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A First Time Buyer (FTB) is a term used in the British property market for a potential house buyer who has not previously owned a property. A First Time Buyer is usually desirable to a seller as they do not have to sell a property, and as such will not involve a housing chain. There are many factors a first time buyer will need to consider before purchasing their first property, such as how much they will be able to borrow, how much they can afford to pay each month, how much initial cash they will need for stamp duty, solicitors fees and a deposit, which sort of mortgage they should use and how they should repay it. For this reason, most will use a mortgage broker. In the UK home ownership is seen as both desirable and essential, as a natural step in the life cycle - like getting a job, getting married or having children. However, in recent years the number of First Time Buyers purchasing property in the UK has declined, which many industry experts claim is a sign of weakness within the housing market, with FTBs being "priced out of the market" by ever increasing house prices.

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Leasehold

Terms

Leasehold is a form of property tenure where one party buys the right to occupy land or a building for a given length of time. A lease is a legal estate, leasehold estate can be bought and sold on the open market and differs from a tenancy where a property is let on a periodic basis such as weekly or monthly. Until the end of the lease period (often measured in decades - a 99 year lease is quite common) the leaseholder has the right to remain in occupation as an assured tenant paying an agreed rent to the owner. Terms of the agreement are contained in a lease, which has elements of contract and property law intertwined. The term estate for years may occasionally be used. This refers to a leasehold estate for any specific period of time (the word "years" is misleading). An estate for years is not automatically renewed. Colloquially, a "lease" is often a formalization of a longer, specific period as compared with a "rental" that created a tenancy at will, terminable or renewable at the end of a short period.

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Shared ownership

A housing equity partnership (HEP) is a partnership in ownership of (equity in) a house. Typically the ownership is split between the resident and some organization or corporation, often a financial institution, with the resident owning at least half of the dwelling. When the house is sold, the institution will receive its share of the selling price. These partnerships were championed by economist Andrew Caplin, Sewin Chan, Joseph Tracy and Charles Freedman in the late 1990s and are very similar to shared-equity plans that have existed for decades in the UK, Europe and the U.S. They are also similar to an earlier proposal produced by Geltner, Miller and Snavely (1995) to develop Home Equity Investment Trusts (HEITs). As with other shared-equity plans, the idea behind HEPs is that they are a way for people to own their homes who otherwise would be unable to purchase a house without a heavy mortgage.

 

Real Estate

With the development of private property ownership, real estate has become a major area of business. Purchasing real estate requires a significant investment, and each parcel of land has unique characteristics, so the real estate industry has evolved into several distinct fields. Specialists are often called on to valuate real estate and facilitate transactions. Some kinds of real estate businesses include:

* Appraisal - Professional valuation services

* Brokerages - Assisting buyers and sellers in transactions

* Development - Improving land for use by adding or replacing buildings

* Property management - Managing a property for its owner(s)

* Real Estate Marketing - Managing the sales side of the property business

* Relocation services - Relocating people or business to different country

Within each field, a business may specialize in a particular type of real estate, such as residential, commercial, or industrial property. In addition, almost all construction business effectively has a connection to real estate. "Internet Real Estate" is a term coined by the internet investment community relating to the parallel that exists between high quality internet domain names and real-world, prime real estate.

 

Mortgage

A mortgage is a method of using property (real or personal) as security for the payment of a debt. The term mortgage (from Law French, lit. death vow) refers to the legal device used in securing the property, but it is also commonly used to refer to the debt secured by the mortgage, the mortgage loan. In most jurisdictions mortgages are strongly associated with loans secured on real estate rather than other property (such as ships) and in some cases only land may be mortgaged. Arranging a mortgage is seen as the standard method by which individuals and businesses can purchase residential and commercial real estate without the need to pay the full value immediately.

There are essentially two types of legal mortgage.

Mortgage by Demise

In a mortgage by demise, the creditor becomes the owner of the mortgaged property until the loan is repaid in full (known as "redemption"). This kind of mortgage takes the form of a conveyance of the property to the creditor, with a condition that the property will be returned on redemption. This is an older form of legal mortgage and is less common than a mortgage by legal charge. It is no longer available in the UK, by virtue of the Land Registration Act 2002.

Mortgage by legal charge

In a mortgage by legal charge, the debtor remains the legal owner of the property, but the creditor gains sufficient rights over it to enable them to enforce their security, such as a right to take possession of the property or sell it. To protect the lender, a mortgage by legal charge is usually recorded in a public register. Since mortgage debt is often the largest debt owed by the debtor, banks and other mortgage lenders run title searches of the real property to make certain that there are no mortgages already registered on the debtor's property which might have higher priority. Tax liens, in some cases, will come ahead of mortgages. For this reason, if a borrower has delinquent property taxes, the bank will often pay them to prevent the lienholder from foreclosing and wiping out the mortgage. This type of mortgage is common in the United States and, since 1925, it has been the usual form of mortgage in England and Wales (it is now the only form - see above). In Scotland, the mortgage by legal charge is also known as standard security.

Repaying the Capital

* Repayment mortgage - a mortgage repayment method where the capital and interest is repaid.

* Interest-only mortgage where the capital is not repaid until the end of the mortgage.

* Endowment mortgage - an interest only mortgage where the capital is repaid by one or more endowment policies at the end of the mortgage term.

* An investment backed mortgage - an interest only mortgage where the capital is repaid with the proceeds of a PEP or ISA or other investment plan at the end of the mortgage term. (Note: PEPs are no longer available to new investors). Sometimes these are referred to as PEP mortgages or ISA mortgages

* Pension mortgage where the tax-free cash lump sum of a personal pension scheme is used to repay an interest-only mortgage at retirement. Types of interest rate

* Variable rate - the rate varies at the discretion of the lender.

* Standard variable rate - the default variable rate the lender offers to mortgage borrowers with a standard residential mortgage.

* Tracker rate - a variable rate that is linked to an underlying public interest rate (typically Bank of England repo rate) by a predetermined margin. For borrowers the rate is often linked to the LIBOR.

* Fixed rate - the interest rate remains constant for a set period; typically for 2, 3, 4, 5 or 10 years. Longer term fixed rates (over 5 years) whilst available, tend to be more expensive and therefore less popular than shorter term fixed rates.

* Discount rate - where there is reduction in the standard variable rate (e.g. a 2% discount) for a set period; typically 1 to 5 years. Sometimes the rate is stepped (e.g. 3% in year 1, 2% in year 2, 1% in year three).

* Capped rate - where similar to a fixed rate, the interest the rate cannot rise above the cap but can vary beneath the cap. Sometimes there is a collar associated with this type of rate which imposes a minimum rate. Capped rate are often offered over periods similar to fixed rates, e.g. 2, 3, 4 or 5 years. Other types

* Buy to let mortgage - a semi-commercial mortgage on residential property let to tenants.

* Right to buy mortgage - a mortgage arranged under the right to buy your home legislation for council or housing association tenants.

* Let and buy mortgage - you let your existing property and buy a new property with a mortgage.

* Flexible mortgage - allows additional capital payments without penalty and often allows payment holidays or underpayments.

* Adverse credit mortgage - mortgage to borrowers with credit problems, e.g. county court judgements.

* Self-cert mortgage - a mortgage where the lender does not seek proof of income to demonstrate affordability; but instead relies on a statement of earnings as certified by the borrower(s).

* Non-status mortgage - a mortgage where the borrowing is not dependent on the income of the applicant and the applicant states they can afford the repayments.

* Deferred interest mortgage

* Offset mortgage - a mortgage where the borrower can reduce the interest charged by offsetting a credit balance against the mortgage debt.

* Foreign currency mortgage - where the debt is transferred to one or more foreign currencies to reduce capital and interest payments through fluctuation in exchange rates.

Fees

* Early repayment charge, redemption penalty or tie-in - With each incentive the lender may be offering a rate at less than the market cost of the borrowing. Therefore, they typically impose a penalty if the borrower repays the loan; this used to be called a redemption penalty or tie-in, however since the onset of Financial Services Authority regulation they are referred to as an early repayment charge.

* Valuation fee, which pays for a chartered surveyor to visit the property and ensure it is worth enough to cover the mortgage amount.

* Higher lending fee