| AAPR
|
Average Annualised Percentage Rate - this figure takes into account some of the other costs associated with the loan and expresses them as an average interest rate so that consumers can compare like loan product interest rates. Also referred to as the Comparison Rate. |
| Acceptance
|
Agree to the terms of an offer or contract. |
| Additional repayment
|
Funds you have paid into the loan in addition to the minimum monthly requirement. |
| Amortisation period
|
The period of time a loan is calculated and paid. |
| Application fee
|
The fee charged by a lender to set up the loan. Could otherwise be referred to as an establishment fee |
| Arrears
|
An overdue account yet to be paid. |
| Assets
|
Money, property or goods owned. |
| Bankruptcy
|
The legal financial state an individual is in, when unable to meet debts. A debtor may be declared bankrupt by the Federal Court at either the debtors or the creditors instigation. The debtors estate will be placed in the hands of an official receiver who will distribute the estate in accordance to the provisions of the Bankruptcy Act. |
| Borrower
|
A person, persons, or entity borrowing money. |
| Buyer's Agent
|
Person to act on behalf of the buyer to find and negotiate on properties. |
| 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. |
| Comparison Rates Schedule (CRS)
|
The table of ‘true’ costs expressed as 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. This is to allow the consumer greater clarity of true costs of a loan when comparing from lender to lender. |
| Consumer Credit Code
|
Legislation designed to protect the rights of the personal consumer by ensuring banks and other financial institutions adhere to the same rules when providing personal, domestic or household credit. Also known as the Uniform Consumer Credit Code or UCCC. |
| Contract of Sale
|
A written agreement outlining the terms and conditions for the purchase or sale of property. |
| Conveyancing
|
The legal process for transferring real estate ownership |
| COSL |
Credit Ombudsman Service Limited. |
| Daily Interest
|
Interest calculated on a daily basis - varies according to daily account balance. |
| Debtor
|
Someone who owes money to another. |
| Deed
|
A document in writing, which is signed, sealed and delivered by the parties, to prove and testify to the agreement of the things contained in the deed. |
| Depreciation
|
The accounting practice where the cost of a fixed asset of a business is spread over the life of the asset. |
| Direct Debit
|
Where the Lender, with the debtors consent and authority, deducts a payment from the client's nominated transaction account. |
| Disbursements
|
Solicitors incidental costs involved when dealing with client on behalf of the Lender, e.g. searches, certificates, etc. |
| Draw Down |
Act of transferring money from lending institution to the borrower folloing settlement of the loan. |
| DSR |
Debt Service Ratio. |
| Encumbrance
|
A charge or liability. |
| Equity
|
The value of the asset owned less the amount of debt against the asset, ie Value – Debt = Equity |
| Exchange
|
The legal point of time when the vendor and the buyer swap documentation with a view to settlement. |
| Fittings |
Items that can be removed from a property without causing damage to it eg, carpet and curtains. |
| Fixed Rate
|
An interest rate set for an agreed term between the lender and the borrower. |
| Fixtures
|
Items that would cause damage to the property if removed. Normally not removed at time of sale. |
| Government Fees
|
State and government charges at the time of settlement, e.g. stamp duty, registration of mortgage fees etc. |
| Gross
|
Income/Profit Income from a person or company, before tax, superannuation or payroll deductions. |
| Guarantor
|
A person/s who agree to be responsible for the payment of another person's debts. |
| Instrument |
Formal legal document in writing, e.g. a deed of conveyance. |
| Interest
|
The Lender's charge for the use of funds or the return on deposited funds. |
| Interest Only Loans
|
Only interest is paid during a agreed period of time. These loans usually revert back to principal and interest. |
| Joint Tenancy
|
Property in the names of two or more persons, where all persons have an equal interest in the whole property. When one person dies his interest passes to the survivor(s). They are known as Joint Tenants or Joint Proprietors of that property. |
| Liability
|
A debt of an agreed amount which one is liable for. |
| Loan
|
An advance of funds from a lender to a borrower where agreement is made between the parties as to amount of interest and repayment period. |
| LVR |
Loan to Valuation Ratio. Usually expressed as a percentage of loan amount in terms of value of asset. |
| Mortgage
|
A form of security for a loan usually taken over real estate. The Lender, the mortgagee has the right to repossess the real estate if the mortgagor fails to repay the loan. |
| Mortgagee
|
The Lender of the funds. |
| Mortgagor
|
The person borrowing money in the terms of the mortgage. |
| Negative Gearing
|
Gearing your investment so that the cost to maintain it (loan repayments, council rates, maintenance etc) out weigh the income produced by the investment, leading to a reduction in taxable income. |
| Off the Plan Purchase
|
Buying a property from the plans prior to completion of the project. |
| Portability |
When a loan can be transferred to another security therefore avoiding the need to to reapply or repay the loan. |
| Power of Attorney
|
A written authorisation to another person to perform certain acts for the signer, as if they were the signer. |
| Principal
|
The sum borrowed on which interest is paid during the term of the loan. |
| Principal & Interest Loan
|
A loan in which both the initial borrowed amount and the accumulating interest are paid during the life of the loan. |
| Redraw
|
Borrower is able to draw on pre-paid funds, ie any amounts they have paid in advance above the required minimum amount |
| Search
|
A legal examination to confirm that the vendor is in a position to sell the property and what encumbrances may affect the property. |
| Securitisation
|
The process where mortgage backed securities in the form of bonds are sold to investors directly in the capital markets. |
| Security
|
An offering of an asset that guarantees the Lender their borrowings until the loan is repaid. |
| Serviceability
|
Ability of borrower to make and meet repayments on a loan calculated using income and any current liabilities |
| Settlement |
Payment by the new owner. |
| 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 his share is not passed to the survivor(s) but becomes part of his estate for disposal according to his will. |
| Term
|
The length of a loan, or part of the terms of the loan, usually expressed in number of months. |
| Third Party Security
|
Security provided for a mortgage by a third party who is legally different from the borrower or debtor. |
| Title Deed
|
Registration showing the ownership of property. |
| Title Search
|
Process to ensure that the vendor has the right to sell and transfer ownership. |
| Torrens System
|
System whereby ownership and all dealings on a property are detailed on the one document,
i.e. a Certificate of Title or Deed of Grant. Under this system a mortgage is a charge or encumbrance on the title. Registrations is compulsory to effect legal transfer of an interest in property and each time the property is sold, mortgaged, or a mortgage discharged, the transaction is recorded on the Certificate of Title. |
| Unencumbered
|
A property free of liabilities, restrictions or mortgages. |
| Valuation
|
A report detailing a professional opinion of a property's value and salability within a specified period of time. |
| Variable Interest Rate
|
A rate that changes in accordance with the rates in the marketplace. |
| Variation
|
Changing any part of the terms of the original loan contract. |
| Veda Advantage
|
The company which records and holds credit information on everyone, such as loan applications, credit defaults, and so on. Was originally known as CRAA, and may often be referred to as the 'CRAA Check'. Also formerly known as Baycorp Advantage |
| Vendor
|
Owner of the property, who is selling. |
