Understanding mortgages isn’t easy. Here’s our dictionary of terms to help you wrap your head around things. Of course, the great benefit of using a broker at Smartline Rockingham is that we do all the heavy lifting for you. If you’re ever confused about something, simply pick up the phone. We’d be happy to have a chat!
Basis points
One basis point equals 0.01% interest. So 30 basis points equals 0.30%.
Bridging loan
A loan to cover you after you buy a new home and before you sell your old home.
Comparison rate
Includes both the interest rate and most of the fees and charges that are payable over the life of your loan. It’s usually based on a $150,000 loan size. It’s especially useful to compare the comparison rate between different lenders to what the right deal is for you.
Drawdown date
When the loan starts
First home owner grant
First Home Owner Grant (FHOG) is a national grant (funded by the states and territories) that’s given to first home buyers.
Honeymoon rate
A lower interest rate offered at the start of your loan which reverts to a standard variable rate after the introductory period ends.
LVR
Loan to value ratio. Your loan amount divided by the appraised value of the property. Example: If your property is valued at $300,000 and your loan is $240,000, then the LVR is calculated 80%.
Rate lock
Lets you lock in a fixed interest rate for three months while your loan is approved. If interest rates go up before the loan drawdown date, you can still access the original rate.
Repayment pause/holiday
If you’re ahead in your repayments, you can apply for a break on your repayments. Can also be used during times of financial difficulty.
A state government charged when you purchase a property.
Valuation
The value of your property as determined by an independent valuer.
