Glossary

Comprehensive support services provided to property investors after purchase, including snagging, repairs, and ongoing property management to ensure long-term tenant satisfaction and asset preservation.

A preliminary mortgage approval that indicates the likely loan amount a lender may offer, helping UK property investors understand their borrowing capacity before making an offer.

The APRC is the amount of interest applied to a mortgage product on an annual basis. It takes into account all additional expenses and discounts, along with how much time is left on the mortgage term, giving you a full average cost of borrowing per year.

The yearly percentage gain on a property investment, calculated by combining rental income and capital appreciation, used by investors to assess profitability.

An account is defined as being in arrears when the due date has passed and payment for that month hasn’t been made.

These are fees that are charged when an account is in arrears. Any charges applied will be added to your mortgage account, along with any interest charged.

A group of investments with similar characteristics, such as residential property, commercial real estate, or equities. Property is a popular asset class for UK investors seeking stable income and capital growth.

The guaranteed or expected rental income expressed as a percentage of the property's market value, an important metric for UK buy-to-let investors evaluating potential returns.

The standard tenancy agreement used in UK residential property lettings, usually lasting six or twelve months. ASTs provide legal protections for landlords and tenants and are essential for buy-to-let investors managing rental agreements.

A property priced below current market rates, offering UK investors an opportunity to acquire real estate with potential for higher capital gains or rental yields.

A term describing physical property assets, highlighting the tangible nature of UK real estate investments compared to financial instruments.

A short-term financing option used by UK property investors to quickly fund property purchases or renovations, bridging the gap until longer-term financing is secured.

Residential developments built and managed for rental purposes, often by institutional landlords, providing UK investors with professionally managed rental properties.

An investment approach where UK investors purchase undervalued properties, improve their condition to increase value, then refinance to extract capital for further investments.

A popular investment strategy where UK investors purchase residential property specifically to rent it out, generating regular rental income and benefiting from potential capital growth.

The total money invested in a property, including purchase price, legal fees, and any refurbishment costs, essential for calculating investment returns.

Tax relief available on certain expenditure for commercial property investors in the UK, such as on plant and machinery, reducing taxable profits.

With a Capital and interest mortgage you repay both the interest and a small percentage of the borrowed capital each month. That means that your mortgage will be paid off in full (if you continue to meet your payments) at the end of the mortgage term.

The increase in a property's market value over time, a key factor driving profits for UK property investors alongside rental income.

A UK tax applied to the profit made when selling an investment property that is not the owner’s main residence, impacting the net return on property sales.

Also called “cap rate,” this metric calculates the expected rate of return on a UK investment property based on net operating income divided by the purchase price.

A property investor who purchases real estate without mortgage finance, often able to complete transactions faster in the competitive UK market.

The net income remaining from rental income after deducting expenses like mortgage payments, maintenance, and management fees, crucial for assessing UK buy-to-let profitability.

A form of property ownership in the UK where individuals own their unit outright and share ownership of common areas, often used in flats and apartments.

Acquiring property through a limited company structure in the UK, often chosen for tax efficiency and asset protection by property investors.

A valuation technique where similar UK properties are analysed to estimate a property's market value, helping investors make informed buying decisions.

The final stage in the UK property purchase process where ownership legally transfers to the buyer, and funds are fully paid.

The legal process of transferring property ownership in the UK, involving title checks and contract exchanges, critical for secure property transactions.

An annual local tax payable by occupants of UK properties, usually passed onto tenants by landlords in rental agreements.

An upfront payment made by buyers, typically 5-20% of the property price in the UK, securing the purchase before completion.

Repairs tenants are legally obliged to perform to return a leased UK property to its original condition at lease end, important in commercial leases.

A risk management strategy where UK property investors spread capital across various property types or locations to reduce exposure.

Paying back your loan early or overpaying may mean you’ll have to pay an ERC. The amount you’ll be charged depends on the terms and conditions of your product.

A UK government-issued rating showing a property’s energy efficiency. EPC ratings affect tenant demand and may impact rental income and compliance with regulations.

The portion of a property's value owned outright by the investor, calculated as market value minus any outstanding mortgage. Building equity is key to long-term wealth in UK property investment.

The stage in a UK property transaction where contracts are legally binding, and a deposit is paid, marking a commitment to complete the purchase.

An applicant who has owned and let a buy to let property for at least the last six months (they may or may not own and occupy their own home).

A private wealth management advisory serving high-net-worth UK investors, often involved in property investment for portfolio diversification.

The UK regulator overseeing financial services, including mortgage lending, ensuring transparency and protection for property investors.

An applicant who hasn’t owned and occupied their own home for the last six months and hasn’t owned and let a buy to let property for the last six months.

An applicant who has owned and occupied their own home for at least the last six months, but hasn’t owned and let a buy to let property for the last six months.

A fixed rate mortgage provides the security of fixed mortgage repayments until the end of the deal period, no matter what happens to interest rates. Once the deal period has finished you will automatically be put on The Mortgage Works managed Rate unless you choose a new Fixed or Tracker deal at that time.

With our fixed rate and tracker mortgages you can overpay part of your capital balance in each 12 month period (from the date your product started), without incurring any early repayment charges. To find out more about your overpayment allowance, check your Mortgage Offer.

A short-term investment strategy where UK investors buy properties to renovate and sell quickly for a profit, relying on capital appreciation.

Full ownership of a property and the land it stands on in the UK, giving investors control without lease restrictions or ground rent.

Full Liability is where the guarantor guarantees (agrees to pay should the main borrower be unable) the full amount of the loan.

A property investment where all aspects, from tenant sourcing to maintenance, are handled by professional management companies, appealing to UK investors seeking hands-off income.

A Further Advance is an additional loan using your property as security (sometimes referred to as a second mortgage or additional borrowing).

The use of borrowed funds (mortgage) to finance a property investment, amplifying potential returns but also risks in the UK market.

The estimated total value of a completed property development in the UK, used by investors to assess project viability.

The profit made after deducting costs like purchase price and refurbishment from the sale price, important for UK property investors flipping homes.

The total return on a property investment before costs and taxes, combining rental income and capital growth.

The total rental income before expenses, expressed as a percentage of the property’s purchase price, used to quickly estimate UK buy-to-let returns.

An annual fee paid by leaseholders to freeholders in the UK, often associated with leasehold properties.

With a guarantor mortgage a close relative agrees to act as guarantor for all or part of the mortgage amount. The guarantor must be able to prove that they can afford to cover the mortgage loan in the event that the borrower is unable to keep up with the monthly payments.

An individual with substantial investable assets, often targeting UK property investments for portfolio diversification and income.

A property occupied by five or more people or with five to seven lettable rooms in an area commensurate with multi letting/ a property with more than one tenancy agreement in place.

A small upfront payment to reserve a rental property in the UK, typically deducted from the first month’s rent or deposit.

An index tracking changes in UK house prices over time, helping investors analyse market trends.

Tax levied on rental income received from UK properties, affecting net returns for landlords and buy-to-let investors.

Buying property in a personal name rather than a company, affecting tax liabilities and mortgage options for UK investors.

The rate at which general prices rise over time, impacting property values and rental income in the UK market, often leading investors to consider real estate as an inflation hedge.

A routine check of a UK rental property’s condition by landlords or agents, ensuring maintenance standards and tenant compliance.

Large organisations such as pension funds or insurance companies investing significant capital into UK property markets, often in commercial or build-to-rent sectors.

A mortgage type where the borrower pays only the interest each month, keeping monthly payments lower but requiring a lump sum repayment of the principal, popular among UK buy-to-let investors for cash flow management.

The cost of borrowing money, expressed as a percentage, influencing mortgage payments and property investment profitability in the UK.

A detailed record of the condition and contents of a rental property, used in the UK to protect landlords and tenants during tenancy agreements.

A property purchased specifically to generate rental income or capital growth, forming the foundation of UK property investment portfolios.

A business arrangement where two or more parties pool resources to invest in UK property, sharing profits, risks, and management responsibilities.

Metrics used by UK property investors to measure investment performance, such as rental yield, occupancy rates, and capital growth.

An individual or company that owns property and rents it out to tenants, a central role in UK buy-to-let investment.

A contract giving a tenant or investor the right to buy or lease a property at a future date, used in UK property deals for flexibility.

The remaining length of a leasehold property’s lease term, a critical factor influencing value and mortgageability in the UK market.

Ownership of a property for a fixed term under a lease agreement, common in UK flats, with responsibilities including ground rent and service charges.

Using borrowed funds, such as mortgages, to increase the potential return on UK property investments, while also increasing risk exposure.

A company structure often used by UK property investors for tax efficiency, liability protection, and easier management of multiple properties.

Cash or assets easily converted to cash, important for UK property investors to fund purchases or cover unexpected costs.

The ratio of a mortgage loan to the property's value, influencing borrowing capacity and interest rates for UK property investors.

A contractually agreed date by which a UK property transaction or development must complete, protecting investors from indefinite delays.

An organisation responsible for the maintenance and administration of communal areas in leasehold UK properties, ensuring property upkeep and compliance.

A charge paid by UK property investors to agents or management companies for handling day-to-day operations like tenant sourcing and maintenance.

The estimated amount a property would sell for on the open UK market, crucial for valuation, mortgage approvals, and investment decisions.

A loan secured against a property, commonly used by UK investors to finance buy-to-let purchases, with terms influencing investment cash flow and returns.

The income from a UK investment property after operating expenses are deducted but before mortgage and tax payments, used to evaluate profitability.

The actual profit made from a property investment after all costs, taxes, and expenses, a key measure of success for UK investors.

The rental income percentage remaining after all expenses, including management fees and maintenance, important for UK buy-to-let investors assessing true returns.

A house/flat built within the last 12 months
A house/flat built over 12 months ago but still owned by the developer
A house/flat built over 12 months ago but the first purchase/legal completion of the property was less than 12 months ago.

A UK property owner who lives abroad but rents out property in the UK, subject to specific tax rules and often requiring a UK tax agent.

The percentage of time a UK rental property is rented out versus vacant, directly impacting rental income and investment cash flow.

Purchasing a property in the UK before it is built or completed, often at a lower price, allowing investors to benefit from capital appreciation upon completion.

The price a property would realistically fetch on the UK market, used for valuations, sales, and mortgage lending decisions.

This is when you pay more than your required minimum monthly payment and build up an overpayment reserve. This enables you to pay off your mortgage earlier (conditions apply).

Part and part mortgages allow you to combine elements of both capital repayment and interest only.

Specialist UK residential property designed for students, offering higher yields but requiring specific management expertise.

A nominal or token rent, often set at one peppercorn per year, used in leases, particularly long leases, to satisfy the requirement for a legally binding agreement while effectively charging little or no money.

A collection of UK properties owned by an investor, diversified by location or type to manage risk and maximise returns.

Porting is the practice of keeping the same mortgage when you sell your old property and buy a new one.

The stage in UK property development where construction is sufficiently finished for the property to be occupied, triggering contractual obligations.

The original amount borrowed on a UK property mortgage, separate from interest payments.

Residential properties in the UK rented out by private landlords rather than housing associations or local authorities.

The segment of the UK housing market made up of privately owned rental properties, a major focus for buy-to-let investors.

A professional valuation of a UK property’s market value, conducted to guide buying, selling, or refinancing decisions.

The service of overseeing rental properties, including tenant relations, maintenance, and rent collection, essential for UK landlords seeking hassle-free investments.

Since no two properties are alike, a valuer has to perform a property valuation to assess each property individually and arrive at a proposed value, usually called its Market Value. A fee is usually charged for this service.

If you have a mortgage with The Mortgage Works and would like to repay your mortgage in full, you’ll pay a charge unless you’re taking a new mortgage with us at the same time.

Replacing an existing loan with a new one, commonly done by UK investors to improve mortgage terms or release equity.

The process of revitalising UK areas through development and investment, often increasing property values and rental demand.

Where the property will be occupied by the borrower or a member of the borrower’s immediate family, now or in the future.

Replacing an existing mortgage on a UK property with a new one, often to secure better rates or release equity for further investments.

An investment strategy where an individual leases a UK property from a landlord and rents it out to tenants, often used to generate positive cash flow without ownership.

The level of interest from tenants seeking to rent properties in a particular UK area, directly impacting rental income and investment viability.

The money received from letting out a UK property, forming the primary revenue stream for buy-to-let investors.

The percentage return on a property based on annual rental income relative to its purchase price, a critical factor for UK buy-to-let investors.

With a Repayment (capital and interest) mortgage you repay both the interest and a small percentage of the borrowed capital each month. That means that your mortgage will be paid off in full (if you continue to meet your payments) at the end of the mortgage term.

The sale of a previously owned property in the UK, often influenced by market conditions and property condition.

A payment made to secure a UK property off plan or under construction before contracts are exchanged.

Properties in the UK intended for people to live in, including houses, flats, and HMOs, the main asset class for buy-to-let investors.

A financial ratio measuring a UK property investment’s profitability relative to the capital invested, used by investors to assess efficiency.

A key metric measuring the profitability of a UK property investment, calculated as net profit divided by the initial investment cost.

A UK tenancy agreement that continues on a periodic basis after the initial fixed term ends, offering flexibility for landlords and tenants.

The equivalent of SDLT in Scotland, a tax payable on property purchases, with its own rates and thresholds.

A second mortgage secured on your property with another lender. A second charge is secondary to your main loan so when the property is sold, the main lender will be repaid first.

A UK legal notice allowing landlords to regain possession of a rental property at the end of a tenancy, subject to regulations.

A sum held by UK landlords to cover potential damages or unpaid rent, protected under tenancy deposit schemes.

Fees paid by leaseholders in the UK to cover maintenance and communal services in shared properties like flats.

Fully furnished UK rental properties offering short-term stays with hotel-like services, appealing for higher yields but requiring active management.

Short-term rental properties in the UK that provide hotel-style services, popular for flexible income streams.

UK rental properties leased for periods shorter than traditional tenancies, often via platforms like Airbnb, offering potentially higher returns with increased management.

The process of identifying and rectifying minor defects or unfinished work in a new UK property, ensuring quality and compliance before full completion.

Already defined.

A temporary UK government scheme reducing or suspending SDLT to stimulate property transactions, ended but notable for recent investment history.

A UK government tax paid on property purchases above a certain threshold, varying by property value and buyer type.

Investments in properties specifically rented to students, often generating strong demand near UK universities.

An independent professional assessment of a UK property’s condition and value, vital for informed investment decisions.

When you move from one mortgage deal to a new mortgage deal with the same lender.

Agreements between landlords and tenants outlining the terms under which a UK property is rented.

A legally binding contract in the UK specifying rights and obligations of landlords and tenants.

A UK government-backed scheme protecting tenant deposits to ensure fair treatment and dispute resolution.

An individual or entity renting a UK property from a landlord, forming the basis of rental income for investors.

If you’re not on The Mortgage Works fixed or tracker deal, then you’re on our Managed Rate which is a variable rate. The Mortgage Works Managed Rate is not subject to any upper limit or cap and is not tied to the Bank of England Bank Rate.

With a tracker mortgage, the interest rate you’re charged will go up and down in line with the Bank of England Bank Rate by an agreed percentage, with no tracker floor. Once the deal period has finished, you’ll automatically be put on the The Mortgage Works Managed Rate unless you choose a new fixed or tracker deal at that time.

A UK property investment fully renovated and managed, ready to generate rental income immediately with minimal effort from the investor.

A UK property priced below its true market value, offering potential for capital appreciation and strong investment returns.

Categories defined in UK planning law that dictate permitted property uses, important for investors considering conversions or developments.

The percentage of time a UK rental property remains unoccupied, impacting rental income and investment performance.

A professional assessment of a UK property’s worth, essential for buying, selling, refinancing, or tax purposes.

A detailed inspection and report conducted by a surveyor to determine the condition and value of a UK property.

An interest rate on a mortgage that can fluctuate over time, affecting UK investors’ borrowing costs and cash flow.

A potential tenant or buyer’s inspection of a UK property before committing to rent or purchase.

Times when a UK rental property is unoccupied and not generating income, a risk factor for landlords.

A guarantee from a builder or developer covering defects or repairs in a new UK property for a specified period.

The property transaction tax in Wales replacing SDLT, applicable to residential and commercial property sales.

The year a property was constructed, affecting its value, condition, and appeal to UK investors.

The annual return on a UK property investment, expressed as a percentage of the purchase price, based on rental income or capital appreciation.

A scenario where a UK rental property is continuously let without any vacant periods, maximising rental income and investment returns.