Getting a mortgage or insurance in Ireland can be confusing. It is not just the rates and the many financial suppliers but the terminology of getting a mortgage or insurance that confuses most people.

New buyers often shout, “What’s it all about?” after looking online or talking to a broker. Is it life insurance, or am I looking for life assurance? Is a fixed-term rate any different to a variable rate? Is a 20-year mortgage any better than a 30-year mortgage? 

Questions follow questions, which usually get answered with only more questions when you’re looking to get a mortgage or insurance in Ireland. The phrases and terminology keep piling up, and when you’re new to the game, it can become very stressful.

There isn’t enough coffee in the world to get you through all the research needed to figure out the language of getting a mortgage or insurance. Our helpful guide to the terminology can be enjoyed with a nice cup of coffee, though, and you’ll be surprised by how much you understand by the end.

At MortgageOne, we aim to make life easy at a time when it can be very stressful. 

Terms to know when getting a mortgage or insurance

The common terms to know when getting a mortgage or insurance in Ireland range from the first-time buyer to life insurance to mortgage repayments. Financial terms can be thrown around in meetings, but each one may be as important as the next and pretending you know what they mean could cost you in many ways.

Some of the common terms you should know when looking for a mortgage in Ireland:

A mortgage is a financial agreement you take out with a lender to pay for the purchase of your home.

A mortgage is a fixed-term agreement, usually of 10, 20 or 30 years.

A first-time buyer is someone who has never taken out a mortgage before to buy land or a property. 

The first-time buyer may qualify for special rates, tax incentives, and other benefits.

A mortgage broker is an expert on the lending market who operates as a go-between with the mortgage provider and the borrower. 

The mortgage broker will know the market, know who to approach to find a mortgage and can be very useful for the first-time buyer when looking for their first home.

Insurance is a policy you take out with an insurance company to cover the costs of an unexpected event. There are specific terms and conditions to each type of insurance policy and you pay a premium for the services of the insurance policy.

Life Insurance is a policy you take out with an insurance company which pays a sum of money to a named beneficiary in the case of your death.

Mortgage protection insurance is a life insurance policy you take out specifically to cover the payment of the mortgage if you die during the term of the mortgage policy. 

The policy will only pay the balance of the mortgage due and finishes on your death or when the mortgage is repaid.

Interest rates are the price a lender charges you for financing your mortgage. The rate is a percentage of the sum borrowed, known as the principal. There are many types of interest rates, but there are two common ones Standard Variable Rate and Fixed Rate.

Standard Variable Rates will change over the lifetime of the mortgage. If interest rates go up, your mortgage payments will go up, but if rates go down, so will your monthly repayments. 

Fixed Interest Rates unlike the variable rate, will stay at the rate agreed with your lender at the time you took out the mortgage and for a fixed length of time, You could set the mortgage rate for five years, ten years or twenty years, depending on how you think the market will go for the term.

Annual Percentage Rates are the cost of the mortgage to the lender per annum. The APR calculates the interest charges and other fees as a yearly cost to you, the borrower.

The cost of Credit is a reckoning of how much the mortgage will cost you by the end of the loan agreement. The cost of credit includes interest paid and all fees charged by the lender minus the initial sum borrowed. 

The cost of credit may be more than expected if interest rates rise.

Loan to Value is a figure calculated by dividing the amount left on your mortgage by the home’s current market value. LTV is usually expressed as a percentage.

The higher the LTV on a mortgage, the higher the interest rate charged by the lender will be. A high LTV indicates a higher risk, and you may need to pay a higher deposit before getting the mortgage.

A Valuation is a report done by the prospective mortgage provider, showing what they think the property is worth and if there are any potential issues which could affect the value of the house or apartment.

A Deposit is the amount of downpayment you will need to pay before agreeing the mortgage with the lender. A first-time buyer in Ireland often needs to pay a hefty deposit, so always ensure it is refundable before paying it to the solicitor.

A Guarantor is a term familiar to first-time buyers in Ireland. The mortgage lender may ask for a guarantor to guarantee to pay the monthly repayments in the case of the buyer defaulting on the loan.

A guarantor is usually a parent or close family member with the financial ability to cover the payments.

Collateral is a form of security to cover the mortgage if things go wrong for the applicant. Usually, the lender sees the house as collateral, but with some high-risk agreements, they may also look for other forms of collateral.

Approval in principal is when the mortgage provider agrees, further to more scrutiny of your application to approve your mortgage application.

The AIP is not a final approval; it is just an acknowledgement that the lender has not found any reason for denying your application on the initial examination.

A letter of offer is the letter you’ve been waiting for since you first saw that home you wanted. The letter of offer will be from your mortgage provider and will outline what they are offering as a mortgage and the terms and conditions.

You will need to meet with your solicitor to go through the letter of offer and make the next move to getting the keys to the front door.

A mortgage drawdown is when you hand over all that money to the seller of the property. In reality, you do not see the money and the mortgage drawdown is handled by your solicitor dealing with the solicitor handling the sale for the seller.

When the mortgage drawdown is complete, you will have to start paying the mortgage.

Mortgage repayments are the monthly instalments you will start to pay the mortgage provider once you draw down the mortgage. The instalments are outlined in your mortgage agreement and are usually taken by direct debit from a nominated account.

The title Deeds are the formal documents describing what you bought with your mortgage. The Title Deeds show that you have purchased the property and should have a map showing the legal extent of what you now own.

Your Title Deeds will stay with the mortgage provider until you have completed the terms of the loan.

Call MortgageOne Today

Call MortgageOne today to get started on getting that mortgage for the home you have your heart set on since the day you viewed it.

Our mortgage experts will guide you through what is available on the mortgage market and how to get the right one for your pocket.

We have the team in place with years of experience and knowledge of the Irish mortgage market to get you the best deal available.

The MortgageOne team work with first-time buyers, home movers, property investors and those looking for a better deal on their existing mortgage.

Call MortgageOne today, and let us help you buy that home.