Buying a home is an exciting endeavour. It isn’t just about owning property. This will be the home that you will make a lifetime of memories in, shared with family and friends. However, for first time buyers, the world of home buying can be a confusing one. There are plenty of words and terminology that are thrown around that newbies and even those already on the property ladder may be confused.
So, we are here to demystify the words in the home buying world and help you have a better understanding, so you can make a fully informed decision when you come to buy a home.
Here is a glossary of terms commonly used in the world of buying a home.
Home loan: The money that is loaned in advance to one or more people to buy a property such as a house and is paid back over time.
Mortgage: A mortgage is a legal agreement between you and a lender, in which money is loaned to purchase property, and paid back over time, alongside interest.
Deposit: The money you must pay upon purchase of the property, to secure both the home loan and the ownership.
Pre-approval: The ballpark figure your potential lender will give you, to give an indication of how much money you can borrow.
Conditional offer: When you offer to buy a house based on certain conditions. For example, you may need to organise finance or see a satisfactory building report.
Unconditional offer: When you make a straightforward offer based on the terms of the contract.
Mortgage broker: A professional who can help navigate through the entire process, from pre-approval, to finding the right lender, to settlement day.
Credit score: The history of your credit, and a prediction of how likely you are to pay your home loan off on time, based on your payment history.
Interest: The monetary charge for borrowing money from a lender.
Principal: The original sum of money borrowed. It is also the price of the property.
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