In Part 1 of our Mortgage Jargon series, you will learn about the jargon terms you might encounter at the beginning of your home-buying journey.

Today, in the second part of our series, we’ll cover the mortgage jargon you’ll encounter as you approach the final stages of buying your first home. Understanding these terms will help you navigate this critical phase, ensuring your homeownership transition is as smooth as possible as you begin thinking about moving into your new home.

Tender

Buyers can submit written offers on a property before the tender deadline. The offers are private and confidential and in writing. You can make a tender conditional, but most sellers prefer unconditional tender offers before opening it up to more offers. 

Fixed Interest Rate

When choosing a mortgage, you’ll need to decide between a fixed interest rate and a variable interest rate. A fixed-rate mortgage locks in your interest rate for a specific period, usually between one and five years. This option provides stability, as your repayments won’t change during the fixed term, allowing for easier budgeting.

Variable Interest Rate

A variable interest rate fluctuates with market conditions. This means your repayments could increase or decrease over time. While a variable rate might start lower than a fixed rate, it carries more risk, as your payments could rise if interest rates go up. Some buyers choose a combination of both—a split loan—where a portion of the mortgage is fixed, and the rest is variable, providing a balance of security and flexibility.

Conveyancing

Conveyancing is the legal process of transferring ownership of the property from the seller to you, the buyer. Your solicitor or conveyancer will handle this process, ensuring that all legal requirements are met, and that the title is transferred to your name without any issues.

Legal Fees

Alongside conveyancing, you’ll encounter legal fees. These fees cover the cost of the legal work involved in the property transaction, including the title search, preparing documents, and liaising with the lender. While legal fees are an additional expense, they’re necessary to ensure that the purchase is legally sound and that your interests are protected.

Mortgage documents

Before you can move in, you’ll need to sign the mortgage documents. These documents outline the terms of your loan, including the interest rate, repayment schedule, and any applicable fees. It’s important to review these documents carefully and ask your lender or solicitor any questions you might have before signing.

Mortgage Repayments

Asa new homeowner, understanding your mortgage repayments is essential. Your repayments will typically include both the principal (the amount you borrowed)and interest. Some loans may also allow for interest-only repayments for a set period, usually up to five years. This option lowers your initial repayments but means you won’t be reducing your loan balance during this time.

Break Fees

If you decide to pay off your mortgage early or switch lenders before your fixed-rate term ends, you may incur break fees. Break fees compensate the lender for the loss of interest they would have earned if you had continued with the loan as originally agreed.

Capital Gain

The Capital Gain is the amount you earn when you sell your property. If you buy a property for $600,000 and sell it for $800,000, you have a $200,000 capital gain.

Chattels

Chattels are moveable items included in the sale of the property, such as curtains, light fittings, and appliances.

Unconditional Offer / Settlement date

Once all conditions of the sale are met, your offer becomes an unconditional offer. This means you are legally bound to purchase the property, and the seller is committed to selling it to you. At this point, both parties will agree on a settlement date—the day the property officially changes hands.

Possession Date

Often the same as the settlement date, this is when you can officially move into your new home!

Work with a leading mortgage broker

Understanding these mortgage jargon terms will help with a seamless home-buying experience. If you found this helpful, you may also want to learn more about the hidden costs of homeownership to ensure there are no surprises and you can get onto the best part -  the excitement of unlocking the door to your first home.

You don’t have to go through this process alone. Contact Benchmark Mortgages today, where you’ll receive expert mortgage guidance focusing on personalised service, delivering tailored solutions to help you achieve your financial goals.

My mortgage broker services have earned me recognition as one of NZA’s inaugural Top 25 Brokers, and I’m thrilled to provide personalised advice to help more first-time homebuyers in New Zealand achieve their dream of home ownership.

Get in touch today, and let’s start your journey to homeownership!

‍