Tools, Terms, Jargon
Glossary of Terms
A contribution of extra funds paid in to a loan account, in addition to the minimum required repayments. These additional repayments reduce the loan term and interest expense. *Some fixed rate loans have restrictions on additional repayments.
Fees charged by the lender to set up the loan.
Penalty fees charged by the lender when a borrower terminates a fixed-rate contract before the fixed rate period expires/matures. The fee covers the bank for the “economic cost” associated with you paying out the loan early.
A loan that can be used when buying a new home before selling an existing home allowing you to own 2 properties for a short time until you sell and settle the existing home. Bridging finance is for a short loan term, usually no longer than 6 months.
An independent pre-purchase building inspection is highly recommended so that you can find out exactly what the seller does not want you to see and to ensure the building is structurally sound. A building inspection is best carried out by a qualified builder with PI insurance.
*When a property is for sale privately, a contract of sale can be signed subject to a satisfactory building and/or pest inspection.
A licenced real estate agent who acts on your behalf to find, negotiate and purchase a property for you.
The legal process for transferring ownership of property (land and real estate) from the seller’s name to the buyer’s name. You’ll need a conveyancer/solicitor when buying and selling property to deal with the legal side of the transaction.
The maximum amount a lender/credit institution will lend you based on your financial position.
A sum of money paid by the buyer as a first installment on the purchase of a property, of which the balance is payable at settlement. Deposits are usually a minimum of 5-10% of the total purchase price.
A fee charged by a lender to cover costs in relation to closing a loan account. Typically charged when a borrower repays their loan in full or when they move their finance to a different lender.
Discharge of Mortgage
A document signed by the lender and given to the borrower once a mortgage has been repaid in full.
The portion of an asset, house or company which is owned by you. Equity in your home = the value of your house less the amount borrowed against your home. (Ie. Equity = Asset- Liability)
First Home Owners Grant
A grant from the government which assists first home buyers to purchase their first home. Not all first home buyers are eligible for the grant. Grants vary from state to state. See http://www.sro.vic.gov.au/first-home-owner for details of the current grants available for First Home Buyers in Victoria.
An interest rate that applies to a loan at a set rate and for a set period of time (usually 1-5 years) regardless of fluctuations in the market. This guarantees interest repayments to remain the same for the fixed period. See ‘variable interest’ rate for more info.
Home and Contents Insurance
An insurance policy that combines cover against damage to a dwelling (ie a home) and its contents.
Interest Only Loan ( i/o )
Is a specified period of time (usually 1-5 years), where the borrower is only required to pay the interest expense on the loan. The borrower can make extra repayments on the loan especially if it is also variable. At the conclusion of the specified term, principal repayment begins. See ‘principal and interest’ for more info or watch this video on interest only loans.
An insurance policy that covers owners from financial losses in relation to the rental of their property. Covers fixtures and fittings owned by the landlord and rent defaults.
Evaluation and assurance from the bank of the amount they are willing to lend a potential borrower subject to them finding an appropriate property.
Loan to Valuation Ratio (LVR)
The ratio of the amount borrowed against the value of the security e.g. a $400,000 loan secured against a $500,000 property means an 80% LVR.
LMI – Lenders Mortgage Insurance
If you want to borrow a loan with LVR greater than 80% (see above), the bank considers this riskier to themselves as there is a higher chance the borrower will default on repayments. Therefore the lender insures themselves for taking on this risk and passes the cost on to the borrower. LMI is an expensive one-off payment however some banks will let you borrow up to 95% LVR which could mean purchasing the home of your dreams sooner. Watch our video for more info.
The amount a borrower is contractually obliged to repay every month in order to repay the loan within the agreed term. See ‘additional repayment’ for more info.
Is a transaction account (non-interest earning) that is linked to a home loan account. The balance in the account is offset daily against the outstanding loan balance thereby reducing interest payable on that loan. i.e. a $400,000 loan with $50,000 in offset means the interest expense is charged on $350,000. Watch this video for more info on offset accounts.
An pre-purchase pest inspection is an assessment of a home’s timber for termites, possible infestations and other pests. Many businesses offer a joint building and pest inspection.
Principal and Interest Loan ( p + i )
A loan set up whereby the monthly repayments consist of both principal (repaying the loan amount itself) and interest (expense charged on loan). See ‘interest only’ for more info.
Is a feature which enables borrowers to withdraw money they have contributed by way of additional repayments to their mortgage. It is important to know the conditions of the facility as there may be a fee associate with redrawing or a minimum/maximum re-draw amount.
Refinancing can mean a number of things for those with existing mortgages. It could mean changing lenders or negotiating with existing lender for a better loan structure and interest rate. The aim is to save money on existing lending. Refinancing can also be used to consolidate debt.
Using an asset as collateral to “secure” a loan until it is repaid in full. In the case of mortgages the bank often uses the property to secure the loan.
Relates to the structure and set up of one loan. Can be divided in to two or more portions, typically these portions have different interest rates i.e. fixed/variable.
State government taxes on the purchase of property. Check out our calculators to see how much stamp duty and government fees will cost on the purchase of property.
A property report carried out by the lender’s certified valuer. Required by most lenders in order to ascertain a property’s market value.
Variable Interest Rate
A rate that varies and is susceptible to changes in accordance with the market rates and economy. See ‘fixed rate’ for more info.
Any change to the structure, interest rates or repayment to an existing loan. ie. Switching from variable to fixed rate or switching from interest only to principle and interest repayments. A Lender can sometimes charge fees for this.
Hatch Helpful Tips
Maximising Sale Price When Selling
Selecting an Agent
Bidding & Winning at Auction
How Much can I borrow?
The Extra Expenses When Buying a House
Offset Accounts Explained
All About Lender’s Mortgage Insurance (LMI)
Interest Only Loans Explained
Frequently Asked Questions
Why use a broker?
Finding the right loan starts with choosing the right broker!
Will your bank let you know that there is a better offer or product with the bank across the street? Do you really want to run around to different banks in order to source the best deal?
A good broker will help you navigate the sometimes daunting world of home loans to secure the most suitable home loan for you and your unique situation. Mortgage brokers have access to an array of lenders who offer varying products and are also able to secure discount rates and special deals with particular lenders. They do the shopping for you, they handle the paperwork for you and essentially take the stress and fuss out of finding a loan. Brokers with experience are often great sources of advice and have expert knowledge on a broader financial issues and are able to guide you and structure loans to meet your big-picture financial goals as well. So why not use a broker?
Why choose hatch?
With over 13 years of experience in the industry, our success starts and ends with you, the client. Hatch Financial services was founded and built upon the values of genuine service, assistance and tailored advice for clients financial situations and personal needs. At Hatch we help to simplify this process. We explain everything you need to know in language you can understand. We help you find a loan that is right for you and then we take care of the application process. From thinking about purchasing a property, all the way through to settlement, we’ll guide you along the way and take away all the hard work, unnecessary stress and paperwork of getting a loan..
We also have the numbers to prove it!
– We settled over 1000 loans and over $330M in loan value.
– 95% of our business is from referrals and word of mouth from out satisfied clients.
– over 40% of our business is from return clients.
So dont ask us, see our testimonials!
A mortgage is one of the greatest debts and financial decisions a person will make in their lifetime. We get a kick out of helping our clients achieve their financial goals, whether its to finally own their first home, to upsize and accommodate for the growing family, or to purchase a holiday home or investment property. And once you’ve settled, we dont just leave you hanging, we check in once a year to make sure your loan still suits your needs and to inform you about the latest offers!
What is your fee?
Free. $0. Nada!
Our service to you is free of charge. We do all the hard work for you in finding the best loan to accommodate your situation and needs.We get paid by the lender that gets the loan and it does not cost you (via higher rates or fees) in any way . See our credit guide for more info.
How do you decide which loan is best suited to my personal situation?
We ask you lots of questions to understand what you need and want, then we find the lenders and products that tick the boxes. We present you with a short list of options and help you to make the final decision.
Do you offer a range of different lenders?
Hatch has access to over 25 lenders. We know the latest offers of all our lenders and how much they would be willing to lend you. We’ll advise you on the top lenders for you position and assist you in structuring the ideal loan for your needs.
For more specific answers please visit our FAQs page:
Our Business Partners
|Property Adviser/ Buyer’s Advocate||Ying Chan||WBP Property Group||
0468 492 645
|Property Adviser/ Buyer’s Advocate||Nicole Jacobs||Jacobs Buyers Advocate||
0411 296 225
|Buyer’s Advocate||Jake Milne||QURA Property||
0410 527 631
|Conveyancer/Legal||Sarah Hinchliffe||Hinchliffe Princeton Legal||
03 9500 0097 or 0408 384 567
|Accountants||Stuart Coulthard||Rubiix Business Accountants||
(03) 9603 0066
|Accountants||Ty Beveridge||Kindle Partners||
(03) 9853 1777
|Property Manager||Anna Guy||Pathway Asset Management||
0408 788 352
|Property Manager||Sabina Aldouby||Luxe Property||
0411 789 389
|Building Inspection||Loui Le||Resicert||
0468 366 616
|Pest Inspection||Joe Zheng||Tru Home||
0431 848 587
|Property Maintenance||Simon Newton||Domestic Fix||
0435 111 677
|Depreciation Schedule||Ying Chan||WBP Property Group||
0468 492 645
|Town Planning||Lorenzo Rigoni||Terrain Consulting Group||
0417 527 020
|Architect||Antony Di Mase||Dimase Architects||
(03) 9482 5144
|Financial Planner||Phillip Richards||Endorphin Wealth Management||
0477 004 455
|Financial Planner||Christian Jarrad||Intralink Wealth Management||
(03) 9629 1100
|Personal Insurance||Phillip Heath||McCombe Financial Services||
(03) 8621 8484
|Health Insurance||Choosewell||1300 421 154|
Please note: We have listed multiple contacts for some services. Feel free to give us a call on 1300 442 824 to see which contact can best assist you as each of these individuals specialise in different areas.