If you’ve been to a couple of inspections, you probably have your sights set on the property of your dreams. But like most of us, you’re going to need a loan to lock it down.
The real estate industry can sometimes feel like another world altogether, and you may want to brush up on your home loan speak before dealing with real estate agents and lenders. It’s easy to get caught behind a smokescreen of property and home loan jargon, so we’ve translated some of it to help you tackle the process with confidence.
Loan term: How long you’ve agreed to make the repayments on your house.
Principal: The original amount you borrowed – without the add-ons.
Interest: It’s the percentage added to the original loan that allows you to pay it off over a longer time.
Pre-qualified: You’ve sat down with a lender and been told the dollar amount you have to play with.
Pre-approved: A bank has given you the thumbs up on the home loan and you’re ready to put your money where your mouth is come auction day.
Guarantor: This is the definition of “having your back”. A guarantor is a mate or backer that will sign to be responsible for following through on your loan if for any reason you default or are unable to pay.
Home equity: This is the amount of a home that’s actually yours. Basically, it’s the value of the house minus the amount still to pay on the loan; and it’s all yours.
Assignment: This isn’t homework. It’s when an existing mortgage is passed on to someone else.
Conveyancing: Lawyer stuff, as they work on your contract when you buy a home.
Deed: A piece of paper you’ll have to sign to ‘officially’ become a home owner.
Meet the players
Auctioneer: That fast-talking guy who may or may not be carrying a gavel, running the auction.
Vendor: The person who currently has the keys to what might be your new place.
What those property descriptions actually mean…
Cosy: Perfect first home material. Before the family comes along, grab yourself a cosy starter house and grow from there.
Potential: This home has a tonne of character, and all it needs is a bit of TLC to turn it into property gold. Invest the time and reap the rewards.
Charming: You can’t quite put your finger on it, but you feel an emotional connection to this house and it will sneak into your top choices bracket with ease.
Low maintenance: You can spend less time coming up with excuses as to why the lawn isn’t mowed – you probably won’t have one.
Art Deco or Retro: Shabby chic is all the rage right now and you’ll feel as creative as they come living in this old school gem.
Starter home: Elbow grease and favours from friends is what you’ll need here. A starter is your dream home, and you snagged it for a bargain.
Luxurious: If you’ve worked hard saving, and it’s within your price range, then go for it. You’ve earned it.
Loan type lingo
‘Principal and interest’ (P&I) loan: Principal, interest and fees. Your lender has accounted for everything and all you have to do is sit back and make the payments.
Flexible or basic loan: Dramatically cut your interest costs over time by getting on the front foot and paying it off early, or when you feel like it.
Fixed or variable loan: Playing it safe. This one fits like a glove for people who want to keep their interest costs to the very minimum and like the security of knowing their repayment amount.
‘Interest only’ (IO) loan: You’re just paying for the add-ons here. It can be renegotiated every decade or so.
Learning a second language is hard work! If you want to put your new found knowledge to use, download the Spring 2015 Buyers Guide or call one of our Home Loan specialists on 1800 100 258.