So many mortgage terms can throw off your confidence when you decide to get a home loan. It’s almost like they are speaking an entirely different language. Luckily, there are plenty of places that can break down these terms for you. While there are many to go through, we thought we would highlight these key ones.
Amortising loan
“The formal term for a standard principal and interest loan.”
Also known as “amortization” for those that watch too many Hollywood movies, it’s also how most loans are calculated. The interest is upfront, so when you are first paying off your loan, you won’t see a significant drop in the amount as you are paying off the interest.
Bridging finance
“A temporary loan used as a gap measure between buying your new home and selling the old one.”
If used correctly, this isn’t always necessary but is a powerful feature of some mortgages.
Comparison rate
“A rate which includes fees so loans can be compared on an equal basis (e.g. a loan with a low advertised rate but high fees might cost the same as a loan with a higher advertised rate but low fees).”
Contract variation
“Any variation or alteration to the terms of a contract.”
As with most contracts, there are standard clauses and terms within, but because of some real estate, lawyers, and settlement terms, these can be negotiated by the seller or the buyer.
Conveyancing
“Legal work carried out by your legal representative to transfer property ownership.”
Not all lawyers are the same, that’s for sure. This specialised law firms work on property matters only and are a must-have when buying or selling, even if the price tag makes you feel otherwise.
Daily interest
“Interest calculated on a daily basis. Most variable rate loans calculate interest on a daily basis.”
Navigating buying a property is hard enough without the minefield of terms, but we hope this helped clear the way. Contact our expert team today if you would like an expert to help cut through the jargon and help you understand mortgage terms, and help cut years and thousands from your mortgage.
