Get fluent in home loan lingo

Get fluent in home loan lingo

That’s when you find out they don’t explain things for first-timers. Most financial professionals, and even real estate agents, just expect you to know what they mean when they talk about table loans or LIMs.

How do you speak the language of home loans like a pro? Read our guide below.

Asset

That’s any existing property, cars, boats or other major valuable item.

Auction

At an auction, all buyers make bids (offers) until the highest bid is accepted. The seller usually sets a minimum acceptable price, known as the reserve. If no one bids high enough to reach the reserve, it’s passed in and doesn’t sell. If you buy at an auction, you’re committed to going through with the purchase, so make sure you do all your homework first and have your finances ready. That includes your real estate deposit which is paid to the auctioneer on the day.

Capital value

The total value of your property as it appears on your Rating Valuation (RV). It includes the land and buildings but not chattels.

Certificate of insurance

A certificate from your insurance company to confirm that your house is insured – your bank will probably ask to see this.

Chattels

Things fitted to the property and sold along with it, such as lights, carpets and curtains.

Code of Compliance Certificate (CCC)

A certificate from your local authority to say the building complies with building consent requirements. Check all buildings and alterations have a CCC before you buy. The LIM should contain compliance details.

Deposit

The mortgage deposit is the amount you pay toward the property in cash. The mortgage covers the balance of the purchase price.

The real estate deposit is the payment you give the real estate agent (or seller, if they are not using an agent) once you agree to buy a home. The money is transferred to the seller when the property becomes unconditional, and if it falls through, this is returned to you.

Floating rate

A type of home loan where the interest rate fluctuates, along with repayments. Read more about floating interest loans and other loan types here.

Security

When you get a home loan, your home is the security for the loan, meaning the lender can sell it if you can’t repay the money. ‘Security’ also applies to bonds, shares and other investments.

LIM

The Land Information Memorandum can be ordered from the council for a fee and tells you any issues with the land the house is built on, including flood risk and drainage issues.

Table loan

With a table loan you have a set payment each fortnight or month. Your money goes largely toward interest at first, but as time goes on it starts repaying the loan itself.

Term

The term of a home loan is the time over which you agree to pay it back. Many home loans have a term of 20 or 30 years.

The term of an investment is the length of time your money will be tied up in that investment for.

The term of a leasehold property refers to the length of the lease.

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