Holding deposit: A deposit to show the buyer's intention to purchase.
I
Indemnity: Security against damages or losses.
Instrument: A legal, written document. Interest: The amount charged by a lender for using funds.
Interest adjustment: A charge meant to compensate a lender for loss of revenue if advance payments are made on a fixed loan.
Interest only loans: A type of short-term loan where monthly payments are for interest only, and the principal is repaid in lump sum at the end of the term.
Introductory loan: A home loan where a lower rate is offered for an introductory period.
J
Joint and several liability: When multiple individuals borrow for a single piece of property, the promise that all parties are each liable for the debt in full.
Joint tenancy: When a piece of property is owned by two or more persons, and each person has an equal interest in the entire property.
L
Liability: A type of debt one is responsible for.
Land tax: A tax levied on a piece of property unless it is a principal place of residence.
Land transfer registration: When the transfer, or conveyance, of ownership is transferred to a buyer.
Lien: A right to hold property as security against a debt.
Line of credit: A loan with a specified maximum, from which funds can be taken at any time up to that maximum amount.
Loan: When a lender provides funds that are to be repaid periodically with additional interest over an agreed upon time.
LVR (loan to value ratio): A ratio of the amount of funds being borrowed, to the property's value.
M
Maturity: The date when a debt or investment must be fully paid.
MIOS: Mortgage Industry Ombudsman Service.
Mortgage: Security for a real estate loan.
Mortgagee: A lender of funds for a mortgage loan.
Mortgagor: A borrower of funds for a mortgage loan.
Mortgage broker: An entity acting as a middleman to help a borrower select the best loan product from a variety of lenders.
Mortgage discharge fee: A fee levied to cover costs that are incurred in closing out a loan.
Mortgage insurance: A type of insurance taken out by lenders and paid for by borrowers, which covers any losses the lender may incur if the borrower defaults.
Mortgage manager: A company that manages a borrower's loan.
Mortgage originator: A lender that sources secured funds and packages them as loans.
Mortgage protection service: A type of insurance that covers loan payments if a lender is not able to meet them.
Mortgage registration fee: A state fee for registering a mortgage.
N
Negative gearing: An investment where maintenance costs exceed the income generated by the investment.
Net income: Income received after taxes have been deducted.
Net profit: Profit from a business after all expenses have been deducted, but tax has not been calculated.
Non-conforming borrowers: An applicant that would not ordinarily be eligible for a loan from a mainstream lender.
O
Off the plan purchase: When a piece of property is purchased from plans, and not the finished product.
Offset account: A savings account that is tied to a mortgage, so that the savings interest is applied to reduce the mortgage interest.
Ongoing fee: A loan maintenance fee that is levied over the life of a loan.
Overdraft: A limit set that allows a person to exceed an account balance.
P
Passed in: When at auction, the high bid on a piece of property does not meet reserve price.
Portability: When a new property is used as security for an existing loan.
Power of attorney: Authorisation for another person to act and sign contracts on one person's behalf.
Principal: The sum borrowed, without interest.
Principal and interest loan: A loan where both principal and interest are repaid in regular payments.
Private treaty sale: A sale of a piece of property where the buyer and seller negotiate with each other directly.
Property: Tangible or intangible asset, such as real estate or leasehold interests.
R
Redraw: When a borrower is able to draw against pre-paid funds.
Refinancing: When an existing loan is extended or replaced with an additional loan.
Rental guarantee: When a developer makes a promise that an investment will generate a certain level of return.
Reserve price: A minimum acceptable price set at an auction.
Residential investment loan: A loan for a piece of investment property.
S
Search: Examination and confirmation that a seller is legally entitled to sell a piece of property and that it is free of other encumbrances.
Securitisation: When assets that generate a cash flow are packaged into a security that can be marketed, for example, in the form of bonds.
Security: Any asset that serves as a guarantee against funds that have been borrowed.
Serviceability: The ability of a borrower to meet the terms of a loan.
Settlement: When a new owner of a piece of property takes possession and finalises payment.
Stamp duty: A state tax on the purchase price and mortgage amount of real estate.
Standard variable: A type of mortgage loan with several features, with an interest rate that may rise and fall over time.Strata title: A title of ownership in a unit of a larger building, which can be bought and sold.
Stratum title: A title of ownership in a unit of a larger building, where the owner is a shareholder in the company that manages the entire structure.
Surety: A guarantor, who is responsible for another's repayment of debt.
Susceptibility report: The likelihood of pest infestations on a piece of property.
T
Tenants in common: When a piece of real estate is owned by two or more individuals, with each having a separate share.
Term: The length of a loan.
Third party security: The security provided by a third party for the purpose of guaranteeing a mortgage.
Title deed: A registration that shows the ownership of property.
Title search: A process that shows that a seller has the right to sell a piece of property and that it is free of encumbrances.
Torrens system: A system of conveyance where all historical transactions of a piece of real estate are documented.
Transfer: A document that shows change in ownership of property.
U
Unencumbered: When a property is free of liabilities.
V
Valuation: A report that shows the property's value.
Variable interest rate: An interest rate that may rise and fall over the duration of the loan.
Variation: When a part of an original loan contract has been changed.
Vendor: An owner who is selling a piece of property.
Z
Zoning: Local guidelines that indicate which uses are permitted on distinct areas of land.
A
AAPR: Average annualised percentage rate. This is a figure that includes costs associated with a loan, and creates an average interest rate for the purpose of comparison.
Acceptance: Agreeing to an offer on real estate.
Additional repayment: Money paid on a loan, in addition to scheduled monthly mortgage payments.
Affordability: A figure derived by comparing disposable income to total obligations, in relation to considering the price of a piece of real estate.
Agent: A person or company that is authorised to act on behalf of another in real estate transactions.
All-in-one loan: A type of loan where you deposit all of your income into an account, and then withdraw it as needed.
Amortisation period: The amount of time allowed for repayment of a loan.
Application fee: A fee charged by a lender for establishing a loan.
Appraised value: An estimate of how much a property is worth.
Arrears: Amount of money that is overdue on a loan.
Assets: Anything of value that is owned.
Asset lender: A lender that provides loans based on the value of an asset that is provided as collateral.
Assignment: Transferring a property title from one party to another.
B
Banker's lien: A document allowing a bank to claim assets used as collateral until a loan has been satisfied.
Basic variable: A type of variable interest rate loan with lower rates, but less features than the standard variable loan.
Bankruptcy: When an individual cannot meet debts, a state of bankruptcy is declared by the courts either at the request of creditors, or of the debtor directly.
BayCorp Ltd: The company that records credit information on all individuals.
Body corporate: A corporate entity that is comprised of multiple owners of units in a common building.
Borrower: Any person or entity that borrows money.
Break costs: Additional fees and expenses incurred when a person pays off a loan ahead of schedule.
Bridging finance: Financing used to purchase new property before you have sold your old property.
Buyer's agent: A real estate agent who acts on behalf of a buyer.
C
Capital: Existing value of all assets.
Capital gain: The additional funds that are realised when a person sells something for more than it was purchased.
Capped loan: A type of variable loan where the interest rate may rise and fall over time, but may not exceed a pre-determined level.
Caveat: A notice that claims entitlement to land.
Certificate of title: A document that shows the dimensions of a piece of land, all encumbrances, and the details of ownership.
Charge over property: The rights that exist over a borrower's real estate that has been used to secure a debt.
Collared rate: A type of variable rate loan which may rise and fall over time, but only within a pre-determined upper and lower level.
Collateral security: Security provided for a loan in addition to the principal security.
Combination loans: Any type of split loan, or form one loan.
Comparison rate schedule (CRS): A schedule that shows the annual percentage rate of a loan for an amount over a pre-determined period of time.
Compulsory comparison rate (CCR): A standardised interest rate calculation that includes the extra costs involved in a loan.
Construction loans: A type of loan used for building a new dwelling.
Consumer credit code: A piece of legislation that protects the rights of consumers by imposing standardised rules on financial institutions.
Contract of sale: A contract that shows the terms of the purchase of a piece of property.
Conveyancing: The process whereby legal ownership of a piece of real estate is transferred between two parties.
CRAA: Credit Advantage Limited, or the company that formerly held credit information on all persons. Now known as BayCorp Ltd.
Credit limit: The maximum amount that can be borrowed.
D
Daily interest: Interest that is calculated daily, and varies according to the daily account balance.
Debtor: An individual or entity that owes money to another individual or entity.
Deed: A document that records and proves that certain listed property is owned by a stated individual or entity.
Default: When a debt payment has not been met by a due date.
Default rate: An interest rate that a loan adjusts to at the end of a fixed period.
Deferred establishment fee: A fee levied when a loan is paid back shortly after taking it out.
Deposit bond: A guarantee that a buyer will pay a deposit in full by a pre-determined date.
Depreciation: A method of accounting where the cost of an asset is spread out over the life of that asset.
Direct debit: A banking system where a lender deducts payments automatically from a borrower's account.
Disbursements: The incidental costs that a solicitor incurs when working on a client's behalf.
Draw down: When money is transferred from a lender to a borrower after settlement of a loan.
E
Encumbrance: A liability, such as a mortgage loan.
End loan. The amount left over after an existing home has been sold, and proceeds have been paid for the bridging loan.
Equity: The financial interest actually owned free of other encumbrance in a piece of property or other asset.
Equity loan: A loan that is secured by the value of one's equity in a piece of real estate.
Establishment fees: Fees a bank may charge to set up a loan.
Estate: An interest in a piece of land.
Exchange: A meeting between seller and buyer for exchanging documents for the purpose of settlement.
F
Fee simple: The highest estate in the land that recognises absolute ownership for practical purposes.
Fittings: Items that an individual can remove from property without causing damage to the underlying structure.
Fixed interest: A fixed interest rate that is set at a pre-determined rate for the duration of the loan.
Fixtures: Items that, if they were removed from property, would cause damage to the underlying structure.
Freehold: A structure and the land it stands on, which is owned indefinitely by an individual or entity.
G
Garnishee order: A court order that can be issued to demand that an individual's employer or bank deduct money to repay a debt.
Gearing: A ratio of a borrower's own money to borrowed funds when making an investment.
General law system: A system in which all transactions concerning property are made through conveyances.
General lien: A document that shows that a bank has the right to retain any property or asset until a debt is repaid.
Government fees: Fees charged by governmental entities, such as stamp duty, at the time of settlement.
Gross income/profit: The income a person or entity has generated before taxes, superannuation and payroll deductions have been taken.
Guarantee: A promise to abide by terms of a contract.
Guarantor: A person who agrees to take responsibility for another's debts.
H
Holding deposit: A deposit to show the buyer's intention to purchase.
I
Indemnity: Security against damages or losses.
Instrument: A legal, written document. Interest: The amount charged by a lender for using funds.
Interest adjustment: A charge meant to compensate a lender for loss of revenue if advance payments are made on a fixed loan.
Interest only loans: A type of short-term loan where monthly payments are for interest only, and the principal is repaid in lump sum at the end of the term.
Introductory loan: A home loan where a lower rate is offered for an introductory period.
J
Joint and several liability: When multiple individuals borrow for a single piece of property, the promise that all parties are each liable for the debt in full.
Joint tenancy: When a piece of property is owned by two or more persons, and each person has an equal interest in the entire property.
L
Liability: A type of debt one is responsible for.
Land tax: A tax levied on a piece of property unless it is a principal place of residence.
Land transfer registration: When the transfer, or conveyance, of ownership is transferred to a buyer.
Lien: A right to hold property as security against a debt.
Line of credit: A loan with a specified maximum, from which funds can be taken at any time up to that maximum amount.
Loan: When a lender provides funds that are to be repaid periodically with additional interest over an agreed upon time.
LVR (loan to value ratio): A ratio of the amount of funds being borrowed, to the property's value.
M
Maturity: The date when a debt or investment must be fully paid.
MIOS: Mortgage Industry Ombudsman Service.
Mortgage: Security for a real estate loan.
Mortgagee: A lender of funds for a mortgage loan.
Mortgagor: A borrower of funds for a mortgage loan.
Mortgage broker: An entity acting as a middleman to help a borrower select the best loan product from a variety of lenders.
Mortgage discharge fee: A fee levied to cover costs that are incurred in closing out a loan.
Mortgage insurance: A type of insurance taken out by lenders and paid for by borrowers, which covers any losses the lender may incur if the borrower defaults.
Mortgage manager: A company that manages a borrower's loan.
Mortgage originator: A lender that sources secured funds and packages them as loans.
Mortgage protection service: A type of insurance that covers loan payments if a lender is not able to meet them.
Mortgage registration fee: A state fee for registering a mortgage.
N
Negative gearing: An investment where maintenance costs exceed the income generated by the investment.
Net income: Income received after taxes have been deducted.
Net profit: Profit from a business after all expenses have been deducted, but tax has not been calculated.
Non-conforming borrowers: An applicant that would not ordinarily be eligible for a loan from a mainstream lender.
O
Off the plan purchase: When a piece of property is purchased from plans, and not the finished product.
Offset account: A savings account that is tied to a mortgage, so that the savings interest is applied to reduce the mortgage interest.
Ongoing fee: A loan maintenance fee that is levied over the life of a loan.
Overdraft: A limit set that allows a person to exceed an account balance.
P
Passed in: When at auction, the high bid on a piece of property does not meet reserve price.
Portability: When a new property is used as security for an existing loan.
Power of attorney: Authorisation for another person to act and sign contracts on one person's behalf.
Principal: The sum borrowed, without interest.
Principal and interest loan: A loan where both principal and interest are repaid in regular payments.
Private treaty sale: A sale of a piece of property where the buyer and seller negotiate with each other directly.
Property: Tangible or intangible asset, such as real estate or leasehold interests.
R
Redraw: When a borrower is able to draw against pre-paid funds.
Refinancing: When an existing loan is extended or replaced with an additional loan.
Rental guarantee: When a developer makes a promise that an investment will generate a certain level of return.
Reserve price: A minimum acceptable price set at an auction.
Residential investment loan: A loan for a piece of investment property.
S
Search: Examination and confirmation that a seller is legally entitled to sell a piece of property and that it is free of other encumbrances.
Securitisation: When assets that generate a cash flow are packaged into a security that can be marketed, for example, in the form of bonds.
Security: Any asset that serves as a guarantee against funds that have been borrowed.
Serviceability: The ability of a borrower to meet the terms of a loan.
Settlement: When a new owner of a piece of property takes possession and finalises payment.
Stamp duty: A state tax on the purchase price and mortgage amount of real estate.
Standard variable: A type of mortgage loan with several features, with an interest rate that may rise and fall over time.Strata title: A title of ownership in a unit of a larger building, which can be bought and sold.
Stratum title: A title of ownership in a unit of a larger building, where the owner is a shareholder in the company that manages the entire structure.
Surety: A guarantor, who is responsible for another's repayment of debt.
Susceptibility report: The likelihood of pest infestations on a piece of property.
T
Tenants in common: When a piece of real estate is owned by two or more individuals, with each having a separate share.
Term: The length of a loan.
Third party security: The security provided by a third party for the purpose of guaranteeing a mortgage.
Title deed: A registration that shows the ownership of property.
Title search: A process that shows that a seller has the right to sell a piece of property and that it is free of encumbrances.
Torrens system: A system of conveyance where all historical transactions of a piece of real estate are documented.
Transfer: A document that shows change in ownership of property.
U
Unencumbered: When a property is free of liabilities.
V
Valuation: A report that shows the property's value.
Variable interest rate: An interest rate that may rise and fall over the duration of the loan.
Variation: When a part of an original loan contract has been changed.
Vendor: An owner who is selling a piece of property.
Z
Zoning: Local guidelines that indicate which uses are permitted on distinct areas of land.