faqs

Going through the mortgage process can be confusing with lots of jargonand technical terms to get to grips with. Now Mortgages are here to assist you every step of the way; guiding you through the application process and helping you understand every aspect of your loan offer.

The following is some of the terminology regularly used in loanapplications which often raise questions from our clients:

What is 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 of the mortgage loan. Full Terms and Conditions are included. It must be signed and returned to the Bank within 90-180 days of the date of the Offer Letter to remain valid.

What does APR mean?

Annual Percentage Rate (APR) represents the total cost of a mortgage loan, including interest rates and other fees, expressed as an annual percentage. It provides borrowers with a standardized way to compare different mortgage offers.

What is a loan-to-value (LTV) ratio?

LTV ratio refers to the percentage of the property's value that a borrower can borrow as a mortgage. For example, if a property is valued at €300,000 and a borrower is approved for an 80% LTV ratio, they can borrow up to €240,000.

What is fixed-rate mortgage?

A fixed-rate mortgage is a type of mortgage where the interest rate remains unchanged for a specific period, typically 1 to 10 years. This provides borrowers with stability and predictable monthly payments.

What is variable-rate mortgage?

A variable-rate mortgage is a type of mortgage where the interest rate can fluctuate over time based on market conditions and on the European Central Bank’s interest rate.

What does the conveyancing involve?

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 and paying government stamp duty on the sale. Typically you will appoint a solicitor to carry out these tasks.

Who conducts the search and how does the process work?

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 your ownership of the property. Your solicitor should also carry out searches to ensure any house or building has full planning permission. These searches are also required by the lending bank and must be considered to be clean in order to progress to drawdown of the loan.

What are the features of mortgage protection insurance?

Mortgage Protection Insurance is a type of life insurance policy specifically designed to pay off the outstanding mortgage balance in the event of the borrower's death. It provides financial protection for the borrower's family and ensures that the mortgage is repaid.

What deposits must a house purchaser make?

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.

What is meant by equity?

Equity represents the value of the homeowners financial interest in the property. calculated by subtracting the mortgage balance (currently outstanding or being sought) from the property's current market value. All mortgage applications will require a level of equity to be present in order to obtain a new loan. Increasing equity can provide homeowners with options such as refinancing or borrowing against it for other purposes.

When does a negative equity occur?

Negative equity occurs when the outstanding mortgage balance exceeds the current market value of the property. This can happen when property values decline, potentially causing financial challenges for homeowners who wish to sell or refinance.

What is 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.

What are early repayment penalties?

Early repayment penalties, also known as breakage costs or exit fees, are charges imposed by lenders if a borrower pays off their fixed mortgage or a portion of it before the agreed term ends. These penalties vary among lenders and mortgage products.

What are the features of Help-to-Buy scheme?

The Help-to-Buy scheme is a government initiative aimed at assisting first-time buyers in purchasing a new-build or self-build property. It provides a tax rebate of up to a certain percentage of the purchase price or value of the property, depending on eligibility criteria.

What is the First Home Scheme?

This is a government-led initiative designed to assist first-time buyers and other eligible homebuyers in bridging the gap between the deposit amount plus the mortgage amount, and the price of your new home. It is what’s known as a shared equity scheme. This means that homebuyers can receive funds from the Scheme in return for the FHS taking a percentage ownership in the property purchased.

FAQs