Glossary

Bank Guarantee

A bank guarantee is issued by banking institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer (debtor) to acquire goods, secure a property, secure a lease, buy equipment, or draw down loans.

Business Loan

A business loan is a loan for which its purpose is for business use. Business loans are generally used to fiancé business expansion or consolidate business debts. Business loans can be secured against real property or unsecured against the business itself.

Basic Variable Loan

Lenders now offer basic variable loans with lower interest rates, but with fewer features than a standard variable loan. The interest rates and repayments vary over the term of the loan. These loans generally have a lower interest rate, Repayments are also lower, and however they may not offer the features or flexibility of other loans (not portable)

Bridging Loan

Bridging loans or bridging finance is usually a short term loan that covers the financial gap between the purchase of a new property and the sale of the old property.

Bank Bill

A bank bill is a short-term money market investment. The investor purchases a bank bill at a discount to its face value. The face value is the amount the investor will receive at the maturity date. The amount of discount (the difference between face value and purchase price) represents the return to be earned by holding the bank bill to maturity. Bank bills are short-term investments. Generally the available terms range from 30 days to 180 days. The interest rate available for longer terms is typically higher than for shorter terms, but this is not always the case.

Commercial finance

Commercial finance is a broad term used to describe the provision of finance (credit) for commercial purposes which include but are not limited to business purposes & investment purposes. Commercial finance from a lending point of view is generally used to describe the nature of the proposition and also the security involved in the transaction for example commercial, retail or industrial property finance.

Construction Loan

A construction loan is a loan used to build or develop property. Construction loans work on the basis of progressive Drawdowns usually around 5 draw downs as each stage of the construction progress completes. Once the dwelling or development site is completed the construction loan converts into a standard term loan.

Credit Impaired Loan

Credit impaired loans are loans specifically designed to cater for the finance needs of borrowers with an impaired credit history which may include defaults or judgements which are listed on the applicants CRAA. These loans are also known as non conforming loans by definition because they do no 'conform' to traditional lending policies. Applicants with an impaired credit history often find obtaining finance more difficult with traditional lending institutions. Red Rock has a range of flexible and highly competitive loans for credit impaired borrowers, Contact Us to find out more.

CRAA

The Credit Reference Association of Australia, the body which holds credit details on all of us, more commonly referred to as your credit file. When applying for any type of credit, credit providers i.e. lending institutions make an enquiry on the applicants credit file to view the credit history of the borrower. Almost all borrowers who have any credit history will have their credit file listed with Baycorp Advantage. To request a copy of you own credit file visit www.baycorpadvantage.com.au

Deposit Bonds

A deposit bond is a written guarantee that substitutes the 10% cash deposit traditionally required to purchase a property. Applicants can apply for a deposit bond and if you are approved you will be required to pay a premium (fee) for the bond. The deposit bond premium is a one off fee that replaces your 10% deposit and secures the property until settlement.

Development Finance

Is finance for the purpose of property development this can be either residential or commercial property development. Development finance is generally a broader term used to describe a one or many construction loan facilities as well as other property development finance related finance facilities for the purpose of developing real estate.

First Home Owners Grant

The First Home Owner's Grant is a payment to people buying their first home in which to live. To see if you are eligible for the grant and for further information you can visit www.firsthome.gov.au

Fixed Rate Loan

Fixed Rate loans protect you against interest rate changes for an agreed time, so you have peace of mind knowing your repayments won't increase. Fixed rate loans lack the flexibility of variable rate loans suck as ability to make additional repayments as you like. This is a trade off for the certainty in locking in rate. If variable rates go down during the fixed rate term you won't benefit, break costs may apply if you wish to revert to a variable rate before the end of your fixed rate term

Home Equity Loan

Home Equity Loans allow you to unlock the equity in your existing property for other opportunities such as renovating your home, investing in shares or financing an investment property.

Interest Capitalisation

An Interest capitalisation option generally applies to Line of Credit loans which do not require regular repayments provided that the loan facility has sufficient credit or equity in the loan. For example you may have a line of credit with a limit of $400,000, but may have only drawn down $300,000 therefore you have $100,000 in credit or equity available for redraw. With a line of credit loan in this case if you choose not to pay the interest on your amount drawn down ($300,000), your unpaid interest is added to your loan balance, increasing the total amount that you owe, this is known as Interest Capitalisation. To find our more about this flexibility and how it may help you, please Contact Us.

Line of Credit

Line of Credit loans are interest only variable rate loans that have full flexibility attached to them such as cheque books and credit cards. These are ideal for wealth most line of credit loans offer interest capitalisation features, provided that the borrower has sufficient equity in the loan account no minimum repayment is required. Line of credit rates are generally higher than standard variable rate term loans.

Low Doc Loan

Low Doc loans are loans which do not require any formal financial documentation from the borrower. Low doc loans are generally used by self employed business people who do not have financial statements or may have complex entity structures making proof of income difficult. With low doc loans tax returns or financial statements are not required. Lenders usually base their qualification for such loans on an income declaration but no proof of income is required. Terms and credit requirements for low doc loans vary from lender to lender including mortgage insurance premiums. Red Rock offers some of the most innovative, marketing leading low doc lending options available. Contact Us about you lending options today.

Mortgage

A mortgage is a loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan.

Mortgage Insurance

Mortgage insurance is Insurance protecting a lender against loss from a mortgagor's (borrowers) default. It is important to understand that mortgage insurance protects the lender and not the borrower. Lenders use mortgage insurance more often when the borrower requires a loan for more than 80% of their property value or if the borrower requires loans where the lender has a higher risk such as low doc loans where a lender does not see any financial statements to verify the borrower's income.

No Deposit Loan

No Deposit loans are loans for 100% or 105% of the property value. Most 100% loans still require borrowers to have 3% in genuine savings, which means providing evidence of regular savings over a minimum of a 3 month period. Red Rock Mortgages can provide 100% & 105% loans where NO genuine savings are required. This benefits borrowers that may have good incomes but inadequate savings history to meet traditional lending institutions guidelines. To find our more about how these loans may help you, please Contact Us.

No Doc Loan

No Doc loans or asset loans are loans secured against property where no financial statements, tax returns or income information is required. No Doc loans are similar to low doc loans but often require even less information from the borrower. No Doc Loans generally permit lower loan to value ratios (LVRs) than with Low Doc and fully verified loans.

Portability

Loan Portability is used to define where a loan can be 'moved' from one security property to another. This feature allows borrowers to substitute their security property, when buying or selling without the need to payout or refinance the loan.

Refinance

Paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same property as collateral. Reasons to refinance include reducing the term of the loan, debt consolidation, increasing your loan size or switching to lending institutions to benefit from a lower rate of interest.

Residential Finance

Residential finance is a broad term used to describe loans secured by residential property, including homes, units, townhouses etc.

Reverse Mortgages

A reverse mortgage is a loan facility that allows you to use the equity in your home to enjoy life in retirement. This is a special loan where you can choose to make no repayments until your home is sold, which only occurs when you leave your home or at death. The home is then sold and the proceeds of the sale used to repay the loan. Any amount left over will go to you or your beneficiaries.

Rate Lock

Rate Lock is a commitment by a lender guaranteeing a specified interest rate for a specified period of time also called lock-in.

Stamp Duty

Stamp Duty may be described as revenue that is imposed on various types of instruments such as transfers and agreements for the sale of real estate, mortgages and insurance policies

Split Loan

A split loan is a loan that you can divide up or 'split' into separate components. Most red rock loans can be split up to 4 separate ways for example you may want a principle and interest portion of the loan to reduce loan debt and increase equity in your option and you may require an interest only portion for easy tax deductibility. Contact Us today about how you may benefit from split loan options

Standard Variable Loan

These are loans where the interest rate can vary throughout the term of the loan. That is to say the interest rate may go up or down during the loan term. If interest rates drop, repayments also drop. Generally, additional or extra payments reducing the principle can be made without penalty, allowing the loan to be paid off faster. Standard variable rate loans are generally flexible and often have more features.


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Glossary Bank Guarantee A bank guarantee is issued by banking institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor fails to settle a debt, the bank will cover it. A bank guarantee enables the customer (debtor) to acquire goods, secure a property, secure a lease, buy equipment, or draw down loans. Business Loan A business loan is a loan for which its purpose is for business use. Business loans are generally used to fiancé business expansion or consolidate business debts. Business loans can be secured against real property or unsecured against the business itself. Basic Variable Loan Lenders now offer basic variable loans with lower interest rates, but with fewer features than a standard variable loan. The interest rates and repayments vary over the term of the loan. These loans generally have a lower interest rate, Repayments are also lower, and however they may not offer the features or flexibility of other loans (not portable) Bridging Loan Bridging loans or bridging finance is usually a short term loan that covers the financial gap between the purchase of a new property and the sale of the old property. Bank Bill A bank bill is a short-term money market investment. The investor purchases a bank bill at a discount to its face value. The face value is the amount the investor will receive at the maturity date. The amount of discount (the difference between face value and purchase price) represents the return to be earned by holding the bank bill to maturity. Bank bills are short-term investments. Generally the available terms range from 30 days to 180 days. The interest rate available for longer terms is typically higher than for shorter terms, but this is not always the case. Commercial finance Commercial finance is a broad term used to describe the provision of finance (credit) for commercial purposes which include but are not limited to business purposes & investment purposes. Commercial finance from a lending point of view is generally used to describe the nature of the proposition and also the security involved in the transaction for example commercial, retail or industrial property finance. Construction Loan A construction loan is a loan used to build or develop property. Construction loans work on the basis of progressive Drawdowns usually around 5 draw downs as each stage of the construction progress completes. Once the dwelling or development site is completed the construction loan converts into a standard term loan. Credit Impaired Loan Credit impaired loans are loans specifically designed to cater for the finance needs of borrowers with an impaired credit history which may include defaults or judgements which are listed on the applicants CRAA. These loans are also known as non conforming loans by definition because they do no 'conform' to traditional lending policies. Applicants with an impaired credit history often find obtaining finance more difficult with traditional lending institutions. Red Rock has a range of flexible and highly competitive loans for credit impaired borrowers, Contact Us to find out more. CRAA The Credit Reference Association of Australia, the body which holds credit details on all of us, more commonly referred to as your credit file. When applying for any type of credit, credit providers i.e. lending institutions make an enquiry on the applicants credit file to view the credit history of the borrower. Almost all borrowers who have any credit history will have their credit file listed with Baycorp Advantage. To request a copy of you own credit file visit www.baycorpadvantage.com.au Deposit Bonds A deposit bond is a written guarantee that substitutes the 10% cash deposit traditionally required to purchase a property. Applicants can apply for a deposit bond and if you are approved you will be required to pay a premium (fee) for the bond. The deposit bond premium is a one off fee that replaces your 10% deposit and secures the property until settlement. Development Finance Is finance for the purpose of property development this can be either residential or commercial property development. Development finance is generally a broader term used to describe a one or many construction loan facilities as well as other property development finance related finance facilities for the purpose of developing real estate. First Home Owners Grant The First Home Owner's Grant is a payment to people buying their first home in which to live. To see if you are eligible for the grant and for further information you can visit www.firsthome.gov.au Fixed Rate Loan Fixed Rate loans protect you against interest rate changes for an agreed time, so you have peace of mind knowing your repayments won't increase. Fixed rate loans lack the flexibility of variable rate loans suck as ability to make additional repayments as you like. This is a trade off for the certainty in locking in rate. If variable rates go down during the fixed rate term you won't benefit, break costs may apply if you wish to revert to a variable rate before the end of your fixed rate term Home Equity Loan Home Equity Loans allow you to unlock the equity in your existing property for other opportunities such as renovating your home, investing in shares or financing an investment property. Interest Capitalisation An Interest capitalisation option generally applies to Line of Credit loans which do not require regular repayments provided that the loan facility has sufficient credit or equity in the loan. For example you may have a line of credit with a limit of $400,000, but may have only drawn down $300,000 therefore you have $100,000 in credit or equity available for redraw. With a line of credit loan in this case if you choose not to pay the interest on your amount drawn down ($300,000), your unpaid interest is added to your loan balance, increasing the total amount that you owe, this is known as Interest Capitalisation. To find our more about this flexibility and how it may help you, please Contact Us. Line of Credit Line of Credit loans are interest only variable rate loans that have full flexibility attached to them such as cheque books and credit cards. These are ideal for wealth most line of credit loans offer interest capitalisation features, provided that the borrower has sufficient equity in the loan account no minimum repayment is required. Line of credit rates are generally higher than standard variable rate term loans. Low Doc Loan Low Doc loans are loans which do not require any formal financial documentation from the borrower. Low doc loans are generally used by self employed business people who do not have financial statements or may have complex entity structures making proof of income difficult. With low doc loans tax returns or financial statements are not required. Lenders usually base their qualification for such loans on an income declaration but no proof of income is required. Terms and credit requirements for low doc loans vary from lender to lender including mortgage insurance premiums. Red Rock offers some of the most innovative, marketing leading low doc lending options available. Contact Us about you lending options today. Mortgage A mortgage is a loan to finance the purchase of real estate, usually with specified payment periods and interest rates. The borrower (mortgagor) gives the lender (mortgagee) a lien on the property as collateral for the loan. Mortgage Insurance Mortgage insurance is Insurance protecting a lender against loss from a mortgagor's (borrowers) default. It is important to understand that mortgage insurance protects the lender and not the borrower. Lenders use mortgage insurance more often when the borrower requires a loan for more than 80% of their property value or if the borrower requires loans where the lender has a higher risk such as low doc loans where a lender does not see any financial statements to verify the borrower's income. No Deposit Loan No Deposit loans are loans for 100% or 105% of the property value. Most 100% loans still require borrowers to have 3% in genuine savings, which means providing evidence of regular savings over a minimum of a 3 month period. Red Rock Mortgages can provide 100% & 105% loans where NO genuine savings are required. This benefits borrowers that may have good incomes but inadequate savings history to meet traditional lending institutions guidelines. To find our more about how these loans may help you, please Contact Us. No Doc Loan No Doc loans or asset loans are loans secured against property where no financial statements, tax returns or income information is required. No Doc loans are similar to low doc loans but often require even less information from the borrower. No Doc Loans generally permit lower loan to value ratios (LVRs) than with Low Doc and fully verified loans. Portability Loan Portability is used to define where a loan can be 'moved' from one security property to another. This feature allows borrowers to substitute their security property, when buying or selling without the need to payout or refinance the loan. Refinance Paying off an existing loan with the proceeds from a new loan, usually of the same size, and using the same property as collateral. Reasons to refinance include reducing the term of the loan, debt consolidation, increasing your loan size or switching to lending institutions to benefit from a lower rate of interest. Residential Finance Residential finance is a broad term used to describe loans secured by residential property, including homes, units, townhouses etc. Reverse Mortgages A reverse mortgage is a loan facility that allows you to use the equity in your home to enjoy life in retirement. This is a special loan where you can choose to make no repayments until your home is sold, which only occurs when you leave your home or at death. The home is then sold and the proceeds of the sale used to repay the loan. Any amount left over will go to you or your beneficiaries. Rate Lock Rate Lock is a commitment by a lender guaranteeing a specified interest rate for a specified period of time also called lock-in. Stamp Duty Stamp Duty may be described as revenue that is imposed on various types of instruments such as transfers and agreements for the sale of real estate, mortgages and insurance policies Split Loan A split loan is a loan that you can divide up or 'split' into separate components. Most red rock loans can be split up to 4 separate ways for example you may want a principle and interest portion of the loan to reduce loan debt and increase equity in your option and you may require an interest only portion for easy tax deductibility. Contact Us today about how you may benefit from split loan options Standard Variable Loan These are loans where the interest rate can vary throughout the term of the loan. That is to say the interest rate may go up or down during the loan term. If interest rates drop, repayments also drop. Generally, additional or extra payments reducing the principle can be made without penalty, allowing the loan to be paid off faster. Standard variable rate loans are generally flexible and often have more features.
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