Glossary of terms

A fee paid to the lender for setting up your home loan.

The rate at which interest is charged on money that is owed over a one year period. Keystart calculates interest daily and charges it to the loan on a monthly basis.

A basis point is equal to 0.01% interest. For example, 50 basis points is an interest rate of 0.5%.

An increase in the value of your property over time.

A caveat lodged upon a land or property title indicates that a party, that is not the owner, claims some right over or interest in the property. In the case of shared ownership loans, the Housing Authority will lodge a caveat to protect their interest as they will be a part-owner in the property.

A tool that helps you identify the true cost of a loan because it includes both the interest rate and fees and charges relating to a loan, reduced to a single percentage figure. A comparison rate allows you to compare ‘apples with apples’ and make a more informed decision when choosing a home loan. The rate will be a percentage rate per annum based on certain fees and charges together with the compounding frequency as outlined in the Consumer Credit Code (Code).

A loan specifically for building a home as opposed to buying an established property. It has a different structure to home loans for existing properties in that the loan funds are drawn down at different stages as the construction progresses. 

See What's different about construction loans?

A written agreement outlining the terms and conditions for the purchase or sale of a property. Often referred to as an Offer and Acceptance.

The transfer of legal title of real estate or land from one person to another. In Western Australia, conveyancing can be done by a solicitor or licensed settlement agent (also known as a conveyancer).

You can read more from A guide to settlement.

An assessment of the credit-worthiness of an individual based on their borrowing and repayment history.

A report from an authorised agency that shows the borrower's credit history.  Lenders access the information in your file to help them decide whether to lend to you. They can also record a default on your file if you make loan repayments late, or don’t pay a utility bill. Every time you make an application for finance an entry is recorded on your file showing the lender you applied to, the type of finance, the amount and the date.

Failure to abide by the terms of a mortgage or loan agreement, such as not making minimum required loan repayments. Defaulting on a loan may result in financial penalties and, in extreme cases, Keystart taking legal action to repossess the mortgaged property.

A reduction in the value of your property over time due to wear and tear.

Regular electronic debiting of funds from a nominated account. This is Keystart’s required method of repaying a mortgage.

Miscellaneous fees and charges incurred during the conveyancing process, including search fees and charges paid to government authorities.

This is when you discharge, or close, your loan obligations to Keystart either by refinancing or paying off your loan.

To access available loan funds. With a Keystart construction loan, the approved loan amount will be drawn down on a gradual basis as the land is settled and construction of the home begins.

The difference between the value of your home and the amount you owe on it. For example, if your home is worth $400,000 and you owe $300,000, your equity is $100,000.  As you pay off your home loan, your equity increases. It is possible to have negative equity if the value of your home is less than the amount you owe.

Keystart allows you to make extra repayments towards your loan account at any time. These extra repayments may assist you in paying off your loan sooner and reduce the amount of interest paid.

A one-off government grant to help pay for the costs of buying your first home. You may be eligible for it if the property you’re buying is a new build or brand new house never lived in.

Find out more about the FHOG.

If you’re buying your first home in WA and it meets the HBAA grant criteria – and you’re buying from a licensed real estate agent – you could be eligible to receive a grant to go towards the costs of buying your home.

A lower interest rate offered for a short time at the start of a loan. The lower rate will revert back to a standard rate at the end of a set period.

The regular payment that you as the borrower agrees to make to Keystart. Principal and interest repayments include both the interest due and a component of the principal amount borrowed.

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.

An insurance payment paid by you as the borrower to a lender to cover them if you cannot make your repayments.  If you are able to, you can pay the premium up front. Otherwise it can be capitalised to your home loan amount, to be paid off each month. Keystart does not charge lender's mortgage insurance on any of its loans. 

A legally enforceable arrangement that sets out the terms and conditions of your loan with a lender.

This is the length of your loan, usually in years.

The total percentage of your property value that you’ve borrowed. For example, if your property is worth $400,000 and you’ve borrowed $320,000, your LVR is 80%.

A mortgage is the legal document that allows a property or real estate to be used as collateral for a home loan. The mortgage allows the lender a legal mechanism to take possession or sell the property if the borrower (mortgagor) defaults on the loan.

(Sometimes referred to as conditional approval): A legal document from your lender that states how much they’re likely to let you borrow based on a review of your financial situation, objectives and requirements. The pre-approval is subject to terms and conditions.

A principal and interest home loan requires borrowers to make payments on the interest accrued on the loan, as well as repay a part of the principal. In this way, repayments on principal and interest home loans actually reduce the debt over time. Repayments are calculated and spread out so that the last scheduled payment fully pays out the home loan. Repaying both interest and the principal will allow borrowers to gradually increase their equity in the property by reducing the size of their loan.

A home loan feature that lets you make extra mortgage repayments and take them back out if you need.

 Moving your home loan from one lender to another. Read our guide on refinancing your Keystart home loan.

Refinancing your home loan

A tax levied by state and territory governments when a property is sold, and likely your biggest upfront cost when you buy a property (aside from your deposit).

The standard variable rate (or SVR, as it’s more commonly known) is the standard home loan rate charged by the lender. It’s normally used as a benchmark rate from which other variable products are priced.

Allows individual ownership of part of a property called a ‘lot’ (generally an apartment or a townhouse) combined with shared ownership in the remainder called ‘common property’, for example driveways, foyers and gardens through a legal entity. This legal entity is often referred to as a body corporate or strata company.

The money that’s built up from making extra mortgage repayments.

This is confirmation that your lender has approved your full home loan application and will lend you the money.

An estimation or assessment of the current market value of your property. Valuations must be carried out by an independent and qualified property valuer, whereas a property appraisal can be undertaken by a real estate agent. In some instances, an independent valuation is required, for example for a Keystart shared ownership customer, we require an independent valuation to determine how much is owed to the Housing Authority when selling or refinancing the property.

The interest rate on a variable rate home loan can change at any time, either up or down. The rate can be influenced by changes in the Reserve Bank of Australia's official cash rate, or the lenders own costs. Market circumstances and competition between lenders can also lead to interest rate changes, which can affect the interest rate of your loan. The interest rates