Mortgage Pension - Remortgage - A To Z

N
Negative Equity
When the market value of the home falls to less than the balance of the mortgage. For Example: if a person owes €100,000 on their house, but it is only worth €80,000, they are said to have negative equity of €20,000.

P
Pension Mortgage
This type of mortgage is available to self-employed people, people without a pension scheme and owner director of companies. Monthly interest payments are made to the lender, and a pension policy is set up to pay off the mortgage when the mortgage holder retires. It can be very tax efficient.

Premium
This is the amount of money the borrower must pay to the insurer regularly (usually every month) for an insurance policy.

Principal
The original amount of the loan or the amount borrowed without any interest included on it.

Prepayment Clause
Allows the borrower to pay off all, or part, of their mortgage ahead of schedule. In some instances, paying off a mortgage early can be a good financial move. However, many lenders charge for this.

R
Redemption
When the mortgage is paid off in full.

Repayment Mortgage
A mortgage where the capital and interest are paid off in monthly instalments from day one. It is similar to a personal loan, only it’s over a longer term. Initially, it is mostly interest being repaid, with a smaller proportion of the payment being made against the loan. Over time, however, this ratio changes with the proportion of capital repayment increasing and interest reducing until the loan is paid off.

Remortgage
This is simply the replacement of an existing mortgage with a new one. This may occur when switching a loan to a more competitive and attractive mortgage provider. However, there may be extra fees charged by old and new lenders. The old lender may charge a penalty, while the new lender may charge an arrangement fee.

Retention
A condition of a mortgage whereby the mortgage lender holds back a portion of the advance, pending work will be carried out by the mortgagor.