Loan Glossary of Terms |
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| Owner Occupied Loan | Check out these types of loans if you’re buying a property you intend to live in. | |
| Investment Loan | Check out these types of loans if you're buying an investment property. | |
| Interest | This is the cost of borrowing money. | |
| Principle and Interest | This type of loan is where you are paying off the loan amount, plus the loan interest. | |
| Interest Only | This type of loan is where you are only paying back the interest charged. Normally these would be for building loans, bridging loans or investment loans. | |
| Bridging Loan | This is a loan provided when you are buying one property and trying to sell another. | |
| Variable Interest Rate | This interest rate can change at any time over your loan period, which means your repayments and interest would be affected. | |
| Fixed Interest Rate | This type of interest rate stays the same for the period you have fixed it for. Usually 1, 2, 3 or 5 years. This means that during the fixed rate period, your repayments won’t change. | |
| Comparison Rate | The comparison rate is designed to help you identify the 'true cost' of a loan. It takes into account other fees and charges such as application fees, monthly or annual charges, valuation costs and legal fees. TIP: When you're shopping for interest rates, look only at the comparison rate! |
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| Lenders Mortgage Insurance | Lenders Mortgage Insurance (LMI) is a cost imposed by financial institutions to protect themselves against ‘high risk’ loans. Any loan that is greater than 80% of the property value is considered ‘high risk’. You will need LMI if you’re borrowing more than 80% of the property value. We can provide this for you in your loan application. For example: - Property price = $500,000 - 80% = $400,000. If you need to borrow more than $400,000 you will need LMI. This is why we recommend you save a 20% deposit to avoid this extra cost. |
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| Repayments | The amount you pay back to us every week, fortnight or month. TIP: Weekly repayments will help you pay your loan off quicker because our interest is calculated daily! |
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| Establishment Fee | There is a bit of work in setting up a loan. This is an upfront cost charged by the financial institution. | |
| Administration Fee | This is a regular fee that may or may not be assigned to your ongoing loan depending on which one you choose. | |
| Variable and lump sum repayments | If you suddenly find yourself with some extra cash, you can put that lump sum towards one or a few repayments. | |
| Offset account | This savings account ‘offsets’ your loan balance. If your loan balance is $400,000 and there is $50,000 in your offset account, we’ll only charge you interest on a $350,000 loan balance. Cool hey? | |
| Additional repayment fee | Fixed Loans An additional repayment fee may apply, if over a 12 month period, $30,000 or more is repaid over and above the scheduled payment amounts. Variable Loans *You can pay repay more each week, fortnight or month with no fee. |
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| Redraw facility | If you’re a great saver and you’ve made some extra repayments, you can withdraw those repayments back if you find yourself needing cash. The flip side is that your loan balance will increase. | |
| Early repayment without penalty | Fixed Loans Fees apply if you pay out before the fixed period. Variable Loans *There are no fees for repaying your variable loan sooner. |
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| Minimum redraw amount | If you’ve made extra repayments, you can withdraw these back. There is no minimum amount to redraw. | |
| Redraw fee | We won't charge you a redraw fee (business loans excluded). | |
*Terms & Conditions Apply
