LIST OF TERMS:
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
Acceptance
to agree to the terms of an offer or contract.
Account-Keeping Fees
fees charged to cover or partially cover the lender's internal costs of administering the loan.
Accrued Interest
interest you have earned or incurred that is yet to be paid or charged.
Additional Securities
an asset that guarantees the lender their loan until the loan is repaid in full. Usually the property is offered to secure the loan.
Adjustments
the process of allocating expenses e.g. council rates, water rates, etc.
Agent
person or body authorised to act on behalf of a Customer in the sale.
Allotment
a block of land created (subdivided) out of a larger area.
Amenity
a feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, parks, water) or man-made (like a swimming pool or garden).
Application
the first step in the official loan approval process; this form is used to record important information about the potential borrower necessary to the underwriting process.
Application Fees
fees charged to cover or partially cover the lender's internal costs of setting up a loan.
Appraisal
a document that gives an estimate of a property's fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.
Appreciation
the increase in the value of a property caused by economic factors.
Arrears
an overdue account yet to be paid.
Assets
money, property (goods owned) or anything that is of value.
Assignment
legal reference of a right or a title to a property, to another party.
At Call
a bank account from which money can be withdrawn immediately.
Auction
public sale of property with new ownership going to the highest bidder.
Balance Sheet
A statement of net assets, liabilities and equity.
Bank Cheque
A cheque on which the drawer is a bank or other finance institution drawing on itself; no individual or company name appears. The Customer buys the cheque for cash and a small fee and uses it in the same way as cash.
Banker's Lien
The right of a Bank to retain a Customer's securities until a liability to a Bank is discharged.
Lender's Opinion
Enquiries made from one Lender to another to check on a Customer's reliability or credit worthiness.
Bankruptcy
When a debtor has his/her estate placed into the hands of a receiver who has the responsibility for its distribution.
Bearer
Person presenting a cheque.
Bill of Sale
A written agreement whereby ownership is transferred but the original owner is allowed to retain possession.
Body Corporate
A corporation of the owners of units within a strata building. They form a self-elected council for the management of the building and common areas.
Borrower
A person, person, or entity borrowing money to purchase, pay off or refinance a product or effect.
Boundary
The line separating adjoining properties.
Breach of Contract
Breaking the conditions of a contract.
Break Costs
Relates to the penalty fees charged when a borrower terminates a fixed-rate loan contract before the expiry of the fixed-rate period.
Bridging Finance
A short-term loan often used to cover a finance gap between the purchase of a new property and the sale of an old property. Higher interest rates are usually charged for this form of finance.
Building inspection
Inspection 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. Customers are 'members'.
Buyers Agent
Person who acts on behalf of the buyer to find and negotiate on properties the buyer wishes to purchase.
Capital Gain
the monetary gain obtained when you sell an assett for more than you paid for it.
Capital
the current value of your long-term assets.
Caveat
Latin for "beware". A notice of warning given to a public authority, eg: Titles Office, claiming entitlement to an interest in certain land. The caveat is registered and remains on the books as a warning to anyone who contemplates dealing with the property. It thereby prevents any action being taken without the previous notice of the person entering the caveat (the caveator).
Caveat Emptor
Latin for "let the buyer beware".
Certificate of Title
A document details the land dimensions and identifies the ownership of land. It shows who owns the land and whether there are any mortgages or other restrictions on it. This document (if issued) is usually held by the lender as security for a loan.
Charge
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. There are two types. Real chattels are buildings and fixtures. Personal chattels are clothes and furniture.
Clear title
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.
Collateral Security
Additional or supporting security given in addition to the principal security.
Commission
Fee payable to a real estate agent for services.
Contract of Sale
A written legally enforceable agreement outlining the terms and conditions for the purchase or sale of property.
Conveyance
The transfer of ownership of property from the seller's name to the buyer's name.
Cover note
A guarantee of temporary property insurance before the implementation of a formal policy.
Company Title
A property title that applies when owners of units in a block form a company.
Compound interest
Interest that is paid on both the accumulated interest as well as on the original principal.
Countersigned
Additional signature or signatures to guarantee the validity of a document.
Covenant
Terms and conditions that specify the usage of a block of land or the buildings on it.
Credit
Borrowed money or other finance (eg. Hire purchase) to be paid back under an arrangement with a lender.
Credit History
history of an individual's debt payment; lenders use this information to gouge a potential borrower's ability to repay a loan.
Creditor
A party to whom money is owed.
CRAA
The company which records and holds credit information on everyone. CRAA is now known as 'Credit Advantage Limited'.
Daily Interest
Interest calculated on a daily basis - therefore varies according to daily account balance.
Debt-to-income ratio
a comparison of gross income to expenses.
Debit
An account entry to charge a withdrawal to a specified account.
Debtor
Someone who owes money to someone else.
Deed
Legal document that states an agreement or obligation regarding a property.
Default
Failure to meet debt payment on a due date. A failure to make loan payments (defaulting on a loan) may result in the mortgage holder taking legal action to repossess the mortgaged property.
Delinquency
failure of a borrower to make timely mortgage payments under a loan agreement.
Deposit
A deposit is normally paid by the buyer at the time of exchanging contracts. Normally a minimum of 5-10% of the total purchase price is required.
Depreciation
The periodic cost assigned for the reduction in usefulness and value of a long-term tangible asset.
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.
Discharge of Mortgage
A document signed by the lender and given to the borrower when a mortgage loan has been repaid in full.
Draw Down
To access available loan funds, might refer 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 or the act of transferring money from lending institution to the borrower after the loan has settled.
Duty (or Stamp Duty)
State Government tax on finance transactions. For the purchase of real estate, it is calculated according to the property value. It also applies to the amount of the mortgage and the amount differs form state to state.
Early Termination Payment
The cost of winding up a loan early.
Easement
A right to use a corridor or passage of land which is owned by another.
Electronic Funds Transfer (EFT)
Electronic transfer of funds from one account to another.
Encumbrance
An outstanding liability or charge on a property.
Endorse
To sign the back of a cheque to confirm or transfer its ownership to someone else.
Equity
The part of something - asset, house or company - which you own. You also have equity in that part of the value of your house above the amount borrowed from the lender which has the mortgage over your house. (Assets – Liabilities = Equity)
Escrow
Money, property, a deed, or a bond put into the custody of a third party for delivery to a grantee only after the specified conditions are fulfilled.
Establishment Fees
Lending body fees which may or may not be charged to set up a loan.
Estate
The whole of one's possessions, especially all the property and debts left by one at death.
Exchange of Contracts (or Exchange)
the legal point of time when the vendor and purchaser swap documentation and start enquiries with a view to settlement.
Exit Fee
Fee imposed by some lenders when the loan is paid off before the end of it's term. Fees most generally apply to fixed rate loans.
Fair market value
the hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.
Foreclosure
a legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.
Freehold
The dwelling and the land on which it stands is owned by the owner until they choose to sell.
Garnishee
To legally divert a part or whole of someone's money or property to someone else.
Garnishee Order
A court order taken out by a creditor on a person's employer or banker for the deduction of funds from his wages or bank account to repay a debt.
Gearing
Ratio of your own money and borrowed funds in an investment.
General Lien
The lender's right to retain property until a debt is paid. Includes Poser of Attorney and other clauses generally contained in Lender security forms.
GST
Goods and Services Tax.
Government Charges
State and government charges at the time of settlement, e.g. stamp duty
Guarantee
A promise made as bound by the terms of a contract.
Highest Bid
The top price offered by a bidder at auction. If the reserve price is not reached and the property is passed in.
Holding Deposit
A refundable deposit demonstrating the goodwill of the buyer to go ahead with the purchase.
Home Equity
The value of a homeowner's unencumbered interest in their property(s). Equity is the difference between the home's fair market value and the unpaid balance of the mortgage and any outstanding debt over the home. Equity changes as the mortgage is paid or as the property appreciates or depreciates.
Home inspection
an examination of the structure and mechanical systems to determine a home's safety; makes the potential homebuyer aware of any repairs that may be needed.
Inclusions
Items included with the property e.g. light fittings.
Income Statement
A statement of income and expenditure for a period.
Indemnity
Security against damage or loss; sum paid in compensation for loss incurred.
Instalment
The regular periodic payment that a borrower agrees to make to the lender.
Instrument
Formal legal document in writing, e.g. a deed of conveyance.
Insurance
Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.
Interest
The lending body's charge for the use of funds or the return on deposited funds.
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 term of one to five years.
Interest Rate
The amount of interest charged on a monthly loan payment; usually expressed as a percentage.
Inventory
A list of items included with a property e.g. furniture.
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 cannot live in the property.
Joint and Several Liability
With Joint and Several Liability , a creditor has as many rights of action as there are debtors; he can sue them jointly or severally until he has obtained payment, and an unsatisfied judgment against one debtor will not be a bar to an action against the others.
Joint Tenants
Equal holding of property between two or more persons. If one party dies the property passes to the survivors.
Judgment
A legal decision; when requiring debt repayment, a judgment may include a property lien that secures the creditor's claim by providing a collateral source.
Land Tax
A State Government tax charged to the owners of any property over a stipulated value.
Lease
A document granting a period of tenancy of a property under specific terms and conditions.
Liabilities
Someone's debts or obligations.
Lien
The right to hold property as security against a debt or loan.
Line of Credit
A flexible loan arrangement with a specified ceiling to be used at a Customer's discretion.
Loan Pre-approval
The loan is approved before the borrower bids on or offers for the property.
Loan to Valuation Ratio (LVR)
the ratio of the amount lent to the valuation of the security (usually the house).
Legal Fee
May be charged where an outside party is used to prepare Lender documentation.
Loan
Money borrowed that is usually repaid with interest.
Loan Fraud
Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.
Loss mitigation
A process to avoid foreclosure; the lender tries to help a borrower who has been unable to make loan payments and is in danger of defaulting on his or her loan.
Low Doc/No Doc Loan
A low doc loan is an abbreviation for low documentation loan and is a type of loan that is granted to individuals or businesses that have a smaller amount of finance documentation like pay slips, bank account records. A Low doc loan often attracts interest rate loading because of the riskier nature for the lender.
(LTV) Loan-to-Value Ratio - see LVR.
Lump sum repayments
Additional ad hoc repayments, made over and above your minimum repayment requirement.
LVR
This is the general term for the Loan to Value ratio. This measure is used to determine the percentage of the equity in a mortgage against the value of the security. eg. If a house is worth $500,000, and the mortgage over the property is $350,000 then the LVR is 70.00%.
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.
Maximum Loan Value Ratio (LVR)
maximum loan to valuation. This means the amount you can borrow expressed as a percentage of the valuation of the security (usually the property you are buying).
Maximum Term
The maximum length of a loan or a specific portion within that loan.
Minimum Fixed Amount
The minimum amount that can be borrowed at a fixed rate of interest.
Minimum Loan Amount
The minimum amount that can be borrowed.
Minimum Repayment
The amount you are contractually obliged to repay each month, in order to repay your loan within the agreed term.
Monthly Fees
The fees charged to cover or partially cover the lender's internal costs of administering the loan each month.
Mortgage Offset
Non-interest earning account that is offset against a home loan to reduce the total interest payable.
Mortgage
A form of security for a loan usually taken over real estate.
Mortgagee
The creditor or lender in a mortgage agreement.
Mortgagor
The person borrowing money under the terms of a mortgage.
Mortgage Broker
A company or person that originates and processes loans for a number of lenders.
Non-conforming loans
Non-conforming finance refers to loans that cater for those who can't meet the standard income verification and credit history criteria mainstream lenders like banks and mortgage originators use for ordinary borrowers. Such borrowers include those who are self-employed, have a poor credit record or who have recently arrived in Australia. Non-conforming loans are usually at higher interest rates to reflect higher risk of these borrowers. the Non -conforming finance is also called 'sub-prime lending'.
Offer
Indication by a potential buyer of willingness to purchase a property at a specific price; generally put forth in writing.
Origination
The process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property valuation.
Origination fee
A fee for originating the loan charged by the lender. Can also be called an application fee.
Offer to Purchase
A legal agreement that details a specific price for the purchase of a specific property.
Old System Title
(common law title) details the 'chain' of the title documents stretching back to the original owner.
Option to Buy
Legally binding document which gives a person first right of refusal on a property etc.
Passed In
Property is 'passed in' at auction if the highest bid fails to meet the reserve price set by the vendor.
Payee
the person or entity to which a cheque is payable.
Plan
detailed illustration of a house that shows the internal layout and dimensions and the position of the house on the land.
Pre-approve
Lender commits to lend to a potential borrower; commitment remains as long as the borrower still meets the qualification requirements at the time of purchase.
Pre-qualify
A lender informally determines the maximum amount an individual is eligible to borrow.
Principal
Capital sum borrowed from a lender on which interest is paid.
Private Sale
the sale of a property without an estate agent.
Real Estate Agent
A person who is licensed to negotiate and arrange real estate sales.
Real Property
Land, with or without improvements (eg. a house).
Refinancing
Replace or extend an existing loan with funds from the same institution or another lender.
Requisitions on title
Process by which the buyer requests additional information about the title of the property from the seller.
Reserve Price
Specified minimum price acceptable to a seller at auction.
Rise and Fall Clause
Building contract clause that allows the final pricing to move up or down according to the fluctuations of material prices or wages.
Search
an examination or research usually carried out on the purchaser's and lender's behalf prior to settlement to confirm that a vendor is in a position to sell a property and that there are no encumbrances on it.
Security
An asset that guarantees the lender their loan until the loan is repaid in full. Usually the property is offered to secure the loan.
Semi-detached
Two houses that share a common wall or walls.
Settlement Date
Date on which the new owner finalises payment and assumes possession.
Settlement Period
Period after contracts exchange and before settlement date. Allows the buyer time to organise finance if that is needed and to conduct searches, surveys and other formalities.
Signatory
a person authorised to utilise an account.
Stamp Duty
State Government tax assessed on the selling price of the property. Each state has different rules and calculations.
Strata Title
A strata title is the most common title associated with town houses and home units and is evidence of ownership of a unit, which is called a 'lot', in a strata plan. Of the entire building, individuals each own a small portion (such as a unit or townhouse) but where there is common property (external walls, windows, roof, driveways, foyers, fences, lawns and gardens) which all owners share.
Survey
Plan that shows the boundaries of a property and the positioning of any buildings on that property.
Tenants in common
The equal or unequal holding of property by two or more persons. If one party dies the share of the property forms part of the estate rather than passing to the other tenant / tenants.
Term
The length of a loan or a specific portion within that loan. The term is usually written in months, rather than years.
Title deed
A document disclosing the legal description and ownership of a property.
Title Fees
Fees payable to the State Titles Office for title search, transfer or property ownership, registration of the new mortgage and/or discharge of an old mortgage.
Title Search
A check of public records to ensure that the vendor has the right to sell and transfer ownership.
Torrens Title
Records your ownership of a piece of property. You are lawfully entitled to lease it.
Town House
Usually a two storey dwelling registered under a strata title.
Transfer
A document registered with the Land Titles Office that confirms the change of ownership as noted on the Certificate of Title.
Unencumbered
a property free of liabilities, encumbrances or restrictions.
Underwriting
The process of analysing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower's credit history and a judgment of the property value.
Valuation
A report required by the lender detailing a professional opinion of a property's value.
Valuation Fee
Fee which may be charged if the lender seeks to cover the cost of valuing the property taken as security for the loan.
Variation
A change to any part of a loan contract.
Vendor Statement
A statement by the seller to the buyer detailing material particulars regarding the property in question.
Vendor
The party who offers a property for sale.
Villa
single storey attached dwelling.
Zoning
Local government authority guidelines as to the permitted uses of land and buildings on that land