Jargon Explained

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Early Redemption Fee
This is often associated with fixed, capped or cash-back mortgages. If pay off your mortgage early or want to changes lenders then you may be charged a fee. The lender gives you a package with benefits but you must keep the mortgage with them for a minimum length of time. Some mortgages don't have any early redemption penalties.

Endowment
An Endowment Mortgage is savings based mortgage with life assurance. Part of your repayment pays the interest only and the other is invested by the lender. These were designed to allow you to pay a smaller monthly premium. At the end of the policy your invested amount should be enough to pay off the balance of your mortgage. However current Endowment Policy Holders have been notified that the final invested amount is unlikely to cover the final balance of their mortgage.

Equity
This is the difference between the amount you owe on your current mortgage and the current value of your property. This amount can be used in a remortgage to allow money for home improvements, a new car, holiday of a lifetime or reduce your monthly premiums.

Exchange of Contracts
The contracts are exchanged between the buyer's and seller's solicitors. Both parties are now legally bound to the sale and purchase of the properties.

First Time Buyer
If you are after your first home and so your first mortgage, you are classed as a first time buyer. There are first time buyer mortgages available aimed at buyers new to the market.

Fixed Rate Mortgage
This is what it says. A fixed interest rate set for an agreed period of time. If the interest rates went really high then you don't pay a higher interest rate. However you don't pay any less if the interest rates go really low.

Flexible Mortgage
This type of mortgage allows flexibility of repayments. Normally, a borrower will be allowed to overpay, underpay, take payment holidays. You can sometimes offset savings against the mortgage to help with payments. Certain flexible mortgages will offer daily interest rates so any overpayment will show benefits straight away.

Freehold
A term which means you are the absolute owner of the property and the land it's on. When you have paid your mortgage you would have the freehold to your property.

Gazumping
This term is used to describe a seller who accepts an offer agreeing the sale of their property and then before the exchange of contracts accept a bigger offer. By this time you could have had surveys and local authority reports and lose your money.

Guarantor
If you can't borrow enough to buy the home you want someone can act to pay the rest of the mortgage. Parents may act as guarantors for their children when buying their first home.