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Glossary Of Terms

- A -

Acceptance Fee
Some mortgage lenders charge an acceptance fee when they give you a mortgage. This is usually only a very small percentage of the value of the loan (e.g. 0.5%). Luckily, most lenders have now waived this fee.

Amortisation
Paying off a debt in regular instalments over a period of time. In this case, it is the number of years it takes to repay a mortgage in full. The most common amortisation period is 25 years.

Annuity mortgage
A mortgage which is repaid by regular by regular instalments of capital and interest repayments. Also sometimes referred to as a capital and interest or repayment mortgage.

APR (Annual Percentage Rate)
A shortened term for Annual Percentage Rate, which is the true annual rate of interest charged on a loan, taking into account the frequency of repayments, the duration for which repayments must be made, and all fees and charges made by the lender in connection with the loan. APR is used as a means of comparing the cost of loans and mortgages.

Applicant
Anyone applying for a mortgage.

Applicant type
Will indicate whether the applicant is a first time buyer or self-employed, for example.

- B -

Bridging Loan
A short-term loan to a person who has bought a new home before selling their current one. The loan is paid off in full when the current home is eventually sold.

Broker
An independent intermediary that charges a fee or commission for giving advice and offering a range of mortgages.

Building Insurance
Insurance covering the structure of the building which you must have. Where the property is leasehold the buildings insurance will normally be arranged by the freeholder and the cost charged on to the leaseholder within the service charges payable. As a general rule of thumb any item which cannot be taken away by the owner is covered by the buildings insurance, anything which can be removed should be covered by the contents insurance. This is only a guideline and any doubts should be raised with insurers as this definition can prove problematic in some instances, such as fitted carpets.

- C -

Capital
The amount you owe excluding costs and interest outstanding.

Capped Rate Mortgage
With a capped mortgage, repayments can vary but only up to an agreed limit. Once it reaches this limit, if mortgage rates go higher, repayments will stay the same, and if rates go down, so will the repayments.

Collateral
Your home, property or some other asset used as security for a loan.

Contents Insurance
Insurance to cover any loss or damage to possessions within a property.

Contract
A written agreement, which will decide ownership of the property between the vendor (seller) and the purchaser (buyer).

Conveyance
What your solicitor does, legal work involved in the sale and purchase of land.

- D -

Deed
The legal document by which legal title to freehold and leasehold property is transferred from the seller to the buyer.

Deferred Start
This allows the buyer to skip repayments during the first one, two or even three months of their mortgage. Skipped payments are spread over the remaining term of the mortgage. This is only available to first-time buyers and only with repayment mortgages.

Deposit
The amount of money a buyer must hand over on exchange of contracts (usually 10% of the agreed property price).

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

Discounted Mortgage
Many lenders offer discounts with their standard variable rate for a set period. This is a good way for first-time buyers to keep repayments lower in the early years of owning a home.

- E -

Endowment Mortgage
A mortgage where the borrower pays interest only to the lender throughout the mortgage term. The borrower also takes out a life assurance savings plan designed to pay off the mortgage in one lump sum at the end of the mortgage term or on death if earlier.

Equity Release
Equity is the difference between the amount of money a person owes on their mortgage and the current value of their home. Equity Release allows you to borrow up to 90% of the current value of your home, for a number of different purposes.

Exchange of Contracts
At this point the buyer and seller are legally bound to the sale and purchase of the property.

- F -

Failed Valuation
This occurs when the lender turns down a mortgage application after reading the surveyor’s valuation report.

Fixed Rate Mortgage
An interest rate on a mortgage, which can not be varied by the lender for a fixed period, e.g. five years. At the end of this period, the rate may revert to a variable rate or the lender may offer a new fixed rate at that time.

Freehold
The owner of the property owns the property without payment of any rent and without a limit in time.

- G -

Gazumping
When an offer, having already been accepted by an auctioneer or a vendor (seller) but before contracts are exchanged, accepts another, higher offer from someone else.

Ground Rent
A sum of money usually paid annually, by leaseholders to the owner of a freehold.

Guarantor
A person who promises to be answerable for the debt of another.

- H -

Home Bond Guarantee Scheme
A guarantee scheme with the objective of protecting new houses and apartments against structural defects and to ensure property standards are maintained in the building industry.

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

- I -

IFSRA
Irish Financial Services Regulatory Authority: a body appointed by the Central Bank established in May 2003 to regulate financial services firms in Ireland.

Indemnity Bond
An insurance policy taken out by the lender when they lend above a certain percentage of the property value, whish they make a claim against when they loose money having repossessed a property. (Although charged to the borrower in the past, most lenders now pay this premium themselves)

Index Linked
Allows you to increase your mortgage repayment by a set percentage each year. This reduces the amount of interest paid and reduces the mortgage term.

Interest Only Mortgages
A mortgage where only interest is paid during the mortgage term. The capital is repaid at the end of the term.

- L -

Land Registry
The solicitor registers the buyer as the new owner of the property. The register is conclusive evidence of the title of the person whose name appears on it. Most agricultural land in Ireland is registered in the Land Registry.

Leasehold
The right to possession, but not ownership, of a property for an agreed period of time. Ultimate ownership remains with the freeholder.

Legal Fees
Solicitors charge a small percentage of the purchase price of a property for their services. This fee will depend upon the agreement made between the borrower and the solicitor.

Life Assurance
If you die before you've paid off the mortgage, the assurance is designed to cover what is still owed. Subject to limited exceptions it is a legal requirement to have life assurance when taking out a mortgage.

Loan to Value (LTV)
This describes the percentage size of the loan based on the value of the property. For example, if you owe €200,000 on your mortgage and your house is worth €400,000, your LTV is said to be 50%

- M -

Maturity Date
The final day of the term of the mortgage. On this date the mortgage must either be renewed or paid off in full.

Mortgage
A long-term loan to finance the purchase of a property, with the property acting as security for the lender

Mortgagee
The lender of the mortgage, i.e. a bank, trust company, credit union or other finance provider.

Mortgagor
The property buyer who takes out the mortgage.

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

Mortgage Break
This allows the borrower to take a break from their mortgage repayments for 3 consecutive months in any one year. It is available up to 4 times over the term of the mortgage, once 3 years of satisfactory repayments have been made, and the Loan to Value (LTV) is 85% or less. One month notice of this is required.

Mortgage Interest Relief
This is tax relief that you can claim on mortgage interest payments. People buying for the first time are entitled to the highest amount of relief.

- N -

Negative Equity
When the value of the property has fallen and is less than the loan secured on it.

- P -

Pension Mortgage
This type of mortgage is 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.

Premium
This is the amount of money the borrower must pay to the insurer regularly (usually every month) for an insurance policy.

Principal
The amount of the loan on which interest is calculated.

- R -

Redemption
The word used to describe a mortgage when it is repaid.

Remortgage
A mortgage that is a replacement loan for another mortgage.

Repayment Mortgage
A mortgage where the capital and interest are paid off in monthly installments from day one. It is similar to a personal loan, only over a longer term. Initially, it is mostly interest being repaid, with a smaller proportion of the payment being made against the loan. Over time, however, this ratio changes with the proportion of capital repayment increasing and interest reducing until the loan is paid off.

Retention
A condition of a mortgage whereby the mortgage lender holds back a portion of the advance, pending work to be carried out by the mortgagor.

- S -

Searches
A process carried out by your solicitor to confirm the title of the property is devoid of any judgement, liens or other conditions, which might affect you obtaining good title to the property.

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. This list is then given to the builder to rectify.

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

Specialist Report
A report required by the lender into particular defects discovered at the property to be purchased, such as dry or wet rot, damp, etc, before they will agree the mortgage.

Split Rate
A split rate can set part of a mortgage at a fixed rate and the remainder at a variable rate, e.g. 50% fixed and 50% variable. If rates fall, the repayments on the variable part of the mortgage will reduce, and if rates rise, there is the security of knowing that only the variable payment is affected.

Stamp Duty
A government tax payable on exchange of contracts on properties of a certain value. Further information on stamp duty.

Structural Survey
A comprehensive and detailed assessment of the condition of the property, which is carried out by a qualified surveyor. It can identify defects that would not be evident from a valuation.

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

- T -

Tenure
Type of ownership of property e.g. freehold or leasehold.

Term
The period for which a mortgage loan is taken out.

Title
The legal right to ownership of a property.

Title Deeds
Documents which show the ownership of a property.

- U -

Undertaking
This can mean a condition of a mortgage where the borrower is obliged to carry out certain things. It can also mean a condition of a mortgage where the borrower is obliged to carry out certain works within a specific period of time following completion of the mortgage. In the context of home loan lending, the word 'undertaking' most frequently refers to the legally binding promise that a borrower's solicitor gives to a lender to have all security documents signed by the borrower and to certify that the borrower's title to the property is good and marketable.

- V -

Valuation
An inspection of the property by a valuer to establish its suitability for mortgage purposes. A valuation should not be confused with a structural survey.

Variable Rate
An interest rate that can increase or decrease over the term of the loan in line with general movements in interest rates in the wider economy.