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It can sometimes be difficult to understand all of the language used by financial institutions. Below is a quick summary of what some of the terms mean! Feel free to ask your IMB First Home Buyer Specialist if you have any questions.

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Acceptance: To agree to the terms and conditions of an offer contract.
Application fee: The fee paid by the borrower (that's you) to cover the costs of establishing or applying for a loan.
Arrears: Overdue payments which are due to be paid.
Assets: Items of value which you own (e.g. property, cash, furniture and fittings, sporting equipment etc).


Borrower: The entity or person/s borrowing the money.
Break costs: The cost incurred if you pay your loan out before the agreed term on a fixed term or before the original term of the loan has expired.


Certificate of Title: A document detailing the ownership of land and the details of the property.
Comparison Rate: Financial institutions are required by law to advertise two rates: the interest rate on the loan and the Comparison Rate. The Comparison Rate is a true representation of the total cost of your loan because it takes into account all other associated costs (like application fees etc). These other costs are added to the interest rate on your loan and then the final cost is expressed as a total interest rate cost to you over an average loan term. It is designed to help you compare home loans without having to do in depth research on fees or other costs that might be associated with a home loan.
Contract of Sale: A contract used in the transfer of property, which documents the conditions for the sale of the property.


Direct Debit: A deduction of funds from a Borrower's bank, credit union or building society account paid directly into another account (e.g. you can set up a direct debit from your Everyday Account to make your home loan repayments).
Discharge Fee: A fee imposed by the lender to process the end of a loan when it is paid off.


Equity: The value which an owner has in an asset over and above the debt against it, (e.g. the difference between the value of a property and the amount still owed on the mortgage).


First Home Owners Grant: A Federal Government incentive where state and territory governments grant funds to First Home Buyers.
Fixed Rate: An interest rate set for an agreed term (e.g. 5% fixed for 1, 2, 3, 4 or 5 years).


Government Fees: All home loans and purchase of residential property attract certain government charges at the time of settlement (e.g. stamp duty).


Interest: What the bank / building society / credit union charges Borrowers for the use of borrowed funds. Interest can also be paid to the customer as a return/profit on deposited funds.
Interest-Only Loan: Under an interest-only loan, the Borrower usually makes repayments only against the interest charged to the loan (not against the original amount they borrowed). These loans are usually for a short period of around 1 to 5 years.
Interest Rate: The rate or percentage at which interest is applied.


Liabilities: A debt for which one is responsible (e.g. mortgages, personal loans, credit cards etc).
Loan Agreement: The contract between the lender and the Borrower setting out the conditions that apply to the loan.
Loan to Value Ratio (LVR): This is the measure of the amount of money loaned compared to the value of the property.
Lump Sum Payment: An additional payment made by the Borrower to reduce the loan amount. These payments are in addition to regular instalments.


Owner Occupied: Property that is lived in by its owners.


Principal & Interest Loan: A loan where you repay a portion of the principal (i.e. the amount you originally borrowed) and the interest over the term of the loan by regular instalments.


Redraw Facility: Withdrawing money from a loan which the Borrower has deposited as a lump sum or additional principal repayments to the loan whilst on a variable rate.
Refinancing (or Switch): When the borrower switches their current loan from one lender to another.


Serviceability: The ability of the Borrower to make and meet repayments on a loan based on the Borrower’s expenses and income.
Settlement: The completion of the sale or purchase of a property. When the final payments are made at settlement, the lender will receive the signed Transfer and the Mortgage. The lender will hold the Title Deeds and the Mortgage until the loan is repaid.
Stamp Duty: A state government tax which is payable when a property is sold. Stamp duty is calculated on the purchase price of the property and is paid by the buyer. Each state and territory has a different rate of duty and different rules governing when/how it must be paid.
Switch (or Refinancing): When the borrower switches their current loan from one lender to another.


Term: The length of a loan or a defined period within that loan.
Transfer: A document registered with the Land Titles Office noting the change of ownership of a property.


Valuation: A professional opinion of the value of a property.
Variable Interest Rate: A fluctuating rate of interest charged by lenders.


Want to speak to someone who speaks your language? Talk to an IMB First Home Buyer Specialist today! Call 133 462, call into your local IMB Branch or request a Home Loan Specialist to call you.


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