To agree to the terms and conditions of an offer contract.
Additional money paid into your loan over and above the mnimum monthly repayments.
A fee paid to the lender for setting up a home loan
A fee charged for a professional opinion about how much a property is worth.
The formal term for a standard principal and interest loan.
Being overdue in repayments.
An item owned with a monetary value (e.g. cash and/or property).
A loan that has regular payments that do not cover the full loan amount by the end of the term, so a larger lump sum is due at maturity.
Equal to 0.01% interest. (e.g. 50 basis points is an interest rate of 0.5%)
Fees charged by the lender if the full loan is paid-off in full before the end of the loan term.
A temporary loan used as a gap measure between buying your new home and selling the old one.
A detailed review of your income and expenses.
Tax payable on the profit made when selling an investment property.
A loan on a personal line of credit, typically a credit card attracting a higher-than-normal interest.
Certificate of Title
Document showing who owns the property as well as all the associated details of size and whether there is a mortgage registered on the title.
A rate which includes fees and charges so loans can be compared on an equal basis (e.g. a loan with a low advertised rate but high fees might cost the same as a loan with a higher advertised rate but low fees).
A variation or alteration to the terms of a contract.
Legal work carried out by your legal representative to transfer owneership of a property.
An agreement whereby the borrower receives goods or money now, on the understanding it is to be repaid under set guidelines that commonly include an interest charge.
A person or organisation who loans money on the expectation it is to be repaid.
The maximum loan amount that a borrower can borrow under their home loan contract.
A report outlining an individual’s credit history, public records and any credit black spots.
Interest calculated on a daily basis. Most variable rate loans calculate interest on a daily basis.
A bank access card used to make withdrawals from current funds in a bank account.
An amount of money owed by one person or organisation to another.
To combine one or more debts previously held seperately into one merged amount.
Debt Servicing Ratio (DSR)
The Debt Servicing Ratio measures whether you can afford the mortgage payments. To calculate the DSR, the lender uses a number of factors to work out the amount of your income that is available to repay the debt.
Failure to make a loan repayment by a specified date.
An agreement between two parties where an amount due to be paid on a given date may be postponed until a later date.
Amount given in advance to show intention to purchase a property.
An insurance policy to cover the deposit on a property being purchased.
The amount claimed on an investment property for the reduction in value of an item due to usage, passage of time, wear and tear.
A fee charged by some Lenders when you decided to refinance with another lender within the first years of the loan.
The difference between your mortgage and your property’s value.
Your interest rate is locked in for a fixed term, you are then protected against possible interest rate rises for the selected ‘fixed’ term period.
When you default on your mortgage and the Lender forces a sale on your property, with the proceeds going towards the mortgage debt.
Investment property is negatively geared when expenses exceed rental income. Investment property is positively geared when the rental income receivd is greater than the total amoutn of epenses.
It may be possible to vary the terms of your contract should you find yourself in a position where you are having difficulty meting your repayment obligations.
A person or organisation who provides money to another under the proviso that it will be repaid according to set guidelines and terms.
Lender’s Mortgage Insurance (LMI)
Lender’s Mortgage Insurance is a one-off insurance premium that protects the lender in the event that you default on your mortgage repayments.
Are assets, either in case or easily convertible to cash.
Loan to Value Ration (LVR)
The value of the loan divided by the value of the property that the loan is for (e.g. if you buy a $500,000 property and need a $350,000 loan – your LVR is 70%)
Low-Doc Home Loan
Low documentation loans designed for the self-employed who don’t have the documentation required to get traditional home loans. These usually carry higher interest rates.
A loan for the purpose of purchasing a property, where the property is used as security.
The lending institution.
The borrower (you).
National Consumer Credit Protection (NCCP)
Australian legislation covering consumer protection and consumer rights.
Where the income from an investment property is insufficinet to meet the interst costs of the loan used to fund the investment property.
Designed for those who find it more difficult to meet the borrowing conditions of standard home loans.
An offset account is an account linked to your mortgage. The balance in the account ‘offsets’ the principal of the loan. Overall interest is calculated on the principal less the offset account balance.
Independent body established within a particular industry to investigate and resolve disputes as an outside party to the dispute.
An arrangement on a cheque or savings account under which a Lender extends credit up to a maxium amount and against which the customer can make withdrawals.
An initial approval pocess that provides an estimate of how much someone can borrow before they find a property.
The amount of capital borrowed.
Switching your loan from one product (or lender) to another, usually with better interest rate or conditions. Your initial loan is paid out and your debt is transferred across to the new product or lender.
To reclaim possession of goods or assets for failure to make payments within agreed terms.
Usually for older home owners who have already paid off their home loans and borrow against the value of their home without having to sell the property.
Revolving Line of Credit
A line of credit that is secured by the value of your home. Allows you to use the funds for other purposes such as the purchase of a second property or other investments. Generally incurs a higher interest rate than a standard variable rate loan.
A right of a lender against the property or other assets of a borrower to guarantee or secure the repayment of a loan.
In this type of loan, the property being purchased is held as security against the loan.
The day on which the process of changign title of a property occurs. Your legal representative will organise for the exchange of money and documents so that you become the legal owner of the property.
Home loans where a predetermined portion of the loan is locked in at a fixed interest rate and the rest comes with a variable rate of interest.
A loan in which no property is held as security, generally attracting a higher rate of interest due to increased risk on the part of the lender.
An estimation of the value of the property prepared by an independent professional valuer.
Variable Interest Rate
The interest rate will vary depending on several factors, including the Reserve Bank’s current cash rate and prevailing sentiment.
The person who is selling the property.