Mortgage brokers can be invaluable when it comes to comparing property loans on your behalf and presenting you with different options.
Here are some of the more commonly used terms by mortgage brokers when discussing loans and their different features:
AAPR, Comparison Rate/Real Rate:
These terms refer to interest rates plus fees and charges
rolled into a single percentage rate for ease of comparison.
Amortising Loan:
The most commonly used loan structure, which requires set
repayments of principal and interest over a set period of time.
Break Cost:
Fees charged by your lender if you exit your loan early and
is most often applied if you have a fixed rate
Bridging Finance:
Helps you "bridge” the gap between the sale of one property
and the purchase off another
Capped or Tunnel Loans:
Capped loans limit how high your loan’s limit (both how high
and low a rate can go)
Conveyancing
Conveyancing is the process of transferring legal ownership
of a property from one party to another
Deposit
The amount of cash you need to contribute towards your loan
application
Fixed Rate Loan
A mortgage with interest rates that are locked in for a
period of time
Interest Capitalisation
An option to add interest charges to your total loan balance
for a limited time, rather than paying it as you go
Introductory/Honeymoon Loan Rate
A mortgage offering a discounted interest rate, for an
initial introductory period, before reverting to a higher standard rate.
Lenders Mortgage Insurance
LMI safeguards the lender in case a borrower defaults on
their mortgage and is typically required mor loans with an LVR higher than 80%.
Loan to Value Ratio
The size of your loan compared to the value of your property
Mortgage Offset
A saving or transaction account linked to your home loan,
which included when calculating interest charges.
Ongoing Fees
Ongoing fees are charged periodically over the life of the
loan
Overdraft
A line of credit, typically secured by the equity in your
property.
Parental Leave
Some lenders offer a repayment holiday for new parents
Portability
An option to pick up your loan and take it with you when you
move
Progressive Draw-down
When building a property, funds can be accessed in small
sums at various intervals to suit the building process.
Redraw
The ability to pay extra money into your loan and withdraw
it back out if you need it in the future
Refinancing
Taking out a new loan to pay out an old one
Repayment Holiday
A temporary reprieve from loan repayment. For example, if
you have lost your income
Revolving Line of Credit
A giant overdraft where money can be borrowed, repaid, then
withdrawn again
Salary Loan
A mortgage where your payments can come directly out of
pre-tax income from your employer as a salary sacrifice, which can have tax
benefits
Split Loans
A loan where interest is charged on part of your balance at
a fixed rate and part of your balance is charged at a variable rate.
Stamp Duty
A State government tax on the sale and transfer of land and
property
Switching Fees
Costs and charges involved when refinancing from one lender
to another
Upfront Fees
Fees charged at the start of your loan to cover the cost of
processing your application
Variable Rate Loan
Your lender can raise or lower your interest rate depending
on a range of economic factors.
Need a property loan?
Contact us @ propertyloans@realrenta.com
Marlene Liontis
Saturday, 1 February 2020
