There are many elements that make up a home loan facility. Consider loan features that meet with your financial needs
Principal, interest, term & repayments.
Here we explain a number of the basic terms and definitions used in home loans, mortgages and business finance:
- Principal
- Interest
- Term
- Repayments
- Amortisation
Loan principal
âPrincipalâ is the amount of money you borrow from the Lender when you take out a home loan, mortgage, or other finance.
Loan interest
âInterestâ is the fee the lender charges you for the use of their money. The interest charge on your loan depends on the amount of money you borrow, the interest rate, and the term of the loan.
Loan term
âTermâ is the agreed period you have to repay your loan. For some loans, this could be a year or less, while for most home loans it is 25-30 years.
Loan repayments
Over the term of the loan, you make repayments on a regular basis â typically monthly. These repayments generally cover the interest charge and a portion of the principal.
Loan amortisation
This is a scary sounding term but itâs just another way to describe the repayment of your debt. Over the term of the loan, your regular repayments are said to âamortiseâ the loan.Â
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