Glossary

This is the yearly cost of your borrowing. It takes into account the interest rate charged and any other fees. Lenders are always required to quote the Annual Percentage Rate (APR) when advertising a loan. This is to help customers compare the true cost of borrowing.

The fee charged to process a mortgage application.

Also referred to as a capital and interest mortgage (the most common type of mortgage), where the monthly repayment consists of an amount to repay the capital (original loan amount) plus an amount towards the interest that is charged to the mortgage account.

Also called a sanction in Principle is provisional approval for a mortgage loan amount and term subject to evidence of income and employment, proven repayment capacity and any other special conditions the lender may issue.

Mortgage repayments that have not been paid.

Also called an Intermediary or mortgage advisor, offers advice on the various mortgage products and options available from a selection of lenders.

This is an energy label and report for homes. The rating is on a scale A to G. A-Grade homes are the most energy efficient and have the lowest energy bills.

The amount owed excluding costs and interest. This is also called ‘the principal’ of the mortgage.

This is the security offered against the value of the Mortgage. The property being purchased is considered the primary collateral for the loan and the borrower will be liable for any shortfall if the property is sold for an amount less than the outstanding loan, including any accrued interest, charges, legal, selling and other related costs if this is the case.

The Cost of Credit is the difference between the amount you borrow and the total you repay, including the interest, by the end of the loan period.

The rating that lenders put on borrowers based on their credit worthiness. The lender obtains credit references from a credit reference agency to enquire on your credit history and this may influence your ability to obtain a loan.

These are the official documents of ownership.

The initial sum paid to the seller for the purchase of a property. The buyer could forfeit this is they don’t complete the transaction.

Any decrease in the value of a property.

By signing a direct debit mandate, you authorise the lender to send instructions to your bank to debit your account in accordance with the instructions received. This allows you to pay your monthly mortgage amount from your current account. If your repayment amount increases or decreases this will automatically be reflected in the amount debited from your current account.

The European Central Bank is the central bank for Europe’s single currency, the Euro.

The difference between a home’s value and the outstanding mortgage debt.

A mortgage lender takes a First Legal Charge on the property being purchased. If a borrower defaults on their mortgage repayments and the property is sold to repay debts etc., the mortgage lender will be the first party to receive any proceeds of the sale.

The rate on a mortgage which doesn’t change for a specified period. This is known as the fixed rate period.

A freehold title gives the holder ownership of the land and buildings for an indefinite period. A leasehold title gives the holder a right to use and occupy land and buildings for a defined period of time.

A guarantor is a person other than the borrower who guarantees loan repayments.

You need a home insurance policy in place before you can draw down your mortgage. This is to cover damage by fire or flooding, burglary or someone injuring themselves on your property.

Once a mortgage application is approved, a formal Letter of Offer is sent to the borrower setting out the conditions of the loan. The borrower’s solicitor also receives a copy.

Loan to values are shown as percentages and represent the difference between your mortgage loan and the value of your property. For example, a mortgage of €90,000 on a property valued at €100,000 would be shown as 90% Loan to Value.

A long-term loan, usually 20 to 35 years, secured by a mortgage against the borrower’s property.

A moratorium is a payment holiday that allows you to take a break from your mortgage or reduce your payments for three months. You can reduce your repayments by the full amount or partially by a selected amount. During your payment holiday, you will need to pay your insurance costs such as life assurance and home insurance. You can avail of the payment holiday option up to three times during the life of the mortgage.

The lender providing the mortgage loan.

The person who takes out the mortgage loan i.e. the borrower.

When the value of the property has fallen below the outstanding mortgage debt.

Payee means the receiver of a payment.

Payer means the maker of a payment.

Principle private residence. A person’s primary residence where they normally live. A person can only have one primary residence at any given time.

The sum of money borrowed from the lender – generally what is owed, not including the interest. This is also known as capital.

Repayment Breaks allow the borrower to spread monthly repayments over a shorter number of months, for example, 10 months instead of 12, or postpone repayments for a time, for example, 3 months.

A property that is not occupied by the owner, usually purchased specifically to generate profit through rental income and/or capital gains.

The possibility that the investment will not yield any/as much return as expected or hoped for.

Also referred to as collateral, security is an asset(s) belonging to you which you have assigned to the Bank. The Bank has the right to sell or apply the asset(s) towards payment of the debt in the event that you default on the borrowing.

This is a rate set by the lender, which may move up or down.

Tax relief is available for home mortgage interest in certain circumstances. This applies in respect of a main residence only. The tax relief is granted at source and is administered by the lender. The lender either reduces the mortgage repayment by the amount of the tax relief, or a credit is lodged into the account from which the repayments are made.

The agreed period of time for the customer to make full repayment of the loan.

Legal documents that provide evidence of a person’s ownership of a property.

An additional amount of money lent to an existing borrower. This is usually for the purpose of home improvements.

This report, which is carried out by a professional valuer, gauges the market value of your property. It is important to remember that this report is different to a structural or planning survey.

This is an interest rate that may rise and/or fall over the period of the borrowing.

The last date of the mortgage agreement – the day the mortgage loan must be paid in full or the agreement renewed.