Mortgage Glossary: Breaking Down Confusing Financial Language for the Everyday Person

Let’s face it—buying a home is stressful enough without having to learn a whole new language. APRs, SVRs, LTVs... it can feel like mortgage professionals are speaking in code. Whether you're a first-time buyer or just need a refresher, this mortgage glossary is here to cut through the confusion and explain common mortgage terms in plain English. Save this blog or send to a friend who is in the process of buying - thank us later!

1. Mortgage

Let’s start simple. A mortgage is a loan you take out to buy a home or property. You pay it back monthly over an agreed period, usually 25–35 years, with interest.

2. Interest Rate

This is the percentage the lender charges you on top of the money you borrow. A lower interest rate usually means lower monthly payments.

3. Fixed-Rate Mortgage

With this type of mortgage, the interest rate stays the same for a set period (typically 2, 3, or 5 years), which means your monthly payments won’t change.

4. Variable-Rate Mortgage

The interest rate can go up or down, usually depending on the Bank of England base rate. This means your payments could change over time.

5. Standard Variable Rate (SVR)

This is the lender’s default interest rate. If your fixed or tracker deal ends, you’ll usually move onto their SVR, which can be higher and less predictable.

6. Tracker Mortgage

A tracker mortgage follows (or “tracks”) the Bank of England base rate, plus a set percentage. For example, base rate + 1%.

7. Loan-to-Value (LTV)

This is the percentage of the property’s value that you’re borrowing. For example, if you’re buying a £200,000 home and you have a £20,000 deposit, your LTV is 90%.

Higher LTVs usually mean higher interest rates because there’s more risk for the lender.

8. Deposit

The amount of money you put down upfront toward the property. The bigger your deposit, the better your chances of getting a competitive rate.

9. Agreement in Principle (AIP) / Decision in Principle (DIP)

This is a pre-approval from a lender showing how much you might be able to borrow, based on your income and credit history. It's not a guarantee, but it’s a helpful step when viewing properties.

10. Credit Score

A number that reflects how reliable you’ve been with borrowing in the past. Lenders use it to help decide whether to approve your mortgage—and on what terms.

11. Conveyancing

This is the legal side of buying or selling a property. A conveyancer or solicitor handles contracts, checks legal ownership, and manages the transfer of money.

12. Stamp Duty

A tax you pay when buying a property over a certain price threshold. The rules vary depending on whether you’re a first-time buyer, and the cost of the property.

13. Mortgage Term

This is the length of time you agree to repay the mortgage over—for example, 25 or 30 years.

14. Early Repayment Charge (ERC)

A fee some lenders charge if you pay off your mortgage early or switch to a new deal before your fixed term ends.

15. Remortgaging

This means switching your mortgage to a new deal—either with your current lender or a different one. People often remortgage to get a better interest rate or borrow more money.

16. Mortgage Broker / Advisor

A professional who helps you find the right mortgage for your needs. They compare deals across the market and handle the application for you—especially helpful if you have complex or adverse credit.

Final Thoughts: Knowledge is Power

Understanding mortgage terminology doesn’t have to be intimidating. The more you know, the more confident you’ll feel when making decisions about your home and finances.

Still feeling unsure? That’s exactly what mortgage advisors are here for—to explain things clearly, guide you through the process, and make sure you’re getting the best possible deal. Top book your free mortgage consultation click here.