Loan Glossary
Confused by loan jargon? Don’t worry, we’ve got your back! Our loan glossary is here to decode the tricky terms and make borrowing easier for you
Information provided by a potential or existing customer, disclosing their personal details and information about their current financial situation. The customer is applying for a consumer financial product.
Once off fee for the lender to review your application. It is usually only payable if the bank approves your loan.
Payments not made by the borrower on or before the agreed date: i.e. all late payments.
Used to describe a poor credit rating. This happens when a borrower either fails to make repayments on a loan (defaults) or falls behind on their payments (arrears).
A single large payment on a loan, typically toward the end of the term, to clear up remaining debt.
A legal term for borrowers who are not able to repay their existing debts.
The loan’s interest rate once the effect of fees and charges has been removed. For example, in a loan with a very low interest rate but very high fees and charges, the comparison rate would be higher than the advertised interest rate.
The refinancing of multiple, outstanding debts, into one new agreement, normally at a reduced interest rate or lower monthly repayment.
Is the means by which customers can get immediate benefit of goods or services upon the promise of payment at a future date.
A contract between a borrower and a lender detailing the terms and conditions under which the money is lent.
A company that keeps records on the existing credit of businesses and consumers. Loan brokers/providers use this information to make assessments of individuals wishing to borrow from them.
Money owed by the borrower to the lender.
Failure to make a loan repayment by the due date.
The amount of money that you put in to purchasing the property. Loans with deposits of 20% or more generally don’t require lender’s mortgage insurance.
The amount of value held in your property over and above that which the lender has a mortgage over. If your home is worth $200,000 and you currently owe $150,000, you have $50,000 equity.
A loan in which the interest rate remains the same for a period set by the borrower, from a range of options set by the lender .
In a home loan, an individual or company that promises to pay off your loan if you are not able to.
Describes a customer who has legally purchased their residential property and they are not renting or boarding.
A loan which doesn’t require you to make payments on the principal. Used often by property investors and those planning to sell within a short time, to reduce repayments in the short term.
Loan used to make an investment.
A device we have developed to help you work out an estimate of what your loan repayments might be.
The reason given by the customer to the lender, why they require the money.
A loan to purchase a property, where the property is used as security in the event of non-payment towards it.
Another mortgage taken out by a borrower to replace the original on the same property.
A loan that uses the borrower’s assets as security. These assets will be at risk if the borrower does not keep up loan repayments as agreed.
Is an item/asset that is pledged by the borrower to the lender as part of the loan Credit Agreement. In the event that a borrower fails to make the agreed repayments a lender may choose to sell the asset to recover their money.
The amount needed to payout and close the loan.
The process by which a potential lender considers the ability of an applicant to repay the loan they have requested.
A loan that does not require any security.
