Loan Glossary of Terms |
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| Owner Occupied Loan | Check out these types of loans if you’re buying a property you intend to live in. | |
| Investment Loan | Check out these types of loans if you're buying an investment property. | |
| Interest | This is the cost of borrowing money. | |
| Principle and Interest | This type of loan is where you are paying off the loan amount, plus the loan interest. | |
| Interest Only | This type of loan is where you are only paying back the interest charged. Normally these would be for building loans, bridging loans or investment loans. | |
| Bridging Loan | This is a loan provided when you are buying one property and trying to sell another. | |
| Variable Interest Rate | This interest rate can change at any time over your loan period, which means your repayments and interest would be affected. | |
| Fixed Interest Rate | This type of interest rate stays the same for the period you have fixed it for. Usually 1, 2, 3 or 5 years. This means that during the fixed rate period, your repayments won’t change. | |
| Comparison Rate | The comparison rate is designed to help you identify the 'true cost' of a loan. It takes into account other fees and charges such as application fees, monthly or annual charges, valuation costs and legal fees. TIP: When you're shopping for interest rates, look only at the comparison rate! |
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| Lenders Mortgage Insurance | Lenders Mortgage Insurance (LMI) is a cost imposed by financial institutions to protect themselves against ‘high risk’ loans. Any loan that is greater than 80% of the property value is considered ‘high risk’. You will need LMI if you’re borrowing more than 80% of the property value. We can provide this for you in your loan application. For example: - Property price = $500,000 - 80% = $400,000. If you need to borrow more than $400,000 you will need LMI. This is why we recommend you save a 20% deposit to avoid this extra cost. |
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| Repayments | The amount you pay back to us every week, fortnight or month. TIP: Weekly repayments will help you pay your loan off quicker because our interest is calculated daily! |
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| Establishment Fee | There is a bit of work in setting up a loan. This is an upfront cost charged by the financial institution. | |
| Administration Fee | This is a regular fee that may or may not be assigned to your ongoing loan depending on which one you choose. | |
| Variable and lump sum repayments | If you suddenly find yourself with some extra cash, you can put that lump sum towards one or a few repayments. | |
| Offset account | This savings account ‘offsets’ your loan balance. If your loan balance is $400,000 and there is $50,000 in your offset account, we’ll only charge you interest on a $350,000 loan balance. Cool hey? | |
| Additional repayment fee | Fixed Loans An additional repayment fee may apply, if over a 12 month period, $30,000 or more is repaid over and above the scheduled payment amounts. Variable Loans *You can pay repay more each week, fortnight or month with no fee. |
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| Redraw facility | If you’re a great saver and you’ve made some extra repayments, you can withdraw those repayments back if you find yourself needing cash. The flip side is that your loan balance will increase. | |
| Early repayment without penalty | Fixed Loans Fees apply if you pay out before the fixed period. Variable Loans *There are no fees for repaying your variable loan sooner. |
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| Minimum redraw amount | If you’ve made extra repayments, you can withdraw these back. There is no minimum amount to redraw. | |
| Redraw fee | We won't charge you a redraw fee (business loans excluded). | |
*Terms & Conditions Apply
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Head Office 27 Stewart Street Wollongong NSW 2500
General Enquiries 02 4224 7700
Horizon Credit Union Ltd ABN 66 087 650 173 AFSL and Australian Credit Licence Number 240573 trading as Horizon Bank