Knowledge Hub

  • 1. Interest Rate
    The interest rate is the percentage charged by the lender on the amount borrowed. It determines the cost of borrowing and influences your monthly mortgage payments. Interest rates can be fixed, meaning they remain constant throughout the loan term, or variable, meaning they may fluctuate based on market conditions.
  • 2. Principal
    The principal is the initial amount you borrowed to purchase the home. If you have a Principal & Interest (P&I) loan, as you make mortgage payments, the principal balance reduces, eventually leading to full repayment at the end of the loan term.
  • 3. Deposit
    The deposit is the upfront cash payment you make towards the purchase price of the home. It is usually expressed as a percentage of the total home value. The higher the deposit, the less you need to borrow, potentially resulting in more favorable loan terms and monthly repayments.
  • 4. Fixed-Rate Mortgage
    A mortgage loan with an interest rate that remains fixed for a specified period.
  • 5. Standard Variable Rate
    The interest rate charged by lenders for their standard mortgage product, which can fluctuate over time.
  • 6. Interest Only (IO)
    A mortgage repayment option where only the interest is paid for a specified period.
  • 7. Guarantor
    A person who agrees to take responsibility for the mortgage repayments if the borrower defaults.
  • 8. Mortgage Offset Account
    A transaction account linked to the mortgage, where the balance reduces the interest charged on the loan.
  • 9. Redraw Facility
    An option that allows borrowers to access any additional repayments made towards their mortgage.
  • 10. Home Loan Package
    A bundled offering that includes a mortgage loan along with additional banking products and services.
  • 11. Lenders Mortgage Insurance (LMI)
    Insurance coverage that protects the lender if the borrower defaults and there is a shortfall in the loan repayment.
  • 12. Loan-to-Value Ratio (LVR)
    The ratio of the mortgage amount to the appraised value of the property, expressed as a percentage.
  • 13. Mortgagee
    The lender or financial institution that provides the mortgage loan.
  • 14. Mortgagor
    The borrower who pledges their property as security for the mortgage loan.
  • 15. Principal and Interest (P&I)
    A mortgage repayment structure where both the principal and the interest are paid off over the loan term.
  • 16. Stamp Duty
    A state or territory tax on property purchases, based on the purchase price or property value.
  • 17. Split Loan
    A mortgage that is divided into two or more portions, each with different interest rates or loan types.
  • 18. Title Deeds
    The legal documents that prove ownership of a property.
  • 19. Valuation
    The assessment of a property’s value by a qualified valuer.
  • 20. Conditional Approval
    Means that your mortgage underwriter is mostly satisfied with your mortgage application. They are willing to approve your mortgage so long as you can meet their pending conditions.
  • 21. Unconditional Approval
    An unconditional approval is the lender’s final decision to approve you for the loan. It means they have taken all your details into account and are happy to lend you a set amount of money to buy a specific property. This can also be referred to as a ‘formal approval’ or ‘full approval’.
  • 22. Debt consolidation
    Consolidating your debt will mean borrowing against the equity you have in your property so you can free up funds to pay out your other debt accounts.
  • 23. Cash out
    Cash out refinancing is a type of mortgage refinancing that allows you to access the equity in your home by taking out a new loan with a higher loan balance than your current loan. The difference between the two loans is then paid out to you in cash.
  • 24. Equity
    The difference between the market value of your property and the remaining balance on your home loan.