Buying your first property can be overwhelming, especially if you do not have the experience and knowledge on how to navigate the Australian property market and you are also confronted with all the mortgage loan jargons.
The good news is that once you understand how the Australian property market works and you know the meaning of all the mortgage loan jargons that professionals use, you will be well on your way to buy your first property without any hassle.
In this article, we have outlined some of the mortgage loan jargons that are commonly used as far as Australian property market is concerned.
#1. Stamp Duty
Stamp duty is a tax imposed by the government on property sale. How much stamp duty you pay when you intend to buy a property depends on the type of property you are buying and the state that the property is located. One thing that usually affect stamp duty is the purchase price. If this is your first time of being involved in property purchase through States in Australia usually offered concessions.
#2. Loan to value ratio (LVR)
In the Australian property market, the loan to value ratio (LVR) is the percentage of the total price that you pay for taking a home loan. The LVR usually calculated by the lender.
#3. Lender’s Mortgage Insurance (LMI)
This is a one-off payment on a home loan. It intends to protect lenders from borrowers who default on their loan repayment. You will be charged this fee in the event that you haven’t save up to 20% deposit and your lenders mortgage insurance is over 80%.
#4. Interest Rates
As with other loan types, interest rate is the amount that you pay for taking a mortgage, until you completely pay off the mortgage. In Australia, interest rates on mortgage loan usually fluctuate between 4% and 6%.