Mortgage Jargon Explained: A Simple Guide to the Terms You'll Hear

One of the biggest reasons people feel nervous about applying for a mortgage isn't the mortgage itself… it's the language.

AIPs, LTVs, fixed rates, trackers, SVRs, ERCs... it can sometimes feel like you're learning a completely new language before you've even started looking for a home.

The good news is that most mortgage terminology is much simpler than it sounds.

At Love Mortgages, we believe good advice should leave you feeling informed and confident, not confused.

So, we've put together this straightforward guide explaining some of the most common mortgage terms you'll come across.

Agreement in Principle (AIP)

An Agreement in Principle, sometimes called a Decision in Principle (DIP), is an indication from a lender of how much they may be prepared to lend.

It's based on some initial information about your circumstances and is often one of the first steps in the home-buying process.

An Agreement in Principle isn't a guarantee that your mortgage will be approved, but it can help demonstrate to estate agents that you're a serious buyer.

Loan to Value (LTV)

Loan to Value, or LTV, refers to the percentage of a property's value that you're borrowing.

For example:

• Property price: £250,000
• Deposit: £25,000
• Mortgage: £225,000

In this example, your Loan to Value would be 90%.

Generally speaking, a lower LTV can provide access to a wider range of mortgage products at lower interest rates.

Fixed Rate Mortgage

A fixed-rate mortgage means your interest rate stays the same for a set period.

This means your monthly mortgage repayments won't change during that fixed-rate period, giving you certainty when budgeting.

Fixed periods commonly last between two and ten years, depending on the product you choose.

Variable Rate Mortgage

Unlike a fixed-rate mortgage, a variable-rate mortgage can go up or down.

This means your monthly repayments may change over time.

Some borrowers prefer the flexibility this can offer, while others value the certainty of fixed repayments.

The right option depends on your individual circumstances.

Tracker Mortgage

A tracker mortgage is a type of variable-rate mortgage.

Rather than setting its own interest rate, it follows (or "tracks") an external interest rate, such as the Bank of England Base Rate, plus an agreed percentage.

If the rate being tracked changes, your mortgage payments may change too.

Standard Variable Rate (SVR)

A lender's Standard Variable Rate, often shortened to SVR, is the rate you may move onto when your fixed or introductory mortgage deal ends. This rate is set by the lender and can change over time.

Many borrowers choose to review their mortgage before reaching this stage, as there may be other options available.

Mortgage Illustration

Before submitting your mortgage application, you'll usually receive a mortgage illustration.

This document explains:

• The mortgage product
• Monthly repayments
• Interest rate
• Product fees
• Key features of the mortgage

It's designed to help you understand exactly what you're applying for before making a decision.

Mortgage Offer

A mortgage offer is the lender's formal confirmation that they're prepared to provide your mortgage.

It includes:

• The amount they're willing to lend
• Your interest rate
• Monthly repayments
• The mortgage term
• Any conditions attached to the offer

Receiving your mortgage offer is an exciting milestone because it means your application has been approved, subject to the terms outlined.

Early Repayment Charge (ERC)

An Early Repayment Charge is a fee that may apply if you repay your mortgage early or leave your mortgage deal before it ends.

Not every mortgage works in the same way, so it's important to understand whether any charges apply before making changes to your mortgage.

Product Fee

Some mortgage products include an arrangement or product fee. Depending on the mortgage, this fee may:

• Be paid upfront
• Be added to your mortgage
• Or not apply at all

It's worth considering the overall cost of a mortgage rather than focusing solely on the interest rate.

Conveyancer or Solicitor

A conveyancer or solicitor handles the legal work involved in buying or remortgaging a property. Their responsibilities typically include:

• Carrying out legal searches
• Reviewing contracts
• Transferring funds
• Registering ownership

They work alongside your mortgage advisor, lender, and estate agent to help move your purchase towards completion.

Valuation

Before approving a mortgage, the lender will usually arrange a valuation of the property. This helps confirm that the property provides suitable security for the amount being borrowed.

A lender's valuation is different from a more detailed survey, which is designed to identify any potential issues with the property.

Completion

Completion is the day you officially become the owner of your new home.

Your solicitor transfers the funds to the seller, ownership changes hands, and you're able to collect the keys.

For most buyers, it's the moment all the planning and paperwork finally becomes reality.

Remortgaging

Remortgaging simply means replacing your existing mortgage with a new one.

People remortgage for many different reasons, including:

• Reviewing their current deal
• Avoiding moving onto their lender's Standard Variable Rate
• Borrowing additional funds
• Changing the mortgage term

Buildings Insurance

Buildings insurance helps protect the structure of your home against certain risks, such as fire, flooding, or storm damage.

Most lenders require suitable buildings insurance to be in place from the point you become legally responsible for the property.

Porting

This is where you transfer (port) your current mortgage with a lender to your new property, with the option to add further borrowing if you have up-sized.

This mitigates any penalties for breaking a fixed term contract. This will be assessed on a case-by-case basis to determine whether this option is the most cost effective for clients.

The most important term of all: Ask.

If there's one piece of mortgage advice we'd encourage everyone to remember, it's this:

There are no silly questions.

Buying a home is one of the biggest financial decisions you'll ever make, so it's completely normal to ask for clarification if something isn't clear.

A good mortgage advisor won't expect you to understand every technical term, they'll explain everything in plain English and make sure you feel comfortable before moving forward.

A final word from Love Mortgages

Mortgage terminology can seem intimidating at first, but once it's explained, most of it is surprisingly straightforward. The important thing isn't memorising every acronym; it's understanding how each part of the process relates to your own circumstances.

At Love Mortgages, we're here to remove the jargon, answer your questions, and help you feel confident throughout your mortgage journey.

Whether you're buying your first home, remortgaging or simply trying to understand your options, we're always happy to help explain things clearly, without pressure or unnecessary complexity.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Approved by In Partnership FRN 190859 August 2026.