Understanding Mortgage Terminology

In this article, we'll break down additional key concepts and terminology to empower potential borrowers with the knowledge they need to confidently navigate the home loan process.

Deposit: The deposit is the initial lump sum payment made by the borrower towards the purchase of a property. Lenders typically require a minimum deposit, expressed as a percentage of the property's purchase price, which can vary depending on factors such as the borrower's financial situation and the type of loan.

Loan Term: The loan term refers to the length of time over which the borrower agrees to repay the loan. Common loan terms range from 25 to 30 years, although shorter terms may be available. It's important for borrowers to consider their financial goals and circumstances when selecting a loan term.

Fixed vs. Variable Rate: Borrowers have the option to choose between a fixed interest rate, which remains unchanged for a specified period, or a variable interest rate, which can fluctuate over time in response to changes in the market. Each option has its pros and cons, and borrowers should carefully consider their preferences and risk tolerance before making a decision.

Repayment Frequency: Repayment frequency refers to how often borrowers make repayments on their loan. Common options include monthly, fortnightly, or weekly repayments. Choosing a more frequent repayment schedule can help borrowers pay off their loan faster and reduce the total amount of interest paid over the life of the loan.

Exit Fees: Exit fees, also known as early repayment fees or break costs, are charges imposed by lenders when borrowers pay off their loan before the end of the agreed loan term. These fees can vary depending on the type of loan and the lender's terms and conditions, so borrowers should be aware of potential exit fees when considering their loan options.

We aim to empower potential borrowers with the knowledge and understanding they need to make informed decisions about their home loan. Whether it's understanding the deposit requirements, selecting the right loan term, or navigating the options between fixed and variable rates, our goal is to provide clarity and guidance throughout the home loan process.

Credit Representative Number 545975 is authorised under Australian Credit Licence 384324 (outsource Financial Pty Ltd). This is general information only and is subject to change. Your complete financial situation will need to be assessed before acceptance of any proposal or product. Vadium Lending (ABN 62 213 831 884).