First Time Home Buyer Guide - 10 mortgage terms you should know

Buying your first home is an exciting milestone. However the mortgage process can feel overwhelming at first. The good news is that once you understand the basic terminology, the process starts to make much more sense. This guide for first time home buyers breaks down ten key mortgage terms to help you feel more confident and prepared as you take the next steps toward owning your home.

1. Mortgage term

   This is the length of time you will take to repay your mortgage. A longer term usually means lower monthly repayments, but you may pay more interest overall. A shorter term means higher monthly repayments but less interest in total and getting to fully own your home sooner.

2. Interest rate

   Your interest rate is the cost of borrowing money from your lender. It can be fixed, variable, or sometimes a mix of both. Even a small change in interest rates can affect your monthly repayments and the overall cost of your mortgage, so it is important to understand this term well.

3. Fixed rate

   A fixed rate stays the same for a set period, this can differ from one year up to ten years. Avant Money is the only lender to offer a Fixed Term Mortgage for the entire term of the mortgage, called the One Mortgage². With a Fixed Term Mortgage, your monthly repayments will not change for the term. At the end of the fixed term your rate you can choose another fixed rate, or alternatively opt for a variable interest rate. Many first time buyers like fixed rates because they may make budgeting easier.

4. Variable rate

   A variable rate can go up or down over time. This means your monthly repayments may change too. Variable rate mortgages can offer you additional flexibility versus a fixed rate and allow you to overpay as often as you wish, or change to another product without a penalty fee. If you are interested in a variable mortgage, why not check out Avant Money’s Flex Mortgage. To find out more about how the Flex Mortgage works, check out our guide to the Euribor rate and how it affects Flex Mortgage.

5. Loan-to-value (LTV)

   Your LTV is the percentage of the property price that you are borrowing. For example, if you buy a home for €300,000 and borrow €270,000, your LTV is 90%. First time buyers in Ireland can usually borrow up to 90% of the property value. This means that the first time buyer deposit in Ireland is generally at least 10%.

6. Approval in Principle (AIP)

   An AIP is a letter from a lender that shows how much they are willing to lend you based on your financial information. It is not a mortgage offer, but it gives you a clear idea of your budget and shows sellers that you are serious about buying. With Avant Money, Approval in Principle generally lasts 12 months once approved.

7. Stress test

   A stress test checks whether you could still afford your mortgage if interest rates increased. Lenders use this to make sure you are not taking on more than you can manage.

8. Valuation

   A valuation is an assessment of the property’s market value. A professional valuer carries this out. Lenders need this to make sure the property is worth the amount you are paying and the amount they are lending.

9. Cashback

   Cashback might sound like one of the more simple mortgage terms, but it is still important to understand how it works. Some lenders offer a percentage of your mortgage amount back to you when it is drawn down. This money can help with the many extra costs that come with buying your first home, such as legal fees or any small jobs you did not expect. At Avant Money, we offer 2% cashback when you draw down a new mortgage with a 3, 4, 5, 7 or 10 year fixed rate ^. These funds can give you a helpful boost at a time when every euro matters. It is a simple idea, but it can make a real difference when you are settling into your new home. It should also be considered that cashback can be attractive in the short term, but some lenders charge higher rates with it. Therefore, it is important to look at the cashback amount and the interest rate being offered.

10. Early repayment charge

    If you decide to pay your fixed rate mortgage off early, or overpay above the allowable limits, you may need to pay an early repayment charge. This fee covers the cost to the lender of ending your fixed term early. It is always a good idea to check the details before making any changes. Both our One Mortgage and Fixed Term Mortgages offer a 10% annual overpayment allowance¹, meaning you can overpay by up to 10% of your balance each year without penalty.

Feeling more confident already

Understanding these key terms can make the mortgage process feel much less stressful. And remember, you do not have to figure everything out on your own. If you are curious to find out more information, take a look at our online mortgage hub.

^ Cashback is available on a New or Top-Up Mortgage drawn down between 1 January 2026 and 31 December 2026 and paid within 2 months of draw down. For phased drawdown mortgages, the cashback amount will be calculated based on the initial mortgage drawdown amount. Offer Excludes One Mortgage, Flex Mortgage and High Value Mortgage.

** 1% cashback also available on a One Mortgage.

¹ A 10% overpayment allowance is based on the balance at the start of each year. An early redemption fee may apply for overpayments above your allowance. A maximum of two overpayments per calendar year are allowed.

² One Mortgage unique/only claim and claim of competitive follow-on variable rates based on comparison against competitor mortgage products as advertised on their websites at 19th January 2026. One Mortgage is designed to give a fixed rate for the full mortgage term (between 5 and 30 years), whereas competitor fixed rate mortgage products are designed to provide a fixed rate for a set number of years (between 1 and 10), following which they revert to a managed variable rate or a new fixed rate.

Lending criteria and terms and conditions apply. The monthly repayment on a 20-year mortgage with Loan to Value (LTV) greater than 80% with variable borrowing rate of 3.95% on a mortgage of €100,000 is €603.35 for 240 months. Total amount repayable is €145,028.74. If interest rates increase by 1% an additional €53.85 would be payable per month. For this example, Annual Percentage Rate of Charge (APRC) of 4.0% applies and consists of variable borrowing rate of 3.95%, valuation fee of €185, and security release fee of €40.

LTV is the amount borrowed as percentage of the value of your home. Information correct at 1st May 2026 and subject to change. You mortgage your home to secure the loan. Maximum loan is generally 3.5 times gross annual income (4.0 for first time buyers) and 90% of the property value (80% for switchers). Applications from residents of ROI over the age of 18 only, and subject to repayment capacity, financial status and property valuation. We require property and life insurance.

The following warning applies in the case of the Flex Mortgage which is a Benchmark Variable Rate loan:

Bankinter S.A. trading as Avant Money, is authorised by the Banco de Espana in Spain and is regulated by the Central Bank of Ireland for consumer protection rules.