To help reduce the interest on a home loan, a borrower may be able to link their loan account to their transaction account. Money held in the transaction account ‘offsets’ the interest charged to the home loan. For example, if there was $10,000 in the transaction account and the home loan principal was $300,000, interest would be charged on the difference being $290,000.
A fee the borrower pays for setting up the loan.
One basis point is equal to 0.01% interest. So, 25 basis points would be 0.25%.
A corporation that manages the building and common areas on behalf of the owners of the units within the building.
If a borrower makes changes to their fixed rate loan, such as switching the loan to a variable rate or paying the loan before the expiry of the fixed rate period, a fee may be applied.
Generally a short term or temporary solution, this is a loan that can be used when you are buying a home but have not yet sold your exisitng home.
An inspection of the property prior to purchase to check the building is structurally sound.
The comparison rate takes into account the interest rate and most fees and charges payable during the term of the loan, and is shown as a single interest rate. Please note that other costs such as early repayment fees and redraw fees are not included in the comparison rate.
A loan used for building a new property.
Hired by the buyer or seller, the conveyancer manages the coneyancing process.
Transferring the ownership of the property from the seller to the buyer is known as conveyancing.
The period of time during which the buyer can decide to not continue with the purchase. Cooling off periods vary between States.
The maximum amount that a borrower can borrow against their home loan contract.
A report showing the credit history of a borrower. This is prepared by an authorised credit reporting agency and requires permission from the borrower to obtain the credit report as part of the loan application.
If cash is not available for a deposit, a deposit guarantee can be used to help with the property purchase. The full purchase price will be required at settlement.
The first date a borrower draws down upon their loan.
The value of an asset, minus any outstanding loans.
A grant introduced by the Australian Government to help Australian’s with their first home purchase.
The interest rate of the loan will stay the same during the fixed rate period, which means your repayments won’t change during the fixed term.
The fees and payments payable to the government/s associated with the loan. For exmaple, stamp duty, transfer and mortgage fees. The Government charges vary between states and territories.
A third party promise to cover the loan if the borrower is unable to make loan payments.
The third party guaranteeing to cover the loan if the borrower is unable to make loan payments.
A reduced interest rate that may be offered at the start of a loan. At the end of the honeymoon period, the interest rate will change to a standard variable rate.
Interest that is charged one year in advance. Generally only available on fixed rate loans for investment purposes.
Interest that is charged at the end of a time period, generally at the end of the month.
The borrower will only be required to pay off the interest on their loan for a certain period of time, usually one to five years. After this interest only period, the borrower will be required to make payments on the interest and the principal amount.
A reduced interest rate that may be offered at the start of a loan. At the end of the introductory period, the interest rate will change to a standard variable rate.
A loan that is taken out for investment purposes.
Insurance taken out by the lender that offers protection should the borrower not be able to pay their loan. This is generally required for loans with an LVR greater than 80%.
An account that has a credit limit. A line of credit allows the borrower the flexibility to access funds from the account as often as needed, staying within the credit limit.
The formal contract that sets out the terms and conditions of the loan. The contract is between the borrower and the lender.
The Loan to Value Ration (LVR) is the amount of the loan compared to the value of the property, and is shown as a percentage. For example, if a home is worth $500,000 and the amount of the loan is $350,000 the LVR is 70%.
An extra, usually large, payment that is made on top of regular repayments
A monthly fee that may be payable to the lender. The fee will vary between lenders and loan types.
A legal agreement between a borrower and lender, giving security over a property as repayment of the money lent.
The person or organisation who holds the mortgage.
The person or organisation who borrows money to purchase the property.
During auction, if the highest bid hasn’t met the reserve price, the property is passed in.
An inspection of the property prior to purchase to check for the presence of, and any damage by, pests and termites.
The ability to transfer your loan from one property to another.
Initial approval process where the lender estimates how much can be borrowed, based on the information provided to the lender (prior to finding a property to purchase).
Additional payment(s) made to a loan, that are over and above the scheduled repayments for the loan.
Principal is the amount of the loan which interest is calculated and paid.
A loan that is made up of principal and interest repayments.
Some lenders may lock in a fixed interest rate at the time a loan is approved. The rate lock period will vary between lenders and a fee may apply.
Where this feature is available on your loan, it allows borrowers access to additional payments that have been made.
Renegotiating a home loan or taking out a new home loan with another lender. The aim of refinancing is to either increase the amount of a loan, or to secure a lower interest rate to reduce monthly repayments.
A repayment holiday is a period of time the borrower can apply for when they are ahead on their loan repayments.
The amount the borrower must repay on the loan at an agreed time, either fortnightly or monthly.
The minimum price a seller will accept at auction.
The property provided to secure a loan.
Settlement is finalised when the transfer of ownership of a property from buyer to seller is completed.
A loan that is split into more than one account, for example a fixed rate loan account and a variable loan account.
The Government duty applied to a loan that is payable when a property is bought or sold. Stamp duty rates are dependent on the value price of the property and are set by each state and territory.
A fee that may apply by making a change to your loan, for example, switching from a variable rate loan to a fixed rate loan.
The agreed length of the loan.
A search done on the title of the property to determine ownership and confirm any interests in the property.
A report completed by a registered valuer for the lender, detailing their professional opinion on the property’s value.
An interest rate that can move up or down, which will also change the amount of your monthly loan repayments.
The person selling the property.
