Rates and costs
APR, or annual percentage rate, expresses the cost of borrowing including certain fees spread over the loan term. It helps compare unlike products but may not include every charge.
Comparison rate is a similar concept in some markets, using standard assumptions for fees and loan size. Points are upfront fees that buy a lower note rate.
Loan structure
Principal is the amount you owe excluding interest. Amortization is the schedule that splits each payment between principal and interest over time.
Fixed rate stays constant for an agreed period. Variable rate moves with lender or market changes. Split loans combine both.
Accounts and features
An offset account links savings to the loan balance for interest calculation. Redraw lets you access extra principal you paid ahead of schedule.
Escrow or impound accounts hold property tax and insurance payments collected with the mortgage so bills stay current.
People and documents
A mortgage broker shops multiple lenders on your behalf. An underwriter approves the loan after verifying risk. Settlement or closing is when funds move and the lien is recorded.
LVR, or loan-to-valuation ratio, compares loan size to bank valuation. PMI and LMI are insurance types on low deposit loans protecting lenders, not your home structure.
FAQs
What is a comparison rate?
It is a regulated summary rate in some countries that includes interest and certain fees using a standard loan amount and term. Use it alongside the actual rate for your size loan.
What does loan portability mean?
Portability lets you transfer an existing loan to a new property instead of refinancing, subject to lender approval and property type.
What is a cooling-off period?
Some purchases allow a short window to cancel a contract without full penalty. Rules vary by region and contract type. It is not the same as a rate lock.
General information only. Not financial, tax, insurance or credit advice.