Continuing what we left off from the previous post, here goes.
Please note that this is part 2 of 4 series of property terms.
Part 1 | Part 2 | Part 3 | Part 4
- Income-weighted Average Age – Let’s just say that this is one of the ways to prevent an older borrower to use a younger people’s name (with little or no income) to get a longer term loan. How it works is that it will average both of your salary and age and match it to the bank’s system.
- Legal Subsidy – Is a subsidy given to you if you refinance your home loan that usually cost around $2,000 to 3,000 by a bank. But now, it will be given only if it involves a large amount of money borrowed.
- Letter of Intent (LOI) – It is a document that involves an agreement between you and the other party to proceed with the negotiations. This is not legally binding though.
- Letter of Offer (LO) – When a bank offer you to to take out a loan.
- Loan Tenure – The period of how long will it takes for you to repay your loan. (You better remember this one in your household budget).
- Loan to Value (LTV) – It is the ratio of your loan vs the value of the property. If a property price is $500.000, 100% LTV means that the bank will pay the whole property for you ($500.000). But, most banks will offer a maximum of 80% LTV. And the other 20% will be coming from your end (You might be interested to know how to accumulate money by doing simple things to save up for this)
- Lock-in Period – Let’s say you settle in one bank for a loan. If for any crazy reason you decide to change your bank during this period (lock-in), they will happily slap you with a penalty fee (a percentage of the outstanding loan).
- Mortgage Servicing Ratio (MSR) – It is a proportion of your monthly gross income that you spend on mortgage payments.
- Total Debt Servicing Ratio (TDSR) – It is a proportion of your monthly gross income that you spend in debt obligations.
- Stress Test Interest Rate – It is a rate that is applied by banks to make sure that the borrowers (you) can make your payments when the interest rates go up.
- Valuation Fee – This is a payment when you want to have experts to determine the value of a property. It is usually will be conducted by banks to find out how much a buyer can borrow. (If you are going to sell you property, this is a must).
- Valuation Limit – This refers to the purchase price or the current property value, whichever lower.
Continue to part 3