| A |
| ABA |
Australian
Bankers' Association |
| Acceptance |
To agree to the
terms of an offer or contract |
| Additional
repayments |
The ability to
make extra repayments into your home loan account - thereby
reducing the term of the loan.
Variable loans have this flexibility. |
| Agent |
Person or body
authorised to act on behalf of a client in the sale, purchase or
management of property. |
| 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 costs of setting
up a loan approval for a
home buyer. |
| Appraised value |
Estimate of the
value of a property being used as security for a loan. |
| Annual percentage rate |
(APR) the annual
effective rate of the mortgage which is made up of the interest
rate, fees and charges
that incur during the contract period. |
| Arrears |
An overdue account
yet to be paid. |
| Assets |
Money, property or
goods owned. |
| At call |
A bank account
from which money can be withdrawn immediately. |
| Auction |
Public sale of
property with ownership going to the highest bidder, subject to a
reserve price being
reached. |
| B |
| BAD |
(Bank Account
Debits tax) State or Territory government tax (except ACt) on
withdrawals from accounts on
which a cheque may be drawn. |
| Balance
sheet |
A statement of
assets, liabilities and net equity for an enterprise at a point
of time. |
| Balloon
payment |
A large loan
repayment to clear a debt. |
| Banker's
option |
Enquiries made
from one bank to another to check on a customer's reliability or
credit worthiness. |
| Bankruptcy |
When a debtor has
his/her estate placed into the hands of a receiver who has the
responsibility for its
distribution. |
| Bearer |
Person presenting
a cheque to a bank |
| 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
cost |
The cost of
exiting a fixed loan early. |
| 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
regulations |
The standards
formulated by local councils to control the quality of
buildings. |
| C |
| Capital |
The current value
of your long-term assets - house, property or business. |
| 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 any encumbrances
on it. |
| Combination
loan |
A loan feature
which allows borowers to take up part of their loan as a
variable rate and part as a fixed
rate loan. This feature lets borrowers hedge their bets in
times of fluctuating
interest rates. A blend of repayment flexibility and
interest rate security. (see
Split Loan) |
| Commission |
A fee payable to
the real estate agent, by the vendor, for the sale of property. |
| Company
Title |
A property title
that applies when owners of units in a block form a company. |
| Comparison
rate |
A nominal rate per
annum together with the compounding frequency as outlined in the
Consumer Credit Code.
BankSmart bases its comparison rate on a 7 year $100,000
loan. |
| Compound
interest |
Interest that is
paid on both the accumulated interest as well as the original
principal. |
| 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 |
The 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! |
| D |
| Deed |
A legal document
that states an agreement or obligation regarding a property. |
| Default |
Failure to meet
debt payment on a due date. |
| Discharge fee |
Fee that covers
the legal and administrative costs at the end of a mortgage. |
| E |
| Early
termination payment |
The cost of
exiting a fixed loan early (Break Cost) |
| Equity |
The amount of an
asset actually owned - the current value of your property less
the sum you still owe on
it. |
| Equity
loan |
A loan with equity
on your home as security. |
| Establishment
fee |
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 where the vendor and purchaser swap documentation and start
enquiries with a view to
settlement. |
| F |
| Fixed
interest |
An interest rate
set for an agreed term. |
| G |
| Gearing |
The ratio of your
own money and borrowed funds in an investment. |
| H |
| High
start loan |
A loan where the
initial repayments are high and decrease over the term of the
loan. |
| I |
| Interest |
The lending body's
charge for the use of funds or the return on deposited
funds. See daily interest and
monthly interest. |
| 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 |
| Introductory
loans |
|
| L |
| Line
of Credit (Equity overdraft) |
A flexible loan
arrangement with a specified ceiling to be used at a customer's
discretion. Secured by the
part of the value of an asset (usually house) which you
own. They work like an
overdraft and are, often referred to as revolving credit. The
money can be used
when needed and paid back when you can. Interest
rates tend to be lower than
credit cards and credit limits higher than for credit cards and
personal loans. |
| Low
start loan |
A loan where the
initial repayments are low and increase over time. |
| M |
| Mortgage
offset |
A non-interest
earning account that is offset agains a home loan to reduce the
total interest payable. |
| N |
| Negative
gearing |
Where the return on
an investment is insuficient to meet the interest costs of the
loan used to fund the
investment. |
| O |
| 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. |
| P |
| Portable
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 |
| R |
| Redraw
facility |
|
| Refinancing |
To replace or
extend an existing loan with funds from the same institution or
another. |
| S |
| Salary
facility |
|
| Search |
An examination to
confirm that a vendor is in a position to sell a property and
that there are no
encumbrances on it. |
| Split
loan |
A loan feature
which allows borowers to take up part of their loan as a
variable rate and part as a fixed
rate loan. This feature lets borrowers hedge their bets in
times of fluctuating
interest rates. A blend of repayment flexibility and
interest rate security. (see
Combination Loan). |
| Stamp
duty on transfer |
A State Government
tax assessed on the selling price or the property. |
| Standard
variable loans |
|
| T |
| Total
entry fee |
Includes
establishment fees, valuation, application fee and legal costs
(settlement, document
registration, title search, mortgage preparation). Does
not include government
charges/disbursements. |
| V |
| Variable
interest rate |
A rate that varies
in accordance with the rates in the marketplace. |
|
