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Everyone would agree "home is where the heart is" or "home sweet home". These are simple and yet meaningful sayings which evoke a sense of belonging and endearment. A home conjures different images to different individuals. In the hustle and bustle of daily city life, a comfortable home is what matters most after a busy day. Choosing the right home in the ideal location is important.
Once you've saved up the deposit for a home, don't forget to take into account all the extra fees that come with buying a house - some or all of these:
- stamp duty, legal costs, disbursements,
- mortgage insurance, pest inspection report, survey report,
- builder's report, strata inspection report, loan application fee, valuation fee,
- registration fee, sundry fees like refinancing or switching fees.
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Once you've saved up the deposit for a home, don't forget to take into account all the extra fees that come with buying a house - some or all of these: stamp duty, legal costs, disbursements, mortgage insurance, pest inspection report, survey report, builder's report, strata inspection report, loan application fee, valuation fee, registration fee, sundry fees like refinancing or switching fees.The results of this loan payment calculator are for comparison purposes only. They will be a close approximation of actual loan repayments if available at the terms entered, from a financial institution. This is being provided for you to plan your next loan application. To use, enter values for the Loan Amount, Number of Months for Loan, and the Interest Rate (e.g. 7.25), and click the Calculate button. Clicking the Reset button will clear entered values.
Non-numeric values will cause errors.
Common LOAN Terms
Average Annualised Percentage Rate. Sometimes referred to as the Compulsory Comparison Rate, this figure takes into account the other costs associated with the loan etc, and expresses them as an average interest rate, to create a level field with which to compare like loan product interest rates.
The fee charged by a lender to cover or partially cover the lender's costs of setting up or establishing the loan.
Lending institution that lends finance based on the value of the asset, which will be held as security.
Basic Home Loans
Also known as 'Discount' Home Loans. These loans are a no frills version of the Standard Variable Home Loan. Generally they have fewer features than the Standard Variable Home Loan and are less flexible. These loans are only available for new borrowings.
Popular with first home buyers, basic home loans typically offer interest rates of half to one per cent below the standard variable rate. Many also have lower ongoing fees.
In return for a lower interest rate, basic home loans have fewer features and can be less flexible. Some lenders may offer the option to pay for extra features when you need them. There may also be fees and charges if you decide to switch loans or lenders, or pay off the loan sooner.
A notice of warning given to a public authority, e.g. Titles Office, claiming entitlement to an interest in certain land. The caveat is registered and remains on the books as a warning to anyone who contemplates dealing with the property. It therefore prevents any action being taken without the previous notice of the person entering the caveat (the caveator).
Additional or supporting security given in addition to the principal security.
Comparison Rates Schedule (CRS)
Or CCR, is the figure expressed an interest rate, that takes into account some of the extra costs of a loan product. The formula used to calculate the CCR is regulated by the Uniform Consumer Credit Code and all Australian lenders are required to use the same formula. Consumer Credit Code
Legislation designed to protect the rights of the individual (personal consumer) by ensuring banks and other financial institutions all adhere to the same rules when providing personal, domestic or household credit. It should provide borrowers with complete and honest information. Also known as the Uniform Consumer Credit Code or UCCC.
Credit Ombudsman Service Limited. Formerly known as MIOS (Mortgage Industry Ombudsman Service).
Solicitors incidental costs involved when dealing with client on behalf of the Lender, e.g. searches, certificates pest reports, etc.
Generally used to denote the financial interest of a person in a property or business enterprise, e.g. a person&$39;s equity in his house is the difference between its value and the amount still owed to a Lender. A person's overall equity refers to his net financial worth, or the difference between what he owns and what he owes (i.e. Assets - Liabilities = Equity).
The legal point of time when the vendor and the buyer swap documentation with a view to settlement.
Fixed Interest (Fixed Rate)
An interest rate set for an agreed term.
Fixed Rate Home Loans
Fixed rate home loans offer a fixed interest rate for a set period of time, 1, 2,3,4,5, 7 or 10 years. Because of this, repayments remain the same for the duration of the fixed rate period. At the end of the fixed period, you can switch to a variable rate loan or negotiate a new fixed rate or even opt for a split rate loan.
They allow you to manage your loan repayments so you can budget for other financial priorities in your life. Fixed rate loans only allow limited additional repayments without penalty.
The Lender's charge for the use of funds or the return on deposited funds.
Interest Only Home Loans
With an interest only home loan, repayments only cover the interest component. The principal is repaid in full at the end of the loan term. Because borrowers only repay the interest component, interest only loans have lower repayments than principal and interest loans.
These loans are usually for a short period of time, 1 to 5 years.
Lenders mortgage insurance (LMI)
In cases where a lender borrows more than 80% of a property's value, they will usually be required to to pay lender's mortgage insurance that protects the lender should the loan default.
Line of Credit Home Loans
A line of credit home loan is a credit facility secured with a first mortgage on a residential property. Similar to a credit card, they allow you to withdraw funds up to a set limit at any time. Repayments can be made in full or on a monthly basis.
(Loan to Valuation Ratio) the ratio of the amount lent, to the valuation of the property.
Gearing your investment so that the cost to maintain it (loan repayments, council rates, maintenance etc) out weigh the income produced by the investment, leading to a reduction in taxable income.
Where a new property can be used as security for an existing loan, i.e. when the loan is transferred to a new security property without needing to repay the loan, reapply, or restructure.
An asset that guarantees the Lender their borrowings until the loan is repaid in full. Usually the property is offered to secure the loan.
Ability of borrower to make and meet repayments on a loan, based on the borrowers expenses and income(s).
Finalisation of payment by the new owner, and assumption of possession. When you pick up the keys!
Split Rate Home Loans
A split or combination loan brings together the benefits of variable and fixed interest rates into a single home loan.
Stamp Duty is a state government-based tax/fee calculated on the basis of property values. Stamp duty laws are different from state to state and may vary depending upon the circumstances of your property purchase eg. whether you are buying the property to live in, or as an investment. Stamp duty exemptions and reductions alson apply in some states.
Standard Variable Rate Home Loans
The most common type of home loan based on the housing market's variable rate of interest. Just as it is subject to rate rises this loan can also provide you with interest rate decreases. These home loans are the most flexible offering a range of features.
A property free of liabilities, restrictions or mortgages.
A report as required by the Lender, detailing a professional opinion of a property's value.
Variable Interest Rate
A rate that changes in accordance with the rates in the marketplace.
STUDENT LOAN (Frequently Asked Questions - FAQ)
There are two main parts of a loan:
* The principal -- the money that you borrow.
* The interest -- that is like paying rent on the money you borrow.
1. Application Fee
It is illegal to charge an application fee for a federal loan. Some lenders may charge an application fee for their alternative loans. This is a fee charged to process the application. It is usually not taken from the principal of the loan and must be paid when you apply for the loan, regardless of the loan amount.
Adding interest that has accrued onto the loan principal. Subsequent interest then begins to accrue on the new principal.
This is a person who signs the promissory note with the borrower and promises to repay the loan if the borrower does not. Both the co-signer and the borrower are responsible to repay the loan. Some loans require a co-signer and some don't.
Being in default is defined differently for different loans. Basically, it means being delinquent in repaying a student loan more than a certain number of days or failure to comply with any of the other terms of the promissory note. Generally missing one payment does not mean the borrower is in default. IT IS IMPORTANT NOT TO DEFAULT ON YOUR LOAN.
Being in default subjects the borrower and co-signer to a variety of extra expenses and penalties. Generally the remedy for a default is more than just bringing the payments up to date. Sometimes it means you must repay the entire loan immediately.
If you default on a federal or state loan, your lender and the government can take a number of actions to recover the money, including:
- Withholding your tax refunds.
- Withholding part of your salary if you work for the federal government.
- Suing and taking you to court.
- Informing credit bureaus which might affect your credit rating. As a result, you may have difficulty borrowing money for a car or a house.
- Requiring you to repay your debt under an income "contingent" or alternative repayment plan. You could end up repaying more than the original principal and interest on your loans!
- Preventing you from obtaining additional state or federal student aid until you make satisfactory payment arrangements.
This means that the payments on the principal of the loan will be delayed for a specified time. However, the interest must be paid or it is added to the principal. This means the loan will cost the borrower more in the long run, but it may make the loan easier for the borrower to repay.
This is when and how you get the money that you've borrowed. Generally the money is sent to the college and then given to you. Some colleges can transfer the money directly into the student's bank account.
If your educational program is short or if there is a short time remaining in the academic year, you might get all the money in one disbursement. If you will be in college for the whole academic year, the money is given to you in two or more parts.
An arrangement to postpone or reduce a borrower's monthly payment amount for a limited and specified amount of time, or to extend the repayment period. The borrower is charged interest during the forbearance.
8. Guarantee Fee
These fees are used to guarantee that lenders are repaid even if the lender can't collect on the loan due to default, death, or disability.
The guarantee fee is often taken from the principal before it is given to the borrower. This means the borrower will not be given all the money that is borrowed, but must still repay the total amount as if he or she had been given all the money.
9. Interest Rate
This is a percentage of the loan amount that you're charged for borrowing money. It is a re-occurring fee that you're required to repay, in addition to the principal. The interest rate is always recorded in the promissory note.
Sometimes, the interest rate remains the same throughout the life of the loan until it is all repaid. Other times, the interest rate will change every year, quarter (three months), monthly, or weekly based on some financial variable such as the interest rate of Federal Treasury notes.
Some lenders will lower the interest rate when the borrower makes a certain number of payments on time, has a co-signer for the loan, and so forth.
10. Loan Consolidation
Several loans are combined into one larger loan. The payment pattern and interest rate may change on the consolidated loans. The total payment may be smaller and the length of time for making repayments may be increased. This means the loan will cost the borrower more in the long run, but it may make the loan easier for the borrower to repay on a monthly basis.
11. Maximum Time to Repay
The promissory note will state the maximum time that the borrower can take to repay the entire loan. Read the promissory note carefully. The maximum loan repayment can be tied to:
- When the student leaves college
- When the money was borrowed
12. Minimum Payment
This is the smallest amount of payment that will be acceptable to the lender. Even if the loan is small, the borrower must make the minimum payment each month until the loan has been fully repaid.
13. Origination Fee
Processing the loan application and setting up the actual loan for disbursement to the borrower is called "originating" the loan. Some lenders may charge origination fees.
Often, the origination fee is taken from the principal before it is given to the borrower. This means the borrower isn't given all the money that's borrowed, but must still repay the total amount as if he or she had been given all the money.
14. Payment Consolidation
The monthly payments for several loans are combined into a single monthly payment or bill. The loans are still separate, but the payments are divided between the loans. The monthly payments are the total of all the separate payments. Check with your servicer or lender to see if this option is available.
Servicing means taking care of the loan after the money is disbursed and until the loan is completely repaid. Many times servicing also means holding the record of the loan even after it has been repaid. Servicing includes:
- Billing the borrower.
- Recording payments.
- Keeping track of the amount of money left to be repaid.
Sometimes the lender will change servicers or sell the borrower's loan to someone else who uses a different servicer.