| A |
| Acceptable referee |
Includes accountant, solicitor, magistrate, doctor & justice of the peace |
| Acceptance |
To agree to the terms and conditions of an offer or contract |
| Additional repayment |
Extra funds paid into the loan over and above the minimum prescribed payments
|
| Allotment |
The area of land that is subdivided into smaller portions of land |
| Amortisation |
To pay off principal and interest under a loan over a period of time, usually by
installments |
| Application fee |
The fee that is charged by a lender when you lodge a loan application |
| Appreciation |
When the value of the property increases from its original value |
|
| B |
| Body corporate levy |
The fee paid to a body corporate to cover various administrative cost relating
to the common property |
| Bridging finance |
A shorter term loan that is taken out to purchase a new property before selling
your existing property |
| Break cost |
Relates to fixed rate loans where the borrower terminates the loan contract
before the expiry of the fixed rate period |
|
| C |
| Capital gain |
The amount by which proceeds from the sale of property exceeds the original
purchase price |
| Certificate of title |
This document details the land dimensions and ownership details, and whether
there are any encumbrances |
| Certificate of currency |
A certificate issued by an insurance company showing that a building is insured
|
| Company title |
The title where the unit holders are shareholders in a private company |
| Comparison rates |
A comparison rate is a tool to help consumers identify the true cost of a loan.
It is a rate which includes both the interest rate and the ascertainable fees
and charges relating to a loan, reduced to a single percentage figure |
| Contract of sale |
A written agreement outlining the terms and conditions for the purchase or sale
of property |
| Cooling off period |
5 day period after exchange of contracts during which time the contracts may be
cancelled |
|
| D |
| Default |
Failure to meet debt payment on due date |
| Deposit |
A portion of the purchase price, usually 10%, is paid by the buyer at the time
of exchanging contracts on the purchase of a property |
| Depreciation |
The value of the property decreases |
| Debt service ratio |
Maximum of the applicants weekly, fortnightly or monthly wage which will support
loan repayments over the agreed loan term. Usually expressed as a percentage –
most lenders set a maximum DSR between 30% to 33% |
| Deferred establishment fee |
Fee imposed by some lenders where the borrower has sought refinance with another
lender within the first few years of the loan |
| Drawdown |
Release of loan funds at settlement |
| Discharge fee |
Fee charged when a loan is discharged |
|
| E |
| Economic cost |
A fee which may be payable if, during a fixed rate period, the borrower makes
certain changes such as switching the loan from a fixed to variable rate or
fully prepaying the loan prior to the expiry of the fixed rate period. Economic
cost is the lender’s estimate of its loss resulting from the change |
| Equity |
The difference between what you owe and what your property is currently worth
|
| Exchange of contracts |
An exchange of contracts is when the buyer and seller enter into a binding
contract that commits them to the purchase/sale of the property |
|
| F |
| Financial institutions duty |
FID is state duty on the receipts of financial institutions |
| Fixed interest rate |
An interest rate that allows you to lock it in for a set time period |
| Formal approval |
When the lender formally approves your loan application and offers you
unconditional approval |
| Full Doc |
Full Doc loans are designed for borrowers who can provide full documentation of
their income. This can include payslips, tax returns and other financial
statements. Full Doc loans offer the customer greater options when it comes to
loan choice as well as a lower rate. |
|
| G |
| Gross income |
Total income before tax |
| giroPost |
A facility allowing you to conduct banking transactions through the post office
|
|
| H |
| Home equity loan |
A home equity account gives you a revolving line of credit secured by the value
of your house. This allows you to use the funds for any other purpose such as
the purchase of a second property, or shares or other investments. The interest
rate is generally higher than a standard variable rate and these accounts are
not suitable for everyone |
| Honeymoon rate |
Term applied to introductory loans. The rate can be fixed, capped or variable
for the first 12 months of the loan. At the end of the term the loan reverts to
the standard variable rate |
|
| I |
| Interest only loan |
Usually a short term arrangement whereby payments are made on the interest only,
not the principal |
|
| J |
| Joint tenants |
The holding of property by two or more people in equal shares |
|
| L |
| Loan to valuation Ratio (LVR) |
This is the measure of the amount of the loan compared to the value of the
property. For example, if you have borrowed $160,000 and your property is valued
at $200,000, the LVR would be 80% |
| Lender’s Mortgage Insurance |
Some lenders may provide up to 95% of funds for a loan if you agree to take out
mortgage insurance (LMI). This figure is a one off payment usually made at the
time of settlement. The figure is calculated based on variables such as the loan
amount, the value of your property and the exact LVR (i.e. the figure between
80% & 95%). This payment allows the lender to recoup the unpaid principal in the
event of default and the borrowers debt is transferred to the mortgage insurer
|
|
| M |
| Mortgage offset |
Offset accounts can help reduce your tax bill when the income earnt from deposit
funds held are offset against interest paid on your mortgage. However, not all
offset accounts are equal, with many not paying the same interest as you are
charged on your mortgage |
| Mortgagee |
The institution who lends the money |
| Mortgagor |
The person who borrows the funds |
|
| N |
| Negative gearing |
Where the return on an investment is insufficient to meet the costs of the
investment, leading to a reduction in assesable income for taxation purposes
|
| Net income |
Gross income less tax |
|
| O |
| Ombudsman |
The Credit & Investments Ombudsman provides an avenue through which customers
can make complaints about their credit provider and have them dealt with
independently |
| Offset loan |
Helps reduce interest costs on a loan by linking the loan to a deposit account.
The balance in the transaction account ‘offsets’ the loan principal. Interest is
then calculated on the loan principal minus the balance in the account. For
example, if the principal on the loan is $180,000 and there is $5000 in the
transaction account, then interest is only calculated on $175,000 |
|
| P |
| Portable loans |
A portable loan allows you to sell your house and move to a new one without
having to refinance. The main benefits of portability apart from not having to
refinance is utilisation of stamp duty and not having to pay break costs if you
are on a fixed rate |
| Pre approval |
When a lender advises you in writing how much they will lend you, subject to
lending terms and conditions |
| Principal & interest loans |
A loan in which both the principal and interest are paid during the term of the
loan |
|
| R |
| Redraw facility |
Allows you to access any additional repayments you have made on your loan |
| Refinancing |
To move your loan from one lending institution to another |
|
| S |
| Settlement |
The completion of the sale transaction. Final payments are made at settlement in
exchange for the relevant documents. The purchaser can then take ownership of
the property |
| Service fee |
Usually a monthly fee levied to cover the cost of administering & maintaining
the loan account i.e. fixed and variable costs such as staff, IT software /
hardware |
| Split loan |
Combination of either a variable rate loan and a fixed rate loan or the
combination of a standard term loan and a line of credit |
| Stamp duty |
Stamp duty is a state government tax which is calculated on the sale price of
the property. Stamp duty is also payable on mortgage documents and is calculated
on the amount borrowed |
| Standard variable rate (SVR) |
The rate which lenders apply to their ‘standard’ home loan product. Carries
features such as a redraw facility, portability, salary account and mortgage
offset |
| Strata title |
Title that is commonly used for units, which forms part of the owners
corporation |
| Switching fee |
A fee charged where an existing borrower wishes to change from one loan type to
another e.g. variable rate loan to fixed rate loan |
|
| T |
| Tenants in common |
The holding of property by two or more people in equal or unequal shares |
| Torrens title |
Title that grants ownership of land |
| Transfer |
A document registered in the Land Titles Office recording the change of
ownership |
|
| V |
| Valuation |
A report as required by the lender detailing a professional opinion of the
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 |
|
