If you’re a first-time buyer looking to get on the ladder, going through the motions of actually purchasing a home can feel seriously daunting.
First, you’ve got the mammoth task of deciding where it is you want to lay down your roots, and then you’ll need to decide on your property non-negotiables.But what about the jargon that comes with buying a home?
If you’ve spent years renting, you’ll be very familiar with the terms ‘deposit,’ ‘contract,’ and crucially, ‘landlord,’ but purchasing your own four walls will come with new terminology.
You’re not alone in feeling confused, as a new study has found that 56% of Brits feel intimidated by complex house-buying jargon.
What’s more, 86% of respondents were unfamiliar with the words ‘housing survey,’ while 77% struggled to understand the meaning of a ‘survey contingency.’
Another 75% struggled with ‘memorandum of sale’ – and honestly? We get it, these are phrases you might only hear a few times in your life if you don’t work in the industry.
So, with that in mind, Barratt Homes has demystified some of the most common words associated with house-buying.
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Housing survey
A housing survey is what happens when the lender (AKA, a banks or building society) conducts a valuation survey to estimate the property’s value.
Buyers might also arrange an independent house survey to check for structural issues, which can include things like cracks, damp, or even subsidence.
Property searches
86% of respondents were unfamiliar with the term ‘property searches,’ which is essentially the process of a solicitor conducting searches to check for local plans or issues.
These might include the Land Registry (the government department that recognises the ownership of both land and property), local authority, environmental and draining searches, as well as things like flood risk and mining searches.
Survey contingency
This is a clause that allows the buyer to renegotiate or even withdraw their offer if serious issues are identified in the survey, which 77% of respondents were confused by.
Memorandum of sale
75% of house-buying Brits were also confused by the concept of a memorandum of sale, which is the document issued when an offer is accepted that confirms the details of the purchase.
It’s necessary when a property makes the transition from being under offer to being sold, subject to contract. You could almost think of it like a property receipt of sorts.
Loan to value ratio
This one feels a little bit simpler, and essentially refers to the process lenders use to detail the amount you need to borrow versus the deposit you can afford to put down.
The higher your deposit, the lower the loan to value ratio (also known as LTV) will be, as well as the interest rate.
To put it into perspective, if your new home costs £250,000 and you have a 10% deposit amounting to £25,000, your LTV will be 90%.
Conveyancing
We’re getting into slightly more understandable territory now, as 57% of respondents were confused by the term conveyancing.
This refers to the legal process of transferring home ownership from the current owner or homebuilder to the new buyer. It’s generally considered good practice to hire a conveyancing solicitor as soon as you’ve made an offer on a house, as this can help speed up the process.
EPC Rating
A rating system showing how energy efficient a property is.
Most new homes in the UK achieve a B rating or above, which means that buyers can take advantage of green mortgage deals that offer discounted rates for energy-efficient homes.
Agreement in principle
Just over half (51%) of Brits are baffled by this term, which simply refers to a conditional offer from a mortgage lender that outlines how much they might lend you.
There are a few different options when it comes to mortgages, including fixed rates, variable rates, and tracker mortgages (which follow the Bank of England’s base rate).
Subject to contract
This is a term that’s used later down the line after an offer has been submitted, and this indicates that while the seller has accepted the offer, the contractual process hasn’t yet been completed.
Property chain
Last but not least, the property chain refers to the series of property transactions that rely on one another to be completed.
The more parties that are involved, the more complex and fragile the transaction can become.
So, if you’re already a homeowner and you’ve had an offer on your current house from someone who is also already on the ladder, the sale of your home will depend on your buyers’ sale going through, as well as the situation of the people you’re looking to buy from next.
Complicated, right?
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