Common terms and acronyms Part 2 – From EOIs to deposit bonds, we unpack them all! (Ep. 187)

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In this week’s episode, Dave, Cate and Pete take you through:

    1. In this week’s episode, Dave, Cate and Pete return to deliver part two of acronyms and terms. They will take you through:
      1. Standard variable rate (SVR), Rate lock fees, P&I, I/O, Owner-occupier lending and EFT. Dave talks us through these terms and highlights a few key points of interest. Firstly, standard variable rate discounting is far more common these days, as opposed to previous decades. Profit margins are wider, banks are hungry for business, and lenders are competing. Rate locking is a timely offering to discuss for our listeners. Given the rate of increase on our cash rate and the general feeling of caution in our current market, rate locking can be a prudent exercise. Dave spells out some of the things that buyers should understand. Owner-occupied terminology is relevant in today’s market as our interest rate contrasts between investor and OO lending is stark. Cate shares with the listeners what a buyer’s agent’s focus on OO is all about… and it’s quite different to Dave’s.
      2. Expressions of interest (EOI), ECOS, and period homes – Cate and Pete delve into these terms – Pete compares the differences between private treaty, EOI and auction campaigns. Cate sheds light on what an executed contract of sale really means. Pete details the different period and character homes and leans on Cate for some Victorian styles that are still prominent in the inner ring suburbs of Melbourne and some of our provincial regions.
      3. OTP…. not the trio’s favourite type of property, but Cate shares a surprising twist – Off the plan doesn’t just refer to a brand new dwelling. For a subdivided older house, an ‘off the plan’ contract can still apply. How?… tune in to find out.
      4. FHOG… not what you suffer after a big night. Dave shares with our listeners a fantastic offering posed by our States and Territories. The first home owner’s grant varies from state to state and any eligible purchasers owe it to themselves to research this valuable opportunity.
      5. FHLDS. This great initiative supports those with insufficient deposit savings on hand, and Dave and his team have been able to assist many clients over recent years due to the first home owner’s low deposit scheme.
      6. DHA and NRAS: Pete doesn’t listen too hard to the negative rhetoric about defence housing. He emphasises that it’s important to focus on the location, the returns and the term of the arrangement. “If you’re going to get into one of these schemes, read the fine print – what does it really involve?” And Pete shares some other very helpful tips as an experienced NRAS investor himself.
      7. OFI’s, cooling off periods: Cate talks about cooling off periods, the ramifications of doing so, and the financial cost of deciding to cool off. Not for the feint-hearted.
      8. Auction quotes – how do buyers approach it? is there a ‘rule of thumb’ way of deciphering the real price? or is there another method? Cate explains. Pete throws cat among the pigeons when he asks about rental price quoting also, and Cate talks about the occasions when cooling off in the state of Victoria is not an option
      9. Rental yield and terms contract – Cate talks through what these both mean, and how rental yield is calculated.
      10. Deposit bonds… not common and often misunderstood. What are they? When are they often used and how do they work? Cate and Dave canvas this unusual deposit method.
      11. EBITDA… earnings before interest, taxes, depreciation and amortisation. Dave walks our listeners through how this measure is calculated.
      12. …and our gold nuggets!

Gold Nuggets

Peter Koulizos, the ‘Property Professor’s Gold Nugget: Pete recommends that buyers get some good advice on what all of these acronyms mean before they sign a contract.
David Johnston, the ‘Property Planner’s Gold Nugget: And Dave implores borrowers to challenge their strategic mortgage brokers and advisors to explain any unknown acronyms. While they are exciting to ponder, these are industry terms that shouldn’t be used for clients.


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