- 100% OFFSET
A savings account run in conjunction with a home loan. The interest ‘earned’ on the account is applied to the interest paid on the loan to reduce the interest payable on the mortgage. A 100 percent offset is where the interest rates earned and paid are the same.
- APPLICATION FEE
Also called an Establishment Fee, is paid to set up your loan and usually includes legal fees and valuation charges.
An increase in the value of a property due to changes in market conditions or other causes. The opposite of depreciation.
To be behind in a repayment.
- BODY CORPORATE
An administrative body made up of all the owners within a group of units or apartments of a strata building. The owners elect a committee which handles administration and upkeep of the areas shared by the owners.
- BREAK COSTS
Also known as economic costs or exit fees. They are charged by an institution to recoup interest lost through a borrower refinancing with another institution or paying their loan out early.
Break costs are normally only charged on fixed rate loans where the amount of interest the institution would receive is easily calculable. It can also be charged well into the variable portion of a honeymoon or introductory rate home loan. Some institutions also charge a flat fee on top of their break cost charge. They may refer to this fee as a “deferred establishment fee”.
A short-term loan that covers a financial gap between the purchase of a new property and the sale of an old property
- BRIDGING LOAN
Finance to buy a new property before an existing property has been sold.
- BUILDING INSURANCE
Insurance which covers the cost of rebuilding or repairing a property following structural damage, for example by flood, fire, storm and subsidence.
- CERTIFICATE OF CURRENCY
A document issued by an Insurance company indicating that a formal policy is currently in place for the insured property.
- CERTIFICATE OF TITLE
The certificate detailing the ownership and land dimensions of a property.
Industrial or non-residential, used soley for business purposes.
- COMPANY TITLE
A property title that applies when owners of units in an apartment block form a company. Each has shares in the company that owns the land and buildings. The owner of the shares is entitled to exclusive occupation of a flat. However, if you want to alter occupancy in any way, you must have the company’s approval to do so.
- COMPARISON RATE
An attempt to express some of the costs of a loan into a single interest rate. These ‘costs’ include the nominal interest rate, some ‘up-front’ fees and on-going charges. It does not include fees and charges based on future events which may not occur e.g. redraw fees, progress payments etc which are not typical of all loans.
The aim of the comparison rate is to help consumers make a more informed judgement of the costs of a loan, and in so doing, help them to compare alike loan products and services offered by the various lending institutions.
A loan specifically granted for the purpose of funding the building of a new dwelling. Money is generally able to be drawn as required, so payments can be made as necessary.
- CONTENTS INSURANCE
A policy insuring household contents against theft and damage.
- CONTRACT OF SALE
A legal document that details the conditions relating to the sale/purchase of the property. This document is legally binding when signed by both the vendor and buyer.
A person qualified and licensed to handle all documentation for the sale and or purchase of a property.
The legal process where ownership of a property is transferred from the vendor to the buyer.
- CREDIT HISTORY
A record of an individual’s open and fully repaid debts. A credit history helps a lender to determine whether a potential borrower has a history of repaying debts in a timely manner.
- DAILY INTEREST
A method of calculating interest that takes into account the amount you owe on a day-to-day basis. Interest is charged on the loan amount outstanding each day.
Failure to make mortgage payments on a timely basis or to comply with other requirements of a mortgage.
The money you pay on exchange of contracts as part of your initial contribution to the purchase of your home. This could be between 5 and 10% of the purchase price. You could also pay your deposit by way of Deposit Bond.
The various costs your Solicitor or Conveyancer have to pay to other organisations and bodies on your behalf, including, for example, search fees and stamp duty/ land tax. Your Solicitor or Conveyancer will itemize the disbursements on the invoice they send you.
The difference between the amount you owe on your home loan and the current value of your property.
- EXIT FEE
Also known as economic costs or break fees. They are charged by an institution to recoup interest lost through a borrower refinancing with another institution or paying their loan out early. Exit fees are normally only charged on fixed rate loans where the amount of interest the institution would receive is easily calculable.
It can also be charged well into the variable portion of a honeymoon or introductory rate home loan. Some institutions also charge a flat fee on top of their break cost charge. They may refer to this fee as a “deferred establishment fee”.
- EXTRA REPAY
The ability to make extra repayments without penalties
- FHOG – FIRST HOME OWNER’S GRANT
A grant available to Australians who are buying or building their first home, and have not previously owned a home, either jointly, separately or with some other person.
- FIXED RATE
An interest rate set for an agreed term regardless of any variations in the market. The benefits are that you know exactly how much you will be paying and are not affected by any rate rises during the fixed term.
Borrowing to invest. Positive gearing is when you borrow to invest in an income producing asset and the returns (income) from that asset exceed the cost of borrowing leaving the investor with a surplus. Negative gearing is where the return on an investment is less than the interest costs of the loan used to fund the investment. This amount can be claimed as a tax deduction.
A party who agrees to be responsible for the payment of another party’s debts.
- HOME INSURANCE
A way of referring to both buildings and contents insurance.
- HONEYMOON RATES
Honeymoon rate, or introductory rate, home loans offer a low interest rate for an introductory period, usually the first 1-3 years of the loan. Once the honeymoon or introductory period ends, the interest rate usually reverts to a higher rate. This is often, but not always, the lender’s standard variable rate.
- INTEREST ONLY
This is where you only pay the interest on the loan. It is popular with investment properties for tax benefits.
- INTRO RATE
A special introductory fixed rate for the first 1 or 2 years
- LIFE ASSURANCE
A form of insurance by which someone’s life is insured. Life assurance policies can run parallel with a principal and interest home loan, so the loan will be repaid if you die before the end of the term.
- LINE OF CREDIT
This loan lets you free up the equity you have in your home for other purposes. It provides you with a revolving line of credit through a convenient single account that you can use daily.
- LMI – LENDERS MORTGAGE INSURANCE
Insurance written by an independent mortgage insurance company protecting the mortgage lender against loss incurred by a mortgage default. Usually required for loans with an LVR of 80.01% or higher.
- LOW DOC LOAN
Are a flexible financing solution for self-employed people who have income and assets, but may not have the usual paperwork at the time of application.
- LVR – LOAN TO VALUE RATIO
The ratio of the amount of your loan to the appraised value. The LVR will affect products available to the borrower and generally, the lower the LVR the more favourable the terms of the products offered by lenders.
- MORTGAGE TERM
The length of time over which you agree to pay back your mortgage, usually up to a maximum of 30 years.
- NEGATIVE GEARING
Negative gearing is where the return on an investment is less than the interest costs of the loan used to fund the investment. This amount can be claimed as a tax deduction.
Are those that don’t meet traditional lender criteria. We are able to assist most borrowers.
- OFF THE PLAN
When you buy a property from the Plans only and not the finished building. The Purchaser will not be able to inspect the property or see the standard of finishes, the practical layout, the size and dimensions or the outlook. However the Purchaser may be able to view a display unit and sample finishes.
- OFFSET ACCOUNT
A transaction account that is linked to your home loan account. 100% offset is where the balance of your offset account, offsets the balance of your home loan account, thus reducing the interest payable on your home loan.
Example: You have a $500k home loan, you have $20k in your offset account, therefore interest on your home loan is calculated on $480k.
- PARTIAL OFFSET
A partial offset account is where the interest rate earned on the offset account is only a portion of the rate paid on the home loan.
A home loan pre-approval confirms how much you can borrow from your lender. It is conditional upon the property you wish to purchase being acceptable security, and your lender confirming your income and other information provided in your application.
- PRIVATE TREATY
A sale of a property at an advertised price that can be negotiated.
- PROFESSIONAL PACK
Borrowers may qualify according to their profession, income and loan amount required. Common professional package loans are aimed at clients looking to borrow at least $150,000. These packages can come with various perks such as lower interest rate, usually 0.5% lower, attractive credit card offers, and they usually have discounted or minimal ongoing fees. Other benefits can include offset accounts, fee free banking, access to financial planners and the choice of interest-only repayments.
- REDRAW FACILITY
This allows you to access any additional payments you have made on your mortgage. It is not a feature of all loans and may attract a fee, and also have a limit.
Moving to a different type of loan product and/or to a different lender in order to save $$ on your loan, or reduce your monthly repayments.
- REVERSE MORTGAGE
Is a flexible financing solution for seniors who are retired and are generally aged 60 and over. It allows you to access the equity in your home without limiting your lifestyle.
This loan for Seniors enables you to access the equity in your home for such things as home improvements, the purchase of a new car, payment of medical expenses, taking a holiday or simply to supplement your income.
A reverse mortgage does not require repayment until the applicant moves out of the home on a permanent basis (e.g. moves into permanent age care or dies).
- SECOND MORTGAGE
If the client has a current property under mortgage that they have been repaying over an extended period, this means the equity within this property is increasing with each payment they make. They are able to take advantage of this growing equity by using it to take out a second mortgage. A lender may offer a fixed rate second mortgage and the client would receive funds in a single lump sum payment
The one key aspect that all Lenders look at. They need to know if you can afford to keep up the monthly repayments to your loan. Lenders vary in the way they calculate serviceability, so the amount you can borrow will vary from Lender to Lender.
The finalisation of the property purchase where your solicitor/conveyancer and the lending institution exchange money and documents so that you become the legal owner of the property.
Loans that have been secured by an asset that must perform in order to pay the loan back. Example a commercial Real estate.
- SPLIT LOAN
Involves splitting the loan into two or more different types or structures. Sometimes also called ‘combination loans’, these loans allow a borrower to have a portion of the loan under one structure and the other portion under another structure. For eg a borrower may wish to combine a line of credit facility with a principal and interest loan. Or split between fixed and variable rate loans.
- STAMP DUTY
A mortgage may attract government duty depending on the purpose of the loan; this varies from state to state. Contact us to confirm if duty applies to your situation.
- STRATA TITLE
A strata title is the most common title associated with townhouses and apartments and is proof of ownership of a unit. Individuals each own a portion, known as a ‘lot’. They share common property, which can comprise: external walls, roof, foyers, fences, lawns or a pool. All owners contribute to the maintenance of these facilities.
Electricity, gas and phone supplies.
A written assessment of how much a property is worth by a registered valuer.
- VARIABLE RATE
The opposite of fixed rates, variable rates go up and down as interest rates rise and fall.
STANDARD VARIABLE RATE Key Benefits include: No penalty for making additional home loan repayments; Ability to redraw on the home loan; Wide choice of additional home loan features such a line of credit, home loan offset, cheque account etc.; Widest choice of home loans and home loan providers.