The Average Annual Percentage
Rate, also known as the “True Rate”, is used
as a tool to assess the average interest payable on a
mortgage over a seven-year period. This assessment also
includes upfront fees, ongoing fees, and the interest
payable on that mortgage over the seven years.
Additional or Accelerated
This facility allows you to make greater
payments than specified on a loan.
Many banks/lenders charge one off and,
in some cases, ongoing account keeping fees for mortgages.
All-in-one loans are usually variable
and enable you to deposit all your income into the loan
account. You are then able to draw on that money for day-to-day
expenses. The purpose of this is to reduce the interest
payable because the excess spare funds act as payments.
This is the term or length of time of
the loan as agreed upon.
Not all banks/lenders charge an application
fee so it is worth checking if the lender you choose is
one that charges a fee. In some cases, lenders who do
not charge a fee offer a higher interest rate. Your FirstPoint consultant will explains all this to you.
Is a written report of the estimates
value of a property. A qualified appraiser, usually employed
by the bank/lender, conducts the valuation.
Is an increase in the value of a property
as a result of inflation and market conditions.
An asset is anything you own that is
worth money, including any savings, stocks or funds.
term that refers to the financial gain obtained when
you sell something for more than you paid for it. Usually,
the profit you receive from selling the asset incurs
capital gains tax, except on the sale of a home that
remains exempt from this tax.
Capital gain tax:
A federal tax on the monetary gain made
on the sale of an asset (excluding your own residence)
bought and sold after September 1985.
The difference between
the price you pay for an asset and the price you receive
when you sell it or the valuation placed on that asset.
A loan where the
interest rate is not allowed to exceed a set level for
a period of time, but unlike fixed rate loans, is allowed
Is Latin for beware
and is a warning on a property’s title that stipulates
that a third party has some rights or interest in the
'Let the buyer beware' - the principle
that puts the onus on buyers to be satisfied with any
item before buying.
Certificate of Eligibility:
A document that is issued by the federal
government confirming a veteran’s eligibility for
a Department of Veteran mortgage.
Certificate of Title:
A statement that identifies who owns
the land and includes details of mortgages, easements,
dimensions of the land and whether there are any obstructions
Refers to personal property. There are
two types of chattels; real chattels which are buildings
and fixtures, personal chattels which are clothing and
Combination or Split loan:
This is exactly as it sounds. It is
a combination of the several of loans on offer and may
have a portion variable, fixed or a line of credit.
As of July 2003 all lenders and brokers
must provide a ‘comparison rate’, by law.
A Comparison Rate reveals the cost of a loan, allowing
you to compare ‘apples with apples’ when choosing
a loan. The Comparison Rate takes into consideration the
costs associated with setting up a loan including the
interest rate, the loan approval fee and any other up-front
or ongoing fees. It excludes government fees and charges,
because they are standard across all loans.
If you are building a property, a construction
loan allows you to draw money as required to assist with
Consumer Credit Code:
is an Act of Parliament that governs
the involvement between borrowers and lenders. Credit
providers such as banks, building societies etc, must
tell you what your rights and obligations are in any credit
arrangement. They are required by law to truthfully disclose
all relevant information about your arrangement in a written
contract, including interest rates, fees, commissions
and other information which in the past was often hidden.
Contract of Sale:
This is a written statement that is
legally binding and outlines the terms and conditions
of the sale of property between purchaser and seller.
is the legal process for transferring
a real estate ownership from one owner to another. This
can be a costly process and is applicable to all States
with the exception of South Australia where Torrens Title
is used instead.
The Federal Government introduced
the FHOG on 1 July 2000. Although it was initially established
to assist counterbalance the increased cost of building
a home due to the GST, it also applies to buying an established
home. The amount of the grant is a non-means tested flat
rate of $7,000.
These are items that can be removed
without causing damage to a property.
This applies to mortgages where the
interest rate is fixed and is not affected by inflation,
or deflation, and is for an agreed period of time. Most
fixed rate loans can be taken out over a 1, 2, 3, 4, 5,
7, or 10-year period and the interest rate offered to
you at the time of applying for the loan will remain ‘fixed’.
These are items that are likely to cause
damage to a property if removed. It pays to check what
the sale contract specifies.
Many buyers have been extremely
frustrated with a practice known as gazumping. This is
when the seller verbally agrees on a price for a property
but then later advises you that someone else wants to
buy the home and has offered more money. In some occasions
you are given the chance to match or better the increased
offer. In most cases, the home is sold for the increased
price without you even knowing about it.
This is when someone agrees to be responsible
for the payment of another person’s debts should
they default on their repayments.
This is a loan that assesses
the amount of home equity you have and based on that,
offers a line of credit that can be used to invest in
a property or to renovate for example. These loans are
not suitable for everyone, so talk to your FirstPoint
Also known as ‘Introductory Rate’,
this is when lenders offer a very cheap interest rate,
usually for a one year period.
This is when there are two
or more purchasers to the one property and each purchaser
owns an equal share in the property. Upon the death of
one owner, their share automatically is transferred to
the remaining owners.
As the name suggests, a
lender is a bank, building society, credit union or a
specialised home lender that lends money.
Line of credit:
Line of Credit also known as an equity
home loan, is when the lender assigns you a credit limit
secured against your property, and when you need cash
you draw against that limit, usually by writing a cheque
or using a special debit card. As you pay back the loan
(the terms of repayment vary), the money becomes available
to you to use again.
Loan To Value Ratio:
This is a tool used
to measure the strength of a loan. The formula used
to calculate the loan to value ratio (LVR) is as follows,
Property Price X 100 = LVR
For example, if a house is worth $320,000
and the mortgage for the property is $220,000, then
the LVR equals 68.75%
This is the date by which
the loan must be paid in full.
Maximum loan amount:
After assessing your disposable income,
deposit and the purchase price of a property, you will
be advised of the maximum amount you can borrow.
This is the least amount you are required
to pay each month on your loan.
If you are borrowing more than 80% of
the property value the bank/lender will most likely request
that mortgage insurance is taken out. It is important
to note that this form of insurance protects the lender
and not you, the borrower.
Mortgage offset account:
This is a savings account that runs
in conjunction with a home loan where the interest earned
on that account is applied to the interest that is paid
on the loan. By doing this, you are depositing extra money
on to the mortgage, which you can access when needed,
and reduce the interest that is charged on your mortgage
Mortgage protection insurance:
Also know an income protection insurance,
this insurance is often recommended as it covers you if
you are unable to meet repayments due to serious illness
Research that is undertaken
by solicitors to confirm information about the property
or the purchaser, prior to settlement.
A borrower’s ability to make repayments
(service) on the loan when payments are due.
The date where the balance of the contract
price is paid and the property officially becomes the
A loan that consists of part fixed rate
and part variable rate.
A variable loan that has extensive features,
which is unlike a basic variable.
This State Government tax is paid by
the purchaser and is calculated as a percentage of the
Strata title has enabled the subdivision
of land and buildings into lots and common property. The
"lots" are the units or other areas owned by
owners. Apart from the unit there can be areas like laundries,
car spaces, garages, marinas which form part of the lot.
The common property is everything that does not form part
of a lot and is owned by the owners corporation (all the
two or more purchasers owning
the one property in any share proportion they choose.
When a tenant in common dies, their share in the property
passes in accordance with their will. Unlike joint tenants
where the share passes to the other owners or joint tenants.
Also known as the life of the loan and
refers to the length of time for which the loan is to
This legal document advises of ownership
of a property.
Torrens Title is the most common form
of property title in Australia. All previous and current
owners are listed on the one deed, as are all previous
mortgagees etc. Also know as "RPA" standing
for "Real Property Act", the legislation that
governs the operation of Torrens Title
This document confirms a properties
change of ownership with the Land Titles Office.