From exchange to EPC rating: We explain the most confusing house buying terminology

Buying a home is arguably one of the biggest milestones of our lives, but according to a recent survey, millions of us are being put off because the process feels just too confusing.

The UK property website Zoopla revealed that more than two million potential UK homeowners have avoided getting onto the property ladder because they don’t understand the house buying process, or many of the key terms associated with it. More than half (54%) of those surveyed couldn’t describe words such as ‘completion’ in relation to buying a home, while a fifth (20%) said that they were unable to confidently explain a mortgage.

This so-called ‘property knowledge gap’ is leading to people missing out on the benefits of owning a home, and not taking advantage of the fantastic first-time buyer schemes that are available.

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To help bridge this gap, Bellway asked our Instagram followers to tell us which house buying terms they found most difficult to understand, and we’re explaining them below. From exchange and completion, to mortgage rates and how they work, we’re busting just some of the jargon around the home buying journey to help it feel more accessible for everyone.

What is ‘first fix’ and what happens at this stage?

When buying a new build home you’re likely to hear about the different stages of its construction, one of which is the first fix, also referred to as ‘pre-plaster’. To put it simply, this is all of the internal work that takes place in your new Bellway home once the foundations, walls and roof have been built, and before the plastering is finished.

This includes constructing internal walls, floors and ceilings, installing electrical cables, and inserting pipes for your water supply – so it’s a very important stage, with many different trades involved. Your home can then be plastered, ready for the next phase to begin.

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The second fix stage, or ‘post-plaster’, is when your fixtures and fittings are added – such as your bathroom sanitaryware, internal doors, and sockets and switches. Your new house is then turned into a home with the installation of your kitchen, wall and floor tiling, plus any additional carpets or flooring that you’ve chosen with your Bellway sales advisor; finally, your home is painted and meticulously cleaned throughout, ready for your long-awaited moving day.

What is the difference between exchange and completion?

Whether you’re buying a brand-new home or an older property, an important stage of the process is reaching the exchange of contracts, followed by completion. These are the culmination of many previous steps, including your mortgage valuation, and conveyancing searches carried out by your solicitor, but what exactly happens at exchange and completion?

When contracts are exchanged between the buyer and seller of a property, via each party’s solicitors, the purchase is legally binding. The deposit is paid to the seller, and a date for legal completion is agreed.

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As the name suggests, completion is the final stage of the home buying process, as it is when the property becomes yours. The money for the full purchase price of the property is transferred to the seller’s solicitor, and you can collect your keys, and move in.

What is an EPC rating?

The acronym EPC stands for ‘Energy Performance Certificate’, which is a document that shows how energy efficient a property is, with a rating from A (highest) to G (lowest). For you as a home buyer, the rating is important to consider as it provides an indication of how much you could expect to pay for your energy bills whilst living there.

A current EPC certificate is a requirement for selling a property, and they’re valid for 10 years. The rating is based upon an EPC assessor’s calculation of how much energy a property uses per square metre, and how much it loses through poor insulation, for example. The certificate will also include useful recommendations for how an EPC rating can be improved, such as by installing loft insulation and fixing draughts, or by taking more significant long-term steps like adding solar panels or upgrading the windows.

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One of the benefits of buying a brand-new house is that they are typically built using innovative technologies and contemporary building materials, which contribute to a highly energy-efficient home. An impressive 99% of new Bellway homes hold an EPC rating of B or above, compared to just 5% of older homes with the same rating.

What is a mortgage interest rate and how do they work?

Mortgage interest rates have been making the news fairly frequently over the past few years, but that doesn’t mean they’re widely understood. The interest rate is the money that you pay back to a mortgage lender in return for borrowing the funds from them to purchase your new home.

This is a percentage of the amount that you borrow, so the lower interest rate you can get, the better. Lenders set their own interest rates for their mortgage products, but generally speaking, they will be influenced by the Bank of England’s current base interest rate and fall into three categories:

• Fixed rate mortgage: This type of mortgage has a set rate of interest that will not change for a certain number of years, regardless of what happens to the Bank of England’s base interest rate.
• Variable rate mortgage: This mortgage type has a rate of interest that can go up and down, depending on the terms of the mortgage set by the lender.
• Tracker mortgage: A tracker mortgage follows the base interest rate set by another independent body, often the Bank of England. The repayments can go up and down, in accordance with fluctuations in the base interest rate that is being tracked.

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Many home buyers choose to appoint an independent mortgage advisor to support them during the process of applying for a mortgage, including understanding the various mortgage products that are available, and the most suitable type of mortgage for their individual circumstances. While there is no obligation to use an independent mortgage advisor when buying a property, any type of buyer could benefit from expert support – especially those who are among the two million potential first-time buyers who don’t feel confident about navigating the home buying journey.

For more help with de-mystifying the house buying process, take a look at our first-time buyer advice hub, and follow Bellway on Instagram for support at every stage of your new home journey.

Header image credit: bricks_to_bowyer