Glossary M-O

Maturity
The date the debt needs to be paid in full.

Maximum Loan Amount
The maximum loan value which can be borrowed & is based on a disposable borrower’s income, deposit & purchase price of the property.

Minimum Loan Amount
The minimum loan value that one can borrow.

Mortgage
An agreement between a borrower and a lender, with the borrower providing security (i.e. property) for a loan from the lender. If the borrower cannot honour the mortgage agreement (i.e. can’t meet the loan repayments), the lender may sell the security property to recover their costs.

Mortgagee
A lender of money, with the loan secured by the borrowers (mortgagors) property as agreed to in a mortgage document.

Mortgagor
Someone who borrows money from a lending institution (the mortgagee) and provides property as security for the loan, as agreed to in a mortgage document.

Mortgage Brokers
Also known as mortgage introducers, these are persons who match prospective borrowers with a panel of lenders. In all cases the service is to offer a service that provides the best loan for the consumer.

Mortgage Discharge Fee
Lenders will charge this administration fee to cover the costs associated with termination of a loan.

Mortgage Insurance
Mortgage Insurance, or Lenders Mortgage Insurance, protects the lender against potential losses should you default on your home loan, and the proceeds from the sale of the property not cover the remaining loan amount. A lender will often require you to take out Mortgage Insurance if you wish to borrow more than 80% of the value of the property. It is usually a one off fee payable when the loan settles.

Mortgage Offset Account
Many lenders now offer mortgage offset facility with some of their loan products. This allows you to offset the funds you have in a transaction (savings) account against your home loan, thereby reducing the interest you will pay on the loan i.e. if your loan amount is $220000, and you currently have $8000 in your savings account, you will only pay interest on $212000.

Mortgage Originator
These are companies that write and process loans with money usually obtained for a pool of funds. They are at the consumer end of the securitisation process.

Mortgage Protection Insurance
This is insurance taken out by a borrower to ensure they have sufficient funds to meet their repayments in the event of sickness or loss of job (through redundancy). Can also be known as income insurance. If considering Mortgage Protection Insurance you should seek professional financial advice from your accountant or a financial planner.

Mortgage Registration Fee
This is a fee charged to register you mortgage with the State Government. Fees will vary from state to state. The fee will be part of the upfront settlement costs of your loan (along with stamp duty, transfer fees etc).

Mortgage Stamp Duty
This is a State Government tax placed on the dollar value of a mortgage.

Negative Gearing
Negative gearing occurs when you borrow for investment purposes (i.e. to purchase an investment property), and the costs of the investment (such as interest charges) exceed the returns from the investment (i.e. rental income). The loss may then be claimed as a tax deduction, depending on the circumstances of the investment – if considering negative gearing, ensure you seek financial advice first.

Non-conforming Loans
Loans where the standard loan criteria (proof of employment, proof of income etc) are not met. Low doc loans can be described as non conforming loans.

NSR
Net Service Ratio

Offset Account
A saving account linked to the home loan that allows the interest earned on the savings is applied to reduce the interest on the loan. An offset can be 100% where interest rates earned & paid are the same. A partial offset is then only a portion of the rate paid on the loan.

Ongoing Monthly Fee
A monthly fee charged by the lender for maintaining and administering your loan. Most lenders have a variety of loan products, some with monthly fees and some without. Also known as a loan maintenance fee or a loan administration fee.

Option to Buy
A legal document which gives the right to buy within a specific time frame at a specific price. There is a cost associated with this.

Overdraft
A pre-arranged limit to which a person can exceed an account balance.