Finance Jargon - What should I know?
Each lender these days has their own jargon for their products and what they can do for you. I would suggest the following key jargon are essential when navigating the banks for a home loan or investment loan:
Standard Variable Rate
This is their variable rate prior to any discount – no-one should be paying this in today’s market unless there is a discount applied. Also note that most lenders have a different Standard Variable Rate for their owner occupied loans and their investment loans!
Basic Variable Rate
This is the no-frills loan often suited to first home buyers – often it should have limited fees and limited add-ons (such as an offset account) which may not be needed).
A transaction account which is linked to your home loan, but offsets the interest payable by how much is in the offset account. It is useful to have your salary placed in this.
Generally has an annual fee of approx. $400 but allows for multiple loans and flexibility to change them as required (without additional fees).
A fixed interest rate which can change even after you have signed you loan documents unless you have opted for a rate lock (often incurring a fee) – note that should you discharge you loan prior to the fixed rate term finishing a ‘break fee’ may be payable.
David Lipschitz, Logic Finance