AAPR |
Average Annualised Percentage Rate. Sometimes referred to as the Compulsory Comparison Rate, this figure takes into account other costs associated with the loan etc, and expresses them as an average interest rate, to more accurately allow you to compare the cost of a product |
Acceptance |
When you agree to the terms of an offer or contract. |
Amortisation period |
The period of time a loan is calculated over (and repaid). |
Application fee |
The fee charged by a lender to obstensibly cover the lender's costs of setting up or establishing the loan. |
Assignment |
Legal transfer of a right or a title to a property, to another party. |
Banker's Lien |
The right of a Bank to retain a customer's securities until a liability to the Bank is fulfilled. |
Borrower |
A person, persons, or entity borrowing money to purchase, payoff, or refinance a product or effect. |
Buyer's Agent |
A person who acts on behalf of a buyer to find and/or negotiate on properties the buyer wishes to purchase. |
Caveat |
A notice of warning given to a public authority, e.g. Titles Office, claiming an interest in certain land. The caveat is registered and remains on the books as a warning to anyone who considers dealing with the property. |
Charge (over property) |
The term used to describe any right established over a borrower's property to secure a debt or performance of an obligation. |
Collateral Security |
Additional or supporting security given in addition to the principal security. |
Compulsory Comparison Rate (CCR) |
The CCR is an interest rate that takes into account some of the extra costs of a loan product. The formula used to calculate the CCR is regulated by the Uniform Consumer Credit Code and all Australian lenders are required to use the same formula. |
Contract of Sale |
A written agreement outlining the terms and conditions for the purchase or sale of property. |
Conveyancing |
The legal process for the transfer of ownership of real estate |
Debtor |
Someone who owes money to another and can be compelled to perform an obligation. |
Deed |
A document in writing, which is signed, sealed and delivered by the parties thereto, to prove and testify the agreement of the parties whose deed it is, to the things contained in the deed. |
Depreciation |
The accounting practice wherein the cost of a fixed asset is spread over the lifetime of the asset. Depreciation is a non-cash expense which allows the money to be retained by the business, thus providing the business with the ability to eventually replace the asset over time. |
Direct Debit |
Where the Lender debits (deducts) a payment from client's bank, credit union or building society account. |
Disbursements |
Solicitors incidental costs involved when dealing with client on behalf of the Lender, e.g. searches, certificates pest reports, etc. |
Draw Down |
Act of transferring money from lending institution to the borrower after the loan has settled. |
Encumbrance |
A charge or liability, e.g. a mortgage. |
Equity |
Generally equates to the financial value of an interest that an individual may have in an existing property or business. In terms of a person’s houses, it is the difference between the market value of the house and the amount still owed to any lender. |
Exchange |
The legal point of time when the vendor and the buyer swap documentation with a view to settlement. |
Fee Simple |
The “estate in fee simple” is the highest interest in land, and it is the closest the law comes to recognising absolute ownership for all practical purposes. |
Fittings |
Items that can be removed from a property without causing damage to it eg, carpet and curtains. |
Fixed Interest |
An interest rate set for an agreed term. |
Fixtures |
Items that are usually affixed to a property and would cause damage to the property if removed. Their removal must be stipulated in the contract of sale, and any damage made good by the seller eg. fireplace, bath. |
General Lien |
Sets out in writing the Bank's right to retain property until a debt is paid. |
Guarantor |
A person(s) who agree to be responsible for the payment of another person's debts. |
Indemnity |
This is security against damage or loss; or sum paid in compensation for loss incurred. |
Instrument |
A formal legal document in writing, e.g. a deed of conveyance. |
Interest Only Loans |
This is a loan where the principle is paid back at the end of the term and only interest is paid during the term. |
Joint Tenancy |
Property owned in the names of two or more persons, where all persons have an equal interest in the entire property. When one person dies their interest passes automatically to the survivor(s). They are known as Joint Tenants or Joint Proprietors of the property. |
LVR |
The Loan to Valuation Ratio (LVR) ratio is the amount lent, divided by the valuation of the property. |
Maturity |
The date at which a debt or investment 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 (repossess) the real estate if the mortgagor fails to repay the loan. |
Mortgagee |
The Lender of the funds. |
Mortgagor |
The person borrowing money via a mortgage |
Negative Gearing |
Gearing your investment so that the cost to maintain it (loan repayments, council rates, maintenance etc) exceeds the income produced by the investment, leading to a net reduction in taxable income. |
Off the Plan Purchase |
Buying a property on the basis of plans or drawings, before it is completed. |
Portability |
Where a new property can be used as security for an existing loan, i.e. when the loan is transferred to a new security property without needing to repay the loan, reapply, or restructure. |
Power of Attorney |
A written authorisation provided to another person(s) to perform certain acts for the signer, or bind the signer, as if they were the signer himself/herself. |
Principal |
The capital sum borrowed on which interest is paid during the term of the loan. |
Principal & Interest Loan |
A loan in which both the principal and the interest are paid during the term of the loan – most mortgages fall within this category. |
Redraw |
The borrower is able to draw on pre-paid funds |
Refinancing |
To replace or extend an existing loan with funds from the same institution or another. |
Search |
An examination of peroperty records to confirm that the vendor is in a position to sell their property and that there are no encumbrances (restrictions) on the property. |
Serviceability |
Ability of borrower to make and meet repayments on a loan, based on the borrowers expenses and income(s). Lending institutions employ a number of different measures of serviceability. |
Settlement |
The final payment for a property made by a new owner, and assumption of possession. |
Tenants in Common |
Property in the names of two or more persons and in which each has a separate and distinct share. When one person dies their share is not passed to the survivor(s) but becomes part of their estate for disposal according to his will. |
Term |
The length/time period of a loan. |
Third Party Security |
Security for a mortgage or other loan provided by a third party (someone who is legally distinct from the borrowers. |
Title Search |
Process which ensures that the vendor has the right to sell and transfer ownership. |
Torrens System |
This is a system wherein all ownership and other dealings with a property are detailed on one document; a Certificate of Title or Deed of Grant. Under this system, a mortgage is a charge or encumbrance noted on the title. Registration of an interest is compulsory to effect a legal transfer of an interest in property and each time the property is sold, a mortgage provided or discharged, the transaction is recorded on the Certificate of Title. |
Unencumbered |
A property free of liabilities, restrictions or mortgages. |
Valuation |
A report as required by the Lender, detailing a professional opinion of a property's value. |
Variable Interest Rate |
A rate that changes in accordance with the interest rates in the marketplace. |
Variation |
Changing any part of the original loan contract. |
Vendor |
The Person selling a property who is the current owner. |
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