Apr 11
15
First Home Loans Finance Appendix – O
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First Home Loans Finance Appendix – O
O
- Offset Account/Mortgage Offset
- Helps reduce interest costs on a loan by linking the loan to a transaction or deposit account. The balance in the transaction account ‘offsets’ the loan principal. Interest is then calculated on the loan principal minus the balance in the account. For example, if the principal on the loan is $180,000 and there is $5000 in the transaction account, then interest is only calculated on $175,000.
- Official Cash Rate
- The Official Cash Rate is the interest rate set by the Reserve Bank of Australia and used to influence the general level of interest rates in banking and the economy. Changes to the cash rate, also termed “official interest rates”, usually flow on to variable home loan, personal loan and credit card rates within weeks.
- Origination Fee
- A fee for originating the loan charged by the lender. Also called an application fee.
- Overdraft
- A pre-arranged limit to which a person can exceed an account balance.
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