A – E
|There are a number of agencies that provide opinions an ratings about the security of companies, shares and bonds. “AAA”rating is given to the most secure investments.
|Average Annualised Percentage Rate (AAPR)
|Sometimes referred to as the Compulsory Comparison Rate, this figure takes into account the other costs associated with the loan etc, and expresses them as an average interest rate, to create a level field with which to compare like loan product interest rates.
|Agree to the terms of an offer or contract.
Additional payments The facility to make extra repayments on your home loan account which reduces the term of the loan.
|An agent is someone who acts on behalf of another person or organisation. A Real Estate agent acts on behalf of a landlord or owner in the letting or sale of property.
|To pay off principal and interest under a loan over a period of time usually by instalments.
Amortisation period The period of time a loan is calculated over (and repaid).
|The fee charged by a lender to cover or partially cover the lender’s costs of setting up or establishing the loan.
|An estimate of the value of a property being used as security for a loan.
|Legal transference of a right or a title to a property, to another party.
|A public sale where the property is sold to the highest bidder.
|A worksheet outlining your assets and liabilities and net worth.
|Bank Bill Swap Reference Rate (BBSW)
|A market rate of interest that is widely used to price commercial borrowings. The Bank Bill Swap reference rate can be found in national newspapers.
|The legal financial state an individual is in, when unable to meet debts (for Companies it’s known as being ‘wound up’). A debtor may be declared bankrupt by the Federal Court at either the debtors or the creditors instigation, and the debtors estate will be placed in the hands of an official Receiver who will distribute the estate in accordance to the provisions of the Bankruptcy Act.
|A term used to measure the rate of interest. For example, ten basis points equal 0.10%.
|A corporation of the owners of units within a strata building. The owners elect a committee responsible for the management of the building and common areas.
|A person, persons, or entity borrowing money to purchase, payoff, or refinance a product or effect.
|Penalty charges for “breaking” or discontinuing the agreed fixed term of a loan.
|When you need to purchase a new home before selling your old home, bridging finance allows you to finance the purchase.
|The monetary (financial) gain obtained when you sell an asset for more than you paid for it.
|A loan where the interest rate cannot exceed a set level for a period of time, but unlike fixed rate loans, can fall.
|If a caveat is lodged on a property Certificate of Title it indicates that another party other than the owner claims some right over or interest in the property.
|Certificate of Title
|A document that details the ownership and land dimensions of a property and lists any encumbrances on it.
|The term used to describe any right established over a borrower’s property to secure a debt or performance of an obligation.
|Chattels are personal property, such as clothing, appliances and furniture. Chattels include moveable possessions which may be included in the sale (e.g. furniture).
|A seller has a clear title when there are no restrictions (such as an outstanding mortgage) preventing the sale, and when ownership of the seller has been established.
|Additional or supporting security given in addition to the principal security.
|Also known as split loans, combination loans occur when various loans are put together to form one loan.
|Comparison Rates Schedule (CRS)
|Comparison Rate Schedule. The schedule displayed by a lender that give the annual percentage rate and the respective Comparison Rate, for the lender’s loan products for specific amounts over specific terms.
|Consumer Credit Code (UCCC)
|The UCCC is a law that protects individuals (and strata corporations – but not other companies) who are borrowing money predominantly for personal, domestic, or household purposes. The Consumer Credit Code applies to such loans regardless of the size of the loan and gives borrowers certain rights and requires lenders to give borrowers certain information about their loan.
|An agreement between two or more people that is enforceable by law. Contracts may be written, oral or implied by a person’s behavior.
|Contract of Sale
|A written agreement outlining the terms and conditions for the purchase or sale of property.
|The transfer of ownership or property from the seller’s name to the buyer’s name.
|Credit Ombudsman Service Limited (COSL)
|Formerly known as MIOS (Mortgage Industry Ombudsman Service).
|A guarantee of temporary property insurance before the implementation of a formal policy.
|A person, entity or business to whom money is owed.
|Interest calculated on a daily basis – varies according to daily account balance.
|Debt Service Ratio
|This is a measure of the borrower’s capacity to repay the loan. Lenders calculate the Debt Service Ratio by taking into account a borrower’s expenses as a proportion of their income.
|Someone who owes money to someone else.
|A legal document that states an agreement or obligation regarding a property.
|Failure to pay a loan payment by a specific due date.
|Deferred Establishment Fee
|The penalty imposed by a lender when the borrower pays off the loan.
|Direct Debit (DD)
|Regular electronic debiting of funds from a customer’s nominated bank/building society cheque or savings statement account (or some credit union accounts).
|The fees and charges, including any government fees, associated with establishing a loan.
|An administration fee to cover the costs incurred in finalising a loan account.
|Act of transferring money from lending institution to the borrower after the loan has settled.
|Debt Service Ratio (DSR)
|Debt Service Ratio.
|A right to use a part of land which is owned by another person or organisation (e.g. for access to another property).
|A home owner’s financial interest in a property. Equity is the difference between the price for which a home could be sold and the amount still owing on its mortgage. Equity usually increases as the outstanding principal of the mortgage is reduced through regular payments. Market values and improvements to the property also affect equity.
|Fees payable to a lender to cover the costs of setting up a loan.
|Penalties changed by the lender when a loan is paid off before the end of its term. Exit fees generally apply to fixed interest rate loans.
F – J
|First Home Owners Grant (FHOG)
|The First Home Owners Grant is a grant from the Federal Government which is available as compensation for the increased cost of housing after implementation of the Goods and Services Tax (GST) on 1 July 2000. From time to time the Government applies additional bonuses, boost payments or stamp duty reductions to supplement the grant. Check the relevant state’s State Revenue Office website for full details of your entitlement.
|A loan that has an interest rate that does not fluctuate.
|The dwelling and the land on which it stands is owned by the owner until they choose to sell it.
|The ratio of your own loan amount to the value of your security.
Sets out in writing the Bank’s right to retain property until a debt is paid. Includes
|Power of Attorney and other clauses generally contained in Bank security forms.
|State and government charges at the time of settlement, e.g. stamp duty.
|A party who agrees to be responsible for the payment of another party’s debts should that party default.
|A refundable deposit based on the goodwill of the buyer to go ahead with the purchase.
|A home loan requires you to pledge your home as the lender’s security for repayment of your loan. The lender agrees to hold the title or deed to your property until you have paid back your loan plus interest.
|Some lenders offer a “discount” or introductory rate for a short period of time, say a year, to entice you to take out a loan with them. At the end of the “honeymoon” period, the interest rate normally reverts to the lender’s standard variable rate.
|Security against damage or loss; sum paid in compensation for loss incurred.
|The regular periodic payment that a borrower agrees to make to the lender.
|The Lender’s charge for the use of funds or the return on deposited funds.
|Interest Only Loans
|A loan where the principal is paid back at the end of the term and only interest is paid during the term. These loans are usually for a short period of time, 1 to 5 years.
|Equal holding of a property between two or more persons. If one party dies, their share passes to the survivor/s.
K – N
|A document granting tenancy of a property for a specified period.
|Lenders Mortgage Insurance (LMI)
|Lenders Mortgage Insurance is insurance taken out against the borrower to protect the lender against default. It is important to understand that lenders mortgage insurance does not provide you, the borrower, any form of protection. If the loan is in default, you may still be required to meet any shortfall between the amount owed to the lender and the amount received from the sale of your property. In most cases, the borrower pays the insurance premium.
|A debt which one is liable for; being responsible only to a limited amount.
|Line of Credit
|A flexible loan arrangement with a specified limit to be used at a customer’s discretion.
|An advance of funds from a lender to a borrower on the agreement that the borrower pays interest on the loan, plus paying back the initial amount of the loan at or over an agreed time.
|The contract between the lender and the borrower, which sets out the conditions that apply to the your loan. It is important that you read the agreement carefully, and are wise to get legal and financial advice, before you enter into the loan.
|Loan to Value Ratio (LVR)
|The loan to value ratio is a percentage rate reflecting the amount of equity in a property versus what you owe on that property.
|Lump Sum Repayment
|Lump sum repayments are payments made to the loan. These payments are made at various amounts at various periods of time.
|Security over property given to the lender for the repayment of the loan.
|An individual or company that works with a group of lenders and can arrange financing for you.
|A government tax which is payable by the borrower on the borrower’s mortgage. The amount of duty varies from state to state and in some states, mortgage duty may not be payable when the loan is refinanced.
|Mortgage Offset Account
|A savings account run in conjunction with a home loan. The interest earned on the account is applied to reduce the interest paid on the loan. A 100% offset is where the interest rates earned and paid at the same. A partial offset account is where the interest earned on the offset account is only a portion of the rate paid on the home loan.
|A regularly scheduled payment that usually includes both principal and interest.
|The lender of money, and the party who has the benefit of the mortgage over your property.
|The person borrowing the money to purchase or refinance a home.
|Gearing your investment so that the cost to maintain it (loan repayments, council rates, maintenance etc) out weigh the income produced by the investment, leading to a reduction in taxable income.
|The income received by an individual AFTER TAX has been taken out.
O – S
|Old System Title
|Common Law Title – consists of a “chain” listing all owners of a property since origin.
|A property is “passed” in at auction if the highest bid fails to meet the reserve price set by the vendor (setter).
|Where a new property may be substituted as security for an existing loan.
|Power of Attorney
|A formal appointment where a person appoints another (called the attorney) to act as their legal representative.
|Any amount paid to reduce the principal balance of the loan before the due date or any amount in addition to the minimum repayment.
|The amount of money that was borrowed, on which interest is paid.
|Principal & Interest Loan (P&I)
|This is the most popular type of loan where you repay a portion of the principal and the accrued interest over the term of the loan by regular installments.
|The capital sum borrowed, upon which interest is payable.
|Sale of a property without the involvement of an estate agent.
|Private Treaty Sale
|A property sale where the buyer negotiates on a price set by the seller, rather than through the auction process.
|A person’s property is “what is he or she owns to do what they like with.” It may be tangible or intangible, and may be given a monetary value (e.g. house, car, goodwill). Property may be classed ‘real’ which relates to land or interests in land (except leaseholds) and buildings, etc or ‘personal’, which relates to other kinds of property such as cars, bank accounts, leasehold interests in land.
|To recalculate the minimum repayment required to repay the outstanding balance of your loan over the remaining period (particularly where the loan balance has substantially increased or decreased from the original amount).
|Borrower is able to draw on pre-paid funds
|To pay off a mortgage and arrange for a new mortgage, sometimes with a different lender.
|Preset minimum acceptable price of seller at auction.
|An asset that guarantees the Lender their borrowings until the loan is repaid in full. Usually the property is offered to secure the loan.
|Ability of borrower to make and meet repayments on a loan, based on the borrowers expenses and income(s).
|Finalisation of payment by the new owner, and assumption of possession. When you pick up the keys!
|Person authorised to access an account.
|A combination of loan types forming one loan, such as a partial fixed/variable interest rate loan.
|Stamp Duty is a state government tax which is payable when a property is sold. Stamp Duty is calculated on the purchase price of the property and is paid by the buyer. Each state and territory has a different rate of duty.
|Standard Variable Rate (SVR)
|An interest rate applied to a loan that may have features such as split loan options or mortgage offset.
|Title that grants ownership of a section or “unit” of a larger building. This “unit” can be sold or transferred by the owner.
|Person who makes themself responsible for another’s payment of debt; also knows as the guarantor.
|Plan that details a block of land noting the position of any buildings.
T – Z
|Tenants in Common
|The equal or unequal holding of property by two or more persons. If one party dies, their share passes according to their Will or the law (not necessarily to the owner of the other share).
|The duration of a loan, or a specific period within the loan. This is usually written in months e.g. 360, which is 30 years.
|Third Party Security
|Security provided for a mortgage by a third party (some one different from actual borrowers) who is legally different from the borrower or debtor.
|Document describing the legal description and ownership of a property.
|Payable to the State’s Titles Office for title search, transfer of property ownership, registration of the new mortgage and discharge of the old one.
|Process to ensure that the vendor has the right to sell and transfer ownership.
|Title that grants ownership of a piece of property. Also knows as Certificate of Title.
|A document registered with the Land Titles Office noting the change of ownership.
|A property free of liabilities, restrictions or mortgages.
|When a lender lends money without taking property as security.
|A report detailing a professional’s opinion as to what a property is worth. Most lenders will require a valuation before lending funds to purchase a property.
|A professional who examines a property in order to determine its worth.
|Variable Interest Rate
|This is a fluctuating rate of interest charged by lenders. Variable interest rtes change as official market interest rates rise and fall.
|Changing any part of the original loan contract.
Vendor The seller of a property.
|Local authority guidelines as to the permitted uses of land and buildings.