A - D

A

                                   
Accrued interest Interest you have incurred that is yet to be charged.
Additional repayment Extra funds paid into the loan over and above the minium 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.
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 for 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.
Allotment A block of land created out of a larger area.
Amortisation period The period of time one has to repay a loan at the arranged terms.
Application fees Fees charged to cover or partially cover the lender's internal cost of setting up a loan approval for a homebuyer.
Appraised value Estimate of the value of a property being used as security for a loan.
Annual percentage rate The advertised rate of interest per annum.
  

B

                                   
BAD (Bad Accounts Debits tax) State or Territory government tax (except ACT) on withdrawals from accounts on which a cheque may be drawn.
Bad debt A debt with little chance of being recovered and written off as a loss.
Balance sheet A statement of assets, liabilities and net equity for an enterprise at a point of time.
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 that a standard variable.
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 Costs incurred when a loan is paid off before the end of its term. Generally applies to fixed loans.
Bridging finance A loan that enables you to cover the purchase of a new property when you are yet to sell your existing property.
Building regulations The standards formulated by local councils to control the quality of buildings.
  

C

                                                                                       
Capital gain The monetary gain obtained when you sell an asset for more that 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.
Capitalisation When interest payable is accrued and added to the total debt payable.
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.
Caveat loan The Latin for 'beware". Usually it is in the form of a contract clause that stipulates a particular requirement.
Caveat emptor Latin for "let the buyer beware", or in Australian "you pays you money and you takes you chances".
Certificate of Title This document details the land dimensions and ownership details, and whether there are any encumbrances on it.
Chattels Chattels are personal property. There are two types; real chattels are buildings and fixtures. Personal chattels are clothes and furniture.
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.
Company title A property title that applies when owners of units in a block form a company.
Comparison 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 outline in the consumer credit Code.
Construction loans A loan specifically granted for the purposed of funding the building of a new dwelling. You are generally able to draw down money as require, 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.
Conveyancing The legal process for the transferral of ownership of real estate.
Covenant Terms and conditions that specify the usage of a block of land or the buildings on it.
CRAA (Credit Reference Association of Australia) the body which holds credit details on all of us!
Credit Borrowed money to be paid back under an arrangement with a lender. Also, a sum of money paid into an account.
Credit limit Maximum amount the borrower can use at any one time.
Creditor A party to whom money is owned.
  

D

                       
Daily interest Interest calculated on a daily basis - therefore varies according to daily account balance.
Debtor Someone who owes money to someone else.
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.
Disposable income Any income left over after all known expenses have been met e.g. mortgage paymen

E - M

E

Easement A right to use a corridor or passage of land which is owned by another.
Encumbrance An outstanding liability or charge on a property.
Equity The amount of an asset actually owned.
Equity mortgage A loan secured by the part of the value of an asset 9usually house) which you own.
Establishment fees Lending body fees which may or may not be charged to set up a loan.
Exchange of contract The legal point of time when the vendor and purchaser swap documentation and start enquiries with a view to settlement.

F

FID (Financial Institutions Duty) state duty on the receipts of financial institutions.
Fixed interest An interest rate set for an agreed term.
Freehold The dwelling and the land on which it stands is owned by the owner indefinitely.
Frozen account An account in which all transactions have been suspended.

G

Garnishee To legally divert a part of whole of someone's money or property to someone else.
Gearing The ratio of your own money and borrowed funds in an investment.
Guarantor A party who agrees to be responsible for the repayment of another party's debts.

H

Holding deposit A refundable deposit based on the goodwill of the buyer to go ahead with the purchase.

I

ILR (Indicator lending Rate) the base rate on which interest rates for variable rate overdrafts and term loans are set.
Inclusions Items included with the property e.g. light fittings, stove.
Interest The lending body's charge for the use of funds or the return on deposited funds.
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 terms of one to five years.
Introductory loan A loan is offered at a reduced rate for an introductory period.

J

Joint tenants Equal holding of property between two or more persons. If one party dies, their share passes to the survivors.

L

Land tax A state government tax charged to the owner of any property over a stipulated value, unless it is their principal place of residence.
Lease A document grating 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 sued at a customer's discretion.
Loan security duty Mortgage stamp duty.
LVR (Loan to Valuation Ratio) the ratio of the amount lent to the valuation of the security (usually the house).

M

Margin This is the difference between the lender's interest indicator rate (or other reference rate) and the rate actually charged to borrowers.
Maturity The date a debt must be paid in full.
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 discharge fee An administration fee to cover the costs (e.g. documents) incurred in winding up a loan.
(lender's) 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% of the property value and sometime at lower loan to valuation ratios.
Mortgage manager A company responsible for managing every facet of a borrower's loan. Often sources loans from mortgage originators.
Mortgage offset A non-interest earning account that is offset against a home loan to reduce the total interest payable.
Mortgage originator Retails and more often wholesale lender who sources securities funds in order to package them as loans.
Mortgage protection insurance Not to be confused with mortgage insurance, this covers borrowers' loan repayments in the event that they are not able to meet them through illness or redundancy, for example.

N - R

N

Negative gearing Where the return on an investment is insufficient to meet the interest cost of the loan used to fund the investment.

O

Off the plan The purchase of a property, often an apartment, before it has been completed i.e. after only having seen the plans, not the finished product.
Offer to purchase A legal agreement that details a specific price for the purchase of a specific property.
Offset account A savings account linked to your mortgage in such a way that the interest earned on your savings is applied to reduce the interest on your mortgage.
Old system title (common law title) consists of a "chain" of the title documents stretching back to the original owner.
Ongoing fee Any loan maintenance fee charge regularly over the life of a loan.
Overdraft A pre-arranged limit to which a person can exceed an account balance.

P

Passed in A property is "passed in" at auction if the highest bid fails to meet the reserve price set by the vendor.
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 paid during the term of the loan.
Private sale The sale or a property without an estate agent.

R

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 and 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 % of the purchase price, its generally relates to investment properties purchased off the plan.
Repayment maximum / minimum The max / min % of income which a lender will allow to be committed to the repayment of a loan.
Requisitions on title A 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.
Residential investment loan A loan granted to purchase a property intended to investment purposes (e.g. to be rented out) as opposed to owner-occupied purposes.
Right of way Can be either somebody's right to cross other property or a general pathway across your land.
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.

S - Z

S

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 tradable security such as a bond which investors can them 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 finalises payment and assumes possession.
Stamp duty on transfer 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 that 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.
Stratum Title A title that records your ownership of a "unit" of a larger property. Unlike a strata title, the owner becomes a shareholder in the company that manages the common area, not just a member.
Survey A plan that show the boundaries of , and the building position within, a block of land.

T

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 of the loan.
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. withdrawls, transfers, deposits.
Transfer A document registered with the Land Titles office that confirms the change of ownership of land.

U

unencumbered A property free of liabilities, encumbrances or restrictions.

V

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.
Vendor statement A statement by the seller to the buyer detailing material particulars regarding the property in question.
Villa Single storey attached dwelling.

Z

Zoning Local authority guidelines as to the permitted uses of land.

Contact

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Home Loan Advisory Service :

Lvl 3.03, 448 St Kilda Road MELBOURNE VIC 3004

Telephone: (03) 9866 4433

Fax: (03) 9866 4944

E-Mail: info@homeloanadvice.com.au