A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Additional payments: The facility to make extra payments on your home loan account which reduces the term of the loan.
Break costs: Penalty charges for 'breaking' or discontinuing the agreed fixed term of a loan.
Direct debit: Regular electronic debiting of funds from a customer's nominated bank/building society cheque or savings statement account (or some credit union accounts).
Fixed rate: An interest rate that applies to a loan for a set term. Both the interest rate and loan repayments are fixed for the agreed period, regardless of any interest rate variations in the home loan market.
Glossary: Plain english definitions of home loan jargon (what you're reading here).
Home Equity: The value of a homeowner's unencumbered interest in their property(s). Equity is the difference between the home's fair market value and the unpaid balance of the mortgage and any outstanding debt over the home. Equity increases as the mortgage is paid or as the property enjoys appreciation.
Home Loan: A home loan requires you to pledge your home as the lender's security for repayment of your loan. The lender agrees to hold the title or deed to your property until you have paid back your loan plus interest.
Interest: The amount you are charged for the money advanced to you by a lender.
Interest only loan: A loan where only the interest is paid for an agreed term (usually a short period of one to ten years) or during a construction period. The principle is then repaid over the remaining term of the loan by the conversion of repayments to Principle & Interest.
Interest Rate: The rate at which interest is applied.
Lump sum repayments: Additional ad hoc repayments, made over and above your minimum repayment requirement.
LVR: This is the general term for the Loan to Value ratio. This measure is used to determine the percentage of the equity in a mortgage against the value of the security.eg. If a house is worth $160,000, and the mortgage over the property is $100,000, then the LVR is 62.50%.Typically, lenders consider 80% as the point at which Mortgage Insurance is required.Sometimes referred to as LTV
Minimum repayment required: The amount you are contractually obliged to repay each month, in order to repay your loan within the agreed term.
Mortgage: A form of security assigned to the mortgage for a loan, usually taken over real estate (such as your home).
Mortgagee: The lender of the funds.
Mortgagor: The person(s) who owns the property offered in support of the loan.
Principle: The capital sum borrowed, upon which interest is payable.
Principle & interest loan: A loan in which both the principle and interest are repaid, during the agreed term of the loan.
Re-amortise: To recalculate the minimum repayment required to repay the outstanding balance of your loan over the remaining period (particularly where the loan balance has substantially increased or decreased from the original amount).
Redraw facility: The component of your variable rate loan into which you can make extra repayments when you can afford to, and later draw on these funds if you need to.
Security: Documentation held by the lender (or mortgagee) regarding property supporting the loan.
Settlement: The date on which loans funds are advanced to you or your legal representative.
Stamp Duty: This is a State Government tax assessed on the selling price of the property. Each state has different rules and calculations. To estimate the amount of stamp duty you may have to pay, use our Stamp Duty calculator (look under Calculators in the menu on the top right of the page)
Strata title: A strata title is the most common title associated with town houses and home units and is evidence of ownership of a unit, which is called a 'lot', in a strata plan. Individuals each own a small portion (such as a unit or townhouse) but where there is common property (external walls, windows, roof, driveways, foyers, fences, lawns and gardens) which all owners share.
Term: The duration of a loan, or a specific period within that loan. This is usually wriiten in months, eg 360, which is 30 years.
Title deed: Document disclosing the legal description and ownership of a property.
Valuation: A report detailing a professional opinion of a property's value.
Variable rate: A rate that goes up or down depending on money market interest rates.
Variation: A change to any part of a loan contract.