Amortisation

Paying off the principal and interest, on a loan over a period of time (Loan Term), usually by instalments.

Bridging Finance

Short-term finance, which is used as a 'bridge' before securing long-term finance or selling a property.

Credit Report

Credit Reporting Agencies such as Veda collect data from credit providers including Banks, Building Societies, Credit Card providers, Telco’s, Utility companies etc. Data such as late payments, defaults and court judgements is collected as well as details of any Bankruptcies and Debt Agreements that you may enter into. This information is retained for up to 7 years. Whenever you apply for credit the credit provider will most likely request a Credit Report which provides details of all of the above and they then use this information to determine if they are willing to provide credit to you.

Equity

Equity is the difference between the value of an asset, such as a home, and the amount still owing on it. For example, if a property is valued at $350,000 and the owner owes $50,000 on their home loan, the equity is the difference, which in this case is $300,000.

Fixed Interest Rate

A fixed interest rate does not vary for the fixed rate period, so payments remain constant for this period.

Genuine Savings

For our home loans that do require a minimum deposit, you will need to demonstrate genuine savings accumulated in your name/s over a minimum 6 month period. Genuine savings are defined as:

• Accumulated savings

• Fixed Term Deposits

• Sale of Shares (Net of Capital Gains Tax)

• Proceeds from Real Estate Sale

• After tax bonus from employer

• Non preserved superannuation contributions (where the borrower has access to finds in a cash form, and meets the lender’s minimum employment requirements)

• Real Estate Equity (must be confirmed by valuation when used as additional security for the loan)
  
  

Government or statutory charges

All home loans and purchase/refinance of residential property attract government charges such as stamp duty and mortgage duty. These charges are determined by the relevant State government, and will vary from State to State.

Interest-Only Loan

Under an interest-only loan, usually the borrower makes no principal repayments for the interest only period of the loan. The repayments are calculated to cover the amount of interest and any monthly account keeping fee.

Joint Tenants

Joint tenancy is the holding of property by two or more persons in equal shares. If one person dies, their share is transferred to the remaining joint tenants in equal shares.

Loan to Value Ratio (LVR)

This ratio measures the amount of the loan, compared to the value of the security property. For example, if the property is valued at $250,000 and you borrow $200,000, the LVR would be 80% (200000 / 250000 x 100 = 80)

Lenders Mortgage Insurance

Insurance taken out to protect the lender against losses on the loan, in case you default - it does not protect or cover the borrower. The cost of Lenders Mortgage insurance is paid by the borrower.

Lump Sum Payment

An extra payment made by the borrower, in addition to the regular loan repayments. These lump sum payments reduce the amount of the loan.

Principal & Interest Loan

This is the most common type of loan. The loan is repaid in regular instalments which repay some of the outstanding loan balance (principal) as well as covering the interest each month.

Progress Payments

If the property you purchase is under construction, progress payments may need to be made to the builder as the building is constructed.

Redraw Facility

If you have made additional repayments on your loan, you may be able to access these funds through a Redraw facility.

Refinancing

Switching your loan from one lender to another.

Settlement (Home Purchase)

Settlement is when the loan is drawn down and the exchange occurs completing of the sale or purchase of the property.

Settlement Date

The date on which settlement takes place.

Stamp Duty

Stamp duty is a state government tax which is payable when a property is transferred. It is calculated on the purchase price of the property and is paid by the buyer. Stamp Duty varies between states and territories. Mortgage Stamp Duty is payable on your mortgage when the funds are used for Business purposes and is calculated on your loan amount.

Tenants in Common

Two or more people who hold the property in specific shares. If one person dies, their share passes according to the terms of their will, and is NOT automatically transferred to the other property holders.

Variable Interest Rate

A variable interest rate may increase or decrease with changes in financial market conditions. Repayments change to cover the new interest rate.