Mortgage definitions

Additional borrowing - This is when you borrow more money and therefore increase the overall size of your mortgage. You can then use the extra money to pay for home improvements, for example.

Annual Percentage Rate of Charge (APRC) - Shows you the total cost of a mortgage, including fees, over the full term of the mortgage.

Bankruptcy search - The conveyancer or solicitor will check if the seller or buyer is, or has previously been made bankrupt.

Base rate - The base rate is set by the Bank of England and determines the interest rates UK banks charge on savings and borrowing money.

Booking fee - A fee charged on some mortgages to secure a particular mortgage deal.

Capital repayment - ‘Capital’ is the money you’ve borrowed, so a capital repayment is the amount you pay to your mortgage lender every month. This includes some of what you've borrowed and some of the interest on the loan.

Completion - This is when the sale and purchase of a property is completed, and the buyer’s solicitor or conveyancer pays the purchase amount to the seller’s solicitor or conveyancer. Once completion has taken place the buyer can collect the keys to the property.

Completion fee - A fee that covers the cost of electronically transferring your mortgage funds to you or your solicitor.

Consent to let (CTL)- This allows you to let your residential property, if you have a short term letting need (for example, if you move outside the UK for a period of time). You need to apply to your lender for their consent to do this.

Contract - A written agreement by the seller and buyer for the sale and purchase of a property. The contract details the terms and conditions of the sale and purchase, and is not legally binding until the exchange of contracts

Conveyancer - A conveyancer is a person or company licenced to represent you when purchasing a property. They will handle legal documentation, including liaising with the appropriate land registry and transferring legal ownership of the property.

Decision in principle - Also known as an agreement in principle), this is an indication of how much you could borrow from a mortgage provider. It's based on your income details and expenditure as well as a soft credit check. It shows an estate agent that you’re in a good position to buy a property.

Deposit - The amount of money you pay towards your property. The deposit will be a percentage of the cost of the property. 

Drawn-down - This is when the mortgage funds have been sent to your solicitor and the mortgage term has started.

Early Repayment Charge - You may have to pay this if you repay all or part of your mortgage early. This includes moving to a different HSBC product or a different lender within a certain period.

Estimated property value - This is the purchase price or the market value of the property you want to buy.

Exchange of contracts - This means the contracts are exchanged between the seller’s and the buyer’s conveyancer or solicitor. The sale and purchase of the property only become legally binding once the contracts have been exchanged.

Exit fee - You may have to pay this when you fully repay your mortgage. HSBC doesn’t charge exit fees.

Fee Saver - With HSBC’s Fee Saver there’s no booking fee and no completion fee when you remortgage. We’ll also cover the cost of standard valuation where we require it as part of your mortgage application. You may have to pay other fees and charges to other parties. 

Financial crime - This means money laundering, terrorist financing, bribery, corruption, tax evasion, fraud, evasion of economic or trade sanctions or any acts or attempts to break any laws relating to these matters.

First legal charge (England, Wales and Northern Ireland) - First legal charge - When using a mortgage to cover the costs of a property purchase, the lender takes a legal 'charge' against the property. Since this would be the first such legal charge attached to the property, it's referred to as a first charge mortgage.

First ranking standard security (Scotland) - This is the document in Scotland which allows the lender to take control of the property if you don’t meet your obligations under the loan.

Fixed rate mortgage - This is a type of mortgage where repayments are set at an agreed amount, for a set period of time, and aren’t affected by changes in interest rates. 

Fixed until - The date on which a fixed rate mortgage ends.

Full reinstatement value - This is the total cost of rebuilding the property for insurance purposes.

HM Land Registry - The register holds details about the property, such as the date the current owner was registered as the owner, the property address, whether the property is freehold or leasehold and other information relating to the property title. The Land Registry is a government department that holds records of property titles registered in England and Wales. 

Illustrative - This means it's just an example.

Interest calculated daily - The interest charged on your outstanding mortgage balance is calculated every day rather than at the end of each week, month or year.

Interest-only mortgage - You will only pay the interest on what you’ve borrowed with this type of mortgage. At the end of the mortgage term you’ll be responsible for repaying the original amount borrowed.

Interest rate type - The interest you pay on your mortgage may be variable or fixed at a set rate for a set period of time. 

Legal charge (England, Wales and Northern Ireland) - This is a legal document signed by the borrower which is registered against the property at the Land Registry and used to secure the mortgage against that property.

Letter of consent - 

This means a letter of consent and postponement by deed that is sent to anyone who: 

• Is aged 17 or over and lives in the property but is not named on the mortgage at the point of application - this includes lodgers and au pairs
• Has a financial interest or a right in the property, including a right to occupy it, and does not own and will not own the property or is not borrowing at the point of application (including a family gift which is to be protected by a declaration of trust)
• Is a full-time student living away from home during term time but who considers the property to be their main residence at the point of application

This means the lender can make anyone who has signed the letter of consent leave the property if the lender ever need to sell the property to repay the mortgage. 

Loan to Value (LTV) - This represents the percentage of the value of the property that you want to borrow. For example, a £100,000 property with an £80,000 mortgage = an 80% LTV.

The maximum LTV we will lend depends on your individual situation, the property, the loan you choose and the amount you borrow.

LPA - This means the Law of Property Act 1925 (England and Wales only).

Lump sum payment - This is a one-off payment to reduce the outstanding balance on your mortgage.

Monthly payment - This is the amount the borrower must pay the lender each month.

Mortgage debt - This is the amount of money the borrower owes the lender on the mortgage.

Mortgage deed - A legally binding document confirming that you and the lender have agreed to go ahead with your mortgage offer, using the property as security.

Mortgage illustration - This shows you all the rates and fees for a mortgage. Lenders will set this out in the same format for all their mortgages so it’s easy to compare. 

Mortgage term (sometimes just called 'term') - This is the length of time on your mortgage – in other words, the period of time that your mortgage lender gives you to repay the money you’ve borrowed. A typical mortgage term is 25 years.

Negative equity - This is when the total amount you owe on a mortgage and/or other loans secured on your home is higher than the value of the property. This means that if property prices fall – you could owe more than your home is worth.

New-build property - A new-build property is defined as:

• A building that has been built in the last 24 months. This includes property bought directly from a builder or a developer, or
• A property that has yet to be occupied for the first-time, or
• A house or flat that has been created by the conversion of an existing building into separate self-contained properties, that has not been previously occupied in its present form

To be eligible for an HSBC mortgage, the property being purchased must have an HSBC recognised satisfactory Structural Defects Warranty.

We may lend up to a maximum of 85% Loan to Value (LTV) on new-build properties. Customers with an LTV of more than 75% are required to have a minimum deposit of £25,000.

Offer - This is the document issued by a prospective lender to a prospective borrower, setting out that lender’s offer of a loan to that borrower. It's normally subject to a number of terms and conditions, which are likely to be detailed in a separate document accompanying it.

Outstanding balance - The outstanding amount owed on your existing mortgage.

Overpayment - These are additional payments you make over your monthly payments. These can be either regular payments (for example, monthly) or occasional (for example one-off lump sum payments).

Payment day - This is the day each month when we take the mortgage payment from your nominated account. When this date isn’t on a business day, the mortgage payment will be taken the next business day.

Personal data - This is information that can be used to identify an individual.

PHTSA - This means the Private Housing (Tenancies) (Scotland) Act 2016.

Porting - You port your mortgage when you move your mortgage from one property to another. You can port your HSBC mortgage subject to terms and conditions.

Product period - This means the period of time during which an interest rate will apply to your mortgage.

Property chain - When buying a property there can be a ‘property chain’, including you (the buyer), the seller, their buyer, and so on. Being a first-time buyer shortens the property chain as you have no onward chain.

Remortgage - You remortgage when you switch your existing mortgage to a new deal with the same lender or a different lender.

Residential mortgage - This simply means a mortgage on a residential property, rather than one for business. 

Right of withdrawal - This is a right you may have in some circumstances to cancel your mortgage application or another contract with us. 

Searches - Searches are checks made by your solicitor or conveyancer to the local authority. They check on things such as property deeds, access rights, planning permission and drainage. 

Securitisation - This refers to the practice of transferring mortgages to an investor so financial institutions can release funds to lend more money out.

Security document - This is the legal document which secure the mortgage debt over your property. It will be a first legal charge (if your property is located in England, Wales or Northern Ireland) or a first ranking standard security (if your property is located in Scotland).

Security - This refers to the fact that when you sign the mortgage agreement, you agree to give the lender a right over your property as security for the loan. This means if you don't keep up with the repayments, the lender has the right to take the property and sell it to recover the debt owed.

Soft credit check - A soft credit check is a type of background check that can be run without your permission. Unlike a ‘hard’ credit check, it doesn’t affect your credit score or any credit applications you might make in the future.

Solicitor - Like a conveyancer, a solicitor manages the legal aspects of purchasing a property, including the contracts, searches, transferring funds and providing legal advice.

Stamp Duty - Stamp Duty Land Tax (SDLT) is a tax payable by the buyer on the purchase of a property over a certain price. SDLT applies in England and Northern Ireland. The amount payable depends on other matters too, including whether the property is to be a main home and whether it is freehold or leasehold.

In Wales, buyers of property over a certain price are charged a Land Transaction Tax (LTT) and in Scotland buyers of property over a certain price are charged Land and Buildings Transaction Tax (LBTT).

The amount of SDLT, LTT and LBTT applies to properties over a certain value. The amount you pay depends on when you bought the property and how much you paid for it. For further information, please visit:

Stamp Duty Land Tax

Land Transaction Tax

Land and Building Transaction Tax

Standard conditions - This means the standard conditions contained in Schedule 3 to the Conveyancing and Feudal Reform (Scotland) Act 1970 as amended.

Standard Valuation - This is a survey of a property to confirm its value. It doesn’t advise on any structural problems or repairs that may add to your costs. This is done for the lenders benefit only. 

Standard variable rate (SVR) - If you don’t switch to a new deal when your current mortgage ends, you’ll be moved to the lender’s standard variable rate. This varies over the term of the loan and is set internally. It doesn’t track the Bank of England base rate. 

Switching - This is when you choose to move to a new mortgage rate with the same lender. You normally do this when your current fixed or term tracker rate is coming to an end. If you choose to do nothing when your current rates ends, you'll normally move on to your lender's standard variable rate.

Tax authorities - This means the UK or any foreign tax, revenue or monetary authorities (for example, HMRC).

Tax information - This means the documentation or information about a person’s tax status, including yours.

Term - The period of time within which the mortgage debt must be repaid

Title search - This is a process that confirms through public records a property's legal ownership

Tracker mortgage - This is a type of mortgage where the repayments change in line with the Bank of England base rate, so they can go up and down. 

Transfer deed - This is a legal document, which finalises the sale of a property and transfers legal ownership of a property from the seller to the buyer.

Underwriting - This is the point in a mortgage application where all the information you have provided is reviewed and a decision is made on whether you can borrow the money you have requested.

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Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage.