© 2024 Mortgage Advice Bureau. All rights reserved | Australia Credit Licence 389087 | Privacy Policy | Terms of Service | Website Designed by We Are Web Design
Menu
The process of gradually paying off a mortgage through regular, fixed payments, typically made fortnightly or monthly, over the agreed loan term. Each payment reduces both the principal and the interest owed.
A public sale where potential buyers bid on a property, with ownership going to the highest bidder, subject to the seller’s agreement. Auctions often create a competitive environment, which can drive up the final sale price.
A mortgage designed for individuals with a poor credit history, usually offered by non-bank or private lenders. These loans often come with higher interest rates and fees due to the increased risk to the lender.
The legal obligation of a mortgage broker to provide advice that is in the best interest of their clients, ensuring the loan products recommended suit the client’s needs and circumstances.
A short-term loan that provides funds to purchase a new property before selling an existing one, typically with a repayment period of up to six months in Australia. It "bridges" the financial gap between buying and selling.
A service conducted by qualified inspectors, for a fee, to assess the condition of a property before purchase. This inspection identifies structural issues, pests, and other potential problems, allowing buyers to make informed decisions.
A licensed real estate professional who represents the buyer in property transactions. They help search for properties, assess their value, and negotiate purchase terms. Sometimes referred to as a buyer’s advocate.
Interest that accrues on a mortgage but is not paid immediately. Instead, it is added to the loan principal, increasing the total amount owed. This can happen if repayments are paused or reduced for a period.
A legal contract between two people planning to live together, outlining their rights and responsibilities, including how assets will be divided if the relationship ends.
The asset pledged as security for a loan. For a home loan, the property itself usually serves as collateral. If a guarantor is involved, they may also provide collateral in the form of their own property to secure the loan.
A rate that reflects the true cost of a home loan, including interest and mandatory fees, expressed as a single percentage. It provides a more accurate comparison between different loan products.
An initial approval from a lender indicating the amount they are likely to lend, pending final verification of information such as income and credit history. This approval is often used to show serious intent when bidding at auctions.
The legal process of transferring property ownership from the seller to the buyer, typically handled by a solicitor or licensed conveyancer. It involves preparing legal documents, conducting searches, and ensuring all terms of the sale are met.
A timeframe, typically up to five business days, after a contract is signed during which the buyer can cancel the purchase with minimal financial penalty. The duration and conditions vary by state in Australia.
Local government charges levied on homeowners for services such as road maintenance, waste collection, and public parks. These rates are typically paid annually or quarterly.
A response from the seller to a buyer’s offer, proposing new terms or a different price. This back-and-forth negotiation can continue until both parties reach an agreement.
A detailed record of your credit history, including past loans, credit card usage, and payment behaviour. It influences your credit score, which lenders use to assess your risk as a borrower.
A tax strategy that allows property investors to reduce the value of their property over time, potentially lowering their taxable income. Depreciation applies to the building itself and certain fixtures and fittings.
An upfront payment, usually ranging from 5% to 20% of the property’s value, made when purchasing a property. A larger deposit can improve your chances of loan approval and may reduce or eliminate the need for Lenders Mortgage Insurance (LMI).
The process of removing the lender’s interest in your property once the home loan is fully repaid. This involves paying a discharge fee and updating the title records to reflect that the property is now mortgage-free.
The legal requirement for sellers to provide certain information about the property to potential buyers, including the property’s condition, title, and any outstanding debts or encumbrances.
A one-time fee charged when you apply for a home loan, covering the cost of processing your application and setting up the loan. Fees typically range from $200 to $700, though some lenders may waive this fee as part of special offers.
The difference between the market value of your property and the remaining balance on your mortgage. Equity represents your ownership stake in the property and can be used as collateral for further borrowing.
Charges imposed by the lender if you repay your loan early or switch to another lender before the end of the loan term. These fees can vary and may be significant, so it’s important to check the terms of your loan.
A formal offer to purchase a property, usually submitted before a price is set or before an auction. An EOI shows serious intent and is often used in situations where the seller is seeking the best possible offer from multiple buyers.
An Australian federal government initiative that helps first-home buyers purchase a property with a deposit as low as 5%, without needing to pay Lenders Mortgage Insurance (LMI). The government acts as a guarantor for the loan.
A one-time payment from state or territory governments to assist first-home buyers with the purchase of a new home or a substantially renovated property. Eligibility and the grant amount vary by location.
A federal government program that allows first-home buyers to withdraw voluntary superannuation contributions to use as a deposit on their first home. This scheme offers tax advantages but has specific eligibility criteria.
An interest rate that remains unchanged for a specified period, typically between one and five years. A fixed rate provides stability in repayments, protecting borrowers from interest rate fluctuations during the fixed term.
A property sale where the owner handles the sale directly, without the assistance of a real estate agent. FSBO can save on agent fees but requires the seller to manage all aspects of the sale, including marketing and negotiations.
The practice of accepting a verbal offer on a property, only to later accept a higher offer from another buyer before contracts are exchanged. Gazumping is legal in some areas but is often considered unethical.
A person, often a family member, who agrees to use their own property or assets as security for your home loan. If you default on the loan, the guarantor is responsible for covering the repayments or debt.
A policy that covers both the structure of your home and your personal belongings against risks such as fire, theft, and natural disasters. It’s often a requirement from lenders as part of your mortgage agreement.
A type of loan that allows you to borrow against the equity in your property. The loan can be used for various purposes, such as home renovations, investments, or other major expenses, and is added to your existing mortgage balance.
The cost of borrowing money, expressed as a percentage of the loan amount (principal). Interest is typically calculated daily and charged monthly, and it forms a significant part of your mortgage repayments.
A form of property ownership where two or more individuals, often spouses or partners, each hold an equal share in the property. If one owner passes away, their share automatically transfers to the surviving owner(s) under the right of survivorship.
An annual tax levied on landowners by state or territory governments once the value of the land exceeds a certain threshold. Title registration involves recording the ownership of property with the relevant government authority, often incurring a fee.
The financial institution or individual providing the home loan. Lenders can be banks, credit unions, or non-bank lenders, each with their own criteria and products.
Insurance that protects the lender if the borrower defaults on the loan. LMI is usually required if the borrower’s deposit is less than 20% of the property’s value. The cost of LMI is typically passed on to the borrower.
A flexible loan option that allows you to access funds as needed up to a pre-approved credit limit, using your home equity as collateral. Interest is only charged on the amount borrowed, making it a versatile option for managing expenses.
A measure of the loan amount relative to the property’s value, expressed as a percentage. For example, a $400,000 loan on a $500,000 property has an LVR of 80%. LVR is a key factor in determining the need for Lenders Mortgage Insurance (LMI).
The practice of making an offer significantly below the asking price to gauge the seller’s willingness to negotiate. While it can lead to a good deal, lowballing may also offend the seller and reduce your chances of securing the property.
Regular fees charged by your lender for managing and maintaining your home loan account. These fees typically range from $5 to $15 per month and are in addition to your regular mortgage repayments.
A loan provided by a lender to purchase a property, where the property itself is used as security for the loan. The borrower makes regular payments over an agreed term until the loan is fully repaid.
A licensed professional who acts as an intermediary between borrowers and lenders, helping clients find the best mortgage product based on their financial situation. Mortgage brokers are typically paid a commission by the lender.
An online tool that allows you to estimate your monthly repayments based on the loan amount, interest rate, and loan term. It’s a useful resource for budgeting and comparing different loan scenarios.
State-government fees required to register the property as security for the home loan. This fee is paid when the loan is established and ensures that any claims on the property are recorded and can be verified by future buyers.
A situation where a significant portion of a household’s income is consumed by mortgage repayments, often leading to financial strain. Mortgage stress is typically defined as spending more than 30% of income on home loan repayments.
A financial institution or individual that offers mortgages outside the traditional banking system. Non-bank lenders often provide more flexible lending criteria but may charge higher interest rates.
A home loan option where part of the loan is on a fixed interest rate and part is on a variable rate. This hybrid approach offers a balance between the security of fixed repayments and the potential benefits of rate reductions.
An initial assessment by a lender indicating the amount they are willing to lend you, based on your financial situation. Pre-approval gives you a clear budget when house hunting and can strengthen your position when making an offer.
The original amount borrowed on a mortgage, excluding interest. Over time, as you make repayments, the principal decreases until the loan is fully paid off.
A non-bank entity, such as a private individual or a non-institutional lender, that provides home loans. These lenders often serve borrowers who may not qualify for traditional bank loans but may charge higher interest rates.
A method of selling property where the seller and buyer negotiate a sale price directly, without going to auction. The majority of properties in Australia are sold via private treaty.
A fee charged by the lender to cover the cost of assessing the property’s market value. This ensures that the loan amount is appropriate for the property being purchased. Fees typically range from $100 to $300, depending on the property’s characteristics.
A licensed professional who facilitates the buying, selling, and leasing of residential and commercial properties. They represent either the buyer or seller in transactions and are typically paid a commission based on the sale price.
A home loan feature that allows you to make extra repayments and withdraw those funds if needed. This option provides flexibility, enabling you to reduce your loan balance faster while still having access to funds in emergencies.
The process of replacing your current home loan with a new one, either with the same lender or a different one, to secure better terms, lower interest rates, or access to additional funds.
Regular payments made to the lender to reduce the balance of your mortgage. Repayments are typically made monthly, fortnightly, or weekly, and include both principal and interest components.
The minimum price a seller is willing to accept for a property at auction. If bidding does not reach the reserve price, the property may be passed in, and negotiations will continue privately.
In a joint tenancy mortgage, the right of inheritance allows the surviving partner to automatically inherit the deceased partner’s share of the property.
A legally binding document that outlines the terms and conditions of a property sale. It details the agreed price, settlement date, and any special conditions, and is signed by both the buyer and seller.
Fees charged by the lender to conduct various searches related to the property, such as title searches or checks for outstanding council rates. These fees are typically required before finalising a loan or bidding at auction.
An additional loan taken out against a property that already has a mortgage. Second mortgages are considered higher risk by lenders and typically carry higher interest rates. They are often used for major expenses or in financial emergencies.
The legal process of transferring ownership of a property from the seller to the buyer. Settlement usually occurs about six weeks after contracts are exchanged, but the timeframe can vary based on the agreement between both parties.
A government tax paid by the buyer upon purchasing a property. The amount varies by state and territory and is usually calculated as a percentage of the property’s value. First-home buyers may be eligible for concessions or exemptions.
A regular contribution paid by apartment or townhouse owners to cover the maintenance and upkeep of common areas within a strata-managed property. These fees also contribute to a reserve fund for future repairs or improvements.
Costs associated with changing your home loan from one product to another, such as from a fixed-rate to a variable-rate loan. These fees may apply if you switch lenders or alter the terms of your existing loan.
A form of property ownership where two or more people own shares in a property. Unlike joint tenancy, each owner’s share can be passed on to beneficiaries in their will rather than automatically transferring to the surviving co-owners.
The length of time over which a home loan is scheduled to be repaid. Common loan terms range from 20 to 30 years, but shorter or longer terms may be available depending on the lender.
An interest rate that fluctuates over time based on market conditions. With a variable-rate loan, your repayments can increase or decrease in line with changes to the lender’s standard variable rate.