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Loan Glossary of Terms
|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!
|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.
- 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.
|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!
|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?|
|Top up facility||If you need a bit more cash than you originally thought, we may be able to top up your loan balance for you. This depends on the type of loan you have.
Note: You cannot top up a fixed loan.
|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.
*You can pay repay more each week, fortnight or month with no fee.
|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.
*There are no fees for repaying your variable loan sooner.
|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