ABA |
Australian Bankers' Association. The ABA is the national organization of licensed banks in Australia.
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Accelerated payment |
The option to make higher repayments to pay off the loan faster.
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Acceptance |
To agree to the terms of an offer or contract.
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Account-keeping fees |
Account keeping fees are charged to cover or partially cover the lenders internal costs of administering the loan.
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Accrued interest |
Interest accounted for but not yet due for payment.
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Add 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.
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Adjustments |
The process of allocating expenses (Council, electricity, phone, water rates) on settlement day that the seller has paid for but not used, and which the buyer has not used but will be billed for.
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Agent |
A person or body authorised to act on behalf of a client in the sale, purchase or management of property.
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Allotment |
A block of land created out of a larger area.
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Amortization period |
The period of time one has to repay a loan at the arranged terms.
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Application fees |
Fees charged to cover or partially cover the lenders costs of processing a loan approval for a home buyer.
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Appraised value |
The estimate of the value of a property being used as security for a loan.
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Arrears |
An overdue amount yet to be paid.
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Assets |
Money, property or goods owned.
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At call |
Money in a bank account that can be withdrawn immediately.
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ATM |
Automatic Teller Machine.
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Auction |
A public sale of property with ownership going to the highest bidder, subject to a reserve price being reached.
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Balance sheet |
A statement of assets, liabilities and net equity for an enterprise at a point of time.
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Balloon payment |
A large loan repayment, typically towards the end of the loan term, to clear a debt.
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Bank cheque |
A cheque that draws money specifically from funds you own held in a bank.
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Banker’s opinion |
A communication from one bank to another to advise on a customers reliability or credit worthiness.
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Bankruptcy |
When a debtor has his/her estate placed into the hands of a receiver who has the responsibility for its distribution.
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Bearer |
A person presenting a cheque to a bank for payment.
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Bill of sale |
A written agreement whereby ownership is transferred but the original owner is allowed to retain possession.
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Body Corporate |
See Owners’ Corporation.
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Bridging finance |
A short-term loan that covers the time gap between the purchase of a new property and the sale of an old property.
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Building regulations |
The standards formulated by local councils to control the quality of buildings.
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Capital gain |
The monetary gain obtained when you sell an asset for more than you paid for it.
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Capital gains tax |
A Federal tax on the monetary gain made on the sale of an asset bought and sold after September 1985.
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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.
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Caveat emptor |
Latin for "let the buyer beware".
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Caveat |
A warning. An entry made in a land registry or court to prevent a certain step being taken (eg the transfer of land) without notice to the person who lodged the caveat.
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Certificate of title |
A document that details the title or ownership details of a property, and whether there are any encumbrances on the title. Not all States and Territories have Certificates of title.
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Chattels |
Any property other than freehold land. Personal chattels are movable, tangible articles of property such as clothes and furniture. Real chattels included leasehold interest in land.
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Cluster housing |
A group of houses or villas that share common space.
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Commission |
A fee payable to a real estate agent, by the vendor, for the sale of property, or by a lender or client for arranging a loan.
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Common property |
An area used by many, not an individual. Owned by the Owners’ corporation.
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Company title |
A form of right of occupancy that applies when owners of units in a block form a company and each holds units that entitle them to occupy a defined area of land.
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Comparison rate |
A nominal rate per annum calculated based on certain fees and charges together with the compounding frequency as outlined in the Consumer Credit Code.
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Compound interest |
Interest that is paid on both the accumulated interest as well as on the original principal.
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Consumer credit code |
An act of Parliament governing the relationship between borrowers and lenders.
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Contents insurance |
A policy insuring household contents against theft and damage.
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Contract of sale |
A written agreement outlining the terms and conditions for the purchase or sale of property.
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Contract |
A legally enforceable agreement between individuals or entities. In real estate, contracts are exchanged when the deposit is paid.
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Conveyancer |
A person qualified and licensed to handle all documentation for the sale and or purchase of a property.
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Conveyancing |
The legal process for the transferal of ownership of real estate.
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Countersigned |
Additional signature or signatures to guarantee the validity of a document.
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Covenant |
Terms and conditions that specify the usage of a block of land or the buildings on it.
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Cover note |
A note of temporary property insurance before the implementation of a formal policy.
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CRAA |
Credit Reference Association of Australia. The body which holds credit details on all people who have established a credit history.
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Credit limit |
The maximum amount a borrower can use at any one time.
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Credit |
Borrowed money to be paid back under an arrangement with a lender. Also, a sum of money paid into an account.
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Creditor |
A party to whom money is owed.
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Crossed cheque |
A cheque with two parallel vertical lines across it to specify that the cheque must be paid into an account and cannot be cashed.
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Daily interest |
Interest calculated on a daily basis - therefore varies according to the daily account balance.
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Debit |
An account entry to charge a withdrawal to a specified account.
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Debtor |
Someone who owes money to someone else.
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Deed |
A legal document that states an agreement or obligation regarding a property.
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Default |
The failure to meet a debt payment on a due date.
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Deposit bond |
A deposit bond acts as a substitute for the cash deposit in between signing a contract and settlement and can be issued for all or part of the deposit amount required, up to 10% of the purchase price. At settlement, the purchaser is required to pay the full purchase price including the deposit.
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Deposit |
The money you pay on exchange of contracts as part of your initial contribution to the purchase of your home. This could be between 5 and 10% of the purchase price. You could also pay your deposit by way of Deposit Bond.
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Disbursements |
The various costs your Solicitor or Conveyancer has to pay to other organisations and bodies on your behalf, including, for example, search fees and stamp duty/ land tax. Your Solicitor or Conveyancer will itemise the disbursements on the invoice they send you.
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Early repayment fee |
The cost of winding up a loan early, also known as early termination payment.
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Early termination payment |
The cost of winding up a loan early, also known as an early repayment fee.
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Easement |
A right to use a corridor or passage of land which is owned by another.
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EFT |
Electronic Funds Transfer. The electronic transfer of funds from one account to another.
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Encumbrance |
An outstanding liability or charge on a property.
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Endorse |
To sign the back of a cheque to confirm or transfer its ownership to someone else.
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Equity loan |
A loan usually secured by the proportion of the value of your house which you own.
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Equity mortgage |
A loan secured by the part of the value of an asset (usually house) which you own.
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Equity |
The difference between the amount you owe on your home loan and the current value of your property.
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Establishment fees |
The lender’s fees which may or may not be charged to set up a loan.
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Exchange of contract |
The legal point of time when the vendor and purchaser swap documentation and start enquiries with a view to settlement.
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Fittings |
Items that can be removed from a property without causing damage to it. Fittings which will remain in the property must be specified in the contract for sale
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Fixed interest rate |
An interest rate set for an agreed term.
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Fixtures |
Items that would cause damage to a property if removed. Their removal must be stipulated in the contract of sale and any damage made good by the seller.
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Freehold |
Freehold gives the purchaser complete and indefinite ownership of a property and the land on which it stands.
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Frozen account |
An account in which all transactions have been suspended.
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Garnishee |
To legally divert a part or whole of someones money or property to someone else by order of a Court.
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Gearing |
The ratio of your own money and borrowed funds in an investment.
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GST |
Goods and Services Tax which is a Federal tax levied as a percentage added to the price charged on specified goods and services.
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Guarantee |
A promise made as bound by the terms of a contract.
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Guarantor |
A person or company that endorses an agreement to guarantee that promises made by the first party (the borrower) to the second party (lender) will be fulfilled, and assumes liability if the borrower fails to fulfill them (defaults). In case of a default, the guarantor must compensate the lender, and usually acquires an immediate right of action against the borrower for payments made under the guarantee.
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Highest bid |
The top price offered by a bidder at auction. If the reserve price is not reached and the property is passed in, the highest bidder is given the first option to negotiate with the vendor.
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Holding deposit |
A refundable deposit demonstrating the goodwill of the buyer to proceed with the purchase.
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Home insurance |
A way of referring to both buildings and contents insurance.
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Honeymoon rate |
Honeymoon rate, or introductory rate, home loans offer a low interest rate for an introductory period, usually the first 1-3 years of the loan. Once the honeymoon or introductory period ends, the interest rate usually reverts to a higher rate. This is often, but not always, the lender’s standard variable rate.
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Inclusions |
Items included with a property e.g. light fittings, stove, etc which must be specified in the contract of sale.
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Income statement |
A statement of income and expenditure for a period, usually a year.
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Interest only loan |
A loan where the borrower elects to make monthly repayments of interest and no principal reductions. The interest only period is limited to between 5 to 10 years depending on the product option selected by the customer. At the end of the interest only period repayments will change to principal and interest for the remainder of the loan term.
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Interest |
The lenders charge for the use of funds or the return on deposited funds. See also daily interest.
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Internal rate of return |
A measure of the return on an investment (or loan) which takes into account the time value of money by showing the rate of interest at which the present value of future cash flows is equal to the cost of the investment or loan.
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Inventory |
A list of items included with a property e.g. furniture, moveable items, etc.
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Joint tenants |
The equal holding of property between two or more persons. If one party dies, their share passes to the survivor(s). Property held under joint tenancy cannot be bequeathed under a will.
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Land tax |
A State Government tax charged to the owners of any property based on a stipulated value of the land, other than a principal place of residence. Land Tax is not applicable in the Northern Territory.
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Lease |
An agreement between two parties under which one is granted the right to use the property of another for a specified period under specific terms and conditions.
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Liabilities |
A persons debts or obligations.
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Lien |
The right to hold property as security against a debt or loan.
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Life Assurance |
A form of insurance by which someones life is insured. Life assurance policies can run parallel with a principal and interest home loan, so the loan will be repaid if you die before the end of the term.
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Lifestyle option |
The option to defer up to half of the regular repayments, in the event of loss of income due to certain, stipulated events.
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Line of credit |
A flexible loan arrangement with a specified ceiling (the credit limit) to be used at a customers discretion.
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Loan pre-approval |
The loan is approved before the borrower bids on or offers for the property and is dependant on the borrowers satisfying the Lender’s lending criteria in principle.
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Loan security duty |
Stamp duty on loan security documentation.
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Loan Term |
Period over which a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term. See also loan terms.
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Loan to valuation ratio (LVR) |
The ratio of the amount lent to the valuation of the security (usually the house).
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Mandatory comparison rate |
An interest rate that includes both the headline interest rate and the fees and charges relating to a loan. It is designed to help consumers identify the true cost of a loan and compare it with other loans.
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Margin |
The difference between the lenders interest indicator rate (or other reference rate) and the rate actually charged to borrowers.
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Maturity |
The date a debt or investment must be paid in full.
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Max loan amount |
The maximum amount that can be borrowed.
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Max LVR |
The maximum loan to valuation ratio. This means the amount you can borrow expressed as a percentage of the valuation of the security (usually the property you are buying). For example, 90% LVR means you can borrow up to 90% of the valuation of the property.
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Max term |
The maximum length of a home loan or a specific portion within that loan.
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Min fixed amount |
The minimum amount that can borrowed at a fixed rate of interest.
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Min lump sum payment |
The minimum amount that can be repaid as a lump sum.
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Min redraw amount |
The minimum amount that can redrawn from a loan at any one time.
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Monthly fees |
The fees charged to cover or partially cover the lenders internal costs of administering the loan each month.
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Mortgage Stamp Duty |
State government tax calculated on the borrowers loan amount.
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Mortgage term |
The length of time over which you agree to pay back your mortgage, usually up to a maximum of 30 years.
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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 borrower, the mortgagor, defaults on the loan repayments. A mortgage over land is registered or noted on the Certificate of Title to that land.
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Mortgagee |
The lender of funds.
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Mortgagor |
The person borrowing money under the terms of a mortgage.
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Negative gearing |
Where the return on an investment is insufficient to meet the interest costs of the loan used to fund the investment.
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No Deposit Home Loan |
A no deposit home loan allows you to borrow the full purchase price of a property without saving for a deposit. Typically you do not need to demonstrate a savings history, and only require funds to cover the transaction costs such as legal fees and any statutory charges such as Stamp Duty. Also known as a 100% deposit home loan.
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Off The Plan |
When you buy a property from the Plans only and not the finished building. The Purchaser will not be able to inspect the property or see the standard of finishes, the practical layout, the size and dimensions or the outlook. However the Purchaser may be able to view a display unit and sample finishes.
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Offer to purchase |
Usually a written contract setting out the terms under which the buyer agrees to buy. If accepted by the seller, it forms a legally binding contract subject to the terms and conditions stated in the document.
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Offset account |
A non-interest earning account that’s balance is offset against the home loan to reduce the total interest payable.
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Old system title (common law title) |
A system of land where a purchaser receives a title that is only as good as that which a seller can sell. Old System transactions require examination of a series of deeds and documents relating to all dealings in the land back to what is recognised in law as good root of title (for example, a conveyance for value more than 30 years ago).
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Option to buy |
A legally binding document which gives a person, for a fee, the right to buy something, usually within a specific time frame at a specific price and subject to specific conditions.
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Overdraft |
An arrangement on a cheque or savings account under which a bank extends credit up to a maximum amount (the overdraft limit) and against which the customer can make withdrawals. Interest is charged on the fluctuating daily balance.
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Owners’ Corporation |
A representative body for and on behalf of the owners, to administer, control, maintain and manage all areas of the common property for the strata scheme.
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Passed in |
A property is passed in at auction if the highest bid fails to meet the reserve price set by the vendor.
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Payee |
The person or entity to which a cheque is payable.
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Plan |
The detailed illustration of a house that shows the internal layout and dimensions and the position of the house on the land.
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Portability |
A feature that enables a home loan to be transferred from one property to another, without refinancing. It can be of benefit by savings on loan set up fees and government loan security duty.
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Pre-Approval |
A home loan pre-approval confirms how much you can borrow from your lender. It is conditional upon the property you wish to purchase being acceptable security, and your lender confirming your income and other information provided in your application.
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Principal and interest loan |
A loan in which both the principal and the interest are repaid over the term of the loan.
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Principal |
The capital sum borrowed on which interest is paid.
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Private sale |
The sale of a property without enlisting the services of a real estate agent.
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Private treaty sale |
A private treaty sale is where a house is offered for sale at a negotiated price. The normal practice is for the vendor to set a price, and the buyer negotiates with the Seller until a mutually agreeable price is reached. Unlike auction, the potential buyers do not know what others may be offering for the property.
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Redraw facility |
A Redraw facility allows you to make additional repayments into your loan account and then access these extra funds when necessary. It has two key advantages; it encourages borrowers to make extra repayments, thereby saving on interest costs, and it provides flexible access to funds when they are most needed. A redraw facility is available on most Variable Rate loans but is not available on Fixed Rate loans.
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Redraw fee |
A redraw fee is charged to cover or partially cover the lenders internal costs of allowing the borrower to redraw funds.
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Refinancing |
To replace or extend an existing loan with funds from either the same or another lender.
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Requisitions on title |
Requisitions are questions asked by the buyer of the seller about the title and statutory obligations and controls affecting the property. The right to make requisitions is created by the contract and the seller must answer the requisitions accurately and in a reasonable time.
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Reserve price |
The specified minimum price acceptable to a seller at auction and which commits the seller to sell the property if the reserve is reached. If a bidding falls short of the reserve it is usual for the seller to negotiate with the highest bidder to arrive at a mutually agreeable price.
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Right of way |
A right of way is a particular type of easement, i.e. a right to travel over land belonging to another person in a particular manner. It does not give a right to take any produce or soil from that other person’s land.
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Rise and fall clause |
A building contract clause that allows the final pricing to move up or down according to the fluctuations of material prices or wages or variations to building work.
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Search |
An examination of records or documents at a Titles Office or Government Department to confirm ownership of property, registered easements and other encumbrances or current or future proposals in respect of the land.
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Security |
A right of a lender against the real property or other assets of a borrower to guarantee or secure the repayment of a loan.
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Semi-detached |
Also called a Duplex. This is a type of construction where two buildings are attached together by a common wall or walls.
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Settlement date |
The date on which documentation for the transfer of ownership of property from the Seller to the Buyer takes place upon finalization of the purchase price. It is also usually the date on which the buyer assumes possession.
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Signatory |
A person authorised to access an account or who has authority to sign and be bound by documents.
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Split Loan |
The loan is split into two (or more) accounts. Customers sometimes use this option to take part of their loan at a fixed interest rate and part of their loan at a variable interest rate giving them rate certainty on the fixed rate portion and flexibility on the variable rate portion.
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Stamp duty on transfer |
A State Government tax based on the value or purchase price of the property.
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Strata title |
A form of title to a unit or lot on a plan of subdivision associated with townhouses, units and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.
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Stratum title |
Also called Company Title. As the owner you become a shareholder in the company that manages the common area, not just a member as in Strata title. Stratum units are regarded as unattractive because of difficulties and complexities involving the operation of the company, Corporations Law obligations, and a reluctance on the part of lenders to accept them as security.
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Survey |
A plan that shows the boundaries of, and the position of, any buildings within a block of land and confirmation whether the building complies with Local Government legislation.
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Susceptibility report |
A report that shows the likelihood of future pest infestations.
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Switch to fixed interest rate fee |
A fee charged to cover or partially cover the lenders internal costs of changing the loan from a variable rate to a fixed rate.
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Tenants in common |
Joint ownership of property which may be in equal or unequal shares. Each joint owner may dispose of their share in the property independently and unlike Joint Tenancy, the shares do not automatically pass to the other owners in the event of death but form part of that person’s estate.
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Title search |
An examination of the public records in a titles office to determine the ownership and encumbrances affecting real property and to determine that the owner has the right to sell and transfer ownership.
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Torrens title |
Torrens Title is the name given to the system of registration of ownership and dealing with property. Under this system title to a property is established by a statutory title issued by the Registrar General. It is the most common form of residential property owner. You are lawfully entitled to lease, sell or dispose of the property as you desire.
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Town house |
A type of dwelling which shares at least one common wall with neighbouring dwellings - usually a two storey dwelling registered under a strata title.
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Transfer |
A document registered with the Land Titles Office that confirms a change of ownership. The change of ownership is noted on the Certificate of Title.
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Unencumbered |
A property free of mortgages, encumbrances, covenants or restrictions.
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Valuation |
A report required by the lender detailing a professional opinion of a propertys value.
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Variable interest rate |
A rate that varies in accordance with the rates in the marketplace.
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Vendor statement |
A statement by the seller to the buyer detailing material particulars regarding the property in question.
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Vendor |
A party who offers a property for sale.
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Villa |
A single storey, attached dwelling.
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Zoning |
Local authority guidelines regarding the permitted uses of land and buildings on that land.
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100% Home Loan |
A 100% home loan allows you to borrow the full purchase price of a property without saving for a deposit. Typically you do not need to demonstrate a savings history, and only require funds to cover the transaction costs such as legal fees and any statutory charges such as Stamp Duty. Also known as a no deposit home loan. |
