Home loans glossary of terms

Did you know that the decision to buy is usually made within 42 seconds of seeing the property? First impressions are most lasting. If you want to make sure your house gives a great first impression, follow the steps below.

Should I buy or should I build? If you are asking yourself this common question the information below might help to make your decision a little easier.

If you've ever had trouble understanding the abbreviation used in real estate advertisements, the handy guide below should remove any confusion. And if there's one we've missed, let us know and we'll add it to the list.

Buying a home is a dream of a lifetime for most of us. Before applying for a home loan, consult professionals who can help you deicide what suits you best. Here are some tips that will be helpful when you are looking for a house on your own.

Once you've saved up the deposit for a home, don't forget to take into account all the extra fees that come with buying a house - some or all of these: stamp duty, legal costs, disbursements, mortgage insurance, pest inspection report, survey report, builder's report, strata inspection report, loan application fee, valuation fee, registration fee, sundry fees like refinancing or switching fees.

Making additional repayments beyond what's required in your minimum monthly repayment is one of the best ways to reduce the total interest paid and term of your loan. As a rule of thumb, every $1 in extra repayments you make early in the life of your loan saves around $2 in interest over the term of the loan, depending on the level of interest rates. Consider either one-off lump sum payments when you have spare cash or commit to increasing your regular repayment amount.

If you're earning more than $50,000 a year, or $80,000 or more with a partner, ask lenders and brokers about the "professional packages". The home loan interest rate is usually discounted by 0.5 per cent on which ever loan you choose. Relationship discounts are also available from banks and credit unions for those borrowers who consolidate a range of planning business with the one institution. Home loan discounts, savings account fee waivers and credit card annual fee waivers are commonly offered.

Home lenders entice borrowers to their home loans with attractive low introductory rates. These rates may be up to 2 percentage points below the standard rates for home loans and look therefore look very attractive. But these "honeymoon rates" only last for six months to a year before automatically reverting to the standard rate offered by that lender. By all means take advantage of these discounted rates but don't let them dictate your choice of loan. It is far more important to compare loans by felxibility of features and the standard rate that you will face for years into the future. The 'comparison rate' that lenders must publish for each loan is a much better tool with which to compare the true interest and fees costs of different loans.

Attractive when interest rates are rising, fixed-rate loans also lock you in for a fixed term and as such are less flexible than variable-rate loans. You may not be able to make additional repayments or pay the loan out early without facing high penalty charges. Fixed rate loans suit borrowers who really value the certainty of knowing exactly what their future repayments will be - property investors and borrowers on a tight budget, for example.