Other International Mortgages : International Mortgage Glossary

At IPF we understand that the world of international private finance can be complicated as it is; but complex terminology in a variety of languages can only serve to make it even more difficult.

In an attempt to counteract this we have developed a glossary to explain some of the most common terms used.

Mortgage Terms & Types of Loans

Agreement in Principle – Initial approval from the bank which is subject to certain conditions being met i.e. further documentation being submitted or satisfactory valuation of the property

Base rate – A rate set by the National Bank or Monetary Governing Body which banks use as their benchmark when offering interest rates to borrowers

Best buy table – provides an indication of the most competitive products available at the time of publication in each product area, to non-resident borrowers.

Cancellation/Full redemption fee – Charge made by the lender for the repayment of the balance of the mortgage before the end of the mortgage term

Capital raising – Raising funds against an unencumbered property

Capped rate – A mortgage where the rate is capped, guaranteeing the maximum rate of interest that can be charged during the mortgage term

Charge – The security used by the lender to support a mortgage

Completion – Completion is the point at which the money to purchase the property is paid to the seller thereby changing legal ownership to the buyer

Discounted rate – This is a standard variable rate mortgage that offers an introductory discounted interest rate for a fixed period of time

Early redemption penalty – Charge made by the lender for the repayment of a lump sum, reducing the mortgage balance in advance of the specified mortgage term

EURIBOR – (European Inter-Bank Offered Rate) The European base rate set by the European Central Bank

Fixed rate mortgage – Mortgage repayments are fixed for a specified term

Gross salary – Income before tax is paid for an employed person

Interest-only mortgage – A mortgage where repayments consist of only interest, during which the balance of the loan remains unchanged

Interest rate – Money charged by the bank for lending money

LIBOR – (London Inter-Bank Offered Rate) The base rate set by the Bank of England

Loan to value – (LTV) A percentage figure indicating the mortgage amount in relation to the property value

Margin – The difference between the interest rate and the base rate. The margin remains stable over the life of the loan. It is the base rate which fluctuates

MIBOR – (Madrid Inter-Bank Offered Rate) The base rate set by the Bank of Spain

Mortgage term – The period of time over which a mortgage will be repaid

Net salary – Income after tax has been deducted

Remortgage – Changing the mortgage on a property from one lender to another

Repayment mortgage – a mortgage where repayments are made up of both interest and capital

Unencumbered property – Property free from debt

Variable Rate – The rate fluctuates as and when the base rate changes

 

Essential Documentation & Important People

Codice fiscale – Fiscal or tax identification number legally required prior to the purchase of a property in Italy

Contrato de Compraventa – Spanish sales agreement

Compromesso – Italian sales agreement

Geometra – Italian equivalent to a Surveyor

NIE No. – (Numero de Identificación de Extranjeros) Fiscal or tax identification number legally required prior to the purchase of a property in Spain

No. de contribuiente – Fiscal or tax identification number legally required prior to the purchase of a property in Portugal

Nota Simple – Extract from the Spanish property register showing a property’s details and whether any debts are secured against it

Power of attorney – A legal document that authorises one person to act on behalf of another with either complete authority or in a limited capacity

RIB (Releve d’Identité Bancaire) – Written confirmation of bank account details provided by a French bank

Title deed – Documents proving legal ownership of property

 

Types of Property

Off-Plan – A new property, often where payments are made to the developer whilst the building work takes place, with the balance payable on completion

Resale – An existing property

 

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