Conveyancing is the legal transfer of the title of a property from the seller to a buyer. It is possible in England for a conveyance to be carried out personally, but it is more common for each party to hire a solicitor or a licensed conveyor to carry out the legal business on their behalf.
A sum of money that is paid by the home buyer and is combined with a mortgage to reach 100% of the property value so the property can be bought. For example, on a house worth £100,000, the buyer may have to put down a deposit of 20% (£20,000) and the mortgage would then be for the remaining 80% (£80,000).
An equity loan is money borrowed in order to ‘top up’ a mortgage so that the buyer can afford 100% of the property. This means the total money spent could be 10% deposit, 70% mortgage and 20% equity loan. In the UK they are issued by the Government in order to assist the growth in the housing market through schemes such as the Help to Buy Equity Loan.
Economic protection against a possible future loss of money. For example, with the NewBuy scheme, the government and building firms pay an agreed amount into a fund that can be used to reimburse mortgage lenders in the event that the borrower cannot keep up with payments and the
lenders lose out on money.
Arguably a more risky type of mortgage which demands no payments other than to pay the interest on the loan. At the end of the loan time however, borrowers have to repay the full amount borrowed. In the short term Interest-only mortgages are cheaper and easy to handle, but borrowers need to ensure they will be able to pay the money borrowed back at the end of the mortgage term. This can be handled by selling the property at the end of the term, but falling into negative equity could leave the borrower short when it comes to paying back. Alternatively, there are some Interest-only backed mortgages that take a portion of the interest payments the lender pays and invest them, in order to generate enough capital to pay off the amount borrowed at the end of the mortgage term. The risk taken here for the borrower is whether or not the investment will produce enough money to pay off the entire loan at the end of the mortgage term.
Purchasing a leasehold property means that the buyer will own the property but not the land that it stands on. Usually, leasehold properties are flats. The main difference between these and freehold properties (where buyers own both the property and the land) is that the lease only extends for a certain amount of years, at which point the property will revert back to the landlord’s ownership. People who have owned a leasehold property for over two years have a right to a 90 year leasehold extension under the use of a section 42 Notice.
Loan to Value Mortgage
This is the most common type of mortgage, especially in the case of first time buyers, in which the deposit and mortgage loan are presented as a ration. So a £200,000 property could have a £150,000 mortgage with a £50,000 deposit, the mortgage is at 75% with a deposit making up the remaining 25%.
A mortgage is simply a loan taken out from a bank or building society that is used to pay off the majority of the price of a house. This then has to be paid back to the lender with interest, usually within 25 years. The property itself is used as security for the lender, meaning that if the borrower falls behind on payments or cannot pay the mortgage off, the lender has the right to repossess the property in order to reimburse themselves for their loss. Usually a mortgage will be a Loan to Value (LTV) mortgage.
Negative equity is a state where the asset (in the case of mortgages, the property) is valued at less than the outstanding debt from the loan. If the lender has to repossess the asset in this case, they may not get the full amount they lent back, and could demand some reimbursement from the borrower to make up their losses.
A payday loan is a loan designed to be used in the short term, for if the borrower needs to acquire some cash quickly to, for example, pay off bills that they cannot afford to until their next pay day. The APR on these loans is often incredibly high, as they are only meant to cover a short amount of time.
How much the property is worth at any given point, most importantly at the times of buying and selling. Many percentages are worked out from this so, for example, if a 12% deposit is required for a house with a property value of £120,000, the buyer would need to put down a deposit of £14,400.
A share is a part ownership. Two or more parties, in the case of the Help To Buy Equity Loan for example, the buyer and the Government/housing association, own a percentage of an asset.
If a buyer falls behind on payments or cannot pay off the debt of a mortgage, the lender has the right to take the property away from the borrower and sell it on in order to get their money back.
Equity Loan Mortgage Calculator
Whether you're a first-time buyer or already a property owner you could buy a new home with a small deposit of 5%, heres how.
How Help to Buy Equity Loans Work
- First time buyers and those already on the property ladder can apply.
- To qualify a 5% deposit is required.
- A 75% mortgage must be secured from your bank or building society.
- The remaining 20% of the property’s value is funded by an equity loan provided by the Government.
- House prices can’t be more than £600,000 in England and £300,000 in Wales.