Auction: A public sale, sold to the highest bidder.

Basic Variable Rate: Rate can vary at any time with notice from the financial institution.

Comparison Rate: Is the rate that includes all fees, charges and assessable costs of the mortgage.

Conditional Approval: Mortgage is approved, subject to conditions such as income, valuation and mortgage insurance.

Content and Building Insurance: Covers your building and possessions kept in your home in the event of theft, fire, floods or any other specific act which harms your building or possessions.

Contract of Sale: A legal document committing to the purchase of a sale.

Credit Rating: Will determine if the borrower has any defaults, this is found out through credit agencies.

Deposit Bond: Guarantee provided for the deposit if needed for when the exchange of contracts is conducted. It is used when funds are currently not available for a deposit.

Exchange of contracts: Solicitors carry out this act of swapping signed contracts between the buyer and vendor, formalising the purchase/ sale contract.

FHOG: First Home Owners Grant, a sum of money given to first home buyers as a subsidy from the government.

Genuine Savings: At least 5% of the property price has to be saved over a period of time, or at least held for 6 months.

Income/Life Insurance: This is cover for your mortgage and property in the event of death, injury or loss of income, depending on your policy.

Lender’s mortgage insurance: Protects the lender if the borrower defaults on the mortgage.

Loan Agreement: Document that outlines the details of fees, charges, and costs related to the mortgage

LVR: Land to Value Ratio, the % of the property compared to the funding needed. E,g:  If you want to borrow 95% of the property, that is your LVR

Mortgage: A document that entitles the lender to be on the property title and have charge over the property if the borrower defaults

Personal Liabilities: What the borrower is already committed to financially.

Settlement: The day you become a property owner! The mortgage becomes funded on this day, and you become the legal owner of your new property.

Stamp Duty: This is a tax for your mortgage and property. If you are a first home buyer you may be eligible for exemption of the stamp duty relating to your property.

Redraw: Withdrawal of payments made above the required or normal repayment instalment.

Registration of property: The lender will register your mortgage at the land titles office.

100% Offset: This facility can reduce your interest bill on the mortgage. It involves savings in an account available at call that will take 100% off the principle amount of the loan

For any further information on please visit our Buying a Home FAQs