This is a fee charged to cover or to part cover the lender’s internal costs of processing your loan application.

What an individual currently owns, such as real estate, cars, home contents, savings accounts, superannuation, shares etc.

A loan which has an interest rate that varies per market forces. The rate charged is lower than a standard variable rate loan but may have fewer features.

When a fixed rate loan is paid off before the end of the fixed rate period ends, or when additional payments are made in advance into the fixed loan.

A short-term loan that covers a financial gap between the purchase of a new property & the sale of a currently owned property.

The monetary gain obtained when you sell an asset for more than you paid for it. These gains may be taxable.

A property title where several dwellings are erected on an estate and the owners own their property & land on freehold title, but have shared access to community facilities such as, tennis courts, BBQ areas, swimming pools etc. Levies will be paid by all property owners for the upkeep of the community facilities.

This is a type of ownership for a unit/flat/apartment in a building that is owned by a company. A purchaser buys particular shares in the company which gives the purchaser the right to occupy a specific unit/flat/apartment. Lenders are generally not enthusiastic about lending on company tittle properties.

This is a rate that includes both the actual interest rate & the upfront & on-going loan fees, expressed as a single percentage over the period the loan is compared.

This loan is specifically for funding the building of a new dwelling. Can also apply to major renovations of an existing property.

Interest calculated on a daily basis, on the outstanding balance of the loan or investment account.

An initial cash contribution towards the purchase of the property, usually payable on exchange of contracts.

This is a substitute for cash deposit that guarantees the purchaser will pay the full deposit amount by the settlement date. Institutions providing deposit bonds act as a guarantor that payment will be made.

The value of an asset minus any lenders interest in the property, e.g. a property worth $600,000 with an outstanding mortgage debt of $400,000, has equity of $200,000.

A loan that uses the equity in your property to borrow for any personal purpose, including personal investment. It usually operates like an overdraft, where the borrower has a set credit limit to which they can draw funds. The term “Equity Loan” can also refer to a line of credit loan.

A state government financial grant to purchasers of their first home only, to assist in meeting the purchase costs. Note, the FHOG amount varies from state to state.

An interest rate set for a fixed period, usually will be 1-year, 2-year, 3-year or 5-year fixed period. In some cases, can be for longer.

A type of property ownership where a parcel of land fully belongs to the owner.

Funds that can be shown to be accumulated over a period of time prior to applying for a loan. Usually a minimum 3-month time frame.

A guarantor is a third party to a loan who is helping the borrower obtain finance by offering additional security support. Guarantors are generally limited to spouses or immediate family members. A guarantor may be liable for the debt if the borrower defaults on their loan.

A loan in which only the interest is repaid with each repayment for a specific time frame.

Note, at the expiry of the interest only period no part of the principal will have been paid, thus the principal will be the same amount as when the interest only period started.

A reduced interest rate offered for a specified period of time.

Joint tenants

Equal holding of a property between two or more persons. If one party dies, their share passes to the survivor/’s. 

This insurance covers the lender, not the borrower, it is usually payable on mortgage loans above 80% LVR. It is a form of insurance that safeguards the lender against a financial loss in the event of a security being sold due to the loan being in default. The premium is passed onto the borrower, this is a once-only premium per application requiring LMI.

An individual’s debts or financial obligations, for example, existing credit cards, personal loans, car loans, mortgages etc.

A flexible loan arrangement with a specified credit limit to be used at the borrower’s discretion, up to the limit of the loan. Also, called an Equity Loan or All in One Loan.

The ratio of the home loan amount to the value of the property / security. This is the LVR & is represented as a percentage. Calculated as per below equation.

Loan Amount / Valuation = Y x 100 = X%

e.g. Loan Amount - $500,000

               Valuation - $700,000

i.e. $500,000 / $700,000 = 0.7143 x 100 = 71.43% (This is the LVR)

Loan products available to applicants who may not have up to date or complete financial information available at the time of the application.

A loan is secured by a property (borrowers property, be it an existing or a new purchase).

This means there is a legal mechanism in place which allows the lender to take possession and sell this secured property in the case when the borrower is in default of the loan agreement. 

The lender of the funds & holder of the mortgage. Typically, it is a Bank or a lending institution.

An individual who borrows money & grants a mortgage over their property (existing or new purchase) as security for the loan.

A non-conforming loan is a loan that fails to meet the banks / lenders normal eligibility requirements. Thus, falls outside of these parameters.

Offset Account

A transactional account linked to the home loan. Any money kept in this account will “offset” daily against your loan balance. Working similarly to having this extra money directly in your home loan except you have direct access to these funds via an ATM card usually a Visa / MasterCard Debit card. 

e.g. Loan amount - $500,000

   Money in offset - $ 30,000

Therefore, $500,000 - $30,000 = $470,000 loan balance.

Interest is calculated daily, on the loan amount of $470,000 & not $500,000, thus not paying interest on $30,000 sitting in the offset account.

A government official who hears & is appointed to investigate complaints by private citizens.

In relation to lending it is the Australian Financial Complaints Authority (AFCA).

The outstanding loan amount on which interest is calculated.

Both principal & interest are paid with each repayment during the term of the loan.

A loan facility whereby you can make additional repayments & then access those extra funds in the future if necessary.

To satisfy a debt by making another loan on new terms.

In other words, to payout an existing loan by taking out another loan on new terms.

Property (usually) offered as collateral to secure the loan.

Date on which the new owner finalises payment & assumes possession of land. Sometimes called the “draw down” date, as this is the date the loan is usually fully drawn.

A tax on legal documents, payment of which is certified by attaching or impressing of official stamps. Stamp duty on purchasing a property is calculated on a sliding scale based on the purchase price of the property.

A loan which has an interest rate that varies per market forces

The form of property ownership most commonly associated with units, apartments & townhouses, where the owner holds title to a particular unit, which is called a lot, in a strata plan.

A plan that shows the boundaries & the building position on a block of land.

Where more than one person owns separate, defined portions of a property. If one person dies, the relevant portion passes through the deceased’s estate rather than to the other property owners/’s as with joint tenancy. Each owner can hold a specific share of ownership and has the right to dispose of their interest.

The time length of a loan or a specific portion within the loan.

A request to the Land Titles Office to ascertain the ownership of a specified property & any encumbrances, covenants & easements that may be recorded on the title.

Torrens Title is the most common form of property title in Australia. Ownership of the property is registered with the Land Titles Office & evidenced by the Certificate Of Title, which shows the current owner’s name & any other interests in the property ie. Mortgages.

A property free of encumbrances (mortgages) or restrictions.

A report required by the lender, detailing a professional opinion (Certified Valuer)  

of a property value.

An interest rate that varies during the term of the loan, in accordance with market forces.