Mortgage basics · Glossary
Mortgage glossary: sixty-eight terms explained, and what each one changes for you
APR, instalment, waiting period, release: sixty-eight mortgage terms defined in three lines, to read an offer or a notice without misunderstanding.
This mortgage glossary defines in three lines the words that determine a sum, a date or a refusal: debt-to-income ratio, disposable income, APR, TAEA, deferral, smoothing, guarantee, mortgage, release, instalment, waiting period, excess, loan offer, cooling-off period. Each entry states what the term designates, what it changes for the borrower, and refers to the article that treats the subject in full.
By Sandy MASCART, mandataire d'intermédiaire en opérations de banque et en services de paiement ORIAS 26000541 sous le mandat de CDV PATRIMOINE & ASSURANCE (ORIAS 14005573)
Key points
- Each term is defined in three lines and refers to the article that treats the subject in full.
- No definition carries a figure: a threshold or a cap has meaning only with its source and its date, given in the dedicated article.
- Waiting period and excess do not designate the same delay: the former runs from the adherence to the contract, the latter from the incident.
- Debit rate, APR and TAEA do not measure the same thing: only the APR aggregates the costs and allows comparing two offers.
- The category of an intermediary and the breadth of its panel say more about the scope of its advice than the word used to designate it.
Sixty-eight terms of residential mortgage lending, defined in one or two lines, to read an offer, a notice or a refusal without misunderstanding. Look up a term, then follow the link. The framework: the rules of residential mortgage lending.
How to read this glossary
Each entry states what the term denotes, what it changes for you, and refers to the full article. No figures here: a threshold only makes sense with its source and date, in the article that carries it.
Before the yes: what the bank calculates
Debt-to-income ratio
Share of income taken by loans. Common ceiling, variable basis. The HCSF rule.
Remaining disposable income
What remains each month, after deductions. Each bank has its own grid. The order of reading a file.
Increase in monthly outgoings
Difference between your current and future housing cost. Too large, it causes doubt. The real reasons for a refusal.
Borrowing capacity
Maximum amount a lender agrees to lend, according to income, outgoings and term. How much to borrow according to income.
Income taken into account
Neither gross, nor net to pay: the income the bank counts. The income taken into account.
Personal contribution
Sum committed outside the loan: it covers the costs and proves your savings. The personal contribution.
Charges deducted
Existing loans, hire purchase agreements, and pensions paid, added to the future instalment. Settling a car loan or a hire purchase agreement.
Weighted rental income
Rent retained after deduction: the method weighs more than the rate. The debt-to-income ratio of an investor.
Delegation of approval
Who decides: the adviser within their grid, or a committee beyond it. Two banks, two answers.
Interest rates: three measures, one for comparison
Debtor rate
The nominal rate, announced and negotiated, excluding insurance and fees. Reading a published rate.
APR
Annual Percentage Rate of Charge, including fees and required insurance: the only one for comparison, and the only one capped by law. The loan offer line by line.
TAEA
The cost of borrower insurance in rate points. Comparing two insurances.
Usury threshold
Maximum legal APR. Blocked? The structure is redone. The usury rate.
Bank grid
Internal grid duration × profile: a starting rate, not the final rate. Reading a grid.
Discount
Discount on the grid, based on profile or in exchange for commitments, which have a price. The levels of a grid.
Intercalary interest
Interest on funds released during a construction or a new-build property purchase. Payment calls.
Intermediation fees
Fees for an intermediary, included in the APRC, set by the mandate. Intermediation fees.
The structure of the loan
Amortisation
Each instalment repays interest and capital, with the capital portion increasing. The loan offer line by line.
Amortisation deferral
A period without capital repayment, either partial or total. Deferral in new-build properties.
Smoothing
Several loans combined into a constant monthly payment. Smoothing loans.
Social accession loan and conventional loan
Two regulated loans with a capped interest rate. What they offer.
Home savings: PEL and CEL
Savings that grant a loan entitlement at the rate fixed at opening. The value of this entitlement.
Action Logement loan
Complementary loan for employees, subject to conditions. Apply early. Who is eligible.
In fine loan
Capital repaid in a single lump sum at maturity, often secured by a pledged investment. Who it suits.
Variable rate, adjustable, capped loan
Indexed rate, according to a frequency and a written cap. The variable rate clause.
Bridge loan
Advance on a property not yet sold. The real question: what if it does not sell? The bridge loan.
Zero-interest loan
An interest-free loan, subject to income and zoning conditions, as a supplement. The zero-interest loan in Lyon.
Loan transfer
Keeping your loan, at its rate, for another property. Now rare. The transfer.
The guarantees
Institutional guarantee
An institution pays in the event of default. No notarial deed required. The cost of guarantees.
Mutual guarantee fund
A share of the guarantee, partially refundable at the end of the loan, without any automatic process. What you will be charged.
Conventional mortgage
A security over the property by notarial deed; a paid discharge in the event of resale. The comparison.
Special legal mortgage of the lender of funds
The former privilege of the lender of funds (IPPD), excluding works. When the mortgage is mandatory.
Discharge
A deed that removes a mortgage before its term. Cost and lead time to be anticipated. The discharge.
Pledge
A blocked investment in favour of the lender, sometimes in place of insurance. Borrowing after 60.
Borrower insurance
Quota
The share of the capital covered per person. The quota for two.
Waiting period
The period from adherence during which a claim is not covered. The three counters.
Excess
The period following the incident during which the cost remains your responsibility. The timeline of waiting periods.
Waiting period
A commercial term with no legal definition: a deductible, an excess, or both. What it covers.
Death and permanent total and irreversible disability
Death is the foundation; permanent total and irreversible disability covers the need for a third party. The guarantees.
Temporary total disability, permanent partial disability, permanent total disability
Temporary incapacity, total or partial disability: defined by the contract. Guarantee by guarantee.
Lump sum or indemnity
The instalment due regardless of your loss, or only the loss actually suffered. The clause that decides.
"Your profession" or "any profession"
Your occupation, or any occupation: the most critical line in a policy document. The definition.
Exclusion
A situation removed from the coverage. The exclusions.
Policy document
The document that describes the guarantees, exclusions and waiting periods, and which is legally binding. Reading a policy document.
Standardised information sheet
The lender's requirements and the proposed contract, side by side. The equivalence.
Equivalence of guarantees
The lender cannot refuse insurance of an equivalent level, according to its communicated criteria. How to invoke it.
Substitution
Change insurance at any time, without fees, under the Lemoine Act. The procedure.
Health questionnaire
Removed subject to amount and age conditions; it returns if one condition is not met. When it disappears.
False health declaration
If intentional, it voids the contract; if made in good faith, it reduces the indemnity. The consequences.
Claim notification
The submission that opens the file; the deadline is contractual. The submissions, in order.
Continuity of cover
What a new contract inherits from the previous one. Nothing is automatic. What is retained.
Surcharge and right to be forgotten
Increased premium for an aggravated risk, regulated by the AERAS agreement; exemption from declaring certain conditions after a set period. The AERAS agreement.
The documents and their timeline
FISE
European information sheet provided at the latest with the loan offer, for comparison. The FISE.
Agreement in principle
Favourable response before assessment: this is not a loan offer. What it is worth.
Proof of funding
Document attached to a purchase offer, with no value if nothing has been verified. The proof of funding.
Loan offer
The lender's written commitment, which starts the cooling-off period. The clauses to read.
Cooling-off period
The statutory period during which the loan offer cannot be accepted. The period.
Loan contingency clause
A clause that cancels the sale if the loan is refused. How to draft it.
Application documents
Identity, income, savings, liabilities, project. The exact list.
After the signature
Outstanding capital
The amount remaining to be repaid, excluding future interest. Renegotiation.
Early repayment and compensation
A legal right; the compensation, if provided for, is capped. The compensation.
Renegotiation and buy-back
With your bank by way of an amendment, or with another bank subject to new fees. The profitability calculation.
Instalment adjustment
Vary the monthly instalment within written limits. Adjust, defer.
Deferral of instalments
Postpone instalments; the deferred interest is added. The flexibility.
Release from joint liability and buy-out
Release a co-borrower, buy out the share of the departing party. After a separation.
Those who prepare the application
Banking operations intermediary
A registered professional, verifiable online. The categories.
Mandate
Scope, amount and duration; nothing is due before the funds are disbursed. The mandate.
Panel
Institutions that an intermediary can genuinely approach. The panel.
Is a term missing?
Notarial, co-ownership, taxation: the national agency for housing information responds free of charge. Otherwise: the index of advice.
The figures: the instalment formula, purchase costs, the budget for a first purchase and the documents to gather. An obscure term? Have it explained over the phone.
Create your file: submit your documents once.
Sources
Read next
- Mortgage in Lyon: frequently asked questions
- Debt-to-income ratio: the HCSF rule, its derogation margin and how the bank applies it Calculate your debt-to-income ratio as an analyst would: retained charges, residual income, HCSF derogation, and the levers to get back under the cap.
- Understanding your loan offer: the twelve clauses to check before signing The twelve clauses of the loan offer, in the order of the document: what is negotiable, what the law caps, and the three points that cannot be rectified.
- Borrower insurance guarantees: what death, total and irreversible loss of autonomy, total and permanent incapacity, permanent total disability and permanent partial disability actually cover The five guarantees of loan insurance, in the order they apply: what triggers them, who decides, and the line in the policy document that settles it.
- Guarantee, mortgage or IPPD: the true cost of securing a mortgage Guarantee, mortgage, lender's privilege: what each form of security costs, what you end up paying, and when the bank requires a mortgage.
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