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Glossary of terms

TermDefinition
Daily Accomodation Payment (DAP)The DAP is the weekly or monthly charge for a retiree’s stay at a residential care facility.
Refundable Accomodation Deposit (RAD)The RAD is a lump sum used to cover a retiree’s stay at a residential care facility. At the end of that time, whatever’s left in the RAD is returned to the retiree’s family.
In-home careThis is a form of aged care in which professional carers visit you at your home. Some of these professionals work part-time, and some move in with you.

Some reverse mortgage lenders put up rules around which in-home care services you can spend their loans on. But with us, you’re free to choose the people you
feel most comfortable with caring for you in your home.
Residential care This is a form of aged care in which you move out of your home and into a professional care facility.

Some reverse mortgage lenders put up rules around which care facilities you can spend their loans on. But with us, you’re free to move into the residence you feel
most comfortable at.
Loan balanceThis is the amount you owe on a loan. It’s basically the remaining principal and interest since your last payment.
Loan to Value Ratio (LVR)The LVR is the value of a potential loan, but as a percentage of the market value of your home.

For example, if you wanted a loan that was worth half of your home’s value, your LVR would be 50%.
MortgageA mortgage is a loan, with interest, where your home is used as the collateral. If you fail to stick to the terms of your mortgage, your lender can take and sell your home
to make their money back.
Reverse mortgageA reverse mortgage is a loan that uses the equity in your home as collateral. You pay it back using what you make from selling your home.

These loans are usually used by home-owning retirees to give themselves a little extra income.
Variable interest rate
This is basically an interest rate that changes during the life of the loan. If the rate goes down, so do your interest repayments.

It allows us to create a more flexible loan, giving you more control over how and when you repay your interest.
Compound interestThis is interest calculated not only on the principal amount of the loan, but also on any interest you haven’t paid off yet. Essentially, it’s interest on interest.

With a Household Loan, you’re free to pay off your interest monthly, to stop it compounding.
Default riskThis is the risk a lender takes that their borrower might not be able to pay off a loan.

A Household Loan has no default risk, because we guarantee you’ll never owe more than your home is worth. So your loan is always covered.
DischargeThis is the end of a loan, when it’s been entirely payed off.
Discharge feeThis is the fee paid to end a loan. We never charge this fee.
Drawdown feeThis is the fee paid every time the funds of a loan are accessed. We never charge this fee
Early Repayment feeThis is the fee paid if a loan is completely paid off before its initially agreed upon end date. We never charge this fee.
Establishment feeThis fee covers the cost of creating your loan. We charge 1.5% of your loan upfront, which you can either take out of your loan or pay with separate funds.
Loan principalThe is the main sum of your loan, not including any interest.
Regular Service feeThis is an ongoing fee charged to keep a loan up and running. We never charge this fee.
Reverse mortgage rateThis is the interest rate of a reverse mortgage. We’re proud to say that ours is the lowest rate in the country.
Special Attendance feeThis fee covers the cost of any third-party management we need to do on your behalf, like discharging your existing mortgage.
Age PensionThis is the government-funded pension designed to give Australians a retirement income. Your eligibility and entitlements are determined by Centrelink’s income and assets tests.
Assets testThis test determines the value of all of the assets you own. The government uses it to decide if you’re eligible for the Age Pension, and how much pension you’re
entitled to.
Association of Superannuation Funds of Australia (ASFA)They’re a national organisation that protects, promotes and advances the interests of Australia's superannuation funds, as well as their trustees and members. They’re non-profit and non-political.
ATOThe Australian Taxation Office. You can visit their website at ato.gov.au
Australian Securities and Investments Commission (ASIC)They’re a federal government body responsible for administering and enforcing laws to protect consumers, particularly when it comes to superannuation,
investments, insurance and banking.
Income testThis test determines the value of all of your income, from every source. The government uses it to decide if you’re eligible for the Age Pension, and how much pension you’re entitled to.
Superannuation (super)Australian Taxation Office defines super as “money set aside during your working life for when you retire.”
Household CapitalThis is what we call your home equity. It’s a fraction of the value of your home, that we then make available to you as capital to use during your retirement.
Household LoanThis is our version of a reverse mortgage. It comes with a number of protections to keep you safe and
comfortable in your retirement.
Live Well At HomeWe want your retirement to live up to its full potential, and this phrase represents our promise to you: we will back your ambition, whatever it may be.
Lump sumThis is a single large payment made at once. It’s one of the ways you can access your Household Capital.
RefinanceThis is when you replace one debt with another one. In our case, a better one with a lower interest rate, flexible repayment and, we reckon, nicer people to deal with.
Retirement incomeThese are the funds you use to support you and your family during your retirement.

In our case, it’s a reliable and comfortable income drawn from your Household Capital.
Retirement specialistAn expert in retirement planning and finance. Someone with the smarts and experience to look at your specific situation and help you put your best foot forward. We happen to know the finest specialists around.
CareThis refers to the in-home or residential are you might need in retirement. Either one can give you a comfortable life, and it’s our goal to help you afford the
care you deserve.
Contingency fundJust a little money saved away for a rainy day. It’ll help you with any unexpected costs, like medical expenses or home repairs.
GiveThis refers to your ability to give your family a little financial help, once your own needs are taken care of, that is. Many retirees enjoy becoming the Bank of Mum & Dad and helping their kids out with buying their first
home, or with the grandkids’ education.
LiveThis refers to your wellbeing, and your ability to live life the way you want to. Your retirement is brimming with potential, and we want bring that potential to life.
SustainabilityThis is one of the qualities of a Household Loan, which are responsibly given and flexibly paid. You should trust that your loan is a long-term solution that takes care of your present without harming your future.
Top UpThis refers to your ability to top up your super using your Household Loan. We simply transfer capital from your home into your super, giving you a more comfortable
super income stream during your retirement
AssetAn asset is just something valuable that you own, which you could convert into capital. Your home is an asset, but so is your land, your car or any investment bonds
you have.
DepreciationThe decrease in the value of your home over time.
Home equityHome equity is the market value of your home, after accounting for any debts against it (like a mortgage).
Property deedA property deed is a legally binding document that confirms your ownership over your property. You can use a property deed to transfer the title of a property to a buyer.
Property titleA property title refers to your ownership, or part ownership, of a property. Having the title of a property means you can use and modify it.
BeneficiariesThese are the people who will one day get your assets.
AppreciationThe increase in the value of your home over time.
Flexible repaymentsYou have total control over how you’d like to repay your loan.

The principal is usually repaid after you choose to sell your home, but you’re free to pay it off earlier, if that’s easier. As for the interest, that can wait till after you sell your home as well. But some prefer to pay it off each month to stop it compounding.
Lifetime occupancyThis is one of your legal protections, and it means you will not have to leave your home until you decide you’re ready to. We can’t force you out, and we can’t force you
to sell it.
No negative equity guarantee (NNEG)This is one of your legal protections, and it means that you cannot end up owing us more than your home is worth.

If, for some unexpected reason, the value of your home depreciates, you won’t have to struggle to find the money to repay your Household Loan. Your home will
always cover your debt.
OwnershipThis is one of your protections, and it means that you will remain the absolute owner of your home, and the title remains entirely in your name.

It also means that if the value of your home appreciates over the coming years, then 100% of that growth goes
into your pocket.