Finance

Glossary

Building rate: This is a higher interest rate [usually 1% above the lower rate] paid to investors Deferred establishment fee: Part or the whole establishment fee is deferred until the rollover or maturity date. Limited availability.

Early term repayment option: This occurs when a borrower pays higher interest to:

Reduce or repay the debt before maturity
Retain an interest reset option

Fixed interest: The interest rate is fixed until maturity.

Fixed term: The secured debt cannot be repaid early unless a repayment option exists

Interest reset option: (IRO) An interest rate premium is paid to the investor to allow the borrower to reset a current interest rate in falling interest market which is explained in the Client Centre.

Repayment options:

NR or CR no right to repay the loan amount before maturity
R1 right to repay with 30 days notice and one month interest for each part or whole year remaining
RR right to repay with 30 days notice
RPR right to repay part or entire principal on any interest payment date after giving written notice not less than 30 days before each repayment.
RPD right to obtain a partial discharge of any security held [minimum 3 month terms and other conditions may apply before repayment options can be exercised]

Variable interest rate:This is set at the time the mortgage security is issued and then rises and falls in line with the cash target rate set by the Reserve Bank of Australia and explained in the Client Centre

Loan to Valuation Ratio (LVR): This is the valuation ratio or the percentage of property value that ASL will lend up to.