Real Estate Alliance

Jargon Buster

Rental Jargon Buster
The APR is the annual rate of interest you will be charged on a loan. It takes account of all the costs involved over the term of the loan, such as any set-up charges and the interest rate. The APR is the true rate of interest on a loan and is the best interest rate to look at when comparing loans.

Buy to let
Purchase of a residential property for letting.

Bridging Loan
This is a loan given by a lending institution to 'bridge' a time difference between buying a new property and selling your current property

Capital and Interest Mortgage
The most popular method of repaying a housing loan. Repayments consist of a mixture of interest and capital. Also known as a repayment mortgage. In the early years of the mortgage the largest part of each repayment is used to meet the cost of interest, and so the capital itself reduces very slowly.

Captial Gains Tax
This is a government tax that you must pay if you make a profit (a capital gain) of more than €1,270 in any tax year if you sell an asset such as an investment property. Certain expenses are allowable when calculating the capital gains tax liability. The current rate of Capital gains tax is 20%.

Completion
The final stage in the process of transferring the legal title of property from a seller to a buyer and the point at which any mortgage commences.

Conveyancing
Legal process of buying and selling a property.

Deferred Payment
Where no loan repayments are made for an initial period. (e.g. 3 or 4 months)

Discounted Rate Mortgage
Mortgage in which the lender agrees a fixed discount off the normal variable rate for a guaranteed period of time. Likely to include penalties for early redemption.

ECB Rate
This is the base rate set by the European Central Bank for eurozone countries.

Equity
The difference between the value of the property, and the amount of the outstanding loan on that property. e.g. if a property is worth €250,000 and the loan balance outstanding is €150,000 then the equity in the property is €100,000.

Equity Release
Allows you to release some of the equity, (the value you have built up in your property). This is a very popular method of raising finance for investors when expanding their property portfolio.

Exchange of Contracts
The point within the conveyancing process at which the agreement between a property buyer and seller for transfer of title becomes binding in law.

Fixed Rate
The interest rate is fixed for a certain period (the fix period) This provides the certainty of a fixed monthly repayment for and agreed period of time e.g. 3 or 5 years.

HB47
This is the home bond certificate that is received from the builder when purchasing a new build property. Homebond protects the buyer against structural defects.

Interest Only
As the name implies this is a loan where the borrower only pays interest to the lender during the loan term or for an agreed period of time e.g. 5 years. The capital is repaid in one lump sum at the end of the loan term. Interest only mortgage are increasingly popular with property investors.

Fixed interest rate mortgage
Mortgage in which the interest rate is fixed for a set period of time. There are likely to be penalties included for early redemption.

Fixtures
Articles such as radiators and light fittings attached to the house itself and deemed to be part of it.

Freehold
Indefinite ownership of a property as opposed to a leasehold tenure,which is for a fixed period.

Good Repair
Landlords are required by law to keep their rented properties in good repair and fit for human habitation.

Land Registry
This is a government body which records the ownership of property.

Leasehold
Ownership of property for a fixed term granted by lease. The lease sets out details of rents and conditions.

Letter of Offer
This is the letter received from a bank confirming that they are willing to provide you with a mortgage based on the appication you completed. The letter contains details such as the amount of the loan, the loan term and the interest rate payable.

Loan to Value (LTV)Size of mortgage as a percentage of the value of a property. Many lenders offer more favourable deals to customers who are seeking lower LTVs.
Size of mortgage as a percentage of the value of a property. Many lenders offer more favourable deals to customers who are seeking lower LTVs.

Mortgage
Deed pledging freehold or leasehold property as security for a loan (also called legal a charge).

Negative Equity
Refers to a situation where the value of the property is less than the amount of the loan outstanding on the property.

Principal
The amount of the mortgage on which interest is calculated. It is the amount of the mortgage received from the bank.

Private Residential Tenancies Board (PRTB)
This is an organisation set up by the government. All residential tenancies must by law be registered by the landlord with the PRTB. The PRTB will act as mediators between landlords and tenants should a dispute arise, if the tenancy has been registered. Note: Residential tenancies must be registered with the PRTB in order for the landlord to claim mortgage interest as an allowable expense against tax.

Quiet Enjoyment
Allowing tenants ‘quiet enjoyment’ is an implied term within any letting agreement and affords tenants the right to uninterrupted use of the property during the course of their tenancy without interference from the landlord or the landlord’s agents.

Rental Yields
Precise definitions can vary but the gross rental yield is usually taken to be the annual rent of a property as a percentage of its capital value or acquisition price. The net rental yield is the annual rent after deducting expenses as a percentage of capital value or acquisition price. The rental return or capital return is the annual income from renting less the costs plus annual capital appreciation as a percentage of the original investment in the property.

Repayment Mortgage
A mortgage in which the borrower pays a set amount each month comprising an element of both interest and capital repayment and calculated to fully pay off the mortgage by its expiry date.

Stamp Duty
This is a tax you pay when you buy a property. A sliding scale of rates applies depending on the size and purchase price of the property. The rate payable is depends on the purchase price of the property and whether the purchaser is an owner occupier or an investor.

Sub-Prime Mortgage
Loans given to borrowers with poor credit history or irregular or uncertain income. The interest rate charges can be significantly higher than on a traditional mortgage.

Title Deeds
Deeds and documents proving ownership of freehold or leasehold property (generally the charge or land certificate).

Tracker Mortgage
The Interest rate charged is guaranteed not to exceed the current ECB (European Central Bank) rate by a specified percentage e.g. 1% . the rate will therefore track the ECB rate as it moves up and down in the ECB rate have a knock on effect on the mortgage rates paid by borrowers.

Valuation Fee
All lenders will seek an independent valuation report to certify the estimated value of the property being offered as security for the loan sought. A valuation fee is usually around €130.

Variable Interest Rate
The interest rate on the loan can be varied by the lender and will move up and down in line with interest rates generally, but unlike a tracker mortgage there is no obligation on lenders to reduce rates when rates generally change and the rate can be changed at the lenders discretion.

Void Periods
Time, usually measured in days, when properties offered for rent remain without tenants.