20 Terms Every Buyer Should Know
Buying a home is an exciting, yet often overwhelming, process. One of the biggest challenges can be understanding the terminology that comes with mortgages and property. To help you feel more confident, here’s a glossary of 20 essential terms every buyer should know.
- Annual Percentage Rate (APR) or Annual Percentage Rate of Charge (APRC)
This is the yearly cost of your borrowing. It includes the interest rate and any other fees.
- Approval in Principle (AIP)
Provisional approval for a mortgage loan amount. There are conditions that you must meet before we will make a formal offer, such a valuation, proof of income and identity. But approval in principle means you can go house hunting with a good idea of how much you can borrow.
- Building Energy Rating (BER)
An energy label for homes, ranging from A to G, with A-rated homes being the most energy-efficient and likely to have lower energy bills.
- Broker
Your advisor who can help you find mortgage deals from various lenders.
- Capital
This is the original amount you borrowed, excluding any costs and interest. It’s also known as the principal of the loan.
- Collateral
Security you offer against the value of your loan.
- Conveyancing
The legal term used to describe the process of purchasing property. The transfer of the legal ownership of a property from one person to another.
- Cost of Credit
The difference between the amount you borrow and the total amount you repay by the end of the loan period.
- Deeds
These are the official documents proving ownership of a property.
- Deferred Start
An option to delay your mortgage. Be aware that your subsequent repayments will increase to ensure the mortgage is repaid within its original term.
- Deposit
An initial sum paid to the seller when purchasing a property. If you don’t complete the transaction, you could lose this.
- Valuation
A report carried out by a professional valuer to gauge the market value of your property. This is different from a structural or planning survey.
- Equity
The difference between your home’s current value and the amount you still owe on your mortgage.
- First Time Buyer
Someone who has never previously borrowed money secured on residential property or land (with the intention to build a dwelling) in or outside the State. If there’s more than one borrower and any of them have previously had a housing loan, none will be considered a first-time buyer.
- Fixed Interest Rate
An interest rate on your mortgage loan that stays the same for a specific period. This can make budgeting easier.
- Foreign Currency Mortgage Loans
Your loan and repayments will be in euro. However, if some of your income or assets used for repayment are not in euro, or you live in a non-eurozone EEA state, it’s considered a foreign currency loan. Fluctuations in exchange rates can impact your outstanding balance and repayments.
- Freehold or Leasehold
A freehold title means you own the land and buildings indefinitely. A leasehold title grants you the right to use and occupy land and buildings for a defined period.
- Home Insurance
You’ll need a home insurance policy in place before your mortgage funds can be drawn down.
- Letter of Loan Offer
Once your mortgage application is approved, you’ll receive a formal letter outlining the loan’s conditions, including the requirement for a valuation report.
- Loan to Value (LTV)
Expressed as a percentage, this represents the difference between your mortgage loan amount and the value of your property. For example, a €90,000 mortgage on a €100,000 property is 90% LTV.
When you’re ready to take the next step in your home buying journey, we’re here to help.