Are you baffled by some of the words and phrases you come across when buying, selling, renting or letting property?

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Advance

A mortgage loan.

Annual Percentage Rate (APR)

Shows you the interest rate paid over the course of a year. Use it to compare mortgage offers when you're shopping around.

Arrangement Fee

Sometimes charged in order to access a particular mortgage deal. Usually apply to fixed or discounted rate mortgages. May be payable up front, added to the loan on completion, or deducted from the loan on completion.

Base Rate

The minimum rate at which banks are prepared to lend money.

Building Insurance

Protection against the cost of rebuilding a property following structural damage, for example by flood, fire or storm. Lenders often offer their own policies, but it may be cheaper to buy elsewhere.

Building Regulations

Legal requirements designed to ensure the health and safety of building users.

Building Survey

A technical report following an inspection of the property. It will give you a comprehensive account of the condition of the property, describing any structural or other defects.

Capped Rate

A capped rate mortgage is a mixture between a fixed rate and a variable rate. The interest rate is guaranteed not to rise above a set level within the capped rate period but if the normal variable mortgage rate is below the capped rate then the variable rate is charged.

Chain

The line of buyers and sellers involved in each house move. e.g. while you're selling your home, you'll be buying a new house from another vendor who's buying from someone else - and everyone has to wait for everyone else's deals to go through. First time buyers are chain-free as they don't have to sell anything.

Completion

The day when the seller and buyer finally exchange money via their respective solicitors and the buyer becomes legal owner of the property and can move in.

Contents insurance

A policy insuring household contents against theft and damage.

Conveyancing

The legal process by which ownership of the property is transferred from the seller to the buyer. This is usually carried out by a solicitor or licensed conveyancer.

Deposit

The money you pay on exchange of contracts as part of your initial contribution to the purchase of your home. Normally 10% on signing of contracts.

Early Redemption Charges

If you sell your house or change to another lender, you'll be paying back your loan early. Many mortgage lenders charge a penalty fee if you do this, particularly during any period of a fixed, capped or discounted rate. Check in advance, so you know how much this will be.

Endowment Mortgage

An interest only mortgage supported by an endowment policy. During the term of the mortgage only interest on the mortgage is paid to the lender. At the same time premiums are paid into an endowment policy which should mature at the end of the mortgage term.

Equity

The difference between the amount you owe on your mortgage and the current value of your property. Negative Equity, on the other hand, is when the value of your property in current market value, is worth less than your mortgage, making it hard and expensive to move.

Exchange of Contracts

This is the stage in the property transaction at which legally binding contracts are exchanged between the buyer and the seller. Once contracts are exchanged the vendor becomes legally obliged to sell and the purchaser to buy on the terms agreed.

Fixed Rate

The lender will fix the interest rate that they charge at a set level for a fixed period of time. There are a range of fixed rate products available which vary in terms from very short periods (three to six months) up to the whole 25 year mortgage term. The lender will normally charge early redemption charges if the mortgage is repaid.

Freehold

A legal title to land, which means you are the absolute owner of the property, and the land it’s on. This compares with leasehold property where the property is held for a limited period of time.

Gazump

What happens if your offer is accepted and then the seller pulls out if they receive a higher offer.

Household Insurance

A way of referring to both buildings and contents insurance.

Income Multiplier

Used to calculate how much a mortgage lender is prepared to lend on a mortgage.

Interest Only Mortgage

Interest only mortgages can be supported by an endowment policy, pension plan, etc. An interest only mortgage may, however, be arranged without the support of any particular repayment vehicle. Many lenders will now accept payment of interest only on the basis that the borrower makes their own arrangements to repay the capital at, or before, the end of the mortgage term. This could be done in a number of ways such as inheritance, sale of the property or from the realisation of other assets.

IAVI

The Irish Auctioneers & Valuers Institute

Land Register

The Land Register is a record of all land registrations

Land Registry Fee

Your conveyancer pays this on your behalf to register your details in the Land Registry records once you've bought a property or changed your mortgage lender.

Leasehold

This is the tenure that applies to most flats and apartments. As opposed to freehold property the rights to the property are owned only for a fixed period of time, with the freehold being held by a third party. This means you own a property for a set number of years. When the lease expires, the property returns to the freeholder

Legal Completion

The time at which the legal ownership of the property changes hands. This date will usually be agreed upon at exchange of contracts. This will also be the date at which the mortgage becomes effective (sometimes the mortgage completion date may be a couple of days before this to ensure that the solicitor has funds on the due day).

Life Insurance

If you've got a joint mortgage, you'll probably want to take out life insurance - this means the cost of the property will be paid off if one of you dies.

Loan to Value (LTV)

Loan to value is expressed as a percentage and represents the relationship between the size of the mortgage and the value of the property. For example a mortgage of €300,000 on a property valued at €400,000 would be shown as 75% LTV. This is an important figure to look at when considering the various mortgage options as the higher the LTV required the fewer the options.

Local Authority Search

Part of the conveyancing process and carried out by your conveyancer. It gives details of any matters that, from the local council’s point of view, affect the property, such as road improvements and details of any planning permission given for the property.

MIAVI

The qualification held by a member of the Irish Auctioneers & Valuers Institute.

Mortgage Deed

A legal document establishing a mortgage on a property.

Mortgage Term

The number of years over which the mortgage is arranged, up to a maximum of 40 years.

Mortgage Valuation

This is the most basic form of survey and is the minimum required by lenders in order to ascertain the suitability of the property as security for their loan. Although the borrower will normally receive a copy of this report it should not be relied upon as a comprehensive report on the condition of the property. A more detailed report (either a snag list on new homes or Structural Survey on 2nd hand properties) should be commissioned when considering the purchase of a property.

Negative Equity

Describes the situation where the value of the property has fallen below the outstanding mortgage debt.

Portable

The ability to move a particular mortgage product from one property to another in the event of a property move. If the mortgage is not 'portable' then moving would involve the payment of early redemption charges even if another mortgage was taken with the same lender.

Re-mortgage

Theprocess by which a mortgage on a property is moved from one lender to another or restructuring with the existing lender.

Repayment Mortgage

Also called an Annuity mortgage or Capital and Interest mortgage, your monthly payments gradually pay off your mortgage as well as the interest.

Stamp duty

This is a tax which is levied on the purchase of property. The tax is paid by purchasers and is currently levied at the following rates:

About Stamp Duty:
Stamp duty is one of the key additional expenses when buying a home so it’s important to understand how it works and to take into account when planning your finances.

What is stamp duty?
Stamp duty is a tax that you pay to the government when changing documents on a property. These documents specify ownership of the property.

What rate of stamp duty do I need to pay?
The level of stamp duty applicable to you depends primarily on the type of property you are purchasing and your status as a property buyer. So for example, different rates will apply to new and second-hand homes for first-time buyers, second or subsequent time buyers or investors. The value of the house, apartment, land or status and your buying status determinesthe amount of stamp duty that is payable. Stamp duty is divided up into different categories and rates and the amount you pay will depend on:

• Buyer Status:
  Whether you are a first-time buyer, an owner occupier or an investor
• Plans:
  Whether you plan to live in the property as your primary residence
• Property Type:
  New or Second-hand
• Floor Area:
  The size of the property

Stamp Duty Rates on New Homes:

First-time Buyers:
There is no stamp duty for first-time buyers on any new homes.

Other Buyers:
For all other owner-occupiers* the stamp duty rate on new homes depends on the floor area of the property. There is no stamp duty on new homes for owner-occupiers if the floor area is less than 125 sq metres. If the floor area is greater than 125 sq metres, then stamp duty is payable at the following rates:

*An owner-occupier is a buyer who is buying the property to live in as their sole residence.

Stamp Duty Rates on Second-Hand Homes

First-time Buyers:
There is no stamp duty for first-time buyers of second-hand homes.

Owner Occupiers/Investors:
The following stamp duty rates apply to Owner-occupiers/Investors of second-hand homes:

Stamp Duty Rates on Lands/Sites:

It is important to note here that there is no reduction in stamp duty rate on the purchase of land or sites. The same rates apply to all buyer types.

Some Frequently Asked Questions about Stamp Duty:

When do I pay stamp duty?

The payment of stamp duty is usually arranged by your solicitor when you are closing the sale. Without the stamp the deeds for the property cannot be registered.

Who do I pay?

Stamp duty is payable to the Revenue Commissioner.

Are there any exceptions to the rules?

Yes. There are a number of exceptions:

• Transfer of property between relatives
  Stamp duty is payable at half the normal rate applicable if there is a transfer of property (other than shares) to certain relatives (e.g., a parent, grandparent, step-parent, child, brother, sister, half-brother, half-sister, aunt, uncle, niece or nephew). This relief is not available on leases or on transactions involving cousins and/or in-laws.
• Site transfers from parent to child
  Stamp Duty and Capital Gains Tax do not apply where a parent transfers a site to a child. The site must be for the construction of the child's principal private residence and the market value of the site must not greater than 253,947.62 euro. A parent can only transfer one site to each child to take advantage of this exemption. If the child then sells the site without the principal private residence being built and lived in for 3 years, there will be a clawback of the capital gains tax relief permitted. There will be no clawback if the child dies.
• Stamp duty relief for exchange of farmland for farm consolidation purposes
  The Finance Act 2005  provided a new stamp duty relief for an exchange of farmland between two farmers. This applies when farmers exchange land in order to consolidate their holdings. The stamp duty is applied to the difference in value between the lands concerned. Formerly each farmer was liable to the full stamp duty on property s/he receives.

Structural Survey

The most detailed type of survey report normally undertaken in connection with a House Purchase. If a Structural survey is opted for then the lender will also need to have a mortgage valuation carried out for their own use and the borrower will be responsible for both fees. An alternative is a Home Buyers Report that will cover both the borrower and the lender. Advice should be taken from a qualified surveyor who will be able to advise on individual properties and circumstances.

Term Assurance

This is life assurance that pays out an insured sum on the death of the policyholder. It is a common method to protect the mortgage in the event of death and to ensure that the mortgage debt is repaid.

Valuation

Arranged by your lender to find out if the property is worth the amount you want to borrow and is suitable to lend a mortgage on.

Variable Rate

This was the traditional way that mortgages were arranged before the concept of fixed rates. A variable rate will fluctuate up and down to reflect the true cost of borrowing. They may be discounted for a period of time.