The time it will take to repay a home loan. Usual amortisation period is 25 – 30 years.

 

The fee charged by a lender to cover or partially cover the costs of setting up or establishing the loan. See also Establishment Fee

Amount by which your loan repayments are overdue.

 

 A charge for administering the arrears position

 

 Money, property, vehicles or goods that you own. Assets include shares and superannuation. If you run a business then assets can also be intangible such as goodwill. When assessing a loan application lenders will look to see that you have build a good asset base which is reflective of both your salary and age. In other words that you haven’t just squandered your money.

 

Finance institutions often publish their base rate, which is a guide for their lending rates. Loans are generally written at a margin above this depending on the product and client.

 A corporation of the owners of units within a building. They form a self-elected council to manage the building and common areas.

 

The person being provided funds in the form of a loan

 

The costs incurred by and charged by a lender when the borrower discharges a loan within a certain period of time following settlement. Most often break costs refer to the financial costs of existing from a fixed rate loan before the expiry of the fixed rate. Break costs are usually based on an economic loss for the lender and can be substantial.

 

 A loan that lets you cover the purchase of a new property before you sell your existing property. Typically bridging finance is arranged to give you up to 6 – 12 months to sell your existing property.

 

A person who arranges finance for another person. All brokers must be fully licensed under National Consumer Credit Protection legislation.

 

A fee for successfully arranging a loan. Usually charged as a percentage of the loan amount. All brokerage fees must, by law, be disclosed to the borrow in writing before they apply for a loan.

 

 A loan where the money is used for business purposes

 

The financial gain you receive when you sell something for more than you paid for it. Tax may be payable on any capital gains.

 

 Short term business or personal finance which is not secured by a mortgage. Caveat loans are typically more expensive than mortgage loans and used where funds are required quickly. A caveat is a legal instrument which is lodged against the title of a property preventing the owner from selling or mortgaging the property until the caveat is removed. The caveat acts as a form of security for the lender.

 

The document of Title to the property held. It sets out the legal description of the land, the registered proprietors, easements, covenants and encumbrances. When you have a mortgage loan the certificate of title is held by the bank as security until the loan is paid off.

 

When more than 2 people apply for a loan the second and subsequent borrowers are known as co-borrowers. See Primary Borrower

 

 

The period of time between when your offer to purchase a property has been accepted by the vendor and when you actually sign and exchange contracts. During this period your solicitor will organise all of the necessary searches and your broker will obtain formal loan approval.

 

The legal process for the transfer of ownership of real estate.

 

An old fashioned system of legal ownership of property where there is more than one dwelling eg units.

 

A report provided by a third party provider. Every time you apply for any type of credit or enter into a new mobile phone contract the provider will make an enquiry on your credit file. These enquiries are then listed on the report along with details of unpaid accounts or loan defaults, court judgements or bankruptcies.

 

The ratio used by lenders when assessing the borrowers capacity to repay a loan. It is a ratio of debts compared to grow income.

 

Default can mean mortgage or loan repayments which are currently in arrears or it can be used to describe a listing on a credit report indicating a previously unpaid credit record blemish. Defaults remain on your credit record for 7 years even if they have been paid.

 

A bond that will guarantee that the purchaser of a property will pay the full deposit by the due date. Deposit bonds are usually used when the cash for the full deposit is not available to exchange contracts.

 

Fees sometimes charged when a loan is repaid in full and discharged (finalised) within a certain period of time following settlement. See also Early Repayment Fee

 

A solicitor's incidental costs involved when dealing with a client on behalf of a lender. (e.g. title searches, certificates, pest reports etc)

 

The payment of loan funds from the lender.

 

Fees sometimes charged when a loan is repaid in full and discharged (finalised) within a certain period of time following settlement

 

An entitlement someone has to use land belonging to someone else et. Power box, fire hydrant, right of carriageway.

 

 A charge noted on the certificate of title showing a debt or a liability such as a mortgage.

 

 Fee charged to set up a loan. See also application fee

 

The financial interest a person has in a property or business. The amount of equity can be calculated by subtracting any debt (loans or mortgages) from the value of the property or business. Equity can also be used to refer to the additional amount which can be borrowed against a property or business.

 

 

Documents which verify your income such as pay slips, group certificates, taxation assessment notices and BAS Statements.

 

Items that can be removed from a property without causing damage to it for example curtains and some light fittings

 

Items that would cause damage to a property if removed such as carpets and hot water systems.

 

The period during which the interest is a set rate

 

An interest rate which remains the same for a specified period of time e.g. 3 years. The rate will not increase or decrease during this time. Repayments will also remain steady for this period of time.

 

A party who agrees to be responsible for the payment of another party's debts should they fail to repay them. Sometimes a lender will ask for another party to guarantee your loan.

 

The charge you incur for the using the lender’s funds. Interest is usually calculated on the daily balance of the debt outstanding and charged once a month.

 

 A loan you only pay off the interest and do not pay off any of the outstanding debt. Interest only loans are often used with investments.

 

Where 2 or more applicants can nominate 1 person to receive notices and documents on behalf of all borrowers. If a joint nomination is not made then the lender will send a copy of all correspondence and statements to each applicant or borrower individually.

 

Court Action taken over monies owed for goods/services and has not been repaid in accordance with a contract/timeframe. Judgements will be listed on an individual or company’s Credit Report

 

fees paid to the lender's solicitor for establishing or discharging the loan and mortgage. These fees are payable by the borrower but can nearly always be included in the loan amount.

 

An insurance that covers the lender in the event of borrower default. LMI is payable by borrowers who borrow more than 80% of the loan amount. It is payable through a one off premium which in some cases is able to be added to the loan amount. The higher the LVR the higher the LMI premium. LMI does not protect the borrower in any way.

 

Liabilities are your debts and obligations. Things such as credit cards, loans, HECS, child support and other debts.

 

A flexible loan arrangement which allows the borrower to draw the loan up to an approved limit. Lines of Credit operate a little like an overdraft. The limit remains static and does not reduce like a principal & interest loan.

 

The ratio of the amount lent to the valuation of the property expressed as a percentage. E.g. If the property costs $350,000 and the loan sought is $280,000 the LVR is 80%

 

The date by which a debt or investment must be paid in full

 

 A form of security for a loan, usually taken over real estate. The lender has the right to take the real estate if the borrower fails to repay the loan

 

The lender of funds

 

The person/s borrowing money in terms of the mortgage

 

National Credit Legislation passed by the Federal Government in 2010 requiring all credit providers to be licensed by ASIC and adhere to principals of responsible lending.

 

State Government fee payable for the transfer of the property title; discharge of a mortgage; registration of a mortgage, caveat and other registrations such as leases.

 

No longer payable in most states. Was previously a state government duty payable on the borrower's mortgage. The amount of duty varied from state to state

 

"Pay As You Go" - Taxes that are deducted weekly/fortnightly/monthly from wages/salaries of employees

 

Written confirmation of income earned, taxes paid etc. from employer. Payslips are issued in line with a person’s pay schedule

 

A loan where the funds not used for real estate purchase or refinance. E.g. debt consolidation, holiday, car, furniture

 

The main borrower on a loan. This is usually the main income earner. Subsequent borrowers are known as co-borrowers.

 

The amount of your loan on which interest is paid

 

A loan where regular repayments pay off both the original amount borrowed as well as interest. The loan amortises or reduces to Nil during the loan term.

 

A law to protect consumers in regards to their privacy from information being shared. By signing the Privacy Act Authority, the consumer gives the lender authority to access credit reports from credit reference associations

 

When a new property can be used as security for an existing loan. E.g when you sell your home and buy another the loan is transferred to the new property without needing to repay the original loan, reapply or restructure the existing loan

 

The person/s buying the property or goods

 

Government duty payable on a property purchase. First Home Buyers and some new home buyers may be exempt in certain circumstances.

 

Local Council Registration particulars of property. The Rates Notice outlines the charges payable to the Council for things such as garbage, roads etc.

 

The borrower is able to draw on pre-paid funds from the loan account

 

To replace or extend an existing loan with funds from the same or another lender

 

An examination to confirm ownership of a property and that the vendor has the right to sell the property and there are no encumbrances or restrictions on the property

 

An asset that guarantees the lender their borrowings until the loan is repaid in full. E.g. real estate, vacant land, motor vehicle

 

You work for yourself in your own business

 

 Your ability to comfortably afford a new loan as well as meeting existing commitments

 

 The finalisation of payment by the buyer to complete the sale and then take possession of the property

 

The date the loan is drawn down.

 

See Purchase Stamp Duty

 

Legal system of ownership or title where a dwelling or building has multiple residences eg) a unit block.

 

See  Search

 

Legal system of ownership for most single dwelling properties.

A document registered with the Land Titles Office that confirms the change of ownership as noted on the Certificate of Title

 A property or car that has no money owing against it

 Phone, gas, electricity or water bill that shows name and full address

A report detailing a professional opinion on the property's market value

 A rate that can vary during the term of the loan, at the discretion of the lender, generally following trends set by the Reserve Bank

Changing any part of the original loan contract

The person selling the property