Mortgage language made simple

Annual Percentage Rate of Charge (APRC): The APRC is a calculation of the overall cost of a loan expressed as an annual rate. It takes into account all costs involved over the term of the loan, such as the interest rate, valuation fee and mortgage charge paid to the Property Registration Authority. We calculate it to a standard set out in consumer protection legislation.

Annuity Mortgage: This is the standard mortgage type (see ‘Mortgage’ below) where part of the initial amount you borrow – the capital (see ‘Capital’ below) – is paid back every month along with interest. Once all the capital and interest is paid back the property is mortgage free.

Arrears: If you fall behind in your mortgage repayments it means your mortgage is in arrears. There may be additional charges associated with a mortgage in arrears.

Building Energy Rating (BER): A BER is the similar to the energy label for household appliances and tells you how energy efficient your new home will be. The label has a scale of A to G, with A-rated homes being the most energy efficient. A BER certificate is compulsory on homes being sold or rented.

Buy to Let: This is a mortgage to purchase a property for investment purposes, usually where you want to let or rent it to a tenant.

Capital: This is the original amount of money you borrow.

Contract / Contract for Sale: A contract is a legal agreement between two or more people. When you wish to buy a house, you first sign a Contract for Sale with the seller. The Contract for Sale should be in the form approved by the Law Society (the professional body for solicitors) and your solicitor will guide you on it. The Contract for Sale will set out the steps that need to be taken before you sign the Deed (see ’Deed’ below). Usually you pay a deposit when signing the Contract for Sale (see ‘Deposit’ below).

Conveyancing: This is the legal process that includes researching, documenting and transferring ownership of a property. It also involves filing records in state registries, such as the Property Registration Authority (see ‘Property Registration Authority’ below) and paying government stamp duty on the sale. Generally a solicitor must look after this.

Deed: A legal document in a special form. The document used to transfer ownership of a property must be in the form of a deed – it is signed by both the vendor and the purchaser as evidence of transferring ownership.

Deposit: A sum of money paid by the purchaser when an offer to purchase is made. Two deposits may be payable – the first is a refundable booking deposit. You normally have 21 days after paying this deposit, generally referred to as the ‘cooling off’ period, before signing the Contract for Sale. On signing the Contract, a deposit is paid to secure the property purchase. In general this deposit is non-refundable.

Drawdown: Once all of the conditions of the mortgage have been fulfilled to the satisfaction of the Bank and the contracts have been exchanged, the Bank will ‘draw down’ the loan funds and send them to your solicitor so that the property purchase can be completed.

Equity: This is the difference between the value of your property and what you owe under your mortgage loan (see ‘Negative Equity’ below).

Equity Release: If you have equity in your home, i.e. if the value of your home is greater than what you owe under your mortgage loan, then you may be able to release some of this equity by taking out an Equity Release, that is, an additional mortgage loan secured on the property. Equity Release could be an ideal option to fund significant expenses like home improvements, a garden makeover, even education expenses.

First Time Buyer (FTB): A first-time buyer is a person who has never before, either on his or her own or with others, purchased a house, a site to build a house or an apartment in Ireland or abroad.

Interest rate: This is the cost to you of borrowing money. The rate is usually expressed as a percentage rate per annum (i.e. per year). Interest rates can be either fixed or variable.

Letter of Offer: Once your application is approved, a Letter of Offer detailing your mortgage offer from the Bank is issued to you and to your solicitor. It will include the Interest Rate, how you are to repay your loan and the duration (see ‘Term’ below) of the mortgage loan. Full Terms and Conditions are included. It must be signed and returned to the Bank within 30 days of the date of the Offer Letter to remain valid.

Loan to Value Ratio (LTV): LTV is the amount that you are borrowing compared to the value of the property you are buying. For example, if you buy a property valued at €300,000 and borrow €240,000, your LTV is 80%.

Mortgage: A Deed you sign to create security over a house or land and sometimes over other types of property. For example, security in the form of a mortgage is usually given to a bank or building society to enable it lend to a borrower to finance the purchase of a property. A loan secured by a mortgage can be called a mortgage loan.

Mover: If you already own a home (or have owned one before) and are moving to a new home you will be considered a Mover. You may be seeking a mortgage loan to allow you move home.

Negative Equity: This is where the market value of your property is less than what you owe under your mortgage loan.

Owner Occupier Mortgage: A mortgage given to a person(s) to purchase a house in which he or she intends to live.

Property Registration Authority: The state registry where dealings concerning land are filed (usually by solicitors) and registered. The Property Registry Authority runs two registration systems at present. The older system is the Registry of Deeds in which details of Deeds concerning land are filed. This older system is being phased out. The more modern system is the Land Registry which is map-based and which records who owns land, who holds a mortgage over land and other details.

Property Registration Authority Fee: A fee paid to the Property Registration Authority to register you as the new owner of the property after you buy your home. This fee will be included in the legal costs charged by your solicitor.

Redeemed / Redemption: When a mortgage loan is fully repaid the mortgage is said to be “redeemed” and “redemption” of a mortgage is full repayment of the mortgage loan. We must release our mortgage once you redeem it.

Repayment: The amount you agree to pay us each month on your mortgage loan.

Searches: Searches are carried out by your solicitor in the Property Registration Authority and other state registries to ensure that the person selling the property has a legal right to sell it and that there is nothing on the title (such as a mortgage from the seller to a bank) which would affect you (see ’Title’ below). Your solicitor should also carry out searches to ensure any house or building has full planning permission.

Stamp Duty: A government tax on the purchase of a property.

Switcher: Someone who moves a mortgage loan secured on a house from one financial institution to another without moving home.

Term: The term of the mortgage loan is the length of time over which you agree to pay off the loan. The longer the term the less you pay each month, but a longer term also means paying more interest over the duration of the loan.

Title: The right to ownership of property, especially land. Types of title include freehold (where the owner owns land outright) and leasehold (where the owner has a lease of the land). For technical legal reasons some apartment owners own their property under leases that last hundreds of years.

Underwriter: A professional employed by lenders or insurers to assess the level of risk in providing lending / insurance cover.

Valuation: A report which describes a property and estimates its market value. It is prepared by a professional valuer. When we agree to lend a mortgage loan, we require such a report (called a Valuation Report). The valuer must be acceptable to the Bank. Remember, the Valuation Report is not a detailed structural survey or planning survey and we strongly recommend you have your own surveyor or valuer carry out a survey / valuation for your own peace of mind.

Want to expand your mortgage vocabulary even further? Call Catherine, our Wicklow Mobile Mortgage Specialist, on 087 669 2605 or fill out a form here.

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