Essential Remortgage Abbreviations Explained
With examples, mini exercises, and simple calculators. When people compare remortgage deals, they usually focus on the headline rate first. But in practice, the decision often comes down to a mix of LTV, SVR, ERCs, lender checks, and the true total cost over time.
Important Information
This content is for educational purposes only and does not constitute financial advice. CHFinance is authorised and regulated by the Financial Conduct Authority. Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
Knowledge Base
Demystifying mortgage terminology
In UK mortgage guidance, LTV affects pricing, SVR is often where borrowers land when an introductory deal ends, ERCs can make switching expensive, AIP/DIP/MIP are provisional borrowing checks, and APRC is one of the key measures for comparing full mortgage cost. Bank Rate influences wider mortgage pricing, and FTB is a common lender term you will still see even if you are reading around remortgage topics.
1) LTV — Loan to Value
What it means
LTV is the size of your mortgage compared with the value of the property. Lower LTVs usually unlock better mortgage rates because you are borrowing a smaller percentage of the home’s value.
Example
Why it matters for remortgaging
A borrower moving from, say, 90% LTV to 75% LTV may open up a wider range of deals and potentially lower rates.
🧮 Quick calculator?
Calculate your Loan-to-Value (LTV) below:
✍️ Mini exercise
A property is worth £275,000 and the mortgage needed is £233,750. What is the LTV?
2) SVR — Standard Variable Rate
What it means
SVR is the lender’s standard variable rate. It can change at any time, and it is usually higher than the lender’s introductory mortgage products. Many borrowers move onto SVR when a fixed, tracker, or discounted deal ends and they do not switch.
Example
🧮 Quick calculator?
Compare your current deal against a potential Standard Variable Rate (SVR):
✍️ Mini exercise
Your current rate is 4.8%, and your lender’s SVR is 6.9%. If your deal ends next month, will your monthly payment usually go up, down, or stay the same?
3) ERC — Early Repayment Charge
What it means
An ERC is a charge that may apply if you remortgage, repay all of the mortgage, or sometimes overpay beyond the allowed limit before your current deal ends.
Example
Why it matters for remortgaging
A new deal can look cheaper on rate, but once you add the ERC, it may not save money overall. That is why lenders and guidance pages stress checking the full switching cost, not just the headline rate.
🧮 Quick calculator?
Estimate your Early Repayment Charge (ERC):
✍️ Mini exercise
Your balance is £220,000 and your ERC is 2%. What is the charge?
4) AIP / DIP — Agreement or Decision in Principle
What it means
A mortgage in principle is a conditional indication of how much a lender might let you borrow. Different lenders use different names, and MIP, DIP, and AIP are commonly used for the same idea. It is helpful, but it is not a guaranteed mortgage offer.
Example
🧮 Quick calculator?
Before seeking an AIP/DIP, self-check your readiness:
✍️ Mini exercise
True or false: "An AIP guarantees the lender will approve the full mortgage later."
5) APR — Annual Percentage Rate
What it means
APR is a general borrowing measure that shows the yearly cost of credit, including interest and fees that are automatically included in the borrowing. It is useful when comparing similar products.
Important mortgage note
For UK mortgages, the figure you will more often rely on is APRC, which is designed to show the total annual cost of the mortgage over its lifetime.
Example
🧮 Quick calculator?
For consumer borrowing, APR is normally supplied by the lender rather than hand-calculated by borrowers. The practical use is comparison:
- Look for a lower APR
- Ensure a similar loan term
- Ensure a similar product type
✍️ Mini exercise
Two similar unsecured loans are offered: Loan A: 6.9% APR Loan B: 7.4% APR Which is generally cheaper on yearly borrowing cost, assuming the products are otherwise similar?
6) APRC — Annual Percentage Rate of Charge
What it means
APRC shows the annual cost of a mortgage over its full lifetime, including relevant charges and fees. The FCA says it is expressed as a percentage and incorporates the charges that relate to the mortgage borrowing. MoneyHelper also notes that lenders must state the APRC on mortgage deals.
Example
Important caution
APRC is very useful, but it still should not be your only test. Monthly affordability, fees paid upfront, ERCs, and how long you expect to keep the mortgage all matter too.
🧮 Quick calculator?
You usually do not calculate APRC manually. Instead, use these steps when you read the lender illustration:
✍️ Mini exercise
Two mortgage illustrations show: Deal A: 5.9% APRC Deal B: 6.3% APRC Which one is generally lower-cost over the full-term comparison basis?
7) BBR — Bank of England Base Rate / Bank Rate
What it means
The Bank of England calls this Bank Rate. It is the official interest rate the Bank uses to influence other interest rates in the economy, including borrowing and savings rates. Tracker mortgages often follow the Bank of England base rate plus a set margin.
Example
🧮 Quick calculator?
Calculate your payable tracker rate:
✍️ Mini exercise
Your mortgage tracks at Bank Rate + 0.99%. If Bank Rate is 3.75%, what is your mortgage rate?
8) FTB — First-Time Buyer
What it means
A first-time buyer is someone buying their first home. The term appears more often in purchase guides than remortgage guides, but it is still useful because lenders, brokers, and product pages often label deals and criteria around FTB status.
Example
🧮 Quick calculator?
1. Have you ever owned a property before?
2. Are you buying your first residential home?
✍️ Mini exercise
You already own a home and are switching to a new mortgage deal on the same property. Are you an FTB?
A simple way to use these terms when comparing a remortgage
A smart remortgage review usually works like this:
- ✓ Check your LTV
- ✓ See whether your current deal is ending and whether you could fall onto SVR
- ✓ Find out whether an ERC applies
- ✓ Get an AIP/DIP if you need an early borrowing sense-check
- ✓ Compare fees, monthly payment, and APRC together
- ✓ Keep an eye on Bank Rate if you are looking at tracker-style pricing