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.

Expert Lending

Expert Lending