Home Loan Glossary
Deferred Establishment Fee (DEF)
Any loans established prior to 1 May 2011 will have a DEF applicable if the loan is paid out within the first 4 years. The fee applicable is on a sliding scale, and dependent on the loan product. For further details refer to your individual loan agreement.Equity
The difference between the value of the property and the loan amount. For example, a property valued at $400,000 with a loan of $300,000 would have $100,000 in equity.Fixed Interest Rate
Repayments are not subject to change. The interest rate is fixed; therefore repayments remain the same during the selected period.First Home Owners Grant (FHOG)
The First Home Owners Grant (FHOG) scheme was introduced in 2001 to offset the effect of the GST on home ownership. It is a national scheme funded by the states and territories. A one-off grant is payable to first home owners that satisfy all eligibility criteria.Genuine Savings
Some of our loans require genuine savings to be demonstrated over a 3 month period.
Examples of genuine savings are:
- Accumulated savings
- Term deposit funds held for more than 3 months
- Shares held for 3 months or more
- Equity in residential property
The following sources do not classify as genuine savings
- Gifts or inheritance
- First Home Owners Grant
- Funds held in company/business accounts
- Proceeds of a personal loan
Government or statutory charges
Charges payable to the relevant state government, such as Stamp Duty and Mortgage Duty.
Home to Home Loan
A bridging loan that allows you to buy a new property and gives you 12 months to sell your existing property. Repayments are based on the end debt, and interest only repayments on your existing property - which is included in the amount borrowed.
Interest only loan
Repayments are made only to cover the interest charged to the loan, no principal reduction is made.
Owners of the property own the property in equal shares. If one dies, then their share automatically passes to other (even if you have a Will that gives your share to someone else - your Will cannot override a joint tenancy).
Line of Credit (LOC)
A Line of Credit is type of loan similar to a credit card. You apply for required funds, which are secured by a residential property. Upon settlement, the funds are funded to an offset account, with access via ATM card, EFTPOS, Internet Banking or Phone Banking. Interest is only payable on the funds used.
The Rock's LOC is one of the most flexible and simplest investment funding facilities available to homeowners.
Loan to Value Ratio (LVR)
The amount of the loan compared to the value of the property. For example; a property valued at $350,000 with a loan of $280,000 is a LVR of 80%.
Lender's Mortgage Insurance (LMI)
Insurance that covers the lender if the home owner defaults on the loan and the house has to be sold for an amount less than what is required to pay out the loan. Depending on LVR, the client pays the premium, but this insurance does not cover the client.
Principal & Interest
Repayments made to the loan to cover the interest portion as well as reduce the loan balance.
The loan is drawn in progressive stages, especially with construction loans, where the funds are paid to the builder at five set stages.
Any payments made in addition to the minimum repayment amount may be withdrawn from the loan, subject to one month's repayment remaining and a minimum redraw of $500.
Stamp Duty is a tax levied upon the transfer of property to cover the cost of the legal documents of the transaction. Varied rates apply in each state.
Tenants in common
Owning a property in equal or unequal shares, if one tenant passes away, their Will decides who gets their ownership share.
Variable interest rate
The interest ate can increase or decrease in line with the Reserve Bank's cash rate or at the lender's discretion.