Irish Mortgages - terms explained

Glossary of terms.  Click on a letter below to go to that section.

A  B  C  D  E  F  G  H  I  J  L  M  N  P  R  S  T  V

A
Acceptance or Arrangement Fee
Some 'specialist' or bad credit lenders charge this fee when they give you a mortgage – it usually is about 0.5% - 1% of the value of the loan.  Most traditional lenders do not charge this fee.

Advance
This is the total amount of the loan you receive.

Agents (see Estate Agents)

APR
Annual Percentage Rate

Annuity Mortgage
A mortgage where the capital and interest are paid off in monthly installments.

Auction
Property sale.  If you win the bid you are legally bound to buy the home so it is vital to have a mortgage approved and to make sure that the house is structurally sound before the auction.

B      (back to top)

Bridging Loan
A temporary loan to allow you to buy your new house before you get the funds from selling your own home.

Broker
An independent intermediary who will give you advice and offer a range of mortgages.  Apply for a mortgage with independent brokers, Mortgages Direct

Building Insurance
Insurance to cover any structural damage to your home.  All lenders will need their interest in your home to be noted on the policy.

C      (back to top)

Capital
The sum borrowed to buy the home.

Chain
This happens when the seller needs the sale of their house to close to complete the purchase of another property.  The same situation may happen for other people in the chain.  As a result if one sale falls through the whole chain can collapse.

Charge (or Legal Charge)  
This is the security that the lender relies on when granting a mortgage.  This is usually recorded at the Land Registry/Registry of Deeds.

Completion
The point when contracts have been exchanged and ownership legally passes to the buyer.

Contents Insurance
Insurance to cover any loss or damage to your possessions.  (It is often better value to take contents insurance as part of the buildings insurance policy rather than on it’s own).

Contracts
A written legal agreement between the seller and buyer.

Conveyancing
Legal work involved in buying and selling a home.
(Read our article on Low Cost Conveyancing)

D      (back to top)

Deeds
The documents which shows the ownership of a property.

Disbursements
Expenses paid out by the solicitor on behalf of the purchaser. (e.g. postage/couriers)

E      (back to top)

Endowment Mortgage
Interest is paid to the lender each month.  A payment is also paid into a savings/investment policy each month.  The loan is repaid at the end of the loan period from the proceeds of this policy.

Equity
The amount of the property you own i.e. the property value less the mortgage balance.

Estate Agent
Property Agent who works on behalf of the seller who has the aim of getting the highest price for the home.

Exchange of Contracts
The point at which the buyer and seller are legally bound to the sale and purchase of the property.

F      (back to top)

Failed Valuation
When the lender turns down your mortgage application after reading the surveyor’s valuation report.

First Charge
A legal charge used by the lender to secure the mortgage.  The lender has a ‘first call’ on any funds available when you sell the property.

First Time Buyers Grant
This grant is now no longer available.

Fixed Rate
Payments on a mortgage can be fixed for a specified period and will not change for that period.

Freehold
Ownership of the property and land.

G      (back to top)

Gazumping
When the seller having already accepted an offer from Party A accepts a higher bid from Party B.

Ground Rent
Rent you pay annually on a long lease.

Guarantor
A person who agrees to guarantee a loan.  With some lenders you can borrow more money with a guarantor.  They are responsible for the mortgage payments if you can’t afford to pay them.

H      (back to top)

Home Bond
Guarantee on most new houses and apartments.  It provides against: losing your deposit if the builder goes bankrupt, 10 years Warranty against major structural faults, and 2 years Defect Warranty against water and smoke damage after completion.

HB47
Certificate issued by Home Bond confirming that the property has been registered and is covered under the Home Bond Guarantee Scheme.

I      (back to top)

Indemnity Bond
An upfront one-off fee charged by some lenders if you borrow in excess of 70-80% of the house value to protect them against you defaulting on the loan. For first time buyers, most lenders will not absorb the cost of the bond, and pay it themselves.

J      (back to top)

Joint Agents
When the seller employs two independent Estate Agents to sell their house.

L      (back to top)

Land Registry
The solicitor registers the buyer as the new owner of the house.

Life Assurance
An insurance policy which pays out a fixed lump sum on the death of a policy holder.  All lenders will require you to have life insurance to cover the mortgage.  This is often referred to as Mortgage Protection.

Loan to Value
This is a formula used to work out the percentage of the value of the house that you borrow from the lender e.g. if the house is worth €100,000 and you borrow €50,000 the Loan to Value is 50%.

M      (back to top)

Mortgage
A long term loan to finance the purchase of a property.

Mortgagee
The lender of the mortgage.

Mortgagor
The house buyer who takes out the mortgage.

Mortgage Term
The period over which the mortgage is to be repaid.

Mortgage Protection
An insurance policy which will pay off a fixed amount of money on the death of an individual.  (Also see Serious Illness)

N      (back to top)
 
Negative Equity
When the value of a home falls to less than the balance of the mortgage.

P      (back to top)

Pension Mortgage
Mortgage available to self employed people, people without a pension scheme and owner directors of companies.  Monthly interest payments are made to the lender, and a pension policy is set up to pay off the mortgage when the mortgage holder retires.  It can be very tax efficient.  Speak to your broker for more details.

Premier Guarantee
Guarantee on most new houses and apartments.  It provides against: losing your deposit if the builder goes bankrupt, 10 years Warranty against major structural faults, and 2 years Defect Warranty against water and smoke damage after completion. Similar to Home Bond.

Premium
The monthly amount payable for an insurance policy.

Principal
The original amount of the loan.

R      (back to top)

Redemption
Paying off the mortgage either to move home or at the end of the mortgage term

Redemption Penalty
Lenders charge a penalty if you pay off your mortgage when you are on a fixed rate.

Repayment Mortgage
A mortgage where the capital and interest are paid off in monthly installments.

S       (back to top)

Searches
Your solicitor carries out searches to ensure the person selling the property has a legal right to it and that there is no other interest shown on the title.  

Serious Illness Cover
This is a type of insurance which can be taken out as part of your Mortgage Protection Policy which will pay off your mortgage if you suffer a serious illness from the insurance company’s list.  It is recommended

Snag List
When a new home is built the buyer is recommended to arrange for a surveyor to check if there are any defects which need to be fixed before they complete the sale. 

Sole Agent
When a seller sells their home exclusively through one Estate Agent.

Solicitor
Legal representative who acts on behalf of a buyer or a seller in the purchase or sale of a house.

Special Conditions
Specific Terms on the loan offer letter which must be satisfied before the loan advance is paid out.

Stamp Duty
A government tax on buying a home.  See Stamp Duty article.

Structural Survey
A report detailing whether the house is structurally sound and listing the major and minor defects.  This is recommended for second hand properties. 

Surveyor
The person who carries out the structural survey of the property. 

T      (back to top)

Term
The period for which a mortgage is taken out.

Title
The legal right to ownership of a property.

Title Deeds
The documents which shows the ownership of a property.

What is a tracker mortgage?
A tracker mortgage is fairly new to the Irish mortgage market.  It is similar to a standard variable rate mortgage, with one main difference - it 'tracks' the European Central Bank (ECB) rates.  The benefit is that it commits the lender to keeping their 'margin' (the markup they charge on top of the wholesale rate) under a certain level.  

V (back to top)

Valuation Survey
A survey carried out by the lender to ensure that the house is not worth less than the proposed loan.  This is separate to a structural survey which is recommended for a second hand property.

Variable Rate
An interest rate that can rise or fall, depending on prevailing rates with the European Central Bank (ECB)

Mortgages Direct Ltd t/a Mortgages Direct is regulated by the Financial Regulator.