• A
• B
• C
• D
• E
• F
• G
• H
• I
• J
• K
• L
• M
• N
• O
• P
• Q
• R
• S
• T
• U
• V
• W
• X
• Y
• Z

A

Accrued Interest

Interest you have earned or incurred that is yet to be paid or charged.

Additional Payments

Additional sums of money that are payed into you loan account that bring down the loan term and/or interest charged.

Agent

Person or body authorised to act on behalf of a client in the sale, purchase or management of property or other legal dealings.

Allotment

When a large area of land is subdivided into smaller pieces the smaller pieces of land are at times know as allotments.

Amortisation Period

The period of time one has to repay a loan at the arranged terms.

Application Fees

Fees charged to cover or partially cover the lender’s internal costs of setting up a loan approval for a home buyer.

Appraised Value

Estimate of the value of a property being used as security for a loan.

Annual percentage Rate

The annual effective rate of the mortgage which is made up of the interest rate, fees and charges that are incurred during the contract period.

Appreciation

The increase in the value of property caused by economic factors such as inflation, and market conditions.

Arrears

An overdue account yet to be paid.

Assets

Money, property or goods owned.

Auction

A public sale where the property is sold to the highest bidder.

B

Baycorp Advantage

Credit Reference institution. It holds details of individual and business credit histories. The largest and most sophisticated singe source of business intelligence in Australia and New Zealand.

Body corporate

A legal entity comprised of the owners of land on a Registered Plan (or Strata Plan) which includes common property. This typically occurs with units, townhouses and duplexes.

Body corporate certificate

An extract from the records of the body corporate. Used by mortgagees primarily to obtain information concerning insurance and levies relating to work on the common property.

Break costs:

Penalty charges for ‘breaking’ or discontinuing the agreed fixed term of a loan.

Bridging Finance

A short-term loan that covers a financial gap between the purchase of a new property and the sale of an old property.

Building inspection

This inspection is generally carried out prior to the purchase of a property to ensure the building is structurally sound. Contracts of sale can be made subject to the satisfactory building inspection.

Building regulations

Rules of a legal or statutory nature by which local councils control the manner and quality of buildings. They are designed to ensure public safety, health and minimum acceptable standards of construction.

Building society

Institutions operating in a similar fashion to banks. That is, they take deposits and provide loans. Customers are ‘members’.

C

Capital

The current value of your long term assets – house, property or business.

Capital gain

The monetary gain obtained when you sell an asset for more than you paid for it.

Capital Gains Tax (CGT)

A federal tax on the monetary gain made on the sale of an asset bought and sold after September 1985.

Capped Loan

A loan where the interest rate is not allowed to exceed a set level for a period of time, but, unlike fixed rate loans, is allowed to drop.

Caveat

A warning or caution. In relation to Torrens system, it is a temporary notice registered on the Title for the purpose of claiming an interest in the property.

Certificate of Title

Also referred to as ‘title deed’. It is a certified copy of the land register. The document details the land dimensions, ownership details, and encumbrances.

Chain of Title

A form of property title grounded in Common law – consists of a ‘chain’ of title documents stretching back to the original owner.

Collateral

Literally secondary or subordinate. A collateral security for example, is one given in addition to the principal security. Also used as a general term in place of ‘security’.

Commission

The fee or payment made to a real estate agent for services

Compound interest

Interest that is paid on both the accumulated interest as well as on the original principal.

Consumer Credit Code

An Act of Parliament governing the relationship between borrowers and lenders.

Contract of Sale

A written agreement outlining the terms and conditions for the purchase or sale of property.

Covenant

Formal and binding restrictions or requirements. A breach of any covenant in any loan document constitutes an act of default.

Conveyancing

The legal process for the transferral of ownership of real estate.

Credit

Borrowed money or other finance (e.g. Hire purchase) to be paid back under an arrangement with a lender.

D

Daily interest

Interest calculated on a daily basis – therefore varies according to daily account balance.

Deed

A document that has been signed, sealed and delivered. A document sealed as an instrument of bond, contract or conveyance.

Default

Failure to perform a task or meet an obligation.

Discharge

A full or partial release of a registered mortgage.

Debtor

Someone who owes money to someone else.

Deposit

a deposit is normally paid by the buyer at the time of exchanging contracts. Normally a minimum o 5-10% of the total purchase price is required.

Deposit bonds

Guarantees that the purchaser of a property will pay the full deposit by the due date. Institutions providing deposit bonds act as a guarantor that payment will be made.

Disbursements

Miscellaneous fees and charges incurred during the conveyancing process, including search fees and charges paid to Government authorities.

Discharge fees

An administration fee to cover the costs incurred in finalising a loan account.

Disposable income

Any income left over after all known expenses have been met (eg. loan payments, bills).

Draw down:

To access available loan funds, usually referring to a staged loan for property constructions, or lines of credit where the limit is set and the borrower can use the funds as required.

Duty (or Stamp Duty)

A state Government tax on financial transactions. For the purchase of real estate, it is calculated according to the property value. It also applies to the amount of the mortgage.

E

Early termination payment

The cost of winding up a loan.

Easement

A right to use a corridor or passage of land which is owned by another.

Encumbrance

An outstanding liability or charge on a property.

Equity

The amount of an asset actually owned.

Equity Loan

A loan which allows the debtor to utilise the equity in their assets in order to make additional purchases.

Establishment Fees

Fees charged to cover or partially cover the lender’s internal costs of setting up a loan.

Execute

To sign and complete a document as necessary.

F

First Home Owners Grant

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. The grant of $7,000 is available for first home buyers.

First party security

Where the debtor and mortgagor are one and the same.

Fixed charge

A mortgage debenture over specific assets of a company.

Fixed interest

An interest rate set for an agreed term.

Floating charge

A mortgage debenture over the business and undertakings of a company. The company is free to deal with the assets in the normal course of business until an event of default occurs or the debt is satisfied.

Foreclosure

The procedure whereby, in the event of default under the terms of the loan documentation and mortgage, the mortgagee takes the security property in full satisfaction of the debt.

G

Guarantee

A promise to meet an obligation if another party fails to do so.

Guarantor

A party who agrees to be responsible for thepaynent of another party’s debts. They give a guarantee.

H

High start loan

A loan where the initial repayments are high and decrease over the term of the loan.

I

Income statement

A statement of income and expenditure for a period, usually a year.

Insolvent

Unable to pay one’s debt.

Installment

The regular periodic payment that a borrower agrees to make to the lender.

Interest

The lending body’s charge for the use of funds or the return on deposited funds. See daily interest and monthly interest.

Interest only

Usually a short-term arrangement whereby payments cover the interest only, not the principal.

Interest Rate

The rate at which interest is applied.

Interest only loan

A loan where the principal is paid back at the end of the term and only interest is paid during the term. The loans are usually for a short period of one to five years.

Introductory Loan

 A loan is offered at a reduced rate for an introductory period (usually 6 to 12 months) to new borrowers. Also called a discounted or honeymoon rate.

Investment property

A property purchased for the sole purpose of earning a return on the investment, either in the form of rent or capital gain. The owner does not live in the property.

J

Joint tenants

A form of property ownership where the interest is equal between all parties. The right of survivorship is a feature meaning that an interest passes automatically to the surviving party/s upon death.

L

Land Titles Office (LTO)

A state government department which maintains the registers containing information on each parcel of land under their jurisdiction.

Lease

A contract granting use or occupation of property during a specified period or a specified rent.

Legal entity

A legal entity is an individual or organisation that can enter into a contract and can be sued for not complying with the terms of the contract. A minor (someone under 18 years of age) is not a legal entity and cannot sign a contract.

Letter of demand

A letter outlining a condition of default which usually demands the rectification of arrears or full clearance of the debt.

Liabilities

Outstanding debts or obligations.

Limit

A specified maximum loan amount.

Line of credit

A flexible loan arrangement with a specified ceiling to be used at the customer’s discretion. An overdraft effectively functions as a line of credit/

Liquidation

The process by which companies are wound up and the assets distributed among creditors. If the company is not insolvent, the assets are distributed among the shareholders.

Loan security duty

Stamp duty on loan security documents.

Loan to Valuation Ration

The ratio of the amount lent to the valuation of the security

(LVR)

(usually the house)

Low start loan

A loan where the initial repayments are low and increase over time.

Lump sum repayments

Additional ad hoc repayments, made over and above your minimum repayment requirement.

M

Market Value

The price that a property will bring in the open market from voluntary bargaining between vendor and purchaser.

Maturity

The date a debt or investment must be paid in full.

Maximum loan amount

The maximum amount that can be borrowed based on an applicants’ disposable income, deposit, and the purchase price of the property.

Minimum repayment required

The amount you are contractually obliged to repay each month, in order to repay your loan within the agreed term.

Mortgage

A form of security for a loan usually taken over real estate. The lender, the mortgagee, has the right to take the real estate if the mortgagor fails to repay the loan.

Mortgage brokers

Also known as mortgage introducers, who match prospective borrowers with financial institutions offering loans.

Mortgage debenture

A form of security taken over a company’s assets.

Mortgage insurance

A type of enhancement which protects the mortgagee from loss in the event that a mortgagee sale fails to realise sufficient funds to repay a debt.

Mortgage managers

Part of the securitised loan system. Manage loans throughout their course until the related mortgages are discharged.

Mortgage offset

A non-interest earning account that is offset against a home loan to reduce the total interest payable.

Mortgage originators

Companies who write and process mortgage loans with money usually obtained from a pool of funds. They are at the consumer end of the securitisation process.

Mortgagee

The lender of funds. In non-securitised loan situations, the mortgagee is typically the bank, building society etc who has supplied the funds. With securiitsed loans, the mortgagee is the Trustee.

Mortgagor

The person borrowing money in the terms of a mortgage (ie. The owner of the property). The mortgagor and debtor are frequently one and the same although this is not always the case.

N

Negative gearing

The process by which losses made on an income bearing investment can be deducted from taxable income from other sources.

Nominal duty

Fixed stamp duty of relatively small amounts.

Notice of acquisition

A document required in some states to accompany the transfer. It provides the LTO with information concerning land dimensions and where local government notices (rates) should be served.

Notional

In relation to stamp duty, a receipt marking on documents where duty is not required.

P

Power of attorney

A formal instrument by which a person empowers another to act on their behalf.

Prepayment

Any amount paid to reduce the principal balance of the loan before the due date or any amount in addition to the minimum repayment.

Prime security

The first or main security document.

Principal

The capital sum borrowed on which interest is paid.

Principal and interest loan

A loan in which both the principal and the interest are paid during the term of the loan.

Priority

A ranking determined by the date and time a register is noted.

Property insurance

Insurance cover which protects property against loss or damage.

R

Re-amortise

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).

Redraw facility

The component of your variable rate loan into which you can make extra repayments when you can afford to, and later draw on these funds if you need to.

Refinance

To replace or extend an existing loan with funds from the same institution or another.

Repayment

An allotted deposit to a loan account to repay a debt. Usually the repayments are broken into monthly amounts over a specified term.

Reserve price

Specified minimum price acceptable to a seller at auction.

S

Search

An examination of a public register. In relation to land, a search provides a copy of the register in order to confirm the owner (and any other rights holders) of property.

Security

Rights over an asset belonging to another. The asset guarantees the lender their borrowings until the loan is repaid in full.

Settlement

The finalisation of a transaction. Typically where documents are exchanged in order to change the ownership of some property.

Signatory

A person authorised to utilise an account.

Split loan

A combination of loan types forming one loan, such as a partial fixed/variable interest rate loan.

Solicitor

A qualified legal practitioner who provides legal knowledge and conveyancing expertise to borrowers and mortgagees.

Stamp duty

A state based charge levied to raise revenue. Stamp duty relating to loan security documents is often distinguished as loan security duty.

Statutory notice

A notice served on any mortgagor in default, setting out the particulars of default and calling on the mortgagor to rectify the situation within the period prescribed in the mortgage.

Strata title

This title gives you ownership of a ‘unit’ of a larger building which you may sell, lease or transfer at your discretion. Also entitles you to membership of the body corporate.

Survey certificate

A certificate issued by a surveyor detailing the position of structures on a parcel of land and any encroachments.

T

Tenants in common

A form of property ownership where interests can be equal or unequal allowing for each party to deal with their share independently. Upon death of one party, their interest passes to their estate for distribution to beneficiaries.

Term

The length of a home loan or a specific portion within that loan.

Terms and Conditions letter

A document that contains the details of a loan to be made available to the borrower including the conditions precedent. Also known as a Letter of Offer.

Third party security

Security offered by one party for the liabilities of another.

Title deed

Document disclosing the legal description and ownership of a property.

Title fees

Payable to the State’s Titles Office for title search, transfer or property ownership, registration of the new mortgage and discharge of the old one.

Title particulars

An allotted number for a parcel of land determined by the volume and folio under which the records are filed at the Land Titles Office. With some automated systems, the particulars are determined by the legal land description using lot and plan numbers.

Torrens

A form of property title based on a register system. The owner is allowed to deal with the property in any way they choose including, leasing, selling or granting mortgages.

Transfer of land

An instrument which authorises the LTO to record a change in property ownership. This form of transfer is used when the change of ownership is due to normal real estate trading.

Trust

The administration of money and property by an independent third party on behalf of the beneficial owners of the money or property.

Trustee

A person or corporation who administers a trust.

U

Unencumbered

A property free of liabilities, encumbrances or restrictions.

Uniform Consumer Credit Code (UCCC)

A legislative Code that regulates various aspects of consumer credit.

Up stamping

The process and costs involved when more stamp duty is required to be paid.

V

Valuation

A report detailing a professional opinion of a property’s value.

Vendor

The seller of property.

Variable interest rate

A rate that varies in accordance with the rates in the marketplace.

Variation

A change to any part of a loan contract.

Z

Zoning

Statutory descriptions of the allowable uses of land as set out by local councils or planning authorities.