Loan Market

23 Low doc loan - where you do not need any supporting evidence, just a declaration from yourself and your accountant that you can afford tomake repayments for the duration of the loan. This type of loan is suitable for those who are self- employed or have an irregular income. Loan settlement - refers to when your debt or loan has been paid in full. Loan-to-Value Ratio (LVR) - expressed as a percentage, it refers to the amount of the loan against the value of the property purchased. Negative gearing - a tax advantage calculated as a return from an investment property after maintenance and mortgage interest costs. Non-bank lenders - are lenders who do not hold an Australian banking licence and who do not represent amutual bank, building society or a credit union. A non-bank lender usually sources their own wholesale funding and then lends out their funds making amargin on the difference. Offset account - a savings account that is linked to a home loan. It reduces your interest payable because the interest is only charged on the net balance of your mortgage account minus your saving account. Parental guarantee - refers to when your parents or other familymembers help you secure a loan in your name by offering you to use the equity in their home for some or all of your loan. Pre-approval - a pending loan whereby the loan documents have passed and a loan is available when the borrower is ready to use it or purchase an asset. Principal - refers to the actual sum that you have borrowed or otherwise, the body of the loan. In contrast, the additional part you need to pay when you borrow money is the interest, which acts as a fee that is calculated as a percentage, usually against the original sum of the loan until the end of the term. Principal and Interest - a loan where both principal and interest are paid together for an agreed amount of time, sometimes for the life of the loan. Redraw facility - where you can access additional payments you’ve made previously on a loan. Refinancing - when you acquire a new loan to take over an older one for the same asset. Rental yield - a measure of the percentage of income return you earn from your property. Reverse mortgage - when retirees unlock the equity in their home and borrow against the value of their home and repay the loan when they sell their property. Settlement date - the agreed date which the seller must deliver the property that was sold, and the buyer must pay the final amount that is owed. Stamp duty - a State Government tax based calculated by a percentage against the monetary value of the property you purchase. Standard variable rate loans (SVR) - usually with a variety of features, including making extra repayments and redraw advance repayments, this type of loan is suitable for both investment and personal purposes. Strata fees - when collective owners of a building pay a fee, usually quarterly, into an account that pays for the overall maintenance and other expenses related to the building. Valuation - an estimation of the worth of a property, carried out by a professional property valuer. Variable interest rate - a percentage charged against the sum of money borrowed as a fee paid at regular installments, that may increase or decrease according to the cash rate.