The Average Annual Percentage Rate, also known as the “True Rate”, is used as a tool to assess the average interest payable on a mortgage over a seven-year period. This assessment also includes upfront fees, ongoing fees, and the interest payable on that mortgage over the seven years.
Additional or Accelerated
This facility allows you to make greater payments than specified on a loan.
Many banks/lenders charge one off and, in some cases, ongoing account keeping fees for mortgages.
All-in-one loans are usually variable and enable you to deposit all your income into the loan account. You are then able to draw on that money for day-to-day expenses. The purpose of this is to reduce the interest payable because the excess spare funds act as payments. enses.
This is the term or length of time of the loan as agreed upon.
Not all banks/lenders charge an application fee so it is worth checking if the lender you choose is one that charges a fee. In some cases, lenders who do not charge a fee offer a higher interest rate. Your mortgage consultant will explains all this to you.
Is a written report of the estimates value of a property. A qualified appraiser, usually employed by the bank/lender, conducts the valuation.
Is an increase in the value of a property as a result of inflation and market conditions.
An asset is anything you own that is worth money, including any savings, stocks or funds.
Is a term that refers to the financial gain obtained when you sell something for more than you paid for it. Usually, the profit you receive from selling the asset incurs capital gains tax, except on the sale of a home that remains exempt from this tax.
Capital gain tax:
A federal tax on the monetary gain made on the sale of an asset (excluding your own residence) bought and sold after September 1985.
The difference between the price you pay for an asset and the price you receive when you sell it or the valuation placed on that asset.
A loan where the interest rate is not allowed to exceed a set level for a period of time, but unlike fixed rate loans, is allowed to drop.
Is Latin for beware and is a warning on a property’s title that stipulates that a third party has some rights or interest in the property.
'Let the buyer beware' - the principle that puts the onus on buyers to be satisfied with any item before buying.
Certificate of Eligibility:
A document that is issued by the federal government confirming a veteran’s eligibility for a Department of Veteran mortgage.
Certificate of Title:
A statement that identifies who owns the land and includes details of mortgages, easements, dimensions of the land and whether there are any obstructions on it.
Refers to personal property. There are two types of chattels; real chattels which are buildings and fixtures, personal chattels which are clothing and furniture.
Combination or Split loan:
This is exactly as it sounds. It is a combination of the several of loans on offer and may have a portion variable, fixed or a line of credit.
As of July 2003 all lenders and brokers must provide a ‘comparison rate’, by law. A Comparison Rate reveals the cost of a loan, allowing you to compare ‘apples with apples’ when choosing a loan. The Comparison Rate takes into consideration the costs associated with setting up a loan including the interest rate, the loan approval fee and any other up-front or ongoing fees. It excludes government fees and charges, because they are standard across all loans.
If you are building a property, a construction loan allows you to draw money as required to assist with building costs.
Consumer Credit Code:
is an Act of Parliament that governs the involvement between borrowers and lenders. Credit providers such as banks, building societies etc, must tell you what your rights and obligations are in any credit arrangement. They are required by law to truthfully disclose all relevant information about your arrangement in a written contract, including interest rates, fees, commissions and other information which in the past was often hidden.
Contract of Sale:
This is a written statement that is legally binding and outlines the terms and conditions of the sale of property between purchaser and seller.
is the legal process for transferring a real estate ownership from one owner to another. This can be a costly process and is applicable to all States with the exception of South Australia where Torrens Title is used instead.
The Federal Government introduced the FHOG on 1 July 2000. Although it was initially established to assist counterbalance the increased cost of building a home due to the GST, it also applies to buying an established home. The amount of the grant is a non-means tested flat rate of $7,000.
These are items that can be removed without causing damage to a property.
This applies to mortgages where the interest rate is fixed and is not affected by inflation, or deflation, and is for an agreed period of time. Most fixed rate loans can be taken out over a 1, 2, 3, 4, 5, 7, or 10-year period and the interest rate offered to you at the time of applying for the loan will remain ‘fixed’.
These are items that are likely to cause damage to a property if removed. It pays to check what the sale contract specifies.
Many buyers have been extremely frustrated with a practice known as gazumping. This is when the seller verbally agrees on a price for a property but then later advises you that someone else wants to buy the home and has offered more money. In some occasions you are given the chance to match or better the increased offer. In most cases, the home is sold for the increased price without you even knowing about it.
This is when someone agrees to be responsible for the payment of another person’s debts should they default on their repayments.
This is a loan that assesses the amount of home equity you have and based on that, offers a line of credit that can be used to invest in a property or to renovate for example. These loans are not suitable for everyone, so talk to your mortgage consultant.
Also known as ‘Introductory Rate’, this is when lenders offer a very cheap interest rate, usually for a one year period.
This is when there are two or more purchasers to the one property and each purchaser owns an equal share in the property. Upon the death of one owner, their share automatically is transferred to the remaining owners.
As the name suggests, a lender is a bank, building society, credit union or a specialised home lender that lends money.
Line of credit:
Line of Credit also known as an equity home loan, is when the lender assigns you a credit limit secured against your property, and when you need cash you draw against that limit, usually by writing a cheque or using a special debit card. As you pay back the loan (the terms of repayment vary), the money becomes available to you to use again.
Loan To Value Ratio:
This is a tool used to measure the strength of a loan. The formula used to calculate the loan to value ratio (LVR) is as follows,
Property Price X 100 = LVR
For example, if a house is worth $320,000 and the mortgage for the property is $220,000, then the LVR equals 68.75%
This is the date by which the loan must be paid in full.
Maximum loan amount:
After assessing your disposable income, deposit and the purchase price of a property, you will be advised of the maximum amount you can borrow.
This is the least amount you are required to pay each month on your loan.
If you are borrowing more than 80% of the property value the bank/lender will most likely request that mortgage insurance is taken out. It is important to note that this form of insurance protects the lender and not you, the borrower.
Mortgage offset account:
This is a savings account that runs in conjunction with a home loan where the interest earned on that account is applied to the interest that is paid on the loan. By doing this, you are depositing extra money on to the mortgage, which you can access when needed, and reduce the interest that is charged on your mortgage
Mortgage protection insurance:
Also know an income protection insurance, this insurance is often recommended as it covers you if you are unable to meet repayments due to serious illness or redundancy
Research that is undertaken by solicitors to confirm information about the property or the purchaser, prior to settlement.
A borrower’s ability to make repayments (service) on the loan when payments are due.
The date where the balance of the contract price is paid and the property officially becomes the buyers.
A loan that consists of part fixed rate and part variable rate.
A variable loan that has extensive features, which is unlike a basic variable.
This State Government tax is paid by the purchaser and is calculated as a percentage of the purchase price.
Strata title has enabled the subdivision of land and buildings into lots and common property. The "lots" are the units or other areas owned by owners. Apart from the unit there can be areas like laundries, car spaces, garages, marinas which form part of the lot. The common property is everything that does not form part of a lot and is owned by the owners corporation (all the owners collectively).
two or more purchasers owning the one property in any share proportion they choose. When a tenant in common dies, their share in the property passes in accordance with their will. Unlike joint tenants where the share passes to the other owners or joint tenants.
Also known as the life of the loan and refers to the length of time for which the loan is to be repaid.
This legal document advises of ownership of a property.
Torrens Title is the most common form of property title in Australia. All previous and current owners are listed on the one deed, as are all previous mortgagees etc. Also know as "RPA" standing for "Real Property Act", the legislation that governs the operation of Torrens Title
This document confirms a properties change of ownership with the Land Titles Office.