Mortgages – a beginner’s guide

From APRC to LTV, we break down some of the most confusing mortgage terms

■ Annual Percentage Rate of Charge (APRC) – APRC is an interest rate calculation designed to reflect the total cost of the credit over the whole term of your mortgage. It equates, on an annual basis, to the present value of all future or existing commitments (drawdowns, repayments, and charges) agreed by the creditor and the consumer.

■ LTV – Loan-To-Value is the amount you’re borrowing in relation to the value of the property.

■ LTI – Loan-To-Income is the amount you’re borrowing in relation to gross annual income.

■ Stamp Duty – A tax the Government puts on your new home, costing 1% of the property price up to €1 million.

■ Equity – This is the difference between the current value of your home and the amount outstanding on your mortgage.

■ Fixed-rate mortgage – With a fixed interest rate, the monthly repayment you make is fixed for the period you choose, (normally one, two, three, five or ten years).

■ Variable-rate mortgage – A flexible rate that allows you to increase your repayments or use a lump sum to pay off all or part of your mortgage. If the variable rates fall, your monthly repayment decreases, and if variable rates rise, your monthly repayment increases.