Jargon Buster

Embarking on the journey to homeownership or refinancing can often feel overwhelming, especially when confronted with the complex world of mortgage jargon and terms. Our comprehensive guide demystifies the mortgage process, breaking down the essential terminology and phrases you’ll encounter. From understanding the intricacies of APR to unraveling the specifics of Loan-to-Value ratios, we’re here to clarify and simplify. Whether you’re a first-time homebuyer or looking to refinance, this guide is your key to navigating the mortgage landscape with confidence and ease.

Whilst it is good to understand the terms – it would be even more helpful to speak with an expert. You can hook up with one of our advisors very easily, or launch straight into an online application.

Affordable Housing Scheme: This scheme provides affordable homes to purchase for eligible first-time buyers. The price of these homes is reduced compared to the open market value.

APR (Annual Percentage Rate): This is a measure used to compare different financial products, like mortgages or loans. The APR reflects the annual cost of a loan to a borrower as a percentage of the loan amount. It includes not just the interest rate, but also other charges or fees associated with the loan, such as origination fees or mortgage insurance. The APR is designed to provide a more complete picture of the cost of borrowing than the interest rate alone.

APRC (Annual Percentage Rate of Charge): This is similar to APR but is a more comprehensive measure. APRC includes the interest rate and all fees and charges that are part of the credit agreement. In the context of mortgages, APRC gives a clearer picture of the total cost of the loan over its entire term. It’s particularly useful for comparing different mortgage products, as it accounts for costs and fees that might be applied at different stages of the mortgage term. The APRC is a standard measure used across the European Union to help consumers compare the total cost of credit offers from different lenders.

Both APR and APRC are useful tools for comparing different mortgage or loan products, providing a clearer understanding of the overall cost of borrowing over the life of the loan.

Arrears: Falling behind in mortgage repayments, potentially incurring additional charges.

BER (Building Energy Rating): An energy efficiency rating for homes, on a scale of A to G.

Buy to Let Mortgage: A loan for purchasing property intended for rental.

Capital: The original amount borrowed for a mortgage.

Contract for Sale: Legal agreement for buying a house, outlining steps before signing the Deed.

Conveyancing: Legal process of transferring property ownership and filing records.

Deed: Legal document for transferring property ownership.

Deposit: Money paid by the purchaser when making an offer, typically in two stages.

Drawdown: Disbursement of loan funds by the bank after satisfying mortgage conditions.

Equity: Difference between a property’s value and the remaining mortgage loan.

Equity Release: Additional loan secured on a property, leveraging existing home equity.

First Time Buyer (FTB): An individual who has never purchased a property before.

Help to Buy (HTB) Scheme: This is a tax refund scheme aimed at first-time property buyers. It helps in accumulating the deposit needed to buy or self-build a new house or apartment. The scheme offers a refund of income tax and Deposit Interest Retention Tax (DIRT) paid in Ireland over the previous four tax year​​​​.

Interest Rate: Cost of borrowing money, expressed as a percentage per annum.

Letter of Offer: Formal mortgage offer from the bank detailing loan terms.

LTV (Loan to Value) Ratio: The borrowed amount compared to the property’s value.

Mortgage: Legal agreement where property is used as security for a loan.

Mortgage Interest Relief: Previously, this relief allowed homeowners to deduct a portion of their mortgage interest payments from their taxable income. However, it’s important to note that Mortgage Interest Relief has been phased out for new entrants since 2013. Only those who took out qualifying mortgages between 2004 and 2012 can still claim this relief, and it is set to be fully phased out by the end of 202​​4.

Mover: Someone moving to a new home, potentially seeking a new mortgage.

Negative Equity: Occurs when a property’s market value is less than the mortgage owed.

Owner Occupier Mortgage: Loan for purchasing a residence for personal use.

Property Registration Authority: State registry for land dealings and registration.

Property Registration Authority Fee: Fee for registering a new property owner.

Rebuilding Ireland Home Loan: A government-backed mortgage for first-time buyers which can be used to purchase new or second-hand properties or to build your own home. It offers reduced interest rates compared to most commercial lenders.

Redeemed / Redemption: Full repayment of a mortgage loan.

Remortgage: Refinancing an existing mortgage with a new loan, either with the same or a different lender. It’s often done to secure a better interest rate or to borrow additional funds against the property’s equit​y.

Repayment: Monthly payment amount on a mortgage loan.

Searches: Legal checks to ensure a property’s right to be sold.

Shared Ownership Schemes: These are designed for those who cannot afford to buy a home outright. They allow you to buy a share of your home (between 25% and 75% of the home’s value) and pay rent on the remaining share.

Stamp Duty: Government tax on property purchases.

Switcher: Someone transferring their mortgage to a different financial institution without moving.

Term: Duration over which a mortgage loan is to be repaid.

Title: Legal right to property ownership.

Underwriter: Professional assessing risk for lenders or insurers.

Valuation: Property assessment report by a professional valuer.

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