A
Accelerated PaymentThe option to make higher repayments to pay off the loan faster.
AcceptanceTo agree on the terms of an offer or a contract.
Account keeping feesAccount keeping fees are charged to cover or partially cover the lender's internal costs of administering the account.
Accrued interestThe amount of loan interest that has already occurred but not yet due for payment.
AdjustmentsThe process of allocating expenses (Council rates, water rates) on settlement day that the seller has paid for but not used.
AgentA person or body authorized to act on behalf of a client in the sale, purchase, or management of the property.
Amortization periodThe period of time you have to repay a loan at the arranged terms.
Application feesFees charged to cover or partially cover the lender's costs of processing a loan application for an applicant.
AssetsMoney, property, or goods owned.
B
Balance sheetA statement of assets, liabilities, and net equity for an enterprise at a point in time.
Balloon paymentA large loan repayment, typically towards the end of the loan term, to clear a debt.
Banker's opinionA communication from one bank to another to advise on a customer's reliability or creditworthiness.
BankruptcyWhen a debtor who cannot pay their debts, has their financial affairs managed by a trustee in bankruptcy.
Bridging financeA short-term loan that covers the time gap between the purchase of a new property and the sale of an old property.
C
Capital gainThe monetary gain obtained when you sell an asset for more than you paid for it.
CalHFA (California Housing Finance Agency)An agency that offers guidance and information to low-to-moderate income borrowers on the down payments, closing costs, and other conditions of their loans.
California VA LoanZero down payment available to veterans residing in California.
Capped loanA 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.
CaveatAn entry made in a land registry or court to prevent a certain step is taken (e.g. the transfer of land) without notice to the person who lodged the caveat.
Certificate of titleA document that details the title or ownership details of a property, and whether there are any encumbrances on the title. Not all States and Territories have Certificates of title.
CommissionA fee payable to a real estate agent, by the vendor, for the sale of property, or by a lender or client to a third party, such as a broker, for arranging a loan.
Compound interestInterest that is paid on both the accumulated interest as well as on the original principal.
ContractA legally bindable agreement between individuals or entities. In real estate, a contract is entered into when contracts are exchanged and the deposit is paid.
Conventional MortgageThe most common type of home loan and usually the best interest rates. Mortgage terms can be either 15 or 30 years.
ConveyancerA person qualified and licensed to handle all documentation for the sale and/or purchase of a property.
CountersignedAdditional signature or signatures to verify the authority of the person signing.
Cover noteA note of temporary property insurance before the implementation of a formal policy.
CreditBorrowed money to be paid back under an arrangement with a lender. Also, a sum of money paid into an account.
Credit limitThe maximum amount a borrower can use at any one time.
CreditorA party to whom money is owed.
Contract of saleA written agreement outlining the terms and conditions for the purchase or sale of the property.
D
Daily interestInterest calculated daily. It therefore varies according to the daily account balance.
DebitAn account entry to charge a withdrawal to a specified account.
DebtorSomeone who owes money to someone else.
DeedA legal document that states an agreement or obligation regarding a property.
DefaultThe failure to meet a debt payment on a due date.
DepositThe money you pay in exchange for contracts as part of your initial contribution to the purchase of your home. This could be between 5 and 10% of the purchase price. You could also pay your deposit by way of a Deposit Bond, if acceptable to the vendor.
Deposit bondA deposit bond acts as a substitute for the cash deposit in between signing a contract and settlement and can be issued for all or part of the deposit amount required, up to 10% of the purchase price, if acceptable to the vendor. At settlement, the purchaser is required to pay the full purchase price including the deposit.
DisbursementsThe various costs your solicitor or conveyancer has to pay to other organizations and bodies on your behalf, for example, search fees and stamp duty/ land tax. Your solicitor or conveyancer will itemize the disbursements on the invoice they send you.
Down PaymentThe minimum amount of disposable cash the vendor must have to obtain a home loan. Upon completing the sales transaction, the borrower must provide this capital. The most common amount required is 10% of the loan amount. At E Mortgage Capital, our down payments go down as 3% or 3.5% except for VA loans (exclusive for veterans) which do not require a down payment.
E
Electronics Fund Transfer (EFT)The online transfer of funds from one account to another.
EncumbranceAn outstanding liability or charge on a property.
EquityThe difference between the amount you owe on your home loan and the current value of your property.
Establishment feesThe lender’s fees may or may not be charged to set up a loan.
Exchange of contractsThe legal point of time when the vendor and purchaser swap documentation and start inquiries with a view to settlement.
F
FHA MortgageFirst-time home loan available to most citizens. Borrowers only need a 3.5% upwards for the down payment.
Fixed interest rateAn interest rate for a home loan, set for an agreed period.
G
GearingThe ratio of your own money and borrowed funds in an investment.
GuaranteeA promise made as bound by the terms of a contract.
GuarantorA person or company that guarantees that promises made by the first party (the borrower) to the second party (lender) will be fulfilled, and assumes liability if the borrower fails to fulfill them (defaults). In case of a default, the guarantor must compensate the lender, and usually acquires an immediate right of action against the borrower for payments made under the guarantee.
H
Home Owners Association Fees (HOA Fees)Monthly payments for the maintenance of the common areas and amenities if you live in a joint association (example, block of flats or condominium association).
Holding depositA refundable deposit demonstrating the goodwill of the buyer to proceed with the purchase.
Home insuranceA way of referring to both buildings and contents insurance.
I
InclusionsHousehold items included with property (for example light fittings).
Income statementA statement of income and expenditure for a period, usually one year.
InterestThe lender's charge for the use of funds, or the return on deposited funds.
Internal rate of returnA measure of the return on investment (or loan) which takes into account the time value of money by showing the rate of interest at which the present value of future cash flows is equal to the cost of the investment or loan.
InventoryA list of items included with a property e.g. furniture, moveable items, etc.
J
Joint tenantsThe equal holding of property between 2 or more persons.
L
LeaseAn agreement between two parties under which one (the lessee) is granted the right to use the property of another (the lessor) for a specified period under specific terms and conditions.
LiabilitiesA person's debts or obligations.
LienThe right to hold property as security against a debt or loan.
Life assuranceA form of insurance by which someone's life is insured.
Line of creditA flexible loan arrangement with a specified ceiling (the credit limit) to be used at a customer's discretion.
Loan security dutyStamp duty on loan security documentation.
Loan pre-approvalThe loan is approved before the borrower bids on or offers for the property and is dependent on the borrowers satisfying the Lender’s lending criteria in principle. It is also subject to a satisfactory valuation.
Loan termPeriod over which a loan agreement is in force, and before or at the end of which the loan should either be repaid or renegotiated for another term.
Loan to valuation ratio (LVR)The ratio of the amount lent to the valuation of the security (usually the house). The LVR measures the amount of the loan compared to the value of the property being used as security for the loan, expressed as a percentage figure. From a lender’s perspective, the higher the LVR, the higher the risk to the lender.
M
Mandatory comparison rateAn interest rate that includes both the headline interest rate and the fees and charges relating to a loan. It is designed to help consumers identify the true cost of a loan and compare it with other similar loans.
MaturityThe date a debt or investment must be paid in full.
Max TermThe maximum length of a home loan or a specific portion within that loan.
MortgageA loan secured by real estate, usually the property being purchased.
MortgageeThe lender or person to whom a mortgage is granted.
MortgagorThe borrower or person who grants a mortgage.
N
Negative equityWhen the current value of a property is less than the amount owed on the mortgage.
NoteA written promise to pay a specified sum of money to a specified person at a specified time.
O
Offset accountA savings or transaction account linked to your home loan. The balance in this account is offset daily against your loan balance, reducing the interest charged.
Outstanding balanceThe amount still owed on a loan.
P
PrincipalThe amount of money borrowed or still owed on which interest is calculated.
Property valuationAn assessment of the market value of a property, often performed by a professional valuer.
Pre-approvalApproval given by a lender based on preliminary information about the borrower, subject to conditions such as property valuation.
Q
Quitclaim deedA deed transferring any ownership interest the grantor has in a property without warranties.
R
RefinanceReplacing an existing loan with a new loan, usually to get better terms or interest rates.
RepaymentThe money paid back on a loan.
Rent rollA record of rental income and lease details for an investment property.
S
SettlementThe process of transferring ownership of property from seller to buyer and paying off the mortgage.
Stamp dutyA tax charged on certain documents and transactions, including property purchases.
SurveyAn inspection and measurement of land and property boundaries.
T
TitleThe legal right to own and use property.
TenancyA rental agreement between landlord and tenant.
TermThe length of time a loan agreement is in force.
U
UnderwritingThe process a lender uses to evaluate the risk of lending money.
V
Variable interest rateAn interest rate that can change over time based on market conditions.
ValuationThe process of estimating the value of a property.
W
WaiverThe voluntary relinquishment of a known right.
WithdrawalThe removal of funds from an account.
Z
Zero balance accountAn account that always maintains a zero balance by transferring funds in or out as needed.
