Suite 28, Level 4 The Hypercentre, 50 - 56 Sanders Street, Upper Mt Gravatt Qld 4122
P.O. Box 6714 Upper Mt Gravatt Qld 4122
Glossary of terms
AAPR
Also known as the mortgage comparison rate or true rate. Used to compare the actual rate of a loan, taking into account the nominal interest rate per annum, the compounding frequency and upfront and ongoing fees, as outlined in the Consumer Credit Code.
ABIO
The Australian Banking Industry Ombudsman (ABIO) provides an avenue through which customers can make complaints about their bank and have them dealt with independently.
Accrued Interest
Interest you have earned or incurred that is yet to be paid or charged.
Additional Repayments
Extra funds paid into the loan over and above the minimum prescribed Repayments.
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.
Agent
Person or body authorised to act on behalf of a client in the sale, purchase or management of property.
All-in-one Loan
A loan, generally variable, that allows you to deposit all of your income into the loan account and then withdraw money form the loan account for all your day to day purchases and transactions. The longer spare funds stay in the account, the greater the interest savings.
Application Fees
Fees charged to cover or partially cover the lender?s internal costs of setting up a loan approval for a homebuyer.
Annual Percentage (APR)
The advertised rate of interest per annum.
At Call
An account from which money can be withdrawn immediately.
ATM
Automatic Teller Machine.
Auction
Public sale of property with ownership going to the highest bidder, subject to a reserve price being reached.
Balloon Payment
A large loan repayment to clear a debt.
Bankruptcy
When a debtor has his/her estate placed into the hands of a receiver who has the responsibility for its distribution.
Basic Variable
A variable home loan at a reduced rate but generally with fewer features than a standard variable.
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.
Break Costs
Penalties charged when loan is paid off before the end of its term. Generally applies to fixed loans.
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 Inspections
An inspection generally carried out prior to the purchase of a property to ensure the building is structurally sound.
Building Society
Institution operating in a similar fashion to banks ? i.e. they take deposits and provide loans. Customers are ?members?.
Capital
The current value of your long-term assets e.g. house, property, business.
Capitalising Interest
When interest payable is accrued and added to the total debt payable rather than being paid as it is charged.
Capital Gain
The monetary gain obtained when you sell an asset for more than you paid for it.
Capital Gains Tax
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.
Certificate of Title
This document details the land dimensions and ownership details, and whether there are nay encumbrances on it.
Collared Rate
A variable rate loan with a set upper and lower limit beyond which the interest rate cannot move past.
Combination Loans
Where various loans come under the same banner to form one loan. May have a portion variable, fixed or even a portion as a line of credit. Also known as split loans.
Commission
A fee payable to the real estate agent, by the vendor, for the sale of property.
Common Property
An area used by many, not an individual. Owned by the tenants in common. Apartments are not individually owned. Owners instead have a stake in the company as a whole.
Comparison Rate
Also known as ?true rate.? Used to compare the actual rate of a loan, taking into account nominal interest rate per annum, the compounding frequency and upfront and ongoing fees, as outlined in the Consumer Credit Code.
Compound Interest
Interest that is paid on both the accumulated interest as well as on the original principal.
Construction Loans
Aloan specifically granted for the purpose of funding the building of a new dwelling. You are generally able to draw money as required, so you can pay as necessary.
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.
Contract
A legally enforceable agreement between individuals or entities. In real estate, contracts are exchanged when the deposit is paid.
Conveyancing
The legal process for the transferal of ownership of real estate.
Cover Note
A note of temporary property insurance before the implementation of a formal policy.
CRAA (Credit Reference Association of Australia)
The body which holds credit details on all of us!
Credit Limit
The maximum overdraft a borrower may have on an account e.g. a credit card account.
Credit Union
A co-operative which is owned and controlled by the people who use its services, which are similar to that of a bank.
Creditor
A party to whom money is owed.
Debtor
Someone who owes money to someone else.
Deed
A legal document that states an agreement or obligation regarding a property.
Default
Failure to meet debt payment on a due date.
Default Rate
The rate a loan rolls/moves to automatically at the end of any fixed period.
Deferred Establishment Fee
Charged when you pay out your loan within a short period of taking it out, such as three years.
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. They are often used as surety when cash isn?t readily available at short notice.
Draw Down
To access available loan funds, especially referring to lines of credit where the limit is set and you can use the funds as required.
Early Termination Charges
Any fees and charges you may incur by paying out a loan early.
Easement
A right to use a corridor or passage of land which is owned by another.
EFTPOS (Electronic Funds Transfer Point of Sale)
This facility allows you to use your ATM card to make purchases and often withdraw cash.
Encumbrance
An outstanding liability or charge on a property.
Equity
The percentage or amount of an asset actually owned.
Equity Loan
A loan secured by the part of the value of an asset (usually house) which you own.
Equity Mortgage
A loan secured by the part of the value of an asset (usually house) which you own.
Establishment Fees
Lending body fees which may or may not be charged to set up a loan.
ETIA
Early Termination Interest Adjustments.
Exchange of Contract
The legal point of time when the vendor and purchaser swap documentation and start inquiries with a view to settlement.
Exit Fees
See break costs.
FID (Financial Institutions Duty)
State duty on the receipts of financial institutions.
Fittings
Items that can be removed from a property without causing damage to it.
Fixed Interest
An interest rate set for an agreed term.
Fixtures
These are 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.
Freehold
The dwelling and the land on which it stands is owned by the owner until they choose to sell it.
Gearing
The ratio of your own money and borrowed funds in an investment. If a property is ?highly geared? then it has a high ration of borrowed funds compared to ownership.
GiroPost
A facility allowing you to conduct banking transactions through the post office.
GST
Goods and Services Tax, to be implemented in July 2000 at 10 percent.
Guarantee
A promise made as bound by the terms of a contract.
Guarantor
A party who agrees to be responsible for the payment of another party?s debts.
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.
Holding Deposit
A refundable deposit based on the goodwill of the buyer to go ahead with the purchase.
ILR(Indicator Lending Rate)
The base rate on which interest rates for variable rate overdrafts and term loans are set.
Interest
The lending body?s charge for the use of funds or the return on deposited funds. See daily interest and monthly interest.
Interest Adjustment
When additional repayments are made on a fixed loan, an interest adjustment cost is sometimes charged to compensate the lender for loss of interest revenue.
Interest Only
Usually a short-term arrangement whereby payments are made on the interest only, not the principal.
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.
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.
Internet Banking
When banking transactions such as transfers, payments and often home loan applications can be made via the Internet.
Introductory Loan
A loan is offered at a reduced rate for an introductory period (usually no longer than 15 months) to new borrowers.
Inventory
A list of items included with the property e.g. furniture, movable items, etc.
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.
Joint Tenants
Equal holding of property between two or more persons. If one party dies, their share passes to the survivor/s.
Land Tax
A State Government tax charged to the owners of any investment property over a stipulated value, and to the owners of any-occupier properties valued above a higher threshold.
Land Transfer Fee
A State Government tax assessed on the selling price of a property, generally around $60.
Lease
A document granting a period of tenancy of a property under specific terms and conditions.
Line of Credit
A flexible loan arrangement with a specified ceiling to be used at a customer?s discretion.
Loan Maintenance Fee
A loan management fee charged over the life of the loan. Often referred to as an ongoing fee.
Loan to Valuation Ratio (LVR)
The ratio of the amount lent to the valuation of the security (usually the house).
Maturity
The date a debt or investment must be paid in full.
Maximum Loan Amount
The maximum loan value which can be borrowed.
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.
Mortgagee
The lender of funds.
Mortgagor
The person borrowing money in the terms of a mortgage.
Mortgage Brokers
A person or organisation marketing numerous loans from a panel of lenders. They offer a service where they will select the best loan or loans for borrowers from this selection.
Mortgage Comparison Rate
Also known as the true rate. Used to compare the actual rate of a loan, taking into account the nominal interest rate per annum, the compounding frequency and upfront and ongoing fees, as outlined in the Consumer Credit Code.
Mortgage Discharge Fee
An administration fee to cover the costs (e.g. documents) incurred in winding up a loan.
(Lenders) Mortgage Insurance
A form of insurance taken out by the lender to cover themselves in the event that the borrower defaults on their loan and the sale of the property is unable to cover the outstanding amount. Mortgage insurance premiums are usually payable by the borrower when the amount borrowed is over 80 percent of the property value and sometimes at lower loan to valuation ratios.
Mortgage Offset Account
A savings account run in conjunction with a home loan. The interest earned on the account is applied to the interest paid on the loan to reduce the interest payable on your mortgage. A 100 percent offset is where the interest rates earned and paid are the same.
Ombudsman
The Australian Banking Industry Ombudsman (ABIO) provides an avenue through which customers can make complaints about their bank and have them dealt with independently.
Ongoing Fee
Any loan maintenance fee charged regularly over the life of a loan.
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.
Overdraft
Pre-arranged limits to which a person can exceed an account balance.
Portability
where a new property may be substituted as security for an existing loan.
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 repaid during the term of the loan.
Private Sale
The sale of a property without an estate agent.
Rebate
A refund, cash back or monetary incentive e.g. the first homebuyers rebate or tax rebate.
Redraw Facility
A loan facility whereby you can make additional repayments on your loan and then access these extra funds when necessary. They will often have limitations such as a minimum redraw amount and a fee for each withdrawal.
Refinancing
To replace or extend an existing loan with funds from the same institution or another.
Rental Guarantee
A promise by the developer guaranteeing a certain level of return on an investment property. Usually stated as a percentage of the purchase price, it generally relates to investment properties purchased off the plan.
Repayment Maximum/Minimum
The max/min percentage of income which a lender will allow to be committed to the repayment of a loan.
Reserve Price
Specified minimum price acceptable to a seller at auction.
Residential Investment
A loan granted to purchase a property intended for investment purposes (for example, to be rented out) as opposed to owner-occupied purposes.
Search
An examination to confirm that a vendor is in a position to sell a property and that there are no encumbrances on it.
Securitisation
The process of taking a pool of diverse assets such as different home loans and converting them into a tradeable security such a bond which investors can then purchase and trade.
Security
An asset that guarantees the lender their borrowings 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 finalizes payment and assumes possession.
Solicitors Mortgages
Mortgages offered through solicitors firms. Some firms will take an active part in managing the loan, while others merely set up the loan. Generally offered at higher rates than other lenders, these loans are normally short term.
Split Loan
See combination loan.
Stamp Duty On Loan
A State Government tax assessed on the amount of a mortgage.
Stamp Duty On Property Purchase
A State Government tax assessed on the selling price of the property.
Standard Variable
A variable home loan, usually with comprehensive features (as opposed to a basic variable). This is often the variable rate fixed rates roll to at the end of their fixed term.
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
A plan that shows the boundaries of, and the building position within, a block of land.
Tenants In Common
The equal or unequal holding of property by two or more persons. If one party dies, the property is divided according to law.
Term
The length of a home loan or a specific portion within that loan.
Term Deposit
Often called a fixed interest account - a type of savings account where the size of the deposit, the interest rate and the length of time the money is deposited for are all fixed.
Title Fees
Payable to the states' Land Title Office for the title search, transfer of property ownership, registration of the new mortgage and discharge of the old one.
Title Search
Process 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, sell or dispose of the property as you desire. Also known as Certificate of Title.
Town House
Usually a two storey dwelling registered under a strata title.
Transaction Fees
charges for any transactions conducted i.e. withdrawals, transfers, and deposits.
Transfer
A document registered with the Land Titles Office that confirms the change of ownership as noted on the Certificate of Title.
True Rate
Also known as the mortgage comparison rate. Used to compare the actual rate of a loan, taking into account the nominal interest rate per annum, the compounding frequency and upfront and ongoing fees, as outlined in the Consumer Credit Code.
Unencumbered
A property free of liabilities, encumbrances or restrictions.
Valuation
A report as required by the lender, detailing a professional opinion of the property's value.
Variable Interest Rate
A rate that varies in accordance with the rates in the marketplace.
Vendor
Party who offers a property for sale.
Zoning
Local authority guidelines as to the permitted uses of land.
