Everything you ever wanted to know about loans, explained in simple terms.


AAPR: Also referred to as a Comparison rate, the Average Annualised Percentage Rate reflects the total cost of your loan by taking into account costs other than the advertised interest rate. This is then expressed as a total cost to you over an average loan term. So basically it is the combination of the interest rate and any compulsory fees that are charged to the loan (and this is key) expressed as a percentage of the actual loan amount. Initially devised to show up those horrid honeymoon rate loans that had super low introductory rates and then jumped up extravagantly once you were locked in; the issue with comparison rates is the lenders can get around allowing for fees by charging them to a different account - remember its only fees charged to the loan which are included - and they don’t talk about incalculable fees like redraw fees which can add up dramatically but can’t be estimated upfront (who knows how many times you might redraw and therefore how many to include). The thought was good but in practice they fall down a little.

Acceptance: To agree to the terms and conditions of an offer contract. Sign on the dotted line and return – usually with an expiry date. Usually referred to as “signing your life away”, but actually that’s the mortgage…

Additional Repayment: Additional funds paid off your loan which exceed the minimum monthly repayments. All loans have a natural balance that drops as you make repayments – that’s how they get paid off – and anything about this amount is called “additional repayments” and in most cases can be accessed via “redraw”, or transfer back out of your home loan (for emergencies and other worthwhile purposes. Because interest is calculated on the current daily balance these additional repayments both put you ahead and save you loads of interest. T