Wednesday, 22 September 2021

First time buyers — confused about terminology?

A RECENT survey showed nearly a third of first-time buyers do not understand the buyer process and have no knowledge

A RECENT survey showed nearly a third of first-time buyers do not understand the buyer process and have no knowledge of the jargon involved in purchasing a property. As a result the Standard has put together a list of terms commonly used:

APR: annual percentage rate, the total cost of a loan including interest charges and arrangement fees, shown as a percentage rate and easily comparable with mortgage interest rates.

Bridging loan: a temporary loan advanced to help buy a new property before the existing one has been sold.

Buildings insurance: insurance against the cost of repair or rebuilding a property from scratch following structural damage, for example by flood, fire or storm.

Chain: a number of linked property sales where exchange of contracts must take place simultaneously.

Completion date: completion of the legal transaction with all monies and documents having been distributed. This is also when the solicitors will instruct the estate agent to release keys.

Conveyancing: the legal work involved in buying and selling properties.

Deeds: legal documents assigning ownership of a property and/or land.

Exchange of contracts: The point at which the sale becomes legally binding from which neither party can withdraw without financial penalties.

Fixtures and fittings: all non-structural items included in the purchase of a property.

Freehold: ownership of the property and land upon which the property is situated.

Full structural survey: this looks at all the main features of the property, including walls, roof, foundations, plumbing, joinery, electrical wiring, drains, and garden.

Gazumping: the practice by a seller accepting a higher price than that previously agreed with someone else.

Gazundering: the practice of a buyer lowering his offer just before exchange of contracts.

Ground rent: the annual fee which a leaseholder pays to a freeholder. This generally applies only to apartments rather than houses.

Homebuyer’s report: the homebuyer’s report comments on the structural condition of most parts of the property that are readily accessible, but does not involve in-depth investigation or the testing of water, drainage or heating systems.

Housing association: a non-profit making body which lets you buy a percentage of the property and pay rent on the rest.

Joint mortgage: a mortgage where there is more than one individual named responsible for the mortgage.

Land certificate: a Land Registry certificate proving ownership of property.

Land Registry: the Government organisation that holds records of all registered properties in England and Wales.

Leasehold: to be given ownership of a property but not the land it is built on. This normally requires payment of ground rent to the landlord. A leasehold is normally offered for either 999 years or 99 years.

Local authority search: an application made to the appropriate local authority requesting details of any planning or other matters which might affect the property being sold.

Maintenance charge: a charge made towards the upkeep of a leasehold property.

Mortgage offer: a formal written offer made by a bank or building society to lend an approved amount to purchase a property.

Multi-agency: the selection of two or more estate agents to act on the seller’s behalf, usually incurring a higher fee than if the sale is completed by a sole agency.

Negative equity: when the value of a property is less than the outstanding sum owed on a mortgage.

Repayment mortgage: monthly interest combined with capital repayment against the original sum borrowed.

Repossession: when loans are in default the mortgage lender can repossess the property and sell it so they can repay the debt.

Searches: checks of local council records for planning applications and restrictions.

Stamp duty: a tax paid to the Government by the buyer upon completion.

Subject to contract: words used to indicate that an agreement is not yet legally binding.

Survey: an inspection made by a qualified surveyor.

Vendor: the legal name used to describe the seller of the property.

Verbal offer: offer from prospective purchaser, not legally binding on either party.

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