accrued interest
Interest you have earned or incurred that
is yet to be paid or charged.
back to top
amortizing or
principal & interest (P&I)
Amortizing is another word for loans that
are gradually being paid off. Borrowers with an amortizing loan have
to make set repayments each month of both principal and interest so
that over a certain period of time their loan is paid out. This is
sometimes referred to as P&I. Other options are interest only or
interest capitalisation. The opposite of an amortising product is a
revolving line of credit.
back to top
average annual percentage rate (AAPR)
The annual effective rate of the
mortgage which is made up of the interest rate, fees and charges
that incur during the contract period.
back to top
appreciation
An increase in the value of a property due to changes in
market conditions or other causes. The opposite of depreciation.
back to top
asset
Anything of monetary value that is owned by a person.
Assets include real property, personal property, and enforceable
claims against others (including bank accounts, stocks, mutual
funds, and so on).
back to top
balance sheet
A financial statement that shows assets, liabilities, and
net worth as of a specific date.
back to top
breakcost
Breakcosts are also known as economic costs. They are
charged by an institution to recoup interest lost through a borrower
refinancing with another institution or paying their loan out early.
Break costs are normally only charged on fixed rate loans. It can
also be charged well into the variable portion of a honeymoon or
introductory rate home loan. Some institutions also charge a flat
fee on top of their break cost charge. They may refer to this fee as
a "deferred establishment fee."
back to top
certificate of title
A statement provided by an abstract company, title company,
or attorney stating that the title to real estate is legally held by
the current owner.
back to top
clear title
A title that is free of liens or legal questions as to
ownership of the property.
back to top
construction loan
A short-term, interim loan for financing the cost of
construction. The lender makes payments to the builder at periodic
intervals as the work progresses.
back to top
consumer credit code
An act of parliament governing the relationship between
borrowers and lenders.
back to top
consumer reporting agency
An organization that prepares reports that are used by
lenders to determine a potential borrower's credit history. The
agency obtains data for these reports from a credit repository as
well as from other sources.
back to top
contract of sale
A written agreement outlining the terms and conditions for
the purchase or sale of property.
back to top
covenant
A clause in a mortgage that obligates or restricts the
borrower and that, if violated, can result in foreclosure.
back to top
cover note
A note of temporary property insurance before the
implementation of a formal policy.
back to top
conveyancing
Conveyancing fees (legal fees on the purchase) vary from
state to state and will generally be between $400 to $1000 depending
on the complexity of the transaction. If you elect to do the
conveyancing yourself, the cost of the certificates and other
documentation will still be required.
back to top
CRAA
Credit Reference Association of Australia – the body which
holds credit details on all of us! Also known as Baycorp Advantage.
back to top
credit
An agreement in which a borrower receives something of value in exchange
for a promise to repay the lender at a later date.
back to top
credit history
A record of an individual's open and fully repaid debts. A
credit history helps a lender to determine whether a potential
borrower has a history of repaying debts in a timely manner.
back to top
debt
An amount owed to another.
back to top
default
Failure to make mortgage payments on a timely basis or to comply with
other requirements of a mortgage.
back to top
FID
Financial Institutions Duty – state duty on the receipts of
financial institutions.
back to top
guarantor
A party who agrees to be responsible for the payment of another party's
debts.
back to top
income statement
A statement of income and expenditure for a period, usually a year.
back to top
joint tenants
Equal holding of property between two or more persons. If one party
dies, their share passes to the survivor/s.
back to top
lender's mortgage insurance (LMI)
Insurance written by an independent mortgage insurance company
protecting the mortgage lender against loss incurred by a mortgage
default. Usually required for loans with an LVR of 80.01% or higher.
(see press release article)
back to top
loan to value ratio (LVR)
The ratio of the amount of your loan to the appraised value. The LVR
will affect programs available to the borrower and generally, the
lower the LVR the more favourable the terms of the programs offered
by lenders.
back to top
monthly fees
Are the fees charged to cover or partially cover the lender's internal
costs of administering the loan each month?
back to top
mortgage
A legal document that pledges a property to the lender as security for
payment of a debt.
back to top
mortgagee
The person or company who receives the mortgage as a pledge for
repayment of the loan. The mortgage lender.
back to top
mortgagor
The mortgage borrower who gives the mortgage as a pledge to repay.
back to top
negative gearing
Where the return on an investment is insufficient to meet the interest
costs of the loan used to fund the investment.
back to top
principal
Amount of debt, not including interest. The face value of a note or
mortgage.
back to top
principal & interest loan
A loan in which both the principal and the interest are paid during the
term of the loan.
back to top
refinancing
To replace or extend an existing loan with funds from the same
institution or another.
back to top
search
An examination of land title documents to confirm the owner (and any
other rights holders) of property.
back to top
security
An asset that guarantees the lender their borrowings until the loan is
repaid in full. Usually the property is offered to secure the loan.
back to top
tenants-in-common
An undivided interest in property taken by two or more persons. The
interest need not be equal. Upon death of one or more persons, there
is no right of survivorship.
back to top
title
The evidence one has of right to possession of land.
back to top
title search
An investigation into the history of ownership of a property to check
for liens, unpaid claims, restrictions or problems, to prove that
the seller can transfer free and clear ownership.
back to top
unencumbered
A property free of liabilities, encumbrances or restrictions.
back to top
valuation
A report as required by the lender, detailing a professional opinion of
a property's value.
back to top
vendor
Party who offers a property for sale.
back to top
|
