Glossary of housing and transaction terms

What do the recurring words on these pages actually mean?

Definitions written for this site, in the sense the terms are used across these pages. Where a word is used differently in different places, the definition says so.

A to C

• Amortisation. The schedule by which a loan balance is repaid over its term; early payments are mostly interest, later ones mostly principal.
• Appraisal / valuation. A lender's own estimate of what the property is worth as security. It constrains the loan regardless of the agreed price.
• Apportionment. The division of ongoing charges such as property taxes between seller and buyer at the day of transfer.
• Closing. The event at which money is exchanged for the deed and the transfer is completed.
• Covenant. A recorded restriction on how land may be used or built on, which binds later owners.

D to L

• Days on market. How long a property has been offered. Later buyers read a high number as a signal, which makes it self-reinforcing.
• Deed. The document that transfers ownership.
• Easement. A recorded right for someone else to use part of the land, such as access or a route for services.
• Equity. The value of the property less what is owed against it.
• Escrow. Money held by a third party; also the lender's practice of collecting taxes and insurance alongside the loan payment.
• Fixed rate. An interest rate held constant for a defined period, purchasing certainty at a cost.
• Lien. A claim against a property securing a debt; it must generally be cleared before a clean transfer.
• Loan-to-value. The borrowed amount as a share of the property value.

M to R

• Mortgage. A loan secured on property; also the instrument creating that security.
• Note. The borrower's personal promise to repay, distinct from the security instrument.
• Origination fee. A charge for arranging the loan.
• Points. A payment made at the start to reduce the interest rate.
• Principal. The outstanding amount borrowed, as distinct from interest.
• Recording. Entering a transfer or charge on the public register, which makes it effective against third parties.
• Right of way. A form of easement permitting passage across land.

S to Z

• Setback. The minimum distance a building must sit from a boundary or the street under local rules.
• Settlement statement. The itemised list of every debit and credit for both parties at closing.
• Survey. A measured determination of a parcel's boundaries and what stands on it.
• Title. The state of ownership of a property, including everything recorded that travels with it.
• Title insurance. Cover against defects in title that the search did not reveal.
• Underwriting. The lender's assessment of borrower and property before committing to lend.
• Variable rate. An interest rate that moves with a reference rate, transferring the risk to the borrower.
• Zoning. The public rules governing what may be built where, and at what size and use.