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Basic mortgage terms explained

Who is this page for?

If you’re looking for definitions of key mortgages terms, you’ll find them here. For more in depth information about mortgages, head to our mortgage help and guidance page

An introduction to mortgage terms

If you’re looking to get a mortgage as a first time buyer, you’re moving home or thinking about remortgaging, it’s handy to know the key terms used in this sometimes confusing process.

This page covers all the key terminology about taking out a mortgage and the application process. 

Guide to common mortgage terms

When starting a mortgage application, it’s helpful to know what all the key terms mean. Common terms include:

  • Completion date – This is the date the purchase of the property goes through and you legally own the property. If everything goes as it should, you’ll get the keys on your completion date and can move in.
  • Conveyancing–Conveyancing is the legal process of buying a house. For more information on conveyancing, read our understanding conveyancing page.
  • Deposit A mortgage deposit is the money you put down to secure a mortgage, usually at least 5%- 10% of the property value. Find out more with our mortgage deposits explained page.
  • Exchange of contracts The buyer and seller both sign contracts agreeing to the sale of the house, which are exchanged by each others’ solicitors or conveyancers. After an exchange of contracts, the buyer and seller are legally committed to complete the sale of the property.
  • LTV ratio – LTV ratio, or loan to value ratio, is the percentage split of your mortgage loan divided by the value of the property.
  • Mortgage term This is how long you’ll repay your mortgage for.
  • Mortgage equity Equity is how much of the property’s value you own. It’s worked out by taking the property’s value and subtracting how much still owe on the mortgage– what’s left is your equity in the property. Learn more about equity.
  • Offset mortgages An offset mortgage links your mortgage to your savings. You’ll only pay interest on your mortgage balance minus the total of your savings.
  • Remortgaging Remortgaging is when you transfer your current mortgage to a new deal, usually with a new lender at the end of an agreed fixed term. Find out more about remortgaging.
  • SVR – stands for Standard Variable Rate. SVR is the standard interest rate offered by lenders. After your mortgage deal expires, you’ll be placed onto the standard variable rate – this is usually a higher rate of interest.
  • Survey – It’s recommended to get a survey carried out on any property you’re looking to buy. Levels of detail vary, but you’ll be able to get an idea of the condition of the property and any repairs that needs to be done.
  • Valuation – A valuation is carried out by a lender to ensure the value of the property matches the mortgage amount that’s been offered in the mortgage Agreement in Principle.

What is a mortgage deed?

A mortgage deed is a legally binding document allowing the lender to hold a secured interest in the property, until you pay the mortgage off. 

You sign a mortgage deed when you become a new homeowner, just before the exchange of contracts.

What is a mortgage underwriter?

A mortgage underwriter works for the lender to assess mortgage applications. They follow a process to review the application and financial situation of the applicant. This includes making sure they meet all the lender’s financial and personal requirements.

They will use credit reference agencies, bank statements and your financial history to inform their decision. If the underwriter thinks there’s too much of a risk that the borrower won’t meet repayments, they may decline your application.

What is a mortgage survey?

Most lenders require a mortgage valuation survey before they accept an application. A surveyor will carry out a valuation to check the amount you’re applying for matches up with what the property is worth.

It is also known as a mortgage valuation or valuation survey. Some firms use automated valuations, so check you have the right level of survey booked beforehand.

This differs from a house survey, which is a more in-depth assessment of the property. Lenders don’t normally require these. They will cover the building and structural risks and a condition report.

What is a mortgage offer?

When you have gone through the full application process – and the lender has completed their checks – you may receive a mortgage offer. This confirms the lender will provide you with a mortgage for the property at the amount requested. 

It differs from a mortgage Agreement in Principle, which you might receive earlier.

A mortgage Agreement in Principle is not a guarantee, just a guide to what you may be able to borrow before making your full application. Find out more with our mortgage Agreement in Principle guide.

What’s a job letter for a mortgage?

On top of proof of income, lenders will often ask for a letter of employment to help prove or verify other financial information and documents supplied. A job letter for mortgage contains confirmation of your employment, including:

  • Salary (some lenders may ask for a net salary too)
  • Employment status (full/part/temporary)
  • Start date
  • Whether you are in a probation period 

The content on this page is for reference and does not constitute finance advice.

For impartial financial advice, we recommend government bodies like the Money Advice Service.

Calculators & tools

We have a range of mortgage calculators to help you:

  • Find out how much you could borrow from Lloyds Bank
  • See how much you could save if you make overpayments on your mortgage
  • Get an idea how a change to the Bank of England Base Rate could effect your monthly payments

Use our calculators and tools >

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Important legal information

Lloyds Bank plc. Registered office: 25 Gresham Street, London EC2V 7HN. Registered in England and Wales No. 2065. Lloyds Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 119278.

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