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Mortgages terms explained

Get to grips with mortgage terminology

If you’re a first-time buyer, you’re probably coming across unfamiliar terms and phrases in the course of your property search and mortgage application. Our list of common mortgage terms explained will help you feel more confident when completing paperwork and making those big decisions.

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Additional borrowing

When you increase your mortgage to get extra funds.

Annual Percentage Rate of Charge (APRC)

This shows the annual cost of a mortgage, including costs and fees. You can use it to compare mortgages.

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 fee

This fee covers the cost of electronically transferring your mortgage funds to you.


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

A Decision in Principle, also known as an Agreement in Principle, is a document from a mortgage lender that gives you an idea of how much you could borrow. It’s based on security checks and a soft credit check, and shows estate agents that you’re in a good position to buy a property.


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

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

The purchase price or the conservative market value of the property you want to buy.

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. 

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 fluctuations in interest rates. 

Fixed until

The date on which a fixed rate mortgage ends.

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. 

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

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.

Loan to Value (LTV)

Loan to value 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.

Lump sum payment

A one-off payment to reduce the outstanding balance on your mortgage.

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 developer
  • a property that has yet to be occupied for the first time and/or
  • a property that is yet to be occupied in its current form, for example following a renovation or conversion.


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.

Outstanding balance

The amount owed under an existing mortgage.


When you make a bigger monthly repayment on your mortgage than the one set by your lender.


You port your mortgage when you transfer your it from one property to another. You can port your HSBC mortgage subject to terms and conditions. 

Property chain

When buying a property there will 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.


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. 


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

Service fee

Lenders charge this fee when they request details from your current mortgage lender. 

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.


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

Standard Valuation

A standard valuation 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, but it does help ensure you’re not paying more than the property is worth.


When you move to a new mortgage with the same lender, eg the fixed rate period ends and you move to a tracker rate mortgage.

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. 

Tracker mortgage

This is a type of mortgage where the repayments vary according to the Bank of England base rate, so they can go up and down. 

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

† Lines open Monday – Saturday 08:00 – 20:00, Sunday 09:00 – 18:00. Calls may be monitored and recorded. Opening hours within the mortgage departments may vary.

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