First time buyers’guide A step-by-step guide to buying your first home Connecting our communities with a better financial future. Helping you take your first steps on the property ladder. Call our Newcastle based call centre on: 0345 606 4488 Monday to Friday 8am to 8pm and Saturday 9am to 3pm (excluding bank holidays) Calls may be monitored and recorded for training and security purposes. Or visit us online: www.newcastle.co.uk Newcastle Building Society Principal Office: Portland House, New Bridge Street, Newcastle upon Tyne, NE1 8AL. Newcastle Building Society is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Newcastle Building Society is entered in the Financial Services Register under number 156058. You can check this on the Financial Services Register or by contacting the Financial Conduct Authority on 0800 111 6768. Call 0345 734 4345 or visit us online www.newcastle.co.uk Details are correct as at time of print (January 2020) ADV003 YOUR MORTGAGE WILL BE SECURED ON YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE. Mortgages newcastle.co.uk
Transcript
First timebuyers’guide
A step-by-step guide tobuying your first home
Connecting our communitieswith a better financial future.
Helping you take your firststeps on the property ladder.
Call our Newcastle based call centre on:
0345 606 4488Monday to Friday 8am to 8pm and Saturday 9amto 3pm (excluding bank holidays)
Calls may be monitored and recorded for trainingand security purposes.
Or visit us online:
www.newcastle.co.uk
Newcastle Building Society Principal Office: Portland House, New Bridge Street, Newcastle upon Tyne, NE1 8AL. Newcastle Building Society isauthorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority.Newcastle Building Society is entered in the Financial Services Register under number 156058. You can check this on the Financial ServicesRegister or by contacting the Financial Conduct Authority on 0800 111 6768. Call 0345 734 4345 or visit us online www.newcastle.co.uk
Details are correct as at time of print (January 2020) ADV003
YOUR MORTGAGE WILL BE SECURED ON YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOTKEEP UP REPAYMENTS ON YOUR MORTGAGE.
Mortgages
newcastle.co.uk
3
Choose the right mortgage
There are a lot of mortgage deals in the market, offering differentfeatures, meaning it can be difficult to choose the right one. But,answering the following questions should make things easier for you.
Firstly, how do you want to pay your mortgage back?
RepaymentA repayment mortgage means on a monthlybasis you are paying back an element ofthe money you’ve borrowed, as well as theinterest payable on your loan.
The benefit of this type of mortgage is thatat the end of the full mortgage term, you willknow you’ve repaid the entire amount youborrowed, as well as any interest, so you willown your home outright.
Interest onlyBy selecting an interest only mortgage, youwill only pay the interest on a monthly basisand so will not reduce the amount youborrowed; meaning the size of your mortgagewill remain untouched.
This means you are responsible for makingsuitable arrangements for the loan (called arepayment vehicle) to ensure it is repaid atthe end of the mortgage term and providingevidence of this.
Helping you take your first stepson the property ladder
At Newcastle Building Society, we understand it can often be dauntingwhen considering buying your first home. There’s so much to thinkabout before you even consider looking for a property, so we’vedeveloped this helpful guide with you in mind.
It provides a step-by-step guide to assist you through each stage of buying your first home, fromworking out your budget before you start house hunting, right through to helpful hints and tipsfor your moving day.
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ContentsChoosing the right mortgage 3
What type of mortgage is best for you 4
How much do you have for a deposit? 5
Start saving 6
The Decision in Principle 7
Looking for a property 8
Found your first home? What’s next 9
Getting a survey/valuation 10
Choosing a Solicitor 11
Making an offer 12
Completion - it’s finally yours 13
The countdown to move day 14-17
Jargon buster 18-19
5
How much do you havefor a deposit?
The amount you can afford as a deposit will have a direct impact onhow much you can and need to borrow. The more deposit you’re ableto put down, the less you will need to borrow.
At the Newcastle, we have First Time Buyermortgages that only require a deposit of5% of the purchase price. This means ifyou’re hoping to buy a property of around£150,000, you will require at least £7,500as a deposit.
What other costs can I expect? Don’t forget there will be other costs involvedin buying a home, so you should factor all ofthese into your budget to ensure you’vecovered everything off.
Some examples of the othercosts are as follows:
l Valuation fee
l Mortgage arrangement fees
l Solicitor’s fees
l Stamp duty (only for properties over£300,000)
l Buildings, contents, life and protectioninsurance
This list isn’t exhaustive and doesn’t covereverything so it’s important you do yourresearch.
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Fixed rateA fixed rate mortgage allows you to fixyour interest rate allowing you to pay a setamount each month, for a set period oftime, for instance two, three, five or tenyears. The advantage is you know exactlyhow much you will have to pay each monthso you can budget more easily.
Variable rateA variable rate mortgage is any ratewhich is not fixed and can be described asa base rate tracker, discounted rate oroffset mortgage. This can vary (and notnecessarily in line with the Bank of Englandbase rate), which means your paymentcan go up or down.
There are two main types ofmortgage deals that you canchoose from:
What type ofmortgage isbest for you?
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What you give up How much will you save each time? Monthly Yearly
Daily coffee (5 days perweek)
£2.70 a day (based on a regular cappuccino)* £58 £692
Cigarettes (10 per day) £5.00 a day (based on a pack of 20 at £10.00)* £152 £1,825
Beer (5 pints per week) £3.98 per pint* £86 £1,035
Wine (2 bottles per week) £7.00 per bottle* £61 £728
Eating Out (weekly) £22.50 (based on average three course meal fortwo at £45.00)*
£98 £1,170
Chocolate (1 bar per day) £0.62p (based on average price of a 51g Mars Bar)** £19 £226
Saving for a deposit can seem daunting, but it may be easier than youthink. Cutting back on just some of those little luxuries can go a longway to helping.
The table below shows our most common luxury’s and how much you could save by givingthem up for a while, all helping you get that deposit saved:
Help to Buy: Newcastle First Home ISA or SaverIf you choose to save for your deposit with our accounts, you could be eligible for a cash bonusof up to £1,000 should you decide to complete a mortgage with the Newcastle.
Lifetime ISAAlternatively you may be eligible for a 25% government bonus through our cash lifetime ISA tohelp you towards the cost of buying your new home.
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How much willwe lend you?
Before starting your search for a home, you’ll need to find outhow much you can borrow. Sometimes, estate agents won’t letprospective buyers view properties until they know a lender islikely to provide a mortgage.
First off, speak to your mortgageadviser to get a Decision in Principle(DIP). The DIP will provide you withuseful information, such as how much wewould be willing to lend you. You can alsotake your DIP to your estate agents toallow you to view potential homes. Thisquotation doesn’t cost you anything.
The quotation provided will be based onthe following information you haveprovided us with;
l Your income(s)
l Your monthly outgoings
l Your employment status
l The type of property you’re lookingto buy
l Credit check/search
It is worth noting that a DIP isn’t aguarantee that a lender will provide youwith a mortgage and any lending will besubject to a full mortgage application.
But don’t worry, we can help you with what’s called a Decision in Principle –known as a DIP.
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Found your firsthome? What’snext?Once you have found the right propertyfor you then you need to make an offerand agree the purchase price with theseller, which is normally done via theestate agent.
As you’re a first time buyer, you’re in the great positionof not being in a ‘chain’ and so may be better able tonegotiate on the price. Again, this is all done throughthe estate agent.
Making a full Mortgage Application Once you’ve had an offer accepted on a property, nowis the time to make a full application. Your mortgageadviser will provide you with free advice and also giveyou a tailored illustration on the best mortgage productfrom our range, by providing advice on what kind ofmortgage to take to suit your needs.
We will also put you in contact with our representativesfrom Newcastle Financial Advisers Limited to help youprepare for the unexpected. We will make sure you, yourhome and family are protected against unemployment,injury, illness and even death.
We can also provide home insurance quotes from ourpartner, Legal and General Insurance Limited, to makesure your new home is protected too. Your mortgageadviser will then issue your application and highlightwhat supporting documents are necessary.
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Viewing a property that could potentially become yournew home is no doubt exciting. But, for some, there’sthe worry they could make the wrong decision to buy,simply because they didn’t find out as much about theproperty as possible when making their first visit.
1. Research the area, your estateagent should be able to providesome information but it’s also worthfinding out about the local travelservices, doctors, entertainmentvenues to see if they are suitablefor you and your family.
2. Visit the area at differenttimes of the day, to get a generalfeel for the town or street you areinterested in. Keep in mind thetraffic and noise volumes.
3. Check out the propertyexternally first, look out for looseroof tiles, cracks in exterior wallsand poor quality window frames asthese could indicate further workand money.
4. Check for damp patches onwalls or ceilings, some may behidden behind furniture or largepictures. Rusty radiators or pipesare also good indicators of dampproperties.
5. Consider areas that would bemost costly to repair, once insidethe property. If the property is old,ask if the electrics, damp proofcourse or heating systems have
been replaced at any time and askto see copies of guarantees andwarranties. Also, don’t forget tocheck the Energy PerformanceCertificate from the seller whichwill give you a good indication ofwhat energy bills you may face.
6. Kitchens and bathrooms arethe most expensive rooms to refitso if you don’t like the currentfixtures and fittings, remember tobudget for replacements.
7. Ignore basic décor, everyone’stastes are different and basicdecorations are not expensive tore-do.
8. What direction does theproperty face? It may sound sillybut if you like to sit in the sun inyour garden, you’ll have to considerthis.
9. Is the driveway big enough?Does it have a garage and doesthe street offer suitable and safeparking spaces for you and visitors?
10. Be prepared to be flexible,remember there’s no such thingas a perfect house.
So for a better chance of finding a house you can happily call your home,take a look at these top ten tips:
Newcastle Building Society introduces to Newcastle Financial Advisers Limited for adviceon Investments, Pensions, Life and Protection Insurance and Inheritance Tax Planning.Newcastle Financial Advisers Limited is an appointed representative of Openwork Limitedwhich is authorised and regulated by the Financial Conduct Authority.
Buildings and contents insurance is arranged by Newcastle Building Society and providedand underwritten by Legal & General Insurance Limited. To get a quote and apply onlineyou will be transferred to Legal & General’s website. Their website terms and conditionsand cookie policy may differ from Newcastle Building Society’s so please read themcarefully.
Looking for a property
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Choose a Solicitor
The solicitor’s main job is conveyancing - this means legally transferringhome ownership from the seller to the buyer. Your solicitor will liaisewith the seller’s solicitor to check the legal title to the property youwish to buy is acceptable and can be legally transferred to you.
They will also carry out local searches with local authorities, drawing up your contract, preparingtransfer documents, checking legal documents, performing land registry searches and much more.
The seller’s solicitor will prepare the contractfor sale and send this to your solicitor alongwith the required title documents. Yoursolicitor will then check and approve thecontract and title to the property on yourbehalf.
The contract is the legal agreement betweenyou and the seller, which sets out the price,terms and date on which the property willtransfer into your ownership.
So how can you make sure youfind the right solicitor?Firstly, it could be helpful to use a localsolicitor as they may have a relationship withthe local planners and may understand localregulations. Calling around and speakingwith companies will give you an idea of howefficient and helpful they’ll be.
A good conveyancer will take the time toexplain what it is they will do clearly andconcisely, and should strive to gain a fullunderstanding of your needs. Talk to friendsand family who have recently moved houseand find out who they used.
Word of mouth really is a powerful tool andcan either put you in the right direction or atleast make sure you steer away from a badone.
Searching the web could provide you with alot of free information to see what companiesthere are available in your local area. Also,how comprehensive and helpful their websiteis can be useful, so it’s well worth a browse.As with anything, costs can be a factor whenchoosing a conveyancer and may be thebiggest decider for you.
Newcastle Building Society does have apartnership with the UK’s leading conveyancingpanel management specialist, Legal MarketingServices (LMS). LMS provides a managedconveyancing service to NBS to carry outlegal work required for remortgaging orpurchasing your home. For further details,please contact us on: 0345 606 4488.
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Getting a survey/valuation
As part of your application, a survey needs to be carried out on theproperty you want to purchase. This is done to make sure the value ofthe property is enough to cover the mortgage and there are no majorproblems with the property.
We’ll arrange the survey and you can generally choose from the following three options:
Valuation for mortgage purposesThis is the basic assessment carried out andenables us to decide whether or not to lendyou the money for the property by assessingits condition. This basic valuation is for thelender’s benefit only.
Homebuyers reportThis is a survey on a property carried out onyour behalf. You will receive a report on thecondition of the property, which will state anyrepairs or defects that need attention.
Structural surveyThis is a comprehensive survey, also knownas a “full” survey, which is carried out tothoroughly examine the condition of aproperty. This type of survey is usuallyrecommended if you’re buying an older ormore unusual property. The report will detailany defects and potential defects, and tellyou what needs to be done to remedy them.
The survey cost depends on the type youchoose and the purchase price/valuation ofthe property.
We will be able to advise you on this cost,this may even be included as part of themortgage we offer you.
In some cases, the mortgage valuation maynot necessarily reflect the price of theproperty. This may restrict the mortgageproducts available to you as your Loan toValue (LTV) may have changed.
In these cases, we may have to switch you toanother, more appropriate mortgage product.It could also mean that we are unable to offeryou a mortgage.
If we are unable to offer you a mortgageafter your mortgage valuation, any productapplication or valuation fees would not berefunded, so it is essential that you are asaccurate as possible when providing us withan estimated value of your property.
There are a number of websites that canprovide estimates of current propertyvaluations and house prices and we wouldencourage you to look at these prior tomaking your application.
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Completion - it’s finally yours!
When you exchange, you should also agree a completion date.Completion is the last legal hurdle you face, this is when the money istransferred from your mortgage provider to the seller and is allorganised through your solicitor.
Once the payment has been confirmed, you will be given the keys to your new home by theestate agent. We will also write to you on completion to confirm what date your first mortgagepayment will be collected.
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Making you an offer
Once we’ve received your application, along with all of your supportinginformation and the valuation has been carried out, we check everythingto ensure all of the details are satisfactory. At this stage we’ll provide youwith a mortgage offer.
This offer will state how much we will lendyou, over what term and the rate of interest tobe charged. A copy of the mortgage offer willalso be sent to your solicitor who will be ableto assist you by fully explaining all of theterms and conditions to ensure you fullyunderstand and accept them.
Once you have accepted the terms of theoffer, your solicitor will take the mortgageoffer and start the procedure of exchangingcontracts with the seller.
Exchanging contractsBy this time, you should be happy with.everything, and so your solicitor will completeall of the legal paperwork, including draftingyour contract ready for you to sign. As part ofthe contract, there should be a list of fixturesand fittings included in the price – such askitchen appliances, carpets and curtains.
This contract is legally binding, so at this pointyou’re making a real commitment and if yousubsequently pull out, you could lose yourdeposit. So, if you have any last minutedoubts or concerns, you must make sure youraise them with your solicitor first.
Once you’ve signed the contract, your solicitorwill hand it over to the seller in exchange forthe contract they’ve signed. From now on, youare both committed to the deal and neitherof you can pull out without attracting somesignificant costs.
Now that you’ve exchangedcontracts, you becomeresponsible for insuring theproperty.
Meaning you will need to get somebuildings insurance in place for this –don’t wait until the completion date. Yourmortgage adviser should have alreadydiscussed getting this insurance in place.
Countdown to move day Now all of the legal bits are out of the way, you can move into your newhome. To help ensure you don’t forget anything, we’ve developed somechecklists; these should help keep the day as stress free as possible.
Before you move checklistIf you live in rented accommodation, as soon as you’ve found somewhere, you should contactyour landlord as you may need to give them notice that you’re leaving
1 month before movingStart having a clear out of anything you don’t want to take with you to yournew home.
Ask friends and family to help you with the move – the more people you havethe easier it will be.
Get a few quotes for removal companies, or van hires, and book one.
Weekends are always in high demand so try to opt for a mid-week move.
Get plenty of boxes and lots of packing materials.
Make sure you book some time off from work for the move.
Make sure your home insurance covers your goods in transit for the move.
1-2 weeks before movingStart packing everything you won’t need on the lead-up to the move. Make sureyou don’t pack boxes too heavy to ensure you don’t hurt yourself during themove. And don’t forget to label all of the boxes.
Arrange for your mail to be re-directed to your new address.
Make sure you have someone to look after your young children and petsduring the move as having them around can sometimes make the movemore difficult.
Inform your providers, such as DVLA, car insurance, banks, building societies,telephone, TV licence, gas/electricity, water, council tax, employer, etc. thatyou’re moving. If you’re moving out of the area you should deregister fromyour doctors and dentists and register with someone in your new area.
Notify local services, such as milk and paper deliveries, window cleaning, etc.to arrange a cancellation date.
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The day before moving Pack everything you don’t need for the move, making sure you keep all yourvaluables in a safe place.
Make sure that you defrost both your fridge and freezer.
Keep all essential items handy, such as cash, credit cards, mobile phones, keysand official documents.
Put aside a few things in a box to make the moving day as stress-free as possible,such as refreshments, toilet paper, cleaning materials, kettle, tea, etc. Keepthese out of the way of any removers to ensure they don’t get packed awaywith every thing else. Perhaps include a bottle of champagne and some glassesto celebrate later!
You should leave your old house as clean as you’d like to find your new house,so once everything has been packed, clean as much as possible.
Moving day hints & tipsAlways ask people to help with the move, the more people you have, the lighterwork it will be. You will also need assistance carrying those heavier items.
Count the boxes before they are moved and check when they are delivered toyour new address that you have them all.
Make it your priority once you reach your new home to make the beds and hangthe bedroom curtains as soon as possible – by the end of the day you’ll be ex-hausted and it will be great to just relax.
Don’t attempt to do all your unpacking on the first day, just unpack the essentials –and make sure there is somewhere comfortable to sit, eat and sleep.
Take meter readings from both your old and new addresses to give to your energysuppliers.
Once everything has been packed into the removal vans, check your old houseover to make sure nothing has been left, everywhere is locked up and the place isclean and tidy.
Make sure you leave the keys in the arranged place.
Income protection - This can give you a regularmonthly income if you are off work for a prolongedperiod because of an accident or illness.
Initial Disclosure Document - This documentconfirms the type of mortgage service we as a lenderwill provide. This can be advised, where we offer helpand advice on the type of product best suited for youor Execution Only, and non-advised, where you decidewhich product to apply for.
Initial Interest - Any payment due for the period fromthe day the mortgage began up to the first paymentdate.
Insurance - An agreement under which individuals,businesses and other organisations, in exchange forpayment of a sum of money (a premium), areguaranteed indemnity for losses resulting fromcertain events or conditions specified in a contract(policy).
Interest Only Mortgage - You only pay interest toyour lender throughout the mortgage term and yourmortgage balance doesn't reduce. At the same time,you put money into a separate investment whichshould grow and pay off the mortgage as scheduled.You will still owe capital at the end of the mortgageterm. It is imperative that you have a plan in place inorder to be able to repay your loan.
Land Registry Fee - A fee charged to register yourdetails in the Land Registry records once you havebought a property or changed lenders.
Leasehold - Ownership of a property for a number ofyears on lease, after which ownership reverts back tothe freeholder.
Lending Into Retirement - When the mortgage termexceeds beyond the customers retirement age.
Lessee - The person to whom a lease is granted - thetenant.
Lessor - The person who grants a lease - the landlord.
Licensed Conveyancer - An alternative to using asolicitor, they specialise in property ownership transfer.
Life Assurance - Type of insurance that will pay anamount to your estate when you die. This can be.arranged to pay out a set lump sum or a decreasingamount that reduces in line with a mortgage.
Loan to Value - The amount of mortgage expressedas a percentage of the value of the property orpurchase price, whichever is lower. For example, amortgage of £80,000 on a purchase price of £100,000would be 80% LTV. You can usually borrow up to 95%LTV although this may vary on certain products.
Local Authority Search - Part of the conveyancingprocess when you buy a property. It gives details ofany matters which, from the local council's pointof view, affect the property. It reveals any proposedchanges to the local area, such as road improvements,and details any planning permission given for theproperty.
Member - A member is a customer who has a qualifyingaccount such as savings or a mortgage with theNewcastle. Our customers are 'members' because weare a mutual society.
Mortgage - A mortgage is a loan secured against aproperty.
Mortgage Payment Protection Insurance (MPPI) -This insurance can cover your mortgage payments ifyou can’t work because you've become unemployedor because of an accident or illness.
Mortgagee - The lender
Mortgagor - The borrower
Mortgage Advance - The actual amount of money welend as a mortgage
Mortgage Deed - The legal document by which thelender secures the loan against the borrower'sproperty.
Mortgage Term - The length of time over which youagree to repay your mortgage
Negative Equity - This is when the amount you oweon a mortgage is greater than the value of yourproperty.
New Build Property - The definition of a 'new build'means a property that has not been occupied withintwo years of being newly constructed, converted orrefurbished.
NHBC Guarantee - A 10-year guarantee provided bythe National House Building Council, that the builderwill put right serious defects on a newly-built property.
Offset Mortgage - An offset mortgage links yoursavings balances with your mortgage. Rather thanpaying you interest on your savings, you can offset yoursavings against your mortgage.
Overpayments - When you pay more than yournormal monthly payment – overpayments made toyour mortgage allows you to pay off your mortgageearlier.
Pension Plan - An investment plan which can providea lump sum and an income after retirement. A pensionplan can be used as a way of providing a lump sum torepay the capital of an interest only mortgage.
Personal Possessions - Cover for accidental loss ordamage to items that you usually take out of yourhome.
Portable Mortgage - If a mortgage is 'portable', it canbe transferred from one property to another.
Property Valuation - When you apply for a mortgagewe may ask you to pay a valuation fee to cover the costof valuing your property. The valuation fee is payableprior to valuation and is non-refundable if the valuationis carried out. The valuation is very basic and is carriedout for our benefit. We strongly recommend that youhave a more thorough survey undertaken, such as aHomebuyer Report as this will tell you about the qualityand condition of the house you want to buy.
Prudential Regulation Authority (PRA) - The PRAworks alongside the Financial Conduct Authority (FCA)creating a “twin peaks” regulatory structure in the UK.
Rebuild Cost - This is the cost of rebuilding your homeif it is damaged or destroyed by a number of differentevents such as storm, fire, flood and subsidence.
The reinstatement value is not the same thing asmarket price. The reinstatement value is the cost tofully rebuild your home, including site clearance andlegal fees. The cost of rebuilding your home varies,depending on where you live.
Redeem/Redemption - To pay off the outstandingbalance of a mortgage in full
Remortgage - Transferring your mortgage from onelender to another without moving house is known as'remortgaging'.
Repayment (Capital & Interest) Mortgage - This isthe most common way to repay your mortgage. Yourregular repayment is made up of some of the amountborrowed plus interest every month. It means yourmortgage will be repaid in full by the end of theterm providing all payments are maintained in full andon time.
Repayment Vehicle/Strategy - This is the means bywhich you choose to pay off the capital on an InterestOnly mortgage when the mortgage term comes to anend. Please note that currently the Society does notoffer Interest Only mortgages.
Reservation Fee - A reservation fee is payable on somemortgage products and is charged to reserve aparticular mortgage product. This fee is non-refundableand is payable upfront.
Repossessed - This is where a property is taken bythe lender if the borrower fails to make the mortgagerepayments. The property is then sold so the lender canget their money back.
Sealing Fee - A fee charged by the lender for sealingyour deeds.
Searches - Checks carried out during the conveyancingprocess to determine any planning proposals or othermatters which might affect the future salability ofthe property. Another search is carried out after theexchange of contracts to check that the borrower is notbankrupt.
Stamp Duty - This is a Government tax which you willhave to pay if the price of the property you are buyingis over £125,000.
Standard Variable Rate - A Standard Variable Rate(SVR) is a rate of interest that is determined by yourlender. The rate can increase or decrease at any time,which means your payments could also fluctuate. Mostmortgage deals revert to SVR when your current fixedor tracker deal comes to an end.
Structural Survey - A comprehensive survey carriedout by a professional surveyor on your behalf, tothoroughly examine the condition of a property.
Subject to Contract - The phrase used beforeexchange of contracts which allows either party towithdraw without incurring a penalty.
Sum Assured - The amount paid out on the death ofa policy holder.
Surveyor/Valuer - The person qualified by theRoyal Institution of Chartered Surveyors or theIncorporated Society of Valuers and Auctioneers tocarry out valuations and surveys of properties.
Telegraphic Transfer - Also known as a CHAPStransfer, this term is used to refer to sending funds fromone bank to another electronically.
Term of Mortgage - The number of years that youagree to repay your mortgage over.
Tie in Period - The period of time you would need toremain on certain mortgage products to avoid an earlyrepayment charge.
Title Deeds/Title Documents - The documents whichshow proof of ownership.
Underpayments - On some mortgages you canarrange to pay less than your normal monthlysubscriptions for a limited period, up to your agreedborrowing limit. Please see product details for moreinformation.
Valuation - This is the basic assessment that is carriedout on a property. It enables the Newcastle to decidewhether to lend on the property by assessing itscondition and likely value. This basic valuation is for thelenders benefit only. We would recommend thatyou have a more detailed survey such as a homebuyersreport or a full structural survey.
Valuation Fee - The charge for obtaining a valuationreport of a property. The fee increases with the valueof the property and is payable upon application.
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Jargon-busterAccidental Damage - Optional insurance cover foryour buildings and/or contents which provides protectionfor accidents that might damage the permanentstructure of your home or your belongings.
Additional Borrowing (also known as FurtherAdvance) - When an existing mortgage customerwishes to increase their mortgage borrowing and whichis often used for home improvements but can (subjectto lending policy) be used for any purpose.
APRC (Annual Percentage Rate of Charge) - A guideto help you compare the cost of different mortgagedeals, taking account of interest rates payable (bothduring the initial product period and after) and inclusiveof any fees.
Arrears - Mortgage payments which have not yet beenpaid as requested and have become overdue.
Bank Base Rate (BBR) - This is the rate which is seton a monthly basis by the Monetary Policy Committee(MPC) of the Bank of England and is the rate that itcharges for its borrowing.
Base Rate Tracker - The interest rate is linked to, butmay not be equivalent to, the Bank of England baserate. When there is a change to the Bank of Englandbase rate your mortgage payment rate will reflect this(within 14 days).
Building Society - A mutual organisation which isowned by its members.
Building Insurance - An insurance policy which istaken to protect your property against hazards such asfire, flood and subsidence. A buildings insurance isrequired as part of the mortgage terms and it is theborrowers responsibility to ensure the property isadequately insured for the duration of the mortgage.
Buy-to-let mortgage - A mortgage that is used forborrowers who wish to purchase a property to rent out.
Capital - The amount of money you still owe on yourmortgage.
Capital and Interest Mortgage - This is the mostcommon way to repay your mortgage. Your regularrepayment is made up of some of the amount borrowedplus interest every month. It means your mortgage willbe repaid in full by the end of the term providing allpayments are maintained in full and on time.
Capital Repayment - A lump sum payment made toyour mortgage account and in addition to your normalmonthly mortgage payment.
Cashback Mortgage - A mortgage product whichoffers you a cash lump sum upon completion - this maybe a fixed lump sum or a percentage of your mortgageamount.
Collateral/Security - This is usually the property andwhich the lender can sell to repay the loan if theborrower does not maintain mortgage payments andfalls heavily into arrears.
Completion - After you exchange contracts on aproperty, you will agree a date for completion with allthe parties involved. This is the date at which propertyownership is legally passed to the buyer, and when theseller must move out and the buyer may move in.
Completion Fee - This is a non-refundable fee whichcovers the processing of your mortgage applicationand setting up of your account.
Consent to Let - Permission from your mortgageprovider will be required if you wish to let/rent outyour property if your current mortgage is arranged ona residential basis.
Contents Insurance - This is an insurance policy whichis used to cover your personal possessions in yourhousehold, in case they are stolen or damaged.
Contract Variations - Where a borrower makes avariation to the terms of their existing mortgage, forinstance reducing /extending the term or convertingthe repayment type.
Contracts - The legal documents under which thebuyer and seller of the property agree terms.
Conveyancing - The process of transferring ownershipfrom one person to another.
County Court Judgements (CCJs) - Is an order madein a county court for a debt to be repaid in England andWales.
Credit reference agency - Credit reference agenciesare organisations that gather information about peopleand businesses across the UK. This information comesfrom lenders such as banks, credit card companies andfraud prevention agencies, as well as records in thepublic domain.
Credit report - Credit report is a report issued by acredit agency usually for a small fee which highlightssomeone's past purchase behaviour and credit rating.
Credit search - A credit search is when we carry outa search on your name and address with a creditreference agency to help us understand more aboutyour credit history. Each time a search is done it isnoted on your credit record to let other organisationsknow that we have asked for information about you.
Credit Scoring - A system used by lenders to assessthe credit worthiness of potential borrowers.
Daily Interest - This means the interest on yourmortgage is calculated on the outstanding balanceeach day so every payment you make immediatelyreduces the balance on which your interest iscalculated.
Debt Consolidation - A loan taken in order to repayexisting outstanding debts. You may be able to spreadthe loan over a longer period, which may reduce yourmonthly payment, but by increasing the term you maypay more interest overall.
It may be possible to increase your mortgage topay off debts (subject to our lending policy), but it’simportant to seek advice before doing this.
Decision in principle (DIP) - Before you make anapplication for your mortgage you can submit a DIPwhich tells you how much we would lend you based onyour income and commitments.
Deposit - This is the amount of money that you payon exchange of contract as part of your initialcontribution to the purchase of your home.
Direct Debit - A Direct Debit is an agreement betweenyou and a company you want to pay on a regular basis.The agreement you make authorises the company tocollect varying amounts from your account on a regularbasis. Because you’re covered by the Direct Debitguarantee, the company should always tell you whatthese amounts are - and when they’ll be collected.
Disbursements - The fees your solicitor or licensedconveyancer will incur during conveyancing e.g. searchfees and land registry fees. These are added to youroverall legal bill.
Discharge Fee / Mortgage Exit Administration Fee- A fee charged for the administration work involved ofthe lender to redeem your mortgage.
Discount Rate - This type of mortgage usually offersa discount off the lender’s Standard Variable Rate(SVR). The discount period usually lasts for a relativelyshort period – typically two or three years, after which,the rate reverts back to the Standard Variable Rate.
Early Repayment Charges - On some mortgages, acharge will be made if part or the entire mortgage ispaid off before a pre-agreed date, or moved to anotherproduct or lender. Your mortgage terms and conditionsshould state if this charge applies.
Electronic Transfer - This is the method by which yourmortgage advance is paid to your conveyancer.
Endowment Policy - A long-term savings policy(usually between 10 and 25 years), which is often usedto repay the capital element of an interest-onlymortgage at the end of the term or pay off anoutstanding mortgage in the event of death. Thistype of policy could be a repayment vehicle for aninterest only mortgage.
Equity - The difference between the value of yourproperty and the total amount of mortgage securedagainst it.
Execution Only - A mortgage transaction completedupon the specific instructions of the customer wherethe lender does not provide advice relating to thesuitability of the mortgage transaction.
Excess - A fixed amount of money, which thepolicyholder agrees to contribute toward the costof a claim under an insurance policy.
Exchange of Contracts - The date at which you agreeto exchange contracts to commit to buying a property.Once contracts have been exchanged, you are legallyobligated to buy the property. After exchange, a datefor the completion of the property purchase can be set.
Feudal - A form of legal title applicable only inScotland
Financial Conduct Authority (FCA) - The FinancialConduct Authority is responsible for the regulation offirms' conduct and ensures the appropriate level ofprotection for consumers.
First Charge - Most mortgage lenders will require afirst charge. This means that the lender has first callon any funds available from the sales of the propertyto clear the outstanding mortgage debt.
First Time Buyer - An individual who has notpreviously owned a property
Fixed Rate - This type of mortgage means that theinterest is fixed for a specified period of time whichmeans that the monthly repayments will remainunchanged until the product period ends.
Freehold - Where the borrower owns both the propertyand the land.
Gazumping - A term used to describe the action ofa seller accepting an offer and agreeing to the saleof their property, only to accept a higher offer beforeexchange of contracts has taken place.
Ground Rent - An annual charge payable byleaseholders to the freeholder.
Guarantor - A person who guarantees you will paythe mortgage repayments. If you don’t pay they areliable to have to pay them themselves. Often parentsor relatives are guarantors for first time home buyersto help them to afford a property.
Higher Lending Charge (HLC) - This is a feesometimes payable by the borrower to insure thelender against potential loss if a home has to berepossessed or sold.
Homebuyers report - A survey on a property, carriedout by professional surveyors on your behalf. Youwill receive a report on the condition of the property,stating any repairs or defects that need attention. Amore comprehensive survey is called a full structuralsurvey, which you might decide to carry out on olderproperties.
Home Mover - A person selling one property andpurchasing another property.
Income Assessment - The Society no longer assessesyour borrowing capacity through income multiples andhas developed a new Affordability Calculator which isnow more tailored to your individual circumstances.
Assessment of how much you can borrow is nowcalculated through a combination of your income,regular commitments and household / lifestyleexpenditure.
