Glossary of useful terms
Key terms you will come across from the mortgage loan application stage to loan disbursement.
A
Amortisation (schedule)
Amortisation (schedule) The predetermined instalment to repay an interest-bearing loan, including the interest and the principal amount.
Annual percentage rate of change (APRC)
The actual cost of the loan: It includes the interest and other expenses the borrower has to pay, expressed in an annual percentage of the total loan.
Appraisal fee
The amount paid by the borrower to the independent appraiser to estimate the value of the property.
B
Bare ownership
Ownership is usually full, i.e. the owner is entitled to fully use and benefit from the asset owned. Sometimes, however, ownership is stripped bare of these elements and is limited to the power of the owner to dispose of the asset owned (power of disposal). In these cases, ownership is called “bare ownership” and the right to use and benefit from the asset owned is called “usufruct”.C
Central bank
The central bank is a public organisation managing the currency of a country or group of countries and controlling money supply – literally the amount of money in circulation. It is responsible for keeping the banking system in operation, monitors commercial banks and plays an important role in formulating monetary policy.Collateral
The property or any other asset withheld by the credit institution to secure the loan it offers.Commercial value of property
The commercial value is the actual market value of a property. It is determined based on supply and demand, as well as on other factors such as general market conditions, location and accessibility.Compounding interest
Adding to the principal the interest amount at the end of a specific period and calculating interest for the new principal. On the other hand, compounding interest is the interest paid for interest due that has not been paid on time.Credit score evaluation
The process whereby the borrower’s ability to repay the loan is evaluated based on their financial information and repayment record.D
Debtor
The borrower.Default interest rate
In case the loan amounts due are not paid within the agreed deadline, default interest is charged, equal to the contractual rate that applies on the day the borrower defaults plus the maximum rate allowed by the law and the competent authorities (currently 2.50%). Default interest is charged with a default interest rate and the arising interest, if not paid, will be capitalised every 6 months.Disposable income
The income after direct taxes and social security contributions, which can be used and saved.E
Εuribor (Euro Interbank Offered Rate):
EURIBOR is a market reference rate without collateral, calculated for different terms (1 week, 1, 3, 6 and 12 months). It is managed by the European Money Markets Institute (EMMI).Extension (loan)
Extension of the loan repayment to reduce the burden on the borrower.F
Financing percentage
The percentage of the commercial value of the property which is financed by the Bank, i.e. the amount granted by the Bank to buy the property. By extension, it also determines the part of the purchase that needs to be covered with own funds.Fixed rate
Interest rate that remains unchanged throughout the loan term or for a specific time period. During the fixed-rate period, the loan instalment remains unchanged.Fixed-rate period
Period during which the interest rate remains fixed.Floating period
The period during which the loan instalment calculation is carried out based on the applicable floating interest rate.Floating rate
The interest rate which changes according to a reference rate agreed to form the calculation basis and set by the European Central Bank (Euribor), as opposed to fixed interest rates. When a floating rate is applied (either from the start or after the end of the fixed-rate period), it is composed of: Change into Euribor (floating) + interest rate spread (fixed) + Law 128/1975 levy (0.12% or 0.60%)Full early repayment
The early payment of the total loan amount due, which means full repayment of the loan.G
Grace period
Time period during which the borrower is entitled to either suspend payment or only pay the loan interest.Guarantor
The natural person who undertakes the obligation to repay a loan in case the borrower fails to do so.I
Instalment
The amount the borrower has agreed to pay to the financial institution in a specific frequency, usually monthly.Interest
The amount the borrower has to pay to the lender as compensation for the loan they got.Interest rate
The charge the borrower is asked to pay to the bank. The interest rate is expressed as a percentage (%) of the borrowed amount.K
Key ECB (European Central Bank) interest rate
The interest rate set by the Governing Council of the European Central Bank to reflect the direction of its monetary policy. Key interest rates include the rate on the main refinancing operations, the rate on the marginal lending facility and the rate on the deposit facility.L
Law 128/1975 levy
The 0.60% rate added to the personal loan interest rate and the 0.12% rate added to the mortgage loan interest rate and paid to the State.Law 3869/2010 (Katseli Law)
It provides for debt settlement for indebted natural persons, excluding the primary residence from asset liquidation. In special cases it even provides for debt write-off.Legal expenses
The lawyer fees for:- checking property deeds at the Land Registry or National Cadastre office
- being present at the signing of the purchase agreement
- appearing in court during the mortgage lien registration process in case of a mortgage loan
- appearing in court after full repayment of the loan during the mortgage lien release process.
Libor
The London Interbank Offered Rate (LIBOR) is published daily by the ICE Benchmark Administration (IBA) and reflects the borrowing cost of banks without collateral in money markets, in different currencies. LIBOR is an interbank interest rate provided by specific banks (Libor panel Banks), which take part in its calculation. It is based on interbank transactions without collateral, to the largest extent, and determined using the “Waterfall Methodology”, allowing its publication under any conditions in the market.Liquidation of assets
Selling, that is turning into money, assets owned by the borrower to satisfy the lenders’ claims against the borrower.Loan application
The application whereby a natural person requests to be financed by a financial institution for a specific purpose, such as buying a primary residence.Loan application assessment
The stage after submitting a mortgage loan application.Loan collateral
An asset of value the lender may take from the borrower in case the latter does not repay the loan per the agreed terms (such as mortgage lien or cash or securities).Loan insurance
The insurance covering the loan in case the borrower is unable to repay due to unforeseen events, such as loss of income or death.Loan repayment
The payment of amounts due to repay the loan, including principal and interest.Loan term
The time period within which the borrower has to repay the principal and interest of the loan.Low start (loan)
At the start of the loan and for a specific time period a lower (up to 50%) instalment is set.LTV
The Loan-to-Value (LTV) ratio is a financial ratio that compares the amount of money being borrowed to the market price of the asset provided as collateral.M
Maximum/Minimum loan amount
The maximum and minimum loan amount, irrespective of the property value.Maximum/Minimum repayment term
The maximum/minimum repayment term (in years) that can be set by the borrower when getting the loan.Mortgage lender
Property lien with mortgage pre-registration. It turns into a mortgage retrospectively, by virtue of a court order, when the borrower does not pay their obligations on time. The right to a property granted to the lender, as debt repayment guarantee.Mortgage loan
Loan to buy a home or plot, buy a commercial property, construct/repair a home, construct/repair a commercial property, repay another mortgage loan etc.Mortgage loan intermediation
The credit intermediary has a partnership agreement with the credit institution to carry out all necessary actions in the interest of their client. The purpose of intermediation is for you to get rid of red tape and benefit from the services of the intermediary, who has the necessary know-how and experience to get what is best for you.Mortgage pre-registration
The registration of the bank’s collateral on the property before the final loan approval.Mortgage registration
The process of registering the mortgage lien in a public record, so that there is an official registration of the loan and the property used as collateral.N
Nominal interest rate
The base rate stated in the loan agreement. The Law 128/1975 levy (0.12%) is added to this interest rate.Non-compounded interest
Up-front payment of an amount less than 50% of the loan principal.Non-cooperating borrower
According to the Code of Conduct per Law 4224/2013, a borrower is considered as cooperating when:- they provide full and updated contact details to the lenders (e.g. landline number, email etc.) and assign someone to act as procedural representative when they are not available;
- they are available to communicate with the Bank and respond honestly and clearly to calls and letters within fifteen (15) working days, they make a full and honest disclosure of information about their current financial situation within fifteen (15) working days from the day it changes or from the date when such information is requested by the lender, they make an honest disclosure of information which is likely to have a significant impact on their future financial situation (e.g. loss of ownership of assets, notice of lay-off etc.) within fifteen (15) working days from the date when such information comes to their knowledge and
- they give their consent to finding an alternative workout arrangement for their debt in accordance with the Code of Conduct.