Annual percentage rate (APR): A type of interest rate used by all lenders that enables you to compare rates.

Asset: An item of value that you own such as property, personal possessions or shares.

Assignment: The transfer of an asset or legal right from one person to another.

Base rate: This is the interest rate set by the Bank of England as a means of controlling inflation and the health of the economy.

Bridging loan: A temporary loan to cover the cost of buying a new home before the old one has been sold.

Building Society: A mutual organisation, owned by the people saving with and borrowing from it. Increasing numbers have converted to banks in recent years, paying windfall profits to the owners.

Buy to let: A type of mortgage taken out by people who want to become landlords. It's a way of investing in property and bringing in an income.

Capped-rate mortgage: The mortgage interest rate cannot go above a certain level, even if mortgage rates rise, but can fall down as rates drop. Ain't no free lunches, though, and if you want to extricate yourself from the mortgage during the capped rate period (say three or five years), you'll have to pay a redemption penalty.

Cash back: The 'bribe' paid to the borrower by the lender for taking out a mortgage!

Collateral: The assets or security offered in exchange for a loan. If you don't repay the loan, the lender takes the collateral!

Completion: The usual term used for when the buyer and seller finally exchange money and keys via their respective solicitors - and the buyer becomes the legal owner of the property. It's the day you can rename the property 'Iona House'!

Compulsory insurance: Some lenders require you to take out house and contents insurance with them as part of the mortgage deal. It's another opportunity for them to make money out of you as it's usually more expensive than you could find elsewhere.

Contract: The written agreement that sets out the terms agreed between the buyer and the seller. When both parties exchange contracts - usually a few weeks before completion - the deal becomes legally binding.

Conveyancing: The legal process of transferring ownership from the seller to the buyer. This is usually carried out by a solicitor or licensed conveyancer.

Current account mortgage: A type of mortgage in which your debt is effectively held in your current account. Interest due is calculated daily as opposed to yearly, which can make a significant difference to the cost for those on a REPAYMENT MORTGAGE. Also more flexible and allows periods of both under- and overpayment of the mortgage to suit the borrower's changing financial circumstances.

Debt consolidation: A means of pooling all your different debts (eg: credit card, car loan, etc) so that you are only borrowing the total debt from one lender. Remortgaging can be an effective way of achieving this as mortgage lenders usually offer the lowest interest rates compared to other finance companies.

Default: This is when you don't meet your side of the bargain - like failing to make the mortgage payments! If you default, your home could get repossessed!

Disbursements: A posh word for the legal costs involved in conveyancing.

Discount-rate mortgage: A mortgage with a guaranteed reduction in the variable mortgage rate (say, 2% below the variable, whatever it may be). Generally lasts for an agreed period and if you change mortgages within that time, you will pay a redemption penalty.

Easement: A right of way over property.

Endowment: A life assurance policy with a savings and investment element, classically sold to back an interest-only mortgage. The key word here is "sold". No-one in their right minds would "buy" one of these overcharging and underperforming abominations these days!

Equity: The bit of the house that you actually own! It's the difference between the market value of the property and the amount still owed to the lender.

Examination of title: This is what your solicitor does when she checks the public records to confirm that the seller legally owns the property that you want to buy.

Fixed-rate mortgage: The interest rate on the mortgage is pegged at a set level for an agreed number of months or years. Pull out before the end of that period and you'll end up paying a redemption penalty.

Flexible mortgage: See Current account mortgage.

Freehold: If you own the freehold of a property, it means you actually own the property forever. This is in contrast to leasehold where, after the period of the lease, the ownership will revert to the freeholder.

Gearing: Buy a house for £100,000 with a deposit of £10,000 and the rest as a mortgage. Six months later, sell it for £150,000 and you've made 400% profit on your original investment: that's gearing. Of course, it can work the other way too!

Ground rent: The annual rent paid by a leaseholder to the freeholder.

Index-tracking unit trust: The only type of unit trust that makes sense to us. While most unit trusts are actively (mis-) managed, index trackers are generally computer-driven and designed to mimic the performance of a given stock market index such as the FTSE 100 or the FTSE All-Share Index.

Individual Savings Account (ISA): ISAs started in April 1999 and replace PEPs and TESSAs. This year you can invest £7,000, and thereafter £5,000 per year, into a wide variety of investments. They are very attractive to Fools.

Interest-only mortgage: Monthly payments to the lender are made up simply of interest. You don't pay off any of the capital of the mortgage during the term of the mortgage, but do so at the end, having accrued a large enough pot of money in an investment fund. Classically, these investment funds have been endowments, but we're pleased to say that ISAs are increasingly being used.

Land registry: The place that keeps track of who owns "registered" land. It was introduced to make things simpler and it's done just that. Almost all land is registered nowadays. With "unregistered" land, you still have to rely on a pile of title deeds to show who owns the property. Buyers of registered land will have to pay a fee to get their ownership reflected on the Land Register.

Leasehold: If you buy leasehold, you only own the property itself for an agreed period of time - not the land on which it is built. An example of this might be a 99-year-lease on a flat where you pay an annual rent (called the "ground rent") to the owner of the freehold of the building which contains your flat. At the end of the 99 years the property reverts to the "freeholder" of the building. The value of your flat will decrease as the lease gets shorter.

Legal charge: The official term for the claim that a lender has over your home until you've paid off the mortgage. Details are registered with the Land Registry which, as mentioned are open for scrutiny by the public. So if you want to know whether your next-door neighbour still has a mortgage…

Local Authority search fee: A fee paid by your solicitor to the local council to check on proposed developments such as roads or a housing estate in the area around your new home. The council also checks to see if any enforcement notices have been served on the property itself for violation of planning regulations, for example.

MIG: Mortgage Indemnity Guarantee. If you borrow more than 75% of the value of your house, you'll probably get stung with one of these. Do your best to avoid it, though. It insures the lender against you being unable to pay. Even though it's you that pays this premium, it still won't stop you ending up at the Salvation Army soup kitchen.

Mortgage: A loan to buy a home, where you put up the property as a security against you paying back the loan. Mortgages offer by far the best long-term interest rates of any loan because they are very low risk for the lender. (You can't make off with your house, no?)

Mortgagee: Another name for the mortgage lender.

Mortgagor: Another name for you - the borrower.

Negative equity: Bought a house for £80,000 and now it's only worth £60,000? Bad luck - that's £20K of negative equity you're sitting on there.

Payment holiday: This is where you get time off from paying the mortgage. It's only really available to those who've got flexible mortgages and who have been making overpayments for a while.

Redemption: The moment when you pay off your mortgage - either at the end of the term, when you move house or when you remortgage with another lender.

Redemption penalty/charge: If you try and bow out of certain types of mortgage early, you'll get charged by the lender for doing so. Signing up for a mortgage that has redemption penalties should be avoided wherever possible. They're sometimes known as Settlement Fees.

Remortgage: When you move your mortgage to another lender. You might be able to get a better deal, but watch out for redemption penalties. Also, it's always worth checking to see whether your current lender can give you a better deal before going to the extra trouble and expense of moving to another.

Repayment mortgage: The monthly repayments pay off both the interest and some of the capital on the mortgage. By the end of the mortgage term, the debt has all gone and the house is all yours.

Repossession: If you default on your mortgage, your lender will repossess your home and sell it to get their money back. Tip: Avoid this at all costs!

Retention: Where the lender holds back part of the mortgage until certain conditions, such as repairs, are met.

Right to buy: One of Margaret Thatcher's more popular ideas - at least for those who could afford it. A tenant living in a council house is allowed to buy it - often at a substantial discount - depending on how long they've been a tenant.

Stamp duty: A tax you pay on buying things like shares and property. No stamp duty is payable on properties costing less than £60,000 but the charges are 1% for those over £60,000, 3% for those over £250,000 and 4% for those over £500,000. Ouch!

Stepped-rate mortgages: A bit like a discount mortgage except the interest rate goes up in stages rather than in one fell swoop. They comprehensively fail the Foolish maxim of "keep things simple" and are best avoided.

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