An agreement in principle (AIP), also known as a decision in principle, is the first step to getting a mortgage. A lender will provide a reasonable estimate of how much you can borrow based on your income and expenditure and your credit score. The amount you can borrow will occasionally change when you get your mortgage offer.

An APRC provides an average annual cost of your mortgage as a percentage. It includes interest charged over the full term of your loan, as well as any other fees you may need to pay, such as an arrangement fee. A lender will always show an APRC on your mortgage illustration to provide an effective way of comparing different lenders.

The base rate is set by the Bank of England for lending to other banks and building societies. The base rate influences the interest rates offered by lenders, so if the base rate goes up expect mortgage or savings rates to go up by a similar amount. Some mortgages track the Bank of England base rate and will change automatically if the base rate moves.

Booking and arrangement fees are administration charges made by lenders for setting up the mortgage.

A booking fee, if applicable, will be applied when you take out the mortgage and is payable upfront at application to secure the rate. This is often not refundable if you decide not to go ahead with the mortgage.

An arrangement fee is charged when the mortgage is drawn down and can be paid separately or added to the mortgage loan.

A broker, or intermediary, is an impartial person or company that arranges a mortgage between you and a lender. An example of a broker is Mortgage Advice Bureau - their expert advisers will recommend the right mortgage for your needs and will be able to justify that recommendation, plus they'll take care of a lot of the paperwork.

A buy-to-let mortgage is specifically for landlords who want to buy property to rent out.

Cashback mortgages are where the applicant will receive a cash lump sum on completion of a mortgage. This offers a potential solution to people needing money in the early days after buying a property.

Deeds, or title deeds, are documents which detail the chain of ownership for land and property. They are usually held by the mortgage provider until you have paid your mortgage off.

A deposit is a sum of money that goes towards the cost of the property that is being purchased. Generally, you will need at least a 10% deposit to buy a house although there are lenders who only ask for a 5% deposit from first-time buyers.

A discount mortgage has an interest rate fixed at a set percentage below the lender's standard variable rate (SVR). If your lender changes the SVR, your interest rate will change as well, so the amount you pay could change.

Some mortgages will charge an early repayment charge if you decide to repay some or all of your mortgage within a certain period of time. This is usually either a percentage of the loan repaid or a number of days interest.

For example, you may need to pay 1% of the loan repaid for the first two years of your two year fixed mortgage.

Many lenders will allow you to overpay an amount each year without paying an ERC, often 10%.

The equity you have in your home is the value of your home minus your outstanding mortgage. In other words, it is the amount of money you would get back from selling your home if you ignore the costs of selling.

An exit fee may be applied by your lender when you repay your mortgage in full or move to another lender. 

A fixed rate mortgage has a fixed interest rate for a set period of time, so your mortgage payments won't change during that period even if the Bank of England base rate changes. Two, three and five year fixed rate mortgages are most common but there has been an increase in mortgages offered at 10 years or longer.

Purchasing a property with help from the Government's Help to Buy scheme means you only need a 5% cash deposit for a newly built home. The Government will lend you up to 20% of the cost and you will need a 75% mortgage to make up the rest. The benefit of this is that you won’t be charged loan fees on the 20% loan for the first five years of owning your home. The current Help to Buy scheme runs from April 2021 to March 2023 and is restricted to first-time buyers and includes property price caps.

A higher lending charge is a fee lenders may apply when you borrow a high proportion of your property’s value, normally over 90% LTV.

An interest only mortgage allows borrowers to only pay the interest charged for the term of the loan. As you're not paying any of the capital of the mortgage, you will need to have another repayment method to pay back the amount borrowed at the end of the term of the mortgage. Your mortgage lender will want details of how you are intending to repay the mortgage.

A mortgage interest rate is the percentage of the loan that you will be charged for borrowing money from your mortgage lender. The amount of interest you pay will affect how much your monthly repayments will be.

A joint mortgage allows two or more people to take out a mortgage to buy a property. All applicants will be responsible for paying the mortgage so if one person can't pay, the other will need to make up the difference. Typically, all applicants will also be owners of the property.

A let to buy mortgage is for borrowers looking to let out their current home so they can purchase a new property. These types of mortgages can allow you to release some equity from your current home and put it down as a deposit on your new one.

Your loan to value (LTV) is the percentage of your property’s value that’s covered by your mortgage. A lower LTV normally means a lower interest rate as the mortgage won't be as risky for a lender.

The amount you pay each month depends on your interest rate, your loan size and, for capital repayment mortgages, the term of your mortgage.

If you are paying interest only, the monthly payment will be the interest charged on the mortgage that month.

Your maturity date is the end of your mortgage term when you will have repaid your mortgage or need to repay the loan if you have an interest only mortgage.

If your mortgage has a period when your interest rate is fixed, or has a fixed discount, then your product maturity date is the end of that period.

The amount you pay each month depends on your interest rate, your loan size and, for capital repayment mortgages, the term of your mortgage.

If you are paying interest only, the monthly payment will be the interest charged on the mortgage that month.

A capital repayment mortgage calculates a monthly payment that will pay off the capital and interest by the end of the term.

A mortgage illustration, or ESIS (European Standard Information Sheet), is a document that will explain the key features of a mortgage. This will include the monthly payment, interest rate details and any fees that will be chargeable at both the start and the end of the mortgage.

An outstanding balance will inform you how much you still have left to pay on your mortgage.

A mortgage overpayment allows you to pay more off your mortgage than what is contractually agreed with the lender. By overpaying you could save money on your interest payments and pay off your mortgage sooner.

Most mortgages allow you to pay more than your monthly mortgage payment. This reduces the interest you are charged and allows you to pay off your mortgage sooner or reduce your monthly payment.

Some mortgages have early repayment charges for partial or full repayments of the mortgage above a certain level.

Remortgaging is where you switch your current mortgage to a new deal either with your existing lender or a new lender. Find out more in our guide to remortgaging.

A retirement interest only (RIO) mortgage allows older customers to borrow money on an interest only basis without a fixed term. Instead, the mortgage is repayable from the sale of your home if you die, move into long term care or sell the house.

A shared ownership scheme allows you to purchase a share in a property, usually 25% to 75%, while paying rent on the rest. The schemes are targeted at helping first-time buyers and lower income households and are usually run by housing associations who own the remaining share.

Stamp Duty Land Tax (SDLT) is a tax paid to the Government when you buy a property. The latest rates can be found here.

A standard variable rate (SVR) is the variable rate set by your lender; your lender may have a different name for it. Most rates with an initial fixed rate or a short term tracker rate move onto an SVR once the initial period has finished.

Tracker rate mortgages usually follow the Bank of England's base rate to set what the interest rate will be. This type of mortgage is variable so the amount you pay could change.

A mortgage term is the length of time, usually in years, that you have to pay the loan off. 

A variable rate mortgage is a mortgage linked to a rate that can change, meaning that the amount you pay each month can change. Discount and tracker rates are types of variable rate mortgages.