Balloon Mortgage
A mortgage with periodic payments of principal and interest that do not fully amortise the loan. The balance of the mortgage is due in a lump sum at a specified date.

Balloon Payment
The unpaid principal amount of a mortgage due on a specified date in a total lump sum.

Bankruptcy
Action taken either voluntarily or by creditors against a person who cannot repay debts outstanding.

Basis point
A term used to measure the rate of interest. 100 basis points = 1%.

Body corporate
A governing body of unit owners in a strata building who are responsible for managing the building and common areas.

Borrower
Person who raises credit to be repaid at a later date.

Breach of contract
Breaking any of the terms or conditions of a contract or otherwise failing to comply with any obligations agreed to in a contract.

Break cost
An extra charge for getting out of a fixed rate home loan account before the end of the fixed rate period (either by paying it off in full or taking it somewhere else).

Bridging finance
A short-term home loan that covers the gap between buying a new home and selling an existing home.

Broker
An individual or company that brings borrowers and lenders together. Brokers shop around for the most appropriate lender for the borrower’s circumstances, and may be paid a commission for their services by both the borrower and lender.

Buyer
The person purchasing a property.

Cap
A limit on how much the interest rate or monthly payment can change, either during the adjustment period or over the life of the loan.

Capital
The current value of your long-term assets.

Capital Gain
The monetary gain obtained when you sell an asset for more than you paid for it.

Capital Gains Tax
A Federal Government tax on any profit made on the sale of an asset (except the house you live in) bought and sold after September 1985.

Capitalising Interest
When the interest owed is calculated and added to the amount borrowed rather than being paid off each month.

Capital Stable
A generally accepted investment industry description of any investment or return that is not subject to equity market fluctuations. However, this is not the equivalent of a capital guarantee. In La Trobe Financial's Mortgage Fund your investment is not capital guaranteed, but at your selection it is invested in cash, fixed interest and mortgage securities, which are not usually subject to significant fluctuations in capital value. However, they are still subject to investment risk which could result in loss of capital.

Capped home loan
A home loan with an interest rate that can't get higher than a certain level for a set period, but can drop.

Cash out
When some or all of the amount loaned is given to you as cash or left in the home loan account as money that can be taken out at any time.

Caveat
A charge taken against a property to protect an interest other than a mortgage.

Certificate of occupancy
Written authorisation from a local municipality allowing you to move into a completed or substantially completed building.

Certificate of Title
An official certificate detailing who owns the land and any restrictions on it.

Clear title
A seller has a clear title when they don't have a mortgage or other interest in their property preventing the sale.

Co-Borrower
A second borrower who signs a mortgage loan with the borrower. The co-borrower’s income, assets, and debt are combined with that of the borrower's for the sake of qualifying and underwriting purposes. The co-borrower’s name must also appear on the mortgage.

Collateral Security
Additional security taken to support a loan.

Commission
The fee paid to a broker or real estate agent for their services.

Comparables
Properties sold recently that are similar to a property being considered for purchase. Comparables should be in the same general location and of similar size, characterisation and construction type.

Compliance Plan
The Compliance Plan sets out the measures La Trobe Financial applies in operating the Fund to ensure compliance with the Law and the Fund’s Constitution.

Compound interest
Interest that's paid on accrued and unpaid interest as well as on the original amount borrowed ('Principal').

Conditional approval
Initial approval given on a home loan application further to certain information being confirmed (like the valuation of the property and income details).

Consumer Price Index
A government index measuring changes in the cost of living as seen through the set price of typical consumer goods.

Contract
A legally binding agreement between parties that's enforceable by law.

Contract of Sale
A written agreement outlining the terms and conditions for the purchase or sale of a property.

Conveyance
The document, such as a deed or mortgage, used to effect a transfer.

Conveyancing
The legal process for the transfer of ownership of real estate.

Cooling-Off Periods
Cooling-Off Periods do not apply to the La Trobe Financial Australian Mortgage Fund. The financial investments are managed investment products that are not liquid in accordance with the Law. A registered scheme is liquid if liquid assets account for at least 80% of the value of scheme property.

Credit history
A record of an individual's open and fully repaid debts. A credit history helps a lender determine whether a potential borrower has a history of repaying debts in a timely manner.

Credit limit
The preset maximum amount you can borrow.

Credit rating
A rating based on your credit history showing whether bills are generally paid on time.

Credit Report
A report obtained from Veda Advantage (previously Credit Reference Association of Australia (CRAA)) which holds credit details on all people who have established a credit history.

Daily Interest
Interest calculated on a daily basis.

Debt servicing ratio
Your long-term debt expenses shown as a percentage of your monthly income that's used to work out if you can afford the amount that you want to borrow.
Read more in:  Borrower FAQs  -  Before the Loan Questions  -  2. How much can I borrow?

Deed of Trust
A security instrument conveying title in trust to a neutral third party. In some cases this is used in place of a mortgage.

Default
When a borrower is unwilling or unable to pay or breaks one of the conditions set out in the home loan contract.
Read more in:  Borrower FAQs  -  During the Loan Questions  -  9. What happens if I miss a payment?

Deposit
In order to borrow money to buy a home you'll need to contribute some of your own money up front (usually between 5% and 10%).
Read more in:  Borrower FAQs  -  Before the Loan Questions  -  12. What is the minimum deposit?

Depreciation
Amount by which an asset reduces in value over time.

Direct Debit
Lenders preferred method of mortgage repayment.

Disbursements
Fees incurred by solicitors in the preparation of mortgage documents to secure a mortgage and billed to the borrower.

Disposable income
The money you have left after paying all your known expenses.

Draw down
To draw out available money from your home loan account. Also known as a redraw.
Read more in:  Borrower FAQs  -  During the Loan Questions  -  10. What is a Redraw?

Duty (stamp duty)
A government tax on contracts. In most cases you have to pay it on both the contract for the sale of the property and on the finance contract (and on home and contents insurance contacts too).
Read more in:  Borrower FAQs  -  Before the Loan Questions  -  13. Do I have to pay stamp duty?

Encumberance
An outstanding liability or charge on a property.

Equity
The difference between the owner’s interest in a property and the outstanding loan balance.

Escrow
The temporary holding by a third neutral party of deposited funds pending completion of agreed terms in a transaction.

Exchange of Contract
The vendor and the purchaser sign and swap contracts with a view to settle.

First Home Owner Grant
A one-off government grant of $7,000 available if you haven't owned property before and plan to live there.
Read more in:  First Home Owners FAQs

First Mortgage
The first registered mortgage on a property. This ranks ahead of all other mortgages and all other Encumberances registered after it.

Fittings
Items that can be removed from a property without causing damage to it.

Fixed Rate Mortgage
A loan with an interest rate that remains unchanged over the term of the loan.
Read more in:  Borrower FAQs  -  General Borrowing Questions  -  6. What's better, a fixed or variable interest rate?

Fixtures
Items fixed to the property and can be removed only if stipulated in the contract of sale.

Freehold title
The owner owns the house and the land it's on until they choose to sell. There is no time limit on freehold title ownership (unlike leasehold titles).

Fund
The registered managed investment scheme known as the La Trobe Financial Australian Mortgage Fund ARSN 088 178 321 as described in its Product Disclosure Statement.

Fund’s Constitution
The deed entered into by La Trobe Financial, the Investment Manager and Investors from time to time setting out the rights and obligations of each party. All Investors are bound by the Fund Constitution as amended from time to time.

Fund Property
Any property, money or money’s worth or entitlements thereto which constitute the property of the Fund from time to time.

Gearing
The ratio of deposit to borrowed money in an investment. A 'highly geared' property has a high ratio of borrowed money to your own.

Gift Declaration
A letter to the lender confirming that funds in a borrower’s account are a gift and do not need to be repaid.

Government Fees
Charges such as Stamp Duty, lodgement and searching fees payable with a transaction that involves transfer of or registration of a mortgage on a title.

Gross Monthly Income
The amount of income received each month before tax is deducted.

Guarantee
A legal agreement to pay someone else's debt if they don't pay it. Sometimes this is also referred to as a Guarantee and Indemnity.

Guarantor
A party who agrees to be responsible for the payment of another party's debts.

Home equity
The portion of your property that you own - the difference between its appraised market value and the amount you still owe under your home loan.

Home loan
A home loan is a promise of your home as security in exchange for being lent the money to buy the property. The lender holds the title to your property until you have repaid your loan plus interest.
Read more in:  Borrower FAQs  -  General Borrowing Questions  -  1. What is a mortgage?

Home Owners Insurance
Property or Contents Insurance coverage providing compensation to the insured party in case of loss or damage.

Index
A base for determining the interest rate adjustment. Indexes generally reflect prevailing market conditions.

Instalment
A regular periodic payment (fortnightly or monthly) that a borrower agrees to pay to the lender.

Interest
Charge for the use of funds or the return on deposited funds.

Interest Only Loans
A home loan where only the interest is paid off for an agreed (usually short) term. The payments then increase to cover both the interest and the original amount borrowed (Principal).
Read more in:  Borrower FAQs  -  General Borrowing Questions  -  7. What's the difference between a Principal & Interest Home Loan and an Interest-only Home Loan?

Investment Interest
Your undivided interest in a Direct or High Yield Mortgage Investment calculated as the proportion that your application money accepted and allocated into the Mortgage, bears to the Minimum Subscription amount for the Mortgage.

Investment Manager
La Trobe Home Loans of Australia Pty Limited ABN 30 006 479 527.

Investment property
A property bought for the sole purpose of making money, either through renting it or selling it for more than you paid for it. The buyer/owner does not live in the property.

Investment Risk
In general, risk is the chance that the return from your investment in terms of income and capital, will be significantly different from what you expect.

Investor
A person, persons or other legal entity that applies for and is accepted as an Investor or legal member in the Fund.

Investor Representative
An Investor Representative is any company, partnership or individual appointed by the Investors to invest in, obtain investment information, or withdraw monies from the Fund on behalf of that Investor.

Joint and Several Liability
Where a loan has more than one borrower, and each is responsible for 100% of the debt. A standard form of lending.

Joint Tenancy
Equal holding of a property between two or more persons with the right of survivorship, that is, if one joint tenant dies, his or her interest in the property passes automatically to the other. The most common example of this is where a husband and wife own their home together.

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La Trobe
La Trobe Financial Asset Management Limited ABN 27 007 332 363 holder of Australian Financial Services Licence No. 222213 and the Responsible Entity of the Fund.

Land Transfer Fee
A state government charge based on the selling price of a property (usually around $70).

Land Titles Office (LTO)
The State Government Office responsible for the registration of land transactions, and charges registration fees like title registration and mortgage registration. The LTO is known by different names in different states.

Law or the Law
The Corporations Act 2001 unless it is otherwise apparent from the context.

Lease
A contract allowing a person to live in a property owned by someone else, under specific terms and conditions.

Lender
Any person (or institution) that lends money to a borrower in exchange for interest payments. Sometimes referred to as a home loan provider.

Lenders mortgage insurance (LMI)
Insurance that protects the lender should the home loan not be repaid in full.

Liabilities
Financial debts.

Lien
A claim against property for debt, such as mortgage.

Line of credit loan
A flexible loan, often with a less competitive interest rate, that allows you to draw out money (up to a certain limit) as needed. With a La Trobe Financial Home Loan you get free redraws - which gives you similar flexibility at a great rate.

Loan
An amount of money you borrow from a lender.

Loan maintenance fee
An ongoing monthly management fee charged by some home loan providers over the life of the loan. You won't pay this with a La Trobe Financial Home Loan.

Loan-to-Valuation Ratio (LVR)
The ratio of the mortgage amount to the appraised value which is used by lenders to determine maximum loan amounts.

Lump sum repayments
An additional ad hoc payment made on top of your minimum ongoing payments.
Read more in:  Borrower FAQs  -  During the Loan Questions  -  8. What if I want to pay a lump sum off my home loan?

Market Value
The current value of real estate that a buyer is willing to pay and the seller is willing to accept.

Margin
The amount, expressed as a percentage, that a lender adds to an index to arrive at the interest rate.

Maturity
The date the debt or investment must be paid in full.

Maximum home loan amount
The maximum amount that can be borrowed based on your individual circumstances as determined by a lender.
How Much Can I Borrow - Calculator?

Minimum home loan amount
The minimum amount that can be borrowed as determined by a lender.

Minimum repayment required
The amount you are legally required to pay each month (or fortnight) in order to pay off your home loan in the agreed time.

Minimum Subscription
The minimum subscription amount is set for each Direct or High Yield Mortgage and equates to the total amount of the loan facility required by the borrower.

Mortgage
A security interest in property given by a borrower to a lender, stipulating the terms of repayment of a loan for a specific piece of property.
Read more in:  Borrower FAQs  -  General Borrowing Questions  -  1. What is a mortgage?

Mortgage broker
An individual or company that brings borrowers and lenders together. Brokers shop around for the most appropriate lender for the borrower's circumstances, and may be paid a commission for their services by both the borrower and the lender.

Mortgage registration fee
A state government fee for registering a loan. The amount differs by state, but generally is around $100.

Mortgage repayment
A regular, scheduled payment (fortnightly or monthly) that usually includes an amount to pay off both the original home loan amount ('Principal') and interest.

Mortgage Repayment Insurance Policy
Life insurance obtained from an insurer that provides the borrower with protection in case the borrower dies or becomes totally and permanently disabled.

Mortgage stamp duty
A state government charge on your home loan contract (you also may have to pay stamp duty on the contract for the sale of the property). Amounts vary from state to state (and it's not payable in all states).

Mortgagee
The lender of funds.

Mortgagor
The person borrowing money under the terms of a mortgage.

Mortgage Investment
Each individual mortgage secured loan facility issued by La Trobe Financial from time to time.

Negative amortisation
This is where the monthly payments on the mortgage do not cover the full interest cost. The remaining interest is added to the unpaid Principal balance.

Negative Gearing
A tax deduction is available where the return on an investment is insufficient to meet the costs of that investment.

Net Income
Income after tax.

Net Profit
The profit of a business after all expenses have been accounted for.

Offset account
An everyday account linked to your home loan that allows you to use your savings to bring down the interest charged on your home loan.

Office of State Revenue (OSR)
A State government office that administers state taxation and collects revenue, outstanding fines and penalties. Mortgage stamp duty is charged by the OSR. The OSR is known by different names in different states.

Off The Plan Purchase
The purchase of a property after seeing the plans before it has been completed.

Overpay
Means you pay off more than your minimum monthly payment. Great if you inherit some money, get a pay rise or want to pay off a bigger amount so you can save on interest.

Passed in
A property is 'passed in' at auction if the highest bid doesn't meet the seller's minimum (reserve) price.

PDS
The Product Disclosure Statement which describes the operation of the Fund. The PDS contains a Registration Form which is required for registration as an Investor in the Fund.

Portability
Where a new property may be substituted as security for an existing loan.

Power of Attorney
Where legal right is given to another person to deal with all aspects of your financial and personal dealings.

Prepayment
An additional ad hoc payment made on top of your minimum ongoing payments in order to reduce the principal amount borrowed.
Read more in:  Borrower FAQs  -  During the Loan Questions  -  8. What if I want to pay a lump sum off my home loan?

Primary borrower
If more than one person is borrowing money, this is the borrower who earns the most money.

Principal
The original amount you borrow, not including interest.

Principal & Interest Loan
Loan where both the principal and interest are repaid concurrently.

Purchase and Sale Contract
The formal agreement in which the seller agrees to sell and the buyer agrees to buy the property.

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Re-amortise
To work out the minimum payments needed to pay back the outstanding balance of your home loan over the remaining period (if the amount borrowed has changed).

Redraw Facility
If you have made any additional repayments to your loan account, you can access those extra repayments, whether the loan is a fixed or variable rate.
Read more in:  Borrower FAQs  -  During the Loan Questions  -  10. What is a Redraw?

Refinancing
A new borrowing against a property that is currently mortgaged, with the intention of repaying the previous debt and obtaining further funds for any purpose.
Read more in:  Refinancing FAQs

Registration Form
The Registration Form attached to the PDS for registration as an Investor in the Fund.

Rental guarantee
A specific level of income from a property, guaranteed by a developer.

Repayment holidays
A break from repayments when you need the money for something else. With La Trobe Financial you can take up to 12 months worth of repayment holidays over the loan term, and a maximum of three months in any 12 month period.
Read more in:  Borrower FAQs  -  During the Loan Questions  -  3. What if my personal or financial circumstances change?

Repayment Types
Interest Only – Where repayments only cover the interest charged on the advance and the original amount borrowed remains the same. At the end of the loan term, the loan will need to be repaid in full or re-negotiated.

Principal & Interest – Repayments are designed to cover the interest on the amount borrowed and repay the total amount borrowed over the term of the loan.

Reserve price
The minimum price a seller will accept at auction.

Searches
Checks done by solicitors before settlement to confirm information provided about the property or the buyer.

Second Mortgage
A second registered mortgage on a property. This will rank after other registered Encumberances, such as a First Mortgage.

Securitisation
A method utilised by financiers to raise substantial funds for mortgage lending to individual borrowers.

Security
An asset that secures the lender its borrowings until the loan is repaid in full.

Seller
The person selling a property. Sometimes this is referred to as a vendor.

Serviceability
The test to determine a borrower's ability to repay proposed borrowings.

Settlement
The delivery of a deed, signing of notes, and disbursement of funds necessary to consummate a real estate sale or loan transaction.

Settlement Costs
Expenses incurred by the buyer and seller during the purchase and sale of real estate, such as title fees, loan fees, real estate fees etc.

Settlement Date
The date the new owner finalises payment and assumes possession of the property.

Solicitors Trust Account
An account held by a solicitor for repayment of taxes, rates, insurance, and other debts against property. The borrower pays an apportioned amount with each monthly payment.

SPDS
Investors who choose the Direct or the High Yield Mortgages Option receive separate Supplementary Product Disclosure Statements which describe specific Mortgage Investments offered for investment by La Trobe Financial to Investors.

Split home loan
Where a portion of a home loan is set up on a fixed interest rate and a portion is set up on a variable interest rate. You can also choose between Principal & Interest and Interest-only repayment options.

Stamp duty
A State Government charge on contracts. You may pay it on both the contract for the sale of the property and on the home loan contract (and on home and contents insurance contracts too).
Read more in:  Borrower FAQs  -  Before the Loan Questions  -  13. Do I have to pay stamp duty?

Standard variable rate
An interest rate offered by a lender that can go up or down as the market changes. See our interest rates for more.

Strata title
The type of ownership associated with town houses and units where each owner owns a small portion of the overall property but where there are common areas that are shared.

Survey
A plan showing the boundaries of a property and any building/s on it.

Tenants in Common
Your interest in a Mortgage Investment is as tenants in common (the equivalent or unequal holding of property by two or more people) with other Investors. This is to be contrasted with "joint tenants".

Term
The period or duration of a loan or investment.

Third Party Security
Security for a loan offered by a party other than the borrower of the loan funds.

Title Deed
Sets out the ownership of a property, together with any mortgages or other interests in the property. This is also known as the "Certificate of Title".

Title fees
Fees charged by each State's Titles Office for services like title search, transfer of property ownership and registration of the new mortgage in replacement of the old one.

Title Search
The process to ensure that the vendor has the right to transfer ownership.

Torrens System
The usual title system in Australia that provides current ownership and encumberance details.

Transfer
A document registered with the Land Titles Office that confirms a change of ownership as noted on the Certificate of Title.

Underwriting
In mortgage banking, the analysis of risk involved in making a mortgage loan to determine whether the risk is acceptable to the lender.

Unencumbered
A property that is free of liability for any financial arrangement or other obligation, or any claim by a third party.

Valuation
A report from an independent valuer giving an estimate of a property's value.

Variable Interest Rate
A rate that usually varies in accordance with market conditions or Reserve Bank changes to the official cash rate.

Variation
Change in the terms of a loan agreement.

Variation fees
Fees to make a change on your home loan contract.

Vendor
Person selling a property who is the current owner.

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Zoning
The Local Governments guidelines as to the permitted uses of land.