Mortgage Glossary
Plain-English definitions of the most common UK mortgage terms. Click any term to read a full explanation with examples.
Basics
Rates & Costs
Annual Percentage Rate (APR)
The total annual cost of a mortgage expressed as a percentage, including the interest rate plus any mandatory fees spread over the loan term.
Standard Variable Rate (SVR)
Your lender's default mortgage interest rate, which you move onto after your initial fixed, tracker, or discounted deal period ends.
Mortgage Types
Fixed Rate Mortgage
A mortgage where the interest rate stays the same for a set period, giving you predictable monthly payments regardless of changes to the Bank of England base rate.
Interest-Only Mortgage
A mortgage where your monthly payments cover only the interest, with the full original loan amount still owed at the end of the term.
Offset Mortgage
A mortgage linked to your savings account, where your savings balance is offset against your mortgage debt so you only pay interest on the difference.
Repayment Mortgage
A mortgage where your monthly payments cover both the interest and a portion of the capital, so the debt is fully repaid by the end of the term.
Tracker Mortgage
A mortgage with an interest rate that moves directly in line with the Bank of England base rate, rising and falling by the same amount.
Process & Procedures
Agreement in Principle (AIP)
A conditional indication from a lender of how much they would be willing to lend you, based on an initial assessment of your finances.
Early Repayment Charge (ERC)
A fee charged by your lender if you repay your mortgage or overpay beyond allowed limits during a fixed or discounted rate period.
Mortgage Broker
A qualified intermediary who searches the mortgage market on your behalf to find suitable deals and guides you through the application process.
Porting
Transferring your existing mortgage deal to a new property when you move, allowing you to keep your current interest rate and avoid early repayment charges.
Product Transfer
Switching to a new mortgage deal with your existing lender without going through a full remortgage application.
Remortgage
The process of switching your existing mortgage to a new deal, either with your current lender or a different one, usually to get a better interest rate.