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Mortgage Glossary

Mortgage Glossary

Welcome to our Mortgage Glossary. Here you will find definitions for more commonly used mortgage terms, making the jargon clearer. If you're unsure of any words or phrases, simply use the guide below.

Shared Ownership

Shared Ownership allows individuals to buy a share in a property rather than buying the property outright. The share is normally between 25% and 75% and rent is then payable on the share that is not owned. This is a popular way for First Time Buyers to get on the market as the amount of deposit they need to save can be significantly lower. The purchase of further shares is often known as "staircasing".

Standard Valuation Report

A basic standard mortgage valuation is an inspection carried out by a valuer to make sure that the property is suitable security for the loan required. This is carried out for the lender but many lenders will provide you with a copy. Depending on the mortgage you apply for, this can often be provided for free.

Stamp Duty

You will pay a Government tax called ‘Stamp Duty’ if the property you are buying costs from £125,001.

Currently, Stamp Duty is payable at the following rates (please check these rates are still valid):

All property in the UK (Residential)

Purchase price/lease premium or transfer value

% of purchase price

£0 - £125,000

£125,001 - £250,000

£250,001 - £925,000

£925,001 - £1,500,000

£1,500,001 and over

0%

2%

5%

10%

12%

For example, a property purchase price of £270,000 would incur Stamp Duty of £3,500 as shown in the table below:

Purchase price band

Amount applicable

% of purchase price

Stamp Duty payable

£0 - £125,000

£125,000

0%

0

£125,001 - £250,000

£125,000

2%

£2,500

£250,001 - £925,000

£20,000

5%

£1,000

Total = £3,500

Stamp duty is paid on completion of the mortgage and is normally paid as part of your solicitor’s overall bill. You do not pay ‘Stamp Duty’ when you remortgage your home.

All property in the UK (Additional residential properties)

From 1st April 2016, a higher rate of stamp duty will apply to all purchases of additional residential properties costing £40,000 or over, in England and Wales. The higher rates will be 3 percentage points above the current SDLT residential rates. They will be charged on the portion of the value of the property that falls into each band.

Band

New additional property SDLT rates

£0* - £125k

3%

£125k - £250k

5%

£250k - £925k

8%

£925k - £1.5m

13%

£1.5m+

15%

*Transactions under £40,000 are not subject to the higher rates.

For example an additional residential property purchased for £200,000, would incur Stamp Duty of £7,500 as shown in the table below:

Purchase price band

Amount applicable

% of purchase price

Stamp Duty payable

£0* - £125k

£125,000

3%

£3,750

£125k - £250k

£75,000

5%

£3,750

Total = £7,500

Stamp Duty is paid on completion of the mortgage and is normally paid as part of your solicitor's overall bill. You do not pay 'Stamp Duty' when you remortgage your home.

Use HMRC’s calculator to find out how much stamp duty you’ll pay. (http://www.hmrc.gov.uk/sdlt/calculate/calculators.htm)

Information correct at time of publication.

Standard Variable Rate (SVR)

A standard variable rate mortgage is linked to the lender's Standard Variable Rate (SVR) and means interest rates can go up or down. The lender will decide when to increase or decrease their SVR. This is usually, but not always, based on the movement of the Bank of England base rate.

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Newbury Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (Financial Services Register number 206077). Registered office: Newbury Building Society, 17 Bartholomew Street, Newbury, Berkshire, RG14 5LY.

English law applies and we will communicate with you in English. We are participants of the Financial Ombudsman Service. We have a complaints procedure which we will provide on request. Most complaints that we cannot resolve can be referred to the Financial Ombudsman Service.

You can check the Financial Services register on the FCA's website.

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