Hundreds of lending and property terminology explained in simple language
Debt consolidation is the process of combining debts into one loan. If you have credit card debt and personal loans, for example, you could combine these into your mortgage.Debt consolidation might be an effective way to simplify your finances by making handling repayments easier.
Rental yield is a measure of whether you are making or losing money on an investment property. It is a percentage figure based on how much rent you make minus the cost of owning the property.The higher the percentage, the more cash flow you are making on your investment property. In contrast, a negative yield represents a potential negative cash flow.
A Principal Place of Residence (PPOR) is a term used to describe when someone resides/lives in a property as their home. In simple terms: it is the home you primarily live in.
Help to Buy is a proposed federal shared equity scheme that lets first-time buyers co-own a home with the government with a 2% deposit.
Negative gearing is the word that describes an asset that costs more to maintain than the income it produces. This can be claimed as an expense to reduce the owner’s taxable income.
Two or more loan products that appear to meet the consumer's preferences, needs & objective and financial scenario
The Preliminary Credit Assessment is a formal documentation of the assessment step in the process of a mortgage broker. It is the part where the broker reviews all your data, documents and needs & objectives ahead of making a formal recommendation
Documentary evidence required by lenders to verify application data, used by us and lenders to confirm the information that the applicant has provided during their application process, usually grouped into a bundle.
A personal insolvency agreement – typically for those in more severe debt than those eligible for a Part IX. Relates to people who are declaring as bankrupt
An Assessment Rate is the interest rate used when the lender is assessing the serviceability of your loan.
In the context of home loans, "credit impairment" refers to a situation where a borrower's creditworthiness is negatively affected, making it more challenging for them to obtain a home loan on standard terms. Credit impairment can result from various financial difficulties, such as late payments, defaults, bankruptcy, or other adverse events that impact the borrower's credit history.
A deposit refers to the initial amount of money that a borrower pays upfront when purchasing a home.
In the context of home loans in Australia, bankruptcy refers to a legal process where an individual or a business is declared unable to meet their financial obligations, and their assets, including their home, may be used to repay creditors. In Australia, bankruptcy is governed by the Bankruptcy Act 1966. When an individual in Australia faces financial difficulties and is unable to repay their debts, they may declare bankruptcy voluntarily or be forced into bankruptcy through a court order.
Relevant industry training that includes seminars, certificates, workshops, etc that a broker needs to undertake
Australian Company Number, required for company applications or in some cases Self Employed applicants
Repayments that contribute to both the principal and interest components of the loan obligations and reduces the principal over the loan term.
Loan portability allows borrowers to transfer their existing mortgage to a new property when moving home, which can save borrowers from repeating the process of getting a mortgage every time they move.
What the customer is looking to achieve and expects from the loan. It is a specific term used by ASIC in their regulation of mortgage brokers
Lo Doc is a form of loan type that refers to the amount of documentation that the lender needs to approve a loan
Items of value owned by a consumer which include real estate, motor vehicles, shares, superannuation, etc.