repaid within the discounted period.

• Discounted Tracker Rate Mortgage:

This is a variable mortgage that is discounted from the Bank of England’s Base Rate by a set percentage within a set period. There are often early repayment charges applicable if the loan is repaid within the discounted period.

When the rate expires, the borrower will typically revert to the lenders Standard Variable rate if no action is taken.

• Early Repayment Charge (ERC):

This is a penalty charged on traditional (i.e. non-Flexible) mortgages when the loan is repaid in full within a set period. Usually it applies on a pro rata basis when capital repayments are made outside of the agreed monthly payments. Many Early Repayment Charge periods are linked to those of offers, such as Capped, Discounted or Fixed rate periods. However, some mortgage rates have extended Early Repayment Charges which tie-in borrowers even while they are paying the Lender’s SVR.

Also known as: Early Redemption Penalty (ERP); Redemption Penalty.

• Early Redemption Penalty (ERP):

See Early Repayment Charge (ERC)

• Equity (Property)

The difference in value between the value of the property and the outstanding mortgage amount.

• Endowment:

A repayment vehicle associated with Interest Only mortgages.

• Exchange of Contracts:

This is the stage in England, Wales and Northern Ireland that the deposit money is paid and both parties are legally bound to fulfil the agreed conditions of sale and purchase.

• Exclusive Mortgage:

This is a mortgage only available to intermediaries through a specific packager, in conjunction with a Lender who provides the funding.

• Fixed Rate Mortgage:

This is a mortgage that is charged at a fixed rate within a set period. There can be early repayment charges applicable if the loan is repaid within the fixed period. During the fixed rate period you interest rate will remain the same, and you won’t benefit if interest rates go down during the fixed rate period. When the fixed rate expires, the borrower will typically revert to the lenders Standard Variable rate if no action is taken.

• Flexible Mortgage:

As its name suggests, this is a type of mortgage that offers considerably more flexibility than traditional mortgages. 

Although specific details vary between Lenders, the core features of Flexible mortgages are:

– Daily or monthly capital rest

– Ability to make overpayments at any point of the loan term without an early repayment charge

In addition, many Flexible mortgages allow borrowers to:

– Defer payment by taking payment holidays

– Drawback overpayments

– Drawdown further advances

– Underpay without penalty (often only to the amount of any previous overpayments)

• Freehold:

The buyer of a Freehold property owns both the property and the land it stands on indefinitely. See also Leasehold.

• Full Status:

This term describes borrowers with a good credit history who are not self-certifying their income.

• Further Advance:

See Capital Raising mortgage.

• Gazumping:

This is when a prospective purchaser has an offer for a property accepted, before another potential buyer puts in a higher offer for the same property.

• Higher Lending Charge:

This is a premium charged by Lenders in order to indemnify themselves, and NOT the borrower, against any financial shortfall they may incur in the event of repossessing a property which must then be sold at a loss. It is applicable if the amount required is higher than a certain percentage of the property value, usually 75% LTV; often the Lender will pay the cost of this insurance themselves between 75% and 90% LTV. The charge may either be added to the loan or deducted from the advance on completion.

Also known as: Additional Security Fee; Indemnity; Mortgage Indemnity Guarantee (MIG).

• Homebuyers’ Report:

See Valuation Fee and Surveys.

• Holiday Let Mortgage

This is a mortgage for property that will be let by the borrower to holiday let customers. When Lenders calculate how large a loan the borrower can afford to repay on a holiday let mortgage they do so primarily on the basis of projected rental income, rather than salary income multiples. Drivers for ownership of Holiday Let property can be rental income, capital growth of the property, or both.

You should also seek separate legal and tax advice (income tax and capital gains) regarding your responsibilities of owning this type of property. 

You may wish to instruct a professional letting agent to source tenants and/or manage your property.

• Income Multiples:

These are the multiples that Lenders apply to borrowers’ income in order to determine the maximum loan they will offer them.

• Income Protection Insurance:

What is Income Protection Insurance?

Provides regular payments that replace part of your income if you’re unable to work due to illness or an accident. The income payment can be setup on a level or increasing basis.

It pays out until you can start working again – or until you retire, die, the plan payment period, or reach the end of the policy term – whichever is sooner.

Can be configured to pay out a maximum between 50% and 65% of your income if you’re unable to work. Lower cover levels are possible.

Typically covers most illnesses that leave you unable to work – either in the short or long term (depending on the type of policy and its definition of incapacity). Once underwritten by the insurer, typically won’t cover pre-existing medical conditions.

With some plans available, can be claimed as many times as you need to while the policy lasts.

There’s often a pre-agreed waiting (‘deferred’) period before the payments start. The most common waiting periods are 4, 13, 26 weeks and a year. The longer you wait, the lower the monthly premiums.

It’s not the same as Critical Illness insurance, which pays out a one-off lump sum if you have a specific serious illness covered by the contract.

When do you need income protection insurance?

When we’re unable to work due to illness or an accident, you might assume that your employer will continue to give you some level of income.

In reality, however, employees are usually moved onto Statutory Sick Pay within six months.

Very few employers support their staff for more than a year if they’re off sick from work. Check what your employer will provide for you if you’re off sick.

Depending on the level of savings you have, the loss of an income can soon leave you unable to pay essential household bills, such as mortgage/rent and utilities.

It can be particularly difficult if you’re self-employed and so have no sick pay to fall back on.

How much does income protection insurance cost?

The amount you pay each month in premiums will depend on the policy and your circumstances.

Income protection policies cover a wide range of illnesses, conditions and situations. So it’s important to compare what different insurers can offer you.

The cost is affected by:

• Your age
• Your occupation
• Whether you smoke or have smoked
• The percentage of income you’d like to cover
• The waiting (or ‘deferred’) period until the policy pays out
• The range of illnesses and injuries covered
• Health – your current health, weight and family medical history.

The cost will also depend on whether you pay:

• A standard premium, which the insurer can increase over time, or
• A guaranteed premium, which remains fixed for as long as you have the policy.

Guaranteed premiums can cost slightly more in the short-term, but many people like the security of knowing what they’ll be paying in future.

• Indemnity:

See Higher Lending Charge.

• Individual Savings Account (ISA):

A repayment vehicle associated with Interest Only mortgages.

• Interest Only Mortgages:

With this payment method the initial loan amount remains the same throughout the term of the loan, while the monthly mortgage repayments only pay off the interest being charged on this amount. The monthly payments each month DO NOT repay the debt. For this reason, Interest Only mortgages are tied to investment in one of a number of different repayment vehicles, which, ideally, should cover the initial loan amount at the end of the loan term. These repayment vehicles include (but are not limited to) sale of property, endowment policies, personal pensions, ISAs etc. All repayment vehicles can fluctuate in value and are not guaranteed to repay the mortgage debt.

• Initial Deal Period:

This is the Initial Deal a lender offers a borrower for a set period of time. The initial deal could be one of the following options:

• Fixed
• Tracker
• Discounted
• Capped
• Collared

The lender can opt to charge an Arrangement / Booking Fee as part of setting up an initial deal.

You then select the period of time you wish the initial deal to run for e.g.  (But not limited to) 2,3,4 or 5 years.

When your initial deal expires, a borrower will then typically revert to a lenders (typically higher) standard variable. At this stage your existing lender can (but is not guaranteed) offer you a selection of new initial deals to move on to. A further lender Arrangement / Booking Fee could feature as part of this process. 

When your initial deal expires, you may not wish to remain with your current mortgage lender, and re-mortgage to a new lender for a new initial deal. When you change to a new lender you will be fully re-assessed by the new lender to ensure you meet their required criteria to qualify for a mortgage with them.

• Introducer Fee:

See Procuration Fees.

• Leasehold:

The buyer of a Leasehold property owns the property for a set number of years, but doesn’t own the land on which it stands. See also Freehold.

• Let to Buy mortgage (LTB):

This is a mortgage where the borrower’s current property is let to other tenants and the rental income is used to cover the mortgage repayments on a new property, bought as the borrower’s main residence.

When Lenders calculate how large a loan the borrower can afford to repay on LTB they do so primarily on the basis of projected rental income, rather than salary income multiples, whilst lenders can take other factors into account as well in calculating the amount they will lend.

Drivers for ownership of Let to Buy property can be rental income, capital growth of the property, or both.

You should also seek separate legal and tax advice (income tax and capital gains) regarding your responsibilities of owning this type of property. 

You may wish to instruct a professional letting agent to source tenants and/or manage your property.

• LIBOR-Linked Mortgage:

This is a variable mortgage that is either above or below the London Inter-Bank Offered Rate by a set percentage within a set period. It is often associated with Lenders that offer loans to borrowers with elements of adverse credit. The SONIA rate replaced LIBOR in 2021.

• Life Insurance Policy: 

What is life insurance?

Life insurance is designed to reassure you that your dependants, such as your children or a partner, will be financially looked after in the event of your death. There are several things to think about when buying it, such as the type of policy you want and when you need it.

How does life insurance work?

Life insurance pays out either a lump sum or regular payments on your death, giving your dependants financial support after you’ve gone.

The amount of money paid out depends on the level of cover you buy.

You decide how it’s paid out and whether it will cover specific payments – such as mortgage or rent – or if it’s to leave your family with an inheritance.

Term Life Insurance policies:

These run for a fixed period of time, known as the ‘term’ of your policy, such as five, ten or 25 years. They only pay out if you die during the policy.

There are 5 kinds of main types of term Life Insurance policies.

• Lump Sum Level – pays as a lump sum if you die within the agreed term. The level of cover stays the same throughout. 
• Lump Sum Decreasing – pays as a decreasing lump sum if you die within the agreed term. reduces each year. It’s designed to be used with repayment mortgages, where the outstanding loan decreases over time.
• Lump Sum Increasing – pays as an increasing lump sum if you die within the agreed term. over the term of the policy, to keep up with inflation.
• Income Level – pays as a level income if you die within the agreed term. The level of cover stays the same throughout. 
• Income Increasing – pays as an increasing income if you die within the agreed term. The level of cover increased to keep up with inflation.

• Loan to Value (LTV):

This is a percentage figure of the loan amount in relation to the property value. For instance a £100,000 property bought with a mortgage of £70,000 has an LTV of 70%. The higher the LTV, the higher the interest rate charged will be; above certain LTVs a Higher Lending Charge comes into effect.

• Mortgage Indemnity Guarantee (MIG):

See Higher Lending Charge.

• Mortgage Offer:

The mortgage offer document is document issued by the mortgage lender when the mortgage application is fully approved. Mortgage offer documents once approved are valid for a set period of time e.g. (but not limited to) 6 months) and will expire after this period. Once expired, it is likely you will need to re-apply for a new product and be fully re-assessed.

• Mortgage Term:

This is the total term of the mortgage, not the initial deal period.

• Mortgage Valuation: 

A mortgage valuation is a specific type of assessment done by the mortgage lender to help them confirm the property’s value. It’s also used to see if the property will be a suitable security for the loan you’ve applied for. This should not be confused as a property survey as this is not a report on the condition of the property and its issues. The data also belongs to the lender and may not be shared with the borrower even though it may be paid for by the borrower.

• Non-Conforming: 

See Adverse Credit.

• Offset Mortgage:

This is a flexible mortgage which allows a borrower to keep balances (such as mortgage debt savings account and current account) in separate accounts, but, for the purposes of interest calculation, all balances are aggregated. Money in savings or current accounts is set against the mortgage balance and interest is only charged on the outstanding amount, meaning interest payments are reduced.

• Overpayment:

This is when an unscheduled capital repayment is made or when monthly payments are increased, in order that the mortgage is repaid before the end of the mortgage term, saving sums of  interest. Many traditional (i.e. non-Flexible) mortgages include early repayment charges if overpayments are made within a set period. In contrast, Flexible mortgages allow unlimited overpayments without penalty and, increasingly, mortgages are semi-Flexible, allowing borrowers to overpay a certain percentage of their loan each year without incurring early repayment charges.

• Part and Part Mortgage:

See Split Payment mortgage.

• Pension:

A repayment vehicle associated with Interest Only mortgages.

• Personal Equity Plan (PEP):

A repayment vehicle associated with Interest Only mortgages.

• Portability:

A portable mortgage is mortgage product that can be transferred to another property without penalty if the borrower moves house within an early repayment charge period. The be able to transfer the product to the new property, the borrower must meet the lenders current criteria so it is not guaranteed a product is portable. The new interest rate that the Lender will be prepared to offer depends on whether the loan amount increases or decreases. If the latter, early repayment charges may apply. 

• Procuration Fee:

This is any commission that may be paid by Lenders to intermediaries for introducing business to them, collating all the information the lender requires from the borrower (known as packaging the case), liaising with the lenders underwriter(s) and representatives to pre-check the case and during the application process, and then managing the case on their system to the point of the mortgage is approved. Also known as: Introducer Fee. 

• Redemption Penalty:

See Early Repayment Charge (ERC).

• Repayment Mortgage:

See Capital and Interest mortgages.

• Right to Buy (RTB):

This is when a tenant living in a council-owned property purchases it at a discount, the size of which depends on the length of their tenancy.

• Self-Build:

This is a mortgage for property under construction. The loan is paid out in stages as the property is completed, in order to ensure the LTV does not rise too high at any point.

• Shared Ownership:

This is a scheme operated by a Housing Association where the borrower owns part of a property, and pays the mortgage on this, while a Housing Association owns the rest of the property, and the borrower pays rent on this.

• Split Payment Mortgage:

This is a mortgage that is taken partly on a Capital and Interest basis and partly on an Interest Only basis so only part of the loan is re-paid with an outstanding balance remaining on interest only.

• Stamp Duty:

This is a government tax charged on the sale of properties. The tax is calculated as a percentage based on the value of the property above a threshold set in the Chancellor’s annual budget. The tax rate is divided into bands with the percentage increasing with the value of the property. It is not payable on re-mortgages.

• Standard Variable Rate (SVR):

This is a variable rate determined entirely at each Lender’s discretion. Unless linked to SONIA (formally LIBOR) or the Bank of England Base Rate, the SVR is typically the reverting rate at the end of any initial deal /special offer period, such as a Capped, Discounted or Fixed rate. As standard variable changes regularly, when a borrower reverts to a standard variable rate the mortgage payments will vary. The standard variable rate will typically be a higher rate of interest when compared to the rate of interest on the initial deal. 

• Sub Prime Mortgage:

See Adverse Credit.

• Survey:

What is a property survey?

A property survey is an inspection of a property’s condition conducted by experts. The experts – surveyors – inspect the property and tell you if there are any issues to do with the condition of the property from minor to significant structural problems. They will highlight what repairs or alterations are needed, whether it’s addressing a damp patch or replacing a whole roof. The report from the surveyor also provides expert commentary on the property, from the type of walls to the type of glazing.

It is the property buyer who usually organises a house survey after their offer has been accepted by the seller. The buyer arranges and pays for the survey. 

Given that a property is probably the largest asset you will purchase it makes good sense to arrange a survey to identify potentially expensive problems.

What types of surveys are there?

RICS Home Survey – Level 1

The RICS Home Survey Level 1 is the most basic – and cheapest – survey. It is suitable if you’re buying a conventional property built from common building materials and in reasonable condition.

RICS Home Survey – Level 2

Previously called a Home Buyer Report or Homebuyer survey, this mid-level survey is a popular choice for most people buying a conventional property in reasonable condition. It covers everything you’d get in a RICS Home Survey Level 1, plus they check roof spaces and cellars. 

RICS Home Survey – Level 3

The RICS Home Survey Level 3, also known as a full structural survey and previously as a RICS Building Survey, is the most thorough survey offered by RICS.

It is a good house survey option if you’re buying a property over 50 years old, of unusual design, is a listed building or in poor condition; if you’re planning to undertake renovations or have any concerns about the property. 

• Term Assurance:

This insurance repays the mortgage in the event of the insured person’s death or diagnosis of illness. Also known as: Life, Life and Critical Illness or Income Protection Policy.

• Tracker Mortgage:

This is a variable mortgage that is set to track either above or below the Bank of England’s Base Rate by a set percentage within a set period. The payments on this mortgage will go up and down in-line with fluctuations of the interest rate it is tracking.  When the tracker rate expires, the borrower will typically revert to the lenders Standard Variable rate if no action is taken.

• Underwriting (Mortgage):

Underwriting is the process by which your lender verifies your personal and financial details including (but not limited to) income, assets, debt and property details in order to issue final approval on your loan.

• Underwriting (Insurance):

Underwriting is the process by which the insurer assesses the risk of the proposal e.g. (but not limited to) reviewing an applicant(s) medical history.

• Valuation Fee:

Whether purchasing or re-mortgaging the Lender undertakes a valuation of the property to ensure I provides adequate security. The charge is borne by the borrower and increases exponentially with the valuation/purchase price. There are 3 levels of valuation: in order of increasing detail these are Mortgage Valuation, Homebuyers’ Report, and Structural survey. The more stringent the valuation, the higher the fee.