Mortgage Terminology

Affordability

Affordability is an assessment of how much you can realistically borrow and repay on a mortgage, based on your gross income, regular outgoings, existing debts, and day-to-day spending habits. In Ireland, lenders are required by the Central Bank to carry out an affordability assessment before approving any mortgage. The result determines the maximum loan amount they will offer you — ensuring your monthly repayments are manageable over the full mortgage term.

Alternative Repayment Arrangement (ARA)

An ARA is a revised payment plan agreed between you and your mortgage lender when you are experiencing financial difficulty and can no longer maintain your standard repayments. It can take many forms — reduced monthly payments, a temporary switch to interest-only, an extended loan term, or a change to the interest rate or repayment schedule.

In Ireland, lenders are legally required under the Mortgage Arrears Resolution Process (MARP) to explore ARAs with you before taking any enforcement action. This may also be referred to as a revised repayment arrangement.

Amortisation Table

An amortisation table (also called a repayment schedule) is a detailed breakdown of every repayment due over the life of your loan. For each payment, it shows the date, the total amount due, how much goes towards interest, and how much reduces your outstanding capital balance. It is a useful tool for understanding exactly how your mortgage is being repaid month by month.

Amortising Loan

An amortising loan is repaid through regular instalments — typically monthly — where each payment covers both the interest charged for that period and a portion of the original capital borrowed. Over time, the interest portion decreases while the capital portion grows, until the loan is fully repaid by the agreed maturity date.

Most residential mortgages in Ireland are amortising loans. If your mortgage has a variable interest rate, your monthly repayment will increase or decrease in line with rate changes.

Annual Equivalent Rate (AER)

The AER is the standardised rate that shows how much interest a savings or deposit account will earn over a full year, taking compounding into account. It allows you to compare savings products on a like-for-like basis, regardless of how often interest is paid. The higher the AER, the more your savings will grow.

Annual Percentage Rate (APR)

The APR represents the true total annual cost of a mortgage, expressed as a percentage. It includes the interest rate charged plus any mandatory fees or charges — such as arrangement fees or government levies. Because the APR captures the full cost of borrowing, it is the most reliable figure to use when comparing mortgage products from different lenders.

In Ireland, lenders are required by law to display the APR clearly in all advertising and mortgage documentation.

Arrears

Arrears arise when you miss one or more scheduled mortgage repayments, leaving overdue amounts outstanding. Interest may also accumulate on the unpaid balance, increasing the total amount owed.

In Ireland, falling into arrears triggers specific obligations on your lender under the Central Bank’s Mortgage Arrears Resolution Process (MARP). Lenders cannot begin legal proceedings without first engaging with you and exploring alternative repayment options.

Bank Identifier Code (BIC)

A BIC is an internationally recognised code that uniquely identifies a specific bank or financial institution. It is used alongside your IBAN to send and receive international bank transfers — for example, when paying a deposit to an overseas vendor or receiving funds from abroad. Your BIC can usually be found on your bank statements or in your online banking portal.

Buy Now, Pay Later (BNPL)

Buy Now, Pay Later is a short-term credit arrangement that lets you purchase goods or services immediately and spread the cost over a fixed number of instalments — often interest-free if paid on time.

While convenient, mortgage lenders may take BNPL usage into account when assessing your affordability, as it represents an ongoing financial commitment.

Credit Report

A credit report is a record of your borrowing history, compiled by Ireland’s Central Credit Register (CCR). It shows all credit agreements in your name — including mortgages, personal loans, credit cards, and overdrafts — along with your repayment history.

Lenders use your credit report as a key part of their mortgage assessment. A strong repayment history strengthens your application, while missed payments or defaults can reduce your chances of approval.

Death Certificate

A death certificate is an official document that confirms a person has died. In the Republic of Ireland, death certificates are issued by the General Register Office. Banks and financial institutions require a death certificate before they can take any action on a deceased person’s accounts.

Default

A default occurs when a borrower fails to meet the terms of their loan agreement — most commonly by missing repayments, but also by failing to maintain required insurance policies (such as mortgage protection or home insurance). If you default on your mortgage, the lender may have the right to demand full early repayment of the outstanding balance.

In Ireland, lenders must follow the Central Bank’s MARP process before taking legal action.

Deposit Interest Retention Tax (DIRT)

DIRT is a tax levied by Revenue on the interest you earn from savings and deposit accounts in Ireland. Your bank deducts DIRT automatically before crediting interest to your account and remits it to Revenue on your behalf.

Direct Debit

A direct debit is an authorisation you give to a company or organisation to collect variable payments from your bank account on agreed dates. Most mortgage repayments in Ireland are collected by direct debit each month. Unlike a standing order, the amount collected by direct debit can vary, though you must be notified of any changes in advance.

Drawdown

Drawdown is the point at which your mortgage lender officially releases the approved funds. In a property purchase, this typically occurs on the day of closing (completion), when the money is transferred to your solicitor, who then pays the vendor. Before drawdown can happen, all mortgage conditions must be satisfied — including a valid valuation, signed contracts, and active mortgage protection insurance.

Drawdown is the moment your mortgage officially begins.

Estate

In a legal and financial context, an estate refers to the total value of everything a person owns — including property, savings, investments, and personal belongings. When someone dies, their estate is administered by an executor (if a valid will exists) or an administrator (if there is no will), and distributed according to their wishes or Irish intestacy law.

Executor

An executor is a person named in a will who is legally responsible for carrying out the deceased’s wishes. This includes gathering assets, paying debts, and distributing the estate to beneficiaries. The executor applies to the Probate Office for a Grant of Probate to give them legal authority to act.

Fraudulent Transaction

A fraudulent transaction is any unauthorized payment or withdrawal made from your account without your knowledge or consent. This can occur if your card or account details are stolen, lost, or compromised through phishing or other scams.

If you notice an unauthorized transaction, contact your bank immediately. Irish consumer protection regulations require banks to refund fraudulent transactions in most circumstances.

Grant of Administration

A Grant of Administration (also called Letters of Administration) is a legal document issued by the Probate Office when a person dies without leaving a valid will. It grants authority to a named administrator to deal with the deceased person’s assets, settle debts, and distribute the estate in accordance with Irish succession law.

Grant of Probate

A Grant of Probate is a legal document issued by the Probate Office confirming that a deceased person’s will is valid and authorising the named executor(s) to administer their estate. Banks and other institutions typically require sight of the Grant of Probate before releasing funds from the deceased’s accounts.

Gross Annual Income

Your gross annual income is your total earnings in a year before income tax, PRSI, and USC are deducted. Mortgage lenders in Ireland use your gross income — not your take-home pay — to calculate your maximum borrowing capacity.

The Central Bank’s mortgage lending rules generally limit borrowing to 3.5 times your gross annual income for most buyers (with some exceptions available).

Guarantee / Guarantor

A guarantee is a formal legal commitment by a third party (the guarantor) to repay a borrower’s debt if the borrower fails to do so themselves. Guarantors take on significant financial risk and should always seek independent legal advice before signing.

In the context of Irish mortgages, a parental guarantee is sometimes used to help younger buyers qualify for a larger loan.

Guaranteed Minimum Future Value (GMFV)

The GMFV is the minimum amount a motor dealer guarantees to pay for your vehicle at the end of a Personal Contract Plan (PCP) or Business Contract Plan (BCP) finance agreement. It is the figure used to calculate your final ‘balloon payment’ if you choose to purchase the vehicle outright at the end of the term.

Hire Purchase Agreement

Under a hire purchase agreement, a finance company purchases an asset (such as a car) on your behalf. You then pay fixed monthly instalments to hire and use the asset, with ownership transferring to you only once the final payment is made. Existing hire purchase commitments will be considered by mortgage lenders when assessing your affordability.

Indemnity

An indemnity is a formal promise to compensate or protect another party against financial loss arising from a specific event. In banking, you may be asked to sign an indemnity form in circumstances such as replacing a lost bank draft, or accessing funds from a deceased person’s account without a Grant of Probate.

Insolvency

Insolvency is a financial state in which a person or business is unable to repay their debts as they fall due, or where total liabilities exceed total assets. In Ireland, individuals experiencing insolvency may be able to avail of formal solutions such as a Personal Insolvency Arrangement (PIA) or bankruptcy through the Insolvency Service of Ireland (ISI).

Interest Rate

An interest rate is the percentage used to calculate the cost of borrowing money, expressed on an annual basis. On a mortgage, the interest rate determines how much you pay your lender in addition to repaying the capital borrowed.

• Fixed interest rate: Stays the same for an agreed period (e.g. 2, 5, or 10 years), giving you predictable monthly repayments.
• Variable interest rate: Can rise or fall in line with market conditions and the lender’s discretion.

Choosing between fixed and variable is one of the most important decisions you will make on your mortgage journey.

Intermediary (Mortgage Broker)

An intermediary — more commonly known as a mortgage broker — is a regulated financial professional who acts on your behalf to find the most suitable mortgage from a panel of lenders. Unlike going directly to a single bank, using a broker gives you access to a wider range of products and independent expert advice.

In Ireland, mortgage brokers must be authorised by the Central Bank of Ireland.

International Bank Account Number (IBAN)

Your IBAN is a standardised international code that uniquely identifies your bank account. In Ireland, IBANs are 22 characters long and begin with ‘IE’. Your IBAN is required for domestic bank transfers and, together with your BIC, for international payments. You will need to provide your IBAN when setting up your mortgage direct debit.

Joint Account

A joint account is a bank account held in the names of two or more people, each of whom has equal rights to access and operate it. Many couples apply for a joint mortgage and manage repayments from a joint current account. All account holders are equally responsible for any overdraft or debt on the account.

Joint and Several Liability

When two or more people take out a mortgage or loan together, they are jointly and severally liable — meaning each person is individually responsible for the full debt, not just their share. If one borrower cannot pay, the lender can pursue the other(s) for the entire outstanding amount.

This is an important consideration for couples and co-borrowers before signing a joint mortgage agreement.

Letter of Undertaking

A letter of undertaking is a formal written commitment issued by your solicitor to your mortgage lender, promising to complete specific actions — such as registering the lender’s charge over your property — as a condition of mortgage drawdown. Lenders will not release funds until a satisfactory undertaking is in place.

Letters of Administration

Letters of Administration are the same as a Grant of Administration. They are issued by the Probate Office when a person dies without making a valid will, and they authorise a named administrator to manage the deceased’s estate.

Maturity Date

The maturity date is the date on which your mortgage is scheduled to be fully repaid, assuming all agreed payments have been made on time. It marks the end of your mortgage term and the point at which you own your property outright, free of any mortgage charge.

For example, if you take out a 30-year mortgage today, your maturity date is 30 years from now.

Monthly Repayment

Your monthly repayment is the amount you pay to your lender each month to repay your mortgage. It comprises both an interest element and a capital repayment element. At the start of your mortgage, the interest portion is larger; as your outstanding balance falls over time, the capital portion grows.

Overdraft

An overdraft is a pre-agreed credit facility on your current account that allows you to spend more than your available balance, up to an agreed limit. Interest is charged on the amount overdrawn. An unauthorised overdraft — where you exceed your agreed limit or have no overdraft in place — incurs additional charges and can negatively affect your credit record.

Probate

Probate is the legal process of validating a deceased person’s will and granting authority to the executor(s) to administer the estate. The Probate Office in Ireland issues a Grant of Probate once the will is verified and all required documentation is submitted. Probate may be required before property owned by the deceased can be sold or transferred.

Redemption Figure

A redemption figure is the precise amount you need to pay on a specific date to clear your mortgage in full. It includes:

• The outstanding capital balance
• Accrued interest up to that date
• Any applicable early repayment charges (which typically apply during a fixed-rate period)

You will need a redemption figure if you are selling your property, remortgaging to a new lender, or making a lump-sum overpayment to clear the mortgage. You can request this figure from your lender at any time.

Security

In mortgage lending, security refers to the property you pledge as collateral for your loan. By signing a mortgage deed, you grant the lender a legal charge over your home, which gives them the right to sell it and recover the outstanding debt if you fail to repay.

This is why a mortgage is described as a secured loan — the lender’s risk is backed by the value of the property.

SEPA — Single Euro Payment Area

SEPA is a payment integration initiative that enables euro-denominated bank transfers to be made simply and efficiently across 36 European countries (including all EU member states and Ireland). SEPA transfers use your IBAN and BIC, and domestic and cross-border euro payments are processed in the same way.

Sort Code

A sort code is a six-digit number that identifies a specific bank branch in Ireland or the UK. It is used alongside an account number for domestic bank transfers. For most modern Irish banking — including mortgage repayments — your IBAN has replaced the need for a sort code in everyday transactions.

Stamp Duty

Stamp duty is a government tax payable in Ireland when you purchase residential or commercial property. For residential properties, it is currently charged at:

• 1% on the first €1,000,000 of the purchase price
• 2% on any value above €1,000,000

Stamp duty must be paid by your solicitor on closing day and is a key cost to budget for when buying a home. The Irish government also charges stamp duty on credit cards, debit cards, and bank drafts.

Standing Order

A standing order is an instruction you give to your bank to transfer a fixed, regular amount to another account on set dates. Unlike a direct debit (which is controlled by the payee), a standing order is set up and controlled entirely by you. They are commonly used for regular savings contributions or rent payments where the amount never changes.

Terms and Conditions

Terms and conditions form the legally binding contract between you and your mortgage lender. They set out the rights and obligations of both parties — covering repayment schedules, interest rate changes, insurance requirements, default procedures, and more.

Always read your mortgage terms and conditions carefully and ask your solicitor or broker to explain anything you do not fully understand before signing.

Transaction

A transaction is any movement of money into or out of your bank account. Transactions include:

• Lodgements — money paid into your account
• Withdrawals — money taken out at a branch or ATM
• Payments — direct debits, standing orders, or card purchases
• Loan repayments — payments made to a loan or mortgage account

Unauthorised Overdraft

An unauthorised overdraft occurs when your current account goes into a negative balance without an agreed overdraft facility, or when you exceed your agreed overdraft limit. Banks charge higher interest rates on unauthorised overdrafts and may apply additional fees. Frequent unauthorised overdrafts can flag financial stress to mortgage lenders during the application process.

Unpaid Item

An unpaid item occurs when your bank is unable to process a payment — such as a direct debit, standing order, or cheque — due to insufficient funds, an out-of-date cheque, or a stop-payment instruction. Unpaid items can incur bank charges and, if they involve mortgage repayments, may result in arrears being recorded on your credit file.

Will

A will is a legally binding document in which you set out your wishes for how your assets — including property — should be distributed after your death. In Ireland, specific formalities must be followed for a will to be valid, including being signed in the presence of two independent witnesses.

Property that is jointly owned may pass automatically to the surviving owner outside of the will. All Irish homeowners are strongly advised to make a will and review it after major life events.

Working Capital

Working capital refers to the funds a business uses to meet its day-to-day operational expenses — such as wages, supplier payments, and utility bills. For self-employed mortgage applicants, strong working capital and consistent business cash flow are key indicators lenders use when assessing income stability and mortgage affordability.