Quick Jump:
A
- This is the entire amount of the money lent to you to pay for the purchase of your house.
: APR can help you compare the cost of different mortgages. It calculates the total interest to be paid over the whole term and includes any charges to be paid as well as the main interest rate.
: Payments are made every month over a set number of years. Each monthly payment repays some of the money you’ve borrowed (the capital) along with the interest. Once the final repayment has been made your mortgage is repaid and you own your home.
: Any increase in the value of your property.
: This is the amount due when a mortgage payment has not been made by the due date. If you fail to keep up your repayments or are constantly in arrears your house could be repossessed.
: A system of selling a property to a group of interested buyers where the highest bid wins. Usually there is a minimum or ‘reserve price’ set by the seller. If your bid is successful you must immediately sign a purchase contract and pay a 10% non-refundable deposit. You are then legally bound to buy the property. You should have mortgage approval from your lender before participating in an auction.
B
: This is a standard interest rate set across the ‘Eurozone’ by the ECB (European Central Bank). Tracker mortgages are usually linked directly or indirectly to this rate.
: This is a loan – usually short term – given to a person who has bought a new home but has not yet sold their existing home. While this type of loan does not have any repayments, it does attract interest. When the borrower sells their existing home the bridging finance is then paid off.
: This is an insurance policy that covers the cost of rebuilding or repairing the structure of a property.
C
: The amount or principal borrowed to buy a new home.
: This is the security that the lender relies on when granting a mortgage. The lender must be paid first from any proceeds in the event of a sale of the property.
: This is an insurance policy that pays for the repair/replacement of your possessions in case of loss, theft or damage. It is advisable, but not compulsory, to have this insurance in place.
: The legal work involved in buying or selling a house.
: This is the cost of your mortgage repayments for each thousand euro borrowed. It is generally expressed in monthly terms. It is calculated based on the bank’s standard interest rate and the term of the mortgage.
: This is the meeting between the solicitors for the buyers and the sellers where the actual purchase of the property takes place. Your solicitor receives the title documents to the property from the seller’s solicitor and pays the remaining purchase money. The sale is then ‘closed’.
: This is where the lender undertakes a search through the Irish Credit Bureau (ICB) to see if a prospective borrower has a good credit history from previous loans.
D
: This involves taking all your existing loans, (e.g. car loans and personal loans, etc.), and merging them into one larger but easier-to-manage loan, repaid over the term or terms of your choice, usually at a lower mortgage interest rate.
: This is where the terms and conditions of the mortgage are broken. Usually, it is the failure to make payments on the loan. Failure to keep up your repayments could result in the repossession of your home.
: The amount a buyer must pay on exchange of contracts (usually 10% of property sale price).
: Once contracts have been exchanged, the bank ‘draws down’ the loan funds and sends them to the buyer’s solicitor who uses the funds to purchase the property on your behalf.
E
: This is a mortgage where the interest is paid back monthly to the lender but where the funds to repay the capital are generated by investing in a separate endowment (or savings) policy.
: This is the difference between the amount you owe on your mortgage and what your home is currently worth. For example, if your home’s current market value is €400,000 and the amount you owe on your mortgage is €250,000, then there is €150,000 of equity in your home.
: This is when you increase your existing mortgage to release equity.
: This is a person who represents the seller in return for a fee, usually represented by a percentage of the price achieved for the property.
: This is a standard interest rate set across the ‘Eurozone’ by the European Central Bank. Tracker mortgages are usually linked directly or indirectly to this rate.
: After an offer to purchase a property has been made you must sign two copies of a formal legal contract and pay a non-refundable deposit, usually 10%, of the purchase price. The seller will then also sign the legal contracts and send one back to your solicitor. This is the actual exchange of contracts. It is a a legally binding agreement to transfer the ownership of the property at an agreed price.
F
: (Letter of Offer) – Upon approval of your mortgage application you will be sent a loan offer setting out the conditions of your loan. Your solicitor will also receive a copy of this Letter, with a request to proceed with the legal formalities.
: This is a statutory body set up to supervise and regulate financial service companies in Ireland.
: A person who has not previously bought or built a house anywhere in the world, including Ireland, and who is purchasing the property as their principal place of residence. Where there is more than one buyer - such as a couple buying together - each of the buyers must be a first time buyer in order to qualify for reduced stamp duty.
: This is an interest rate set for an agreed period of time, (e.g. 3 or 5 years). At the end of this period, the rate converts to a variable interest rate. With this type of interest rate it means that you know for certain what your repayments will be for the fixed interest period.
: This is a form of legal ownership of property or land.
G
: This is a person other than the borrower who agrees to guarantee the mortgage repayments in the event of the borrowers(s) not being unable to.
: The practice where a seller, having already accepted an offer from one buyer, accepts a higher bid from another buyer before the exchange of contracts.
H
: This is another commonly used term for a mortgage.
I
- An insurance premium you may have to pay if the amount you are borrowing is over 75% of the value of the property.
: A charge by the lender for the use of their money.
: The amount you pay for borrowing a particular sum of money for a specific time, expressed as a percentage rate.
: With an interest-only mortgage your monthly repayments only repay the interest charged on the loan. The original amount of the loan is repaid on or before the end of the mortgage term. This type of loan is often offered for investment properties.
: This is the period of time for which only interest on the loan amount is payable. Once the interest-only period expires, your monthly repayments will increase, as you will revert to repaying both a portion of the capital and interest on your mortgage.
L
: A leasehold title is a right of possession, but does not constitute ownership, of a property under the terms of a Lease, for an agreed period of time, with the payment of rent.
: Upon approval of your mortgage application you will be sent a loan offer setting out the conditions of your loan. Your solicitor will also receive a copy of this Letter, with a request to proceed with the legal formalities.
: It is required that you take out life assurance in conjunction with your mortgage so that in the event of the death of a borrower, the loan is repaid in full to the lender.
: This is a ratio that expresses your loan as a percentage of the value of your property. For example, if you have a property worth €100,000, and you are borrowing €85,000, your Loan to Value is 92%.
M
: A mortgage is a loan arrangement whereby the bank lends you money so that you can purchase a property. The house is used as security for the loan.
: By law, you must have a mortgage protection insurance policy that will pay the amount outstanding on your loan (but not any arrears) in the event of your death.
: The lender in a mortgage transaction.
: The borrower in a mortgage transaction.
N
: When the value of the property falls below the outstanding amount owed on your mortgage.
O
: A term used to describe a person who owns and lives in their own property, which is their sole or main residence.
P
: The amount you pay for an insurance policy, usually paid for monthly.
: (Capital) The amount borrowed to buy a new home.
: The interest rate that is applied to most standard loans where a customer does not have any credit history problems.
: This is where offers are made directly to the seller via an estate agent. It is open to the seller to go back to lower bidders to ask them if they want to increase their bid until eventually one bidder remains.
R
: When you pay off a mortgage in full.
: This the statutory system of registering the ownership of land and other interests, such as mortgages. It is similar to the Land Registry, but unlike the more modern Land Registry it registers deeds, not land, and cannot be accessed electronically. Both systems operate in Ireland to register property ownership and charges affecting property such as mortgages and rights of way.
: This is the process of switching your mortgage from one lender to another, usually for a more competitive rate or as a way of releasing equity on your home. The new mortgage is used to pay off the loan with the existing lender and can also be a way of raising new funds for other purposes.
: This is a type of mortgage. Every month, over a set number of years, you pay back the money you've borrowed (known as the capital) along with the interest.
S
: A solicitor carries out searches on the property to establish if the seller has a legal right to sell the property and to determine whether there is anything that might affect the title of the property.
: This is a government duty, which is charged on a purchase deed and assessed on the market purchase prices of a property. Payment of the duty is noted by placing a stamp on the deed, hence the term "Stamp Duty". There are tiered rates of duty depending on the size and price of the property and on the status of the buyer. First Time Buyers don’t have to pay stamp duty if the floor space is equal or less than 125 square metres (1,346 square feet) and you live in the property. If you buy a second-hand home or a new property (over 125 square metres) you may need to pay stamp duty. Residential investors also have to pay stamp duty see the table below for details.
| Residential Property Consideration |
First Time Buyer
|
Other Owner Occupier
|
Investors
|
|
Up to €127,000
|
Nil
|
Nil
|
Nil
|
|
€127,001 – €190,500
|
Nil
|
3%
|
3%
|
|
€190,501 – €254,000
|
Nil
|
4%
|
4%
|
|
€254,001 – €317,500
|
Nil
|
5%
|
5%
|
|
€317,501 – €381,000
|
3%
|
6%
|
6%
|
|
€381,001 – €635,000
|
6%
|
7.5%
|
7.5%
|
|
Over €635,001
|
9%
|
9%
|
9%
|
: This is a survey to confirm the structural soundness of a property. It must be carried out by a qualified surveyor who will produce a report determining whether a property is structurally sound and who will produce a list of any defects. This report is highly recommended if you are considering buying an older second-hand property.
T
: This means that your mortgage interest rate tax relief is granted at source by your lender thus reducing your monthly repayment. This means that the tax relief on your mortgage interest has already been calculated and is factored into your monthly repayment.
: The length of time for which a mortgage loan is taken out. It can vary from 5 to 40 years.
: The legal ownership of a property. It is also the type of ownership, e.g. freehold or leasehold.
: The chain of legal documents showing who owns a property. They also contain other information such as planning permissions affecting the property and certificates confirming that all taxes payable on the property, e.g. inheritance tax, have been paid in full.
: Title Insurance is an alternative to the traditional solicitor’s investigation of title. It is an insurance policy that protects the lender against any defects in the title to your property, e.g. boundary disputes, planning issues and lost deeds. With title insurance, the mortgage-switching process can be carried out in as little as 10-14 days.
: This is a variable interest rate that tracks the European Base Rate* with a margin that is fixed for the full term of the loan. For example, the margin may be 1% above the European Base Rate. Any fall in the European Base Rate results in lower repayments, but any increase means higher repayments.
* European Central Bank Main Refinancing Operations Minimum Bid Rate.
U
: The process of assessing a mortgage application to determine the amount of risk involved for the lender; it includes a review of the potential borrower's credit history and a judgment of the property value. It also outlines suitable loan terms and conditions.
V
: This is carried out by a qualified valuer who will assess the value of the property you wish to purchase to make sure that it is worth at least its asking price for mortgage purposes. Some lenders will insist that the valuation is performed by a valuer chosen from an approved list provided by them.
: This is an interest rate which can go up or down during the life of the mortgage..
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