Below you will find a list of mortgage terms and their definitions. If you have a question or enquiries, feel free to contact or email us.
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A B C D E F G H I J K L M N O
P Q R S T U V W X Y Z
A
AAPR: AAPR stands for Average Annual Percentage Rate. This term refers to the loan’s true rate and is used to calculate the actual cost of the loan. The AAPR considers the advertised interest rate, honeymoon rates, introductory offers and ongoing fees.
Agent: An individual that represents and acts on behalf of an organization or another individual.
Amortisation period: The pre-determined length of time that the borrower has to pay back the loan.
Application fee: Fee charged by the lender to cover the costs of setting up the loan.
Appraised value: A property’s estimated worth.
Appreciation: An increase in the value of an asset.
Arrears: An amount that is overdue.
Assets: Something of value that is owned, such as property, goods or money.
Auction: A sale held publicly in which property or assets are sold to the highest bidder.
B
Breach of contract: Breaking a contract’s conditions.
Bridging Finance: A loan given to a borrower to cover the gap in finance that occurs when the borrower purchases a new home before selling the old one.
Borrower: The individual or organization borrowing money from a lender.
Break costs: Penalties incurred when a loan with a fixed rate is repaid early.
C
Capital: Current value of an individual or entity’s assets.
Capital gain: The monetary gain obtained by an individual or entity when an asset has been sold for an amount higher than its original purchase price.
Caveat: A warning placed on the title to a piece of property indicating that someone other than the owner is claiming a right to the property.
Certificate of Title: A document detailing all information relevant to a piece of property.
Consolidation Loan: A loan given to a borrower to pay off multiple pre-existing debts and combine the amount owed into one new loan.
Contract of Sale: A document detailing the terms and conditions of the sale or purchase of a piece of property.
Conveyancing: The process by which the ownership of real estate is legally transferred.
Credit: Money borrowed from a lender that must be paid back under a pre-determined agreement.
D
Direct debit: The regular electronic transfer of funds from a borrower’s bank account to the lender.
Discharge fees: Fee that must be paid to a lender when a loan is repaid early.
Disposable income: The income that remains after all recurring payments are made.
Draw down: The transfer of available loan funds to the borrower.
E
Encumbrance: a liability.
Equity: The property value less the amount owed on the mortgage.
F
First Home Owners Grant: A grant given to first-time home buyers in Australia.
Fixed rate: An interest rate that remains the same throughout the duration of a loan term.
G
Guarantor: An individual or entity that agrees to repay a loan if the borrower defaults.
H
Home equity: The property value less the amount owed on the mortgage.
Home loan: A loan given to a borrower to purchase a piece of property.
I
Interest only loan: A loan where the interest is paid first. The principal is then paid in the latter portion of the loan term.
Interest rate: The percentage of the principal that the borrower must pay to the lender as a fee for the lender’s services.
Investment property: Property purchased to make a profit.
J
Joint tenants: Two or more people who have equal interests in the same property.
K
L
Lender’s Mortgage Insurance (LMI): Insurance that protects the lender from financial loss if a borrower doesn’t repay a loan.
LVR: This stands for Loan to Value ratio, which is the percentage obtained when the loan amount is divided by the property value.
M
Maturity: The pre-determined date when a loan must be fully repaid.
Maximum loan amount: The largest amount of money a borrower is permitted to borrow. This amount is determined by the borrower’s credit, disposable income, and pre-existing debts.
Mortgage: The borrowed funds used to purchase the property.
Mortgagee: The lender of the funds used to purchase a home.
Mortgagor: The individual or entity that owns the property used to secure a loan.
N
O
P
Portability: Allows the borrower to exchange the property that is used to secure an existing loan.
Principal: The base amount of the loan on which interest is paid.
Q
R
Redraw: When the borrower draws on prepaid funds.
Refinance: Replacing the loan for a piece of property with a new loan, either from the same institution or a different one.
S
Security: An asset used as collateral to obtain a loan.
Settlement: When payment arrangements are finalised and property ownership officially transfers to the buyer.
Split loan: A loan that includes both a variable portion and a fixed portion.
T
Tenants in common: An agreement in which two or more persons have purchased a piece of real estate together. Each person has a distinct share in the property.
Term: The length of a loan or of a certain portion of the loan.
Title deed: Paperwork stating the ownership and legal description of piece of property.
U
V
Valuation: A professional evaluation of the value of a property.
Variable rate: An interest rate that will fluctuate based on the behavior of the market.
Variation: Any change that is made to the loan contract.
W
X
Y
Z
Zoning: Description of the way a portion of land is allowed to be used.
