Account Keeping Fees / On Going Fees -Varies $0-$20pm depending on the institution. Are charged to cover or partially cover the lender's internal costs of administering the loan.

Annual Percentage Rate -(APR) The advertised rate of interest per annum.

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.

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.

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 a sale of an asset bought and sold after September 1985.

Certificate Of Title -This document details the land dimensions and ownership details of the property and whether there are any encumbrances on it.

Comparison Rate -A nominal rate per annum calculated based on certain fees and charges together with the $ compounding frequency as outlined in the Consumer Credit Code.

Consumer Credit Code -An act of Parliament governing the relationship between borrowers and lenders.

Conveyancing -The legal process for the transferral of ownership of real estate.

Cover Note -A note of temporary property insurance before the implementation of a formal policy.

Deed -A legal document that states an agreement or obligation regarding a property.

Early Termination Payment -The cost of winding up a loan early.

Easement -A right to use a corridor or passage of land which is owned by another.

EFT -(Electronic Funds Transfer) Electronic transfer of funds from one account to another.

Encumbrance -An outstanding liability or charge on a property.

Financial Statement -A detailed account of income and expenses for a fixed period of time, and of assets and liabilities at a particular time. Individuals, properties and businesses all have their own financial statements.

Freehold -The owner owns the dwelling and the land on which it stands indefinitely.

Gearing -The ratio of your own money and borrowed funds in an investment. See Leverage.

Guarantee -A promise made as bound by the terms of a contract.

Guarantor -A party who agrees to be responsible for the payment of another party's debts.

Interest Only -Usually a short-term arrangement whereby payments are made on the interest only, not the principal.

Joint Tenants -Equal holding of property between two or more persons. If one party dies, their share passes to the survivor/s.

Line Of Credit -A flexible loan arrangement with a specified ceiling to be used at a customer's discretion.

Loan To Valuation Ratio -(LVR) The ratio of the amount lent to the valuation of the security (usually the house).

Max LVR -(LVR) Maximum loan to valuation. This means the amount you can borrow expressed as a percentage of the valuation of the security (usually the property you are buying). For example, 90% LVR means you can borrow up to 90% of the valuation of the property.

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.

Mortgage Offset -A non-interest earning account that is offset against a home loan to reduce the total interest payable.

Mortgagee -The lender of funds.

Mortgagor -The person borrowing money under the terms of a mortgage.

Negative Gearing -Where the return on an investment is insufficient to meet the interest costs of the loan used to fund the investment.

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.

Overdraft -A pre-arranged limit to which a person can exceed an account balance.

Portability -Where pre-approval can be transferred from one property to another, saving on Government loan security duty.

Principal And Interest Loan -A loan in which both the principal and the interest are paid during the term of the loan

Redraw Facility -Indicates whether the loan allows the borrower to redraw funds.

Re-financing -To replace or extend an existing loan with funds from the same institution or another.

Security -An asset that guarantees the lender their loan until the loan is repaid in full. Usually the property is offered to secure the loan.

Split Fixed/Variable -A split account is one in which different amounts of interest are paid on different portions of the account. For example, the fixed rate on the first $1,000 and the variable rate on the second $1,000.

Stamp Duty On Transfer -State Government tax assessable on purchase price.

Strata Title -Gives you ownership of a 'unit' of a larger building that you may sell, lease or transfer at your discretion. Also entitles you to membership of the body corporate.

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 period of time until a loan must be repaid.

Title Search -The process to ensure that the vendor has the right to sell and transfer ownership.

Town House -Usually a two-storey dwelling registered under a strata title.

Unencumbered -A property free of liabilities, encumbrances or restrictions.

Vacancy Rate -A figure representing either the percentage of units un-rented or the percentage of time a single dwelling remains unrented during the year.

Valuation -A report required by the lender detailing a professional opinion of a 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.


The above are a guide to some common finance lending terms and they are not to be relied upon as an absolute accurate source of definitions in all cases.