Financial Products and Services Flashcards
7 cards from real NAB practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Financial Products and Services flashcards as text
What is Lenders Mortgage Insurance (LMI) and when does NAB typically require it?
Answer: Insurance that protects the lender; typically required when the LVR exceeds 80%
LMI protects the lender, not the borrower, and is generally required when the loan-to-value ratio (LVR) exceeds 80%, meaning the borrower has less than 20% deposit.
How does a NAB mortgage offset account reduce the interest charged on a home loan?
Answer: The balance in the offset account is subtracted from the loan balance when calculating interest
An offset account balance is offset against the outstanding home loan balance, so interest is only charged on the difference, reducing the total interest paid.
What is the difference between a NAB fixed-rate home loan and a variable-rate home loan?
Answer: Fixed rates are locked for a set period; variable rates move with market interest rates
A fixed-rate loan locks in an interest rate for a specified period, while a variable-rate loan's rate moves in line with market conditions and RBA cash rate changes.
What is a redraw facility on a NAB home loan?
Answer: Access to any extra repayments made above the minimum required amount
A redraw facility allows borrowers to access any additional repayments they have made above the required minimum, providing financial flexibility.
What does 'interest-only' mean in the context of a NAB home loan repayment structure?
Answer: The borrower pays only the interest charged each period without reducing the principal
During an interest-only period, the borrower's repayments cover only the interest charges and do not reduce the outstanding loan principal.
Which factor does NAB primarily assess when determining a home loan applicant's borrowing capacity?
Answer: Income, existing debts, living expenses, and the ability to service the loan
NAB assesses borrowing capacity using a comprehensive review of income, existing debts, living expenses, and the applicant's ability to meet loan repayments.
What is a 'split loan' option that NAB offers to home loan customers?
Answer: Dividing the loan into separate portions with different interest rate types (e.g., part fixed, part variable)
A split loan lets borrowers allocate portions of their home loan to different rate types, such as part fixed and part variable, balancing certainty and flexibility.