AARP

Stand for "Average Annual Percentage Rate" which endeavors to represent the costs of a particular loan, including fees and charges

Administration Fund

Part of a Body Corporate, the Administration fund covers the day to day running of a Body corporate Property such as gardening, marinating pools, lifts, exterior of the building etc.

Aged Pension

Is a Government Pension administered by Centrelink which provides a Pension to people who have reached the retirement age and don't have enough Superannuation or other income to support themselves

Aggregator

An Aggregator in Lending is a business which groups a number of independent Mortgage Brokers under them to provide support and larger amounts of services and lenders to the Brokers.

Alternate Verification

A method of demonstrating Self Employed income without showing tax returns. Usually by showing Business Activity Statements to the Lender instead of full Tax returns. Very few lenders will accept Alternate Income Verification.

Annual Fee

A fee charge by the Lender to the customer once a year for use of a particular product, loan or service. Particularly common on Professional Pack Loans and Credit Card

Apartment

A private Residence within a building (usually a high rise) which shares some facilities such as lifts & Gardens with other private residences. Can also be referred to as a Unit or a flat but these terms are a little inaccurate in their legal definitions.

Application

Completing an application form which is presented to a lender for the purpose of obtaining finance. It is not a legally binding contract to accept the finance.

Application Fee

A fee some lenders charge for processing an application form. It can either be required before the lender assesses the application or rolled into the loan at settlement.

Approval

When a loan application form is accepted either in part (Conditional Approval) or completely (Formal Approval)

APRA

The Australian Prudential Regulation Authority (APRA) is the prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance, friendly societies, and most members of the superannuation industry. It is a Commonwealth Government Body

Arrears

An unpaid, overdue debt or missed payment.

ASIC

The Australian Securities & Investments Commission enforces and regulates company and financial services laws to protect consumers, investors and creditors. It is a Commonwealth Government Agency

Asset Lend

See Equity Lend

Assets

An item of value that is owned either outright or in part i.e. a house or car or furniture etc.

ATM

Bank term for an Automatic Teller Machine, usually positioned outside banks for withdrawing money without the aid of a bank teller

ATO (Australian Taxation Office)

The federal Government's agency for collecting Tax

Auction

A public sale where Items or items of Merchandise are sold to the highest bidder. A common way to sell property and Vehicles in Australia

Austudy

Austudy provides government financial assistance to students aged 25 years and older. To be eligible for Austudy students must be undertaking full-time study which is defined as at least 9 units per semester. You will automatically lose your Austudy if you drop below this load

Bad Credit

Any Arrears, writ, default, judgment, bankruptcy, summons etc. which may have a detrimental impact on your ability to obtain credit

Bailiff

An official who is court appointed and who has the power to execute writs, processes, and repossessions. In the Case of a Foreclosure, a Bailiff appearing on your front door will usually mean you moving out very soon!

Bank

An APRA approved deposit taking and lending institution

Bankruptcy

An Act of Federal Law giving relief to people who cannot pay their debts. Bankruptcy usually lasts 3 years but will stay on your credit history for 7 years and may effect you lending ability for many years

BAS

Business Activity Statement. All self employed people, partnerships, companies and businesses who are registered for GST are required to submit BAS to the ATO usually on a quarterly basis. The BAS is a summary of the sales and purchases that a business has made which the ATO use to calculate how much GST is owed or needs to be refunded.

Basic Interest Rate/Loan

A Basic style loan has very few fees and charges and has an interest rate somewhat lower than the standard variable rate. While the Basic rate is a variable rate, it will remain below the Standard Variable rate for the life of the loan. It's a "No Frills" style of loan. You don't get very many features, but the interest rate and fees are lower

Baycorp

Is a company listed on the Australian Stock Exchange which is a credit reporting agency. If you have been listed for a default, judgement, writ, bankruptcy etc. it is reported on your Baycorp File. Lenders will do a Baycorp search do discover whether you have any past credit problems. You may also access your Baycorp file by referring directly to Baycorp; they are obliged to send you File to you upon request although they may charge a fee of this service.

Beneficiary

The receiver of property, funds or benefits, usually from an insurance policy or a will.

Bidding (Auction)

To make an offer on a property in a public Auction. The highest bidder at an Auction doesn't necessarily buy the property; the owner could have a reserve price higher than the highest bid which prevents the Auctioneer selling the property. In such cases the property will be passed in to the highest bidder and the negotiations can continue under private treaty.

Board

Renting a room in a house, usually sharing amenities such as showers and kitchens. Boarders don't always have a formal lease agreement and, as such, very few lender will accept income from board for loan serviceability purposes

Body Corporate

A Body Corporate is a legal entity created when land is subdivided and registered to establish a Community Title Scheme. The scheme can be a Duplex, a residential Unit Block (units), a high rise accommodation complex (apartments), a shopping complex or a business park. Every owner in a Community Titles Scheme is automatically a member of a Body Corporate. Owners do not have a choice as to whether or not they will be a body corporate member. The Body Corporate handles the day to day running and maintenance of the common property such as gardens, insurance for the building, administering the sinking fund, maintenance of lifts, pools, tennis courts, BBQ areas etc. It is common practice to outsource these tasks to a Body Corporate Manager who may administer several different Body Corporates.

Body Corporate Insurance

In a Community Title Scheme, the common property belongs to all the owners and is administered by the Body Corporate. This includes the exterior of the building and the common property of the interior of the building such as stair wells, lifts, common hallways, common balconies and common landings. It also includes some of the plumbing and electrical wiring inside the walls. As such, the Body Corporate must (by Law) have insurance on the building. Prior to settlement of a loan, the lender will require a copy of the building insurance to ensure that the building is adequately insured. The Body Corporate Insurance does not cover the interior of the individual dwellings and won't cover appliances, carpets etc. To ensure that you are adequately covered, you should consider your own needs for insurance on the interior of your property in a Community Titles Scheme.

Bond

A sum of money (usually 4 weeks rent) which the tenant of a property pays as security in the event of damage or rent arrears. Usually held and administered by a state government agency.

Boundary

The perimeter of a property. Boundaries marked by fences etc. shouldn't be relied on a being the legal Boundary, the only true way of determining the correct boundary is to have the property surveyed and pegged out. Fences have a habit of moving over time!

Break Fees

The cost to end a loan or commitment. Most commonly used in relation to the cost to break a Fixed term early but can also be used to describe the costs to finish a home loan. See also Deferred Establishment fee.

Bridging Loan

A Bridging loan is a temporary loan (usually 6 months) that allows you to purchase a property prior to selling a previous property. The lender will often service the loan on the end debt rather that the total borrowings. Bridging loans are often confused with Short Term Loans and 2nd Mortgages.

Brokerage

A fee for service paid by the client to a broker for obtaining finance. Usually paid at the settlement of the loan out of the loan proceeds

Building Society

A savings and loan association approved by APRA.

Business Loan

A loan to obtain money for business purposes. A number of business lenders require the borrower to own property and/or will require a mortgage over the property

Capital Gain / Growth

The difference between the price you pay for a property and the price you receive when you sell the property. Capital gains on investment properties are usually taxed (Capital Gains Tax) however capital gains on your primary residence is exempt. You should consult an accountant regarding Capital Gains prior to selling to confirm whether or not capital gains are payable. Particularly if you have moved into an investment property or rented out a property that was your primary residence.

Car Loan

A loan to purchase a car which is secured against the car

Carers Allowance

A Government Allowance administered by Centrelink for a person who is looking after a disabled person full time and can't work because of that commitment

Casual Employment

Generally, casual employees are employed on an irregular basis with no set roster or routine as to when they work. Furthermore, there is no guarantee of ongoing employment. Casuals, unlike permanent employees, are employed on an "as need" basis, often to meet a changing workload within the workplace.

Caveat

Latin for "beware". A caveat is a form of statutory injunction provided for under the Real Property Act 1900. When a Caveat is lodged against a property title, it effectively prevents the registration of any dealing (except for some statutory exceptions and any specifically permitted dealings) until the Caveat is withdrawn, lapses or is contested successfully in court. Caveats lodged without reasonable cause may leave the lodger open to compensation claims.

Caveat Emptor

Latin for "let the buyer beware" In a real estate transaction it puts the onus on the purchaser to perform due diligence prior to purchasing the property with little or no comeback against the seller after settlement. The law does provide some right of recourse for a purchase if they were deliberately misled.

Centrelink

Centrelink is a government agency delivering a range of Commonwealth services to the Australian community. Centrelink is set up so people can get more of the help they need in one place. Its primary role is to administer the payment of pensions and allowances.

Certificate of Currency (Insurance)

A certificate of currency is a document provided to the insured by the insurer which confirms that the insurance policy is paid up to date and has a summary of the amounts insured and the beneficial parties. In Finance, the lender will often require a minimum insured amount on the policy as well as their interest noted if they have security over the item.

Certificate of title

In a property transaction, all dealings of the property used to be recorded on the certificate of title. In these days of electronic systems, Certificate of Titles is being replaced by computer records. However, in some states, certificate of titles are still being used. Generally, the lender will hold the certificate of title until the mortgage is discharged.

Chattel

An article of movable personal property such as a car, furniture or other possession of value. Used predominately in legal terms such as on a contract to buy a property to describe items included in the purchase i.e. pool maintenance equipment or pot plants. Can also be used to describe a type of personal finance over an item i.e. a car loan is often described as a "chattel mortgage", the chattel being the car.

Chattel Mortgage

A Chattel Mortgage or Commercial Loan Agreement is where a first registered Bill of Sale/Chattel Mortgage is granted by the borrower in favour of the lender. Normally the total Stamp Duty is payable up front. This facility is ideal for clients who operate their accounts on a cash basis and wish to claim the GST up front as input tax credit. This facility can be structured similar to a Commercial Hire Purchase facility. The term is usually 2-5 years and a balloon amount can also be structured into the loan depending on usage and depreciation of goods. This facility is ideal when financing motor vehicles

Childcare Allowance

A government allowance administered by Centrelink for people who are sending children to approved daycare centers. Essentially it is to compensate for the cost of the daycare.

Collateral

In finance, an asset (such as a car or a property) which the borrower must surrender to the lender if the loan is not repaid.

Commercial Loan

A loan secured against a property of a commercial nature such as a shop, industrial shed, some rural property etc. They are similar to a home loan although different lending criteria and ratios apply

Commercial Property

Any property of a commercial nature. The most common are shops, Offices, industrial sheds, rural property etc. Although the term will also cover more specific properties such as service stations, hotels, motels, clubs etc

Commission

The fee a lender will pay a broker for a referred loan.

Common law title

Consists of a chain of Title documents to track the ownership and dealings on a property. The Title is sound only if every document in the chain is sound. To trace a Common Law title is Complicated and expensive

Common property

Areas in a Community Management Scheme which are shared by the Lot owners and managed by the Body Corporate. While technically not owned by the Lot holders, they have full use of any facilities subject to the by laws of the body corporate. These areas could include pools, tennis courts, driveways, hallways etc.

Community Title

A Body Corporate is a legal entity created when land is subdivided and registered to establish a Community Title Scheme. The scheme can be a Duplex, a residential Unit Block (units), a high rise accommodation complex (apartments), a shopping complex or a business park. Every owner in a Community Titles Scheme is automatically a member of a Body Corporate

Company Title

Similar in some respects to a community title, a company title administers the building by forming a private company and owners become shareholders in the company. Shareholders have exclusive use of their unit and all decisions affecting the property require a majority approval of the shareholders. The title system is old and rarely used these days however there are still some around. They can cause all sorts of problems when you try to get finance on them due to their unusual nature

Comparison Rate

A single "artificial" percentage rate designed to capture all the costs of a particular loan, including fees and charges. The comparison rate came about because fees and charges have made it so much harder to compare home loans. A home loan with a 6.03% interest rate and no fees may end up costing you less than a 5.97% loan with a $10 monthly fee, a $600 valuation fee, redraw fees and a $2000 early-exit fee. Australia's lawmakers have agreed that for a three-year trial period, all lenders and brokers must provide comparison rates: In their ads, in their offices & at the time they hand you an application form. The comparison rate is based on a $150,000 loan paid off over 25 years. The comparison rate can be useful but of course, it isn't perfect. It won't be very accurate if you're taking out a $600,000 loan that you expect to redraw from and then refinance in five years' time. And it requires borrowers to deal with two interest rates rather than one.

Comparison Rate Schedule

A list of comparison rates designed to let you choose the comparison rate calculated on the basis which most closely matches your loan. A lender or broker must provide a comparison rate schedule whenever they give a borrower a loan application form.

Conditional Approval

A conditional approval happens after you have submitted an application to a lender but before formal approval. It effectively says that you appear to fit the lenders criteria however they need something else to happen before the loan is formally approved. They could require a valuation to be carried out on the property or they might be missing some important paperwork such as loan statements or a letter from an employer confirming your wages. Once the condition has been fulfilled to the lenders satisfaction, the lender should then proceed to formal approval

Construction Loan

Used to build residential houses, duplexes and also for major renovations, a construction loan is the facility whereby the lender can liaise with the builder and complete the construction in sections. Once the construction is complete, the loan reverts to a standard loan for the remainder of the term.

Contract of Sale

A legally binding document setting out the terms and conditions of a property sale. To form a contract, the parties must have agreed on all terms, signed the contract and the purchaser needs to have paid a consideration (deposit). The property is then transferred according to the terms and conditions of the contract.

Contractor

A self employed person who is employed by another business via a contract

Conveyancing

The transfer of ownership on a property from a seller to a buyer, in most cases it is performed by solicitors acting on behalf of their respective clients.

Council / Shire

The local council authority in which your property resides and to whom you pay rates

Council Rates

Council rates are the local government levy which funds the administration of the council and the local council amenities. Council rates are considered to be a regular expense and most lenders won't refinance a property while rates are in arrears. Most people don't know that the local rating authority has the right to sell the property to repay rates that a considerably in arrears.

Covenant

Terms, conditions and restrictions noted on the certificate of title regarding a property. The covenant may specify a certain style or standard of building to keep in with the surrounding properties etc.

Cover Note (Insurance)

A cover note is a short term insurance cover prior to a full insurance policy being accepted and the premium paid. They are becoming quite rare these days as most insurance companies don't want to do them anymore; they would prefer to just do the whole policy over the phone. A cover note cannot be used instead of a Certificate of Currency for lenders replacement value requirements.

Credit Card

A plastic card, usually with a pre-approved limit, allowing the user to obtain goods and services without the use of cash. Credit cards usually have a higher interest rate than most other forms of credit and can cause financial difficulties if used irresponsibly. The most common forms of Credit Card are Visa, MasterCard, Bankcard American Express & Diners Club

Credit History

A record of your credit over the last 5 to 7 years as recorded by one of the credit recording agencies (Baycorp & Dunn and Bradstreet). You can obtain a copy of your credit history by contact either of those two agencies directly. Contrary to popular belief, your credit history doesn't show whether you have obtained credit or whether you have made all your payments on time, it only shows who you have applied to for credit and if you have any registered defaults, judgements, writs, bankruptcies and any business names or directorships. Commercial credit checks are also available for companies and business names.

Credit Union

A financial Service co-operative owned and controlled by the people who use it. They provide similar services to Banks and Building Societies

CSA (Child Support)

The Child Support Agency, which is part of the Department of Family and Community Services, is responsible for the administration, assessment and collection of child support payments for Centrelink customers receiving Family Tax Benefit. The Child Support Agency can collect child support payable under court orders or registered agreements. When child support is paid through the Agency, the amount may be deducted from the paying parent's wage or salary (together with tax) or paid directly to the Agency.

Debt agreement

A term that is perhaps too loosely used in the industry because it can mean a couple of things, however it's most common use is for a debt agreement under the bankruptcy act. A debt agreement can take several forms but the most common is the Part 9 which runs over 3 years and you pay your creditors a set monthly fee without interest charges to repay your debts

Debt Consolidation

Combining 2 or more debts into one to reduce the interest rate and/or reduce the number of different payments required each month. The most common form is using the equity in your home to consolidate your consumer debts into your mortgage

Debt Councilors

A professional person who gives advice on reducing and eliminating debt

Debt Mediators

A professional person who intervenes at your request to negotiate with your creditors for different terms on a debt. Generally used prior to a debt agreement or bankruptcy

Default

To miss payments on a loan which may cause a default to be registered on your credit history and may impede you from obtaining future credit

Defence Force Home Loans

A home loan for people who have served in the defence forces at a reduced interest rate. Usually capped to a certain amount.

Defence Service Pension

A service pension provides a regular income for people with limited means.  A service pension can be paid to veterans on the grounds of age or invalidity, and to eligible partners, widows and widowers.  It is subject to income and assets tests

Deferred Establishment fees

A fee on loans discharged within the first few years of the loan being taken out. The fee varies from lender to lender as does the number of years it applies to. Not all lenders charge the Deferred Establishment fee.

Deposit

In lending, it is a sum of money provided by the purchaser to complete a purchase of a property. For Real Estate agents, it is the initial holding money to show good will in a purchase contract.

Deposit Bond

A facility where an insurance company provides a letter of deposit without the purchaser putting in cash. They are usually secured against an asset such as a property.

Direct Debit

A method of payment in which the payer authorizes the payee to take funds from the payer's bank account, as for paying monthly bills; an instruction to a bank for this transaction

Disability Pension

A Commonwealth Government Pension administered by Centrelink available to people who have a permanent Injury, illness or disability that will prevent you working for at least 15 hours a week within the next 2 years. The impairment must be greater that 20 points on the impairment tables and you or your partner's income must be below a certain amount.

Discharge

The act or instance of removing an obligation, burden or responsibility. In finance, to complete a loan & remove a mortgage from a property

Discount Rate

A discount on an interest rate, usually for a short period of time i.e. 6 or 12 months. sometimes referred to as a Honeymoon rate

Discretionary Trust

A Family Trust (also called a Discretionary Trust) is one of the most common small business structures in Australia. Unlike, say a Unit Trust, you establish a Family Trust to benefit the members of a family. Family Trusts provide families with a great deal of flexibility in sharing the tax burden among family members and protecting family assets

Dividends

A share of profits received by a stockholder

Duplex

A Community Title property with two residences on it.

Dwelling

A place to live in; an abode

Easement

A right such as a right of way or right of access afforded to a person to make limited use of another person's real property

Eftpos

Electronic Funds Transfer Point Of Sale - A method of electronic payment which allows money to be transferred from the account of the shopper to the merchant in close-to real-time. Generally the shopper will give the merchant a credit or debit card, which will be swiped to obtain the account information. The shopper will then be required to either sign a receipt or enter a PIN via a keypad to authorise the transaction

Encroachment

Something (as a structure) that encroaches on another's land

Encumbrance

A Lien or claim on a property

Equity

The residual value of a business or property beyond any mortgage thereon and liability therein

Equity Loan

A line of credit secured against the equity in property  by way of a mortgage

Establishment fee

A Fee to establish a loan can also be known as an application fee, although some lenders charge both an application and an establishment fee, particularly if the processing of the loan has been outsourced to another business.

Estate

1. The whole of one's possessions, especially all the property and debts left by one at death. 2. A housing development

Factoring

The selling of a company's accounts receivable, at a discount, to a factor, which then assumes the credit risk of the account debtors and receives cash as the debtors settle their accounts. Also called accounts receivable financing.

Family Allowance

Family Allowance provides assistance for families for the costs of raising children and is paid at a rate determined by income and assets, marital status, age and number of children and whether the family is renting privately. It reduces as family income increases until the minimum rate is reached. Families whose incomes move beyond the applicable income limits are excluded from Family Allowance entitlements

Family Tax Benefit

A supplementary income source for people who have children. It is administered by Centrelink and comes in two parts, Part A & Part B. The Family tax benefit is means tested

Family Trust

A Family Trust (also called a Discretionary Trust) is one of the most common small business structures in Australia. Unlike, say a Unit Trust, you establish a Family Trust to benefit the members of a family. Family Trusts provide families with a great deal of flexibility in sharing the tax burden among family members and protecting family assets

FBAA

Finance Brokers Association of Australia.

Fees

Most loans in Australia have fees of some description attached to them whether its application fees, settlement fees, deferred establishment fees, monthly fees or annual fees. Different lenders charge some but not others and at different amounts. The comparison rate was brought out to try and make the loan fees more transparent however the comparison rate isn't perfect by any stretch of the imagination. If you are concerned about loan fees, ask your broker for a full breakdown of all fees that could be payable on the proposed loan. A full breakdown of all fees will also appear in the Mortgage Documents which you are required to sign prior to a loan settling

Finance Broker

A person who obtains finance for a client and is paid to do so. For a finance broker, phone 1300 139 883

First Home owners grant

A one off Commonwealth government grant of $7000 paid when you purchase your owner occupied dwelling. To be eligible, you or your spouse must not have owned property in Australia before.

Fittings

For Real Estate - Fittings are objects in a property that are attached such as light fittings, plumbing features etc.

Fixed Rate Loan

A rate of interest that is a fixed for a certain period of time. Common for home loans

Fixtures

Something attached to a property that is deemed to be part of that property i.e. plumbing

Flat

An apartment on one floor of a building

Foreclosure

A situation in which a homeowner is unable to make principal and/or interest payments on his or her mortgage, so the lender, be it a bank, building society, credit union or other lender, can seize and sell the property as stipulated in the terms of the mortgage contract

Formal Approval

When the lender has completed all their checks and are satisfied to lend you money, they may issue a formal approval with the basic terms and conditions prior to mortgage documents being issued.

Freestanding

A building that stands unattached to any others i.e. a house

Full Time Employment

Being employed on a regular 48 hour week with all benefits and entitlements under law, Holiday pay, sick pay etc.

Fully Detached Dwelling

See Freestanding

Fully Verified Income

A method of proving income to a lender by way of showing pay slips, group certificates, tax returns and (for self employed) profit and loss statements and ATO notices.

Gazumping

Raising the price of a property after agreeing on a lower price (often involving another party)

Government Fees

Government fees are charged on real estate transactions and mortgages. They can include stamp duty, lodgement fees, discharge fees, transfer fees and many others.

GST

Goods and services tax. A federal Government tax on goods and services currently set at 10%

HECS Debt

HECS offers Commonwealth loans to assist students to pay their higher education fees and to study overseas.

Hire Purchase

The Commercial Hire Purchase (CHP) agreement is simply a contract where the financier (the ‘owner') allows you (the ‘hirer') the right to possess and use a car or other vehicle in return for regular payments. A balloon payment (a final payment made at the end of the term - ideally this payment should be no more that the estimated value of the car at that time) is optional with a hire purchase agreement. When the final payment of the commercial hire purchase is made, the title to the goods is transferred to you.

Home Loan Consultant

A person who obtains finance for a client and is paid to do so. For a finance broker, phone 1300 139 883

Honeymoon Rate

Some lenders offer a discounted introductory or 'honeymoon' interest rate which usually lasts six moths or one year of the mortgage.  After the first year the rate usually reverts to the 'standard variable' rate

House

A free standing dwelling on a lot of real property.

Income

The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments

Industrial Property

Property zoned for industrial businesses and activities

Insolvency

Unable to meet debts or discharge liabilities; bankrupt

Interest

A charge for a loan, usually a percentage of the amount loaned

Interest Only

A type of loan where only the interest is paid, the principle amount does not reduce

Internet Banking

Accessing and using a banks facilities to transfer money and pay bills by way of a computer and the internet

Investment

An asset or item that is purchased with the hope that it will generate income or appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price

Joint Tenants

A tenure by two or more persons of estate by unity of interest, title, time, and possession, under which the survivor takes the whole

Judgement

A court act creating or affirming an obligation, such as a debt. A judgement against you will appear on your credit history and may impair your ability to borrow money in the future

Land Tax

A capital tax on property imposed by municipalities; based on the estimated value of the property; Rates

Landlords Protection Insurance

An insurance policy on an investment property which covers risks that an ordinary home and contents policy won't cover such as malicious damage or theft caused by tenants, or loss of rent if a tenant defaults.

Lease

A contract granting use or occupation of property during a specified period in exchange for a specified rent

Lender

A person, company or institution who provides money temporarily on condition that the amount borrowed be returned, usually with an interest fee

Lessee

One that holds a lease over a building or object

Lessor

One that lets property under a lease

Liabilities

Something for which one is liable; an obligation, responsibility, or debt

Limited Title

A title where the actual boundaries have never been investigated by the Land Titles Office because of lack of relevant information and are therefore subject to change until there has been a formal survey plan lodged for that title. A prudent purchaser may wish to obtain a formal survey and lodge it for registration on title, although this can involve considerable expense and delay

Line Of Credit

A line of credit allows you to make the bulk of your purchases or payments through a credit card with an interest free period. You use the credit card for most purchases allowing you to leave the bulk of your wage in the loan until your credit card account is payable. This slightly reduces the balance of the home loan debt for part of the month and therefore slightly reduces the interest payable. These types of savings are called offset savings. The credit card will be paid off each month by using your funds from the line of credit. The offset savings achieved for most people will be minimal - ASIC

Liquidation

To settle the affairs of (a business firm, for example) by determining the liabilities and applying the assets to their discharge

LMI (Lenders Mortgage Insurance)

Lenders Mortgage Insurance protects the lender (not the borrower) should you default and the property is sold for less than the outstanding amount on the loan. You remain liable for any amount owing under the contract even if the mortgage insurer has paid that amount to the lender

Lo Doc Loan

A low document loan or lo-doc loan for short. This type of loan caters mainly for self-employed borrowers who are unable to provide full financial statements and other evidence of their income

Loan Term

A limited period of time, usually referring to a period a loan is over.

LVR (loan to Value Ratio)

The maximum loan a lender will do against the value of an item (usually property), expressed as a percentage

MIAA

Mortgage Industry Association of Australia. A regulatory body for mortgage brokers. Membership is voluntary

Mortgage

A temporary, conditional pledge of property to a creditor as security for performance of an obligation or repayment of a debt

Mortgage Broker

A person who obtains finance for a client and is paid to do so. For a finance broker, phone 1300 139 883

Mortgage Documents

A Mortgage document creates, acknowledges, evidences or records a legal or equitable interest in, or charge over real or personal property as security for a liability

Mortgage Insurance

See Lenders Mortgage insurance (LMI)

Mortgage Manager

Mortgage managers are lending specialists who arrange funding for home and investment loans. Unlike banks, building societies and credit unions, mortgage managers do not have a base of customer deposits with which to fund their loans. Instead they source their funds via a process known as securitisation

Mortgage Originators

While mortgage managers, RAMS for example, may also be mortgage originators, this is not necessarily the case and there is a marked difference between the two. Originators initiate or generate mortgage applications for the mortgage trust. Put simply, they ‘pool' a group of mortgages which can then be sold on to investors as an income producing asset. Originators are responsible for receiving applications for finance, assessing credit and monitoring the transaction through to settlement. They may then appoint a mortgage manager or may take on the management role themselves

Mortgagee

An entity that lends money to a borrower for the purpose of purchasing a piece of real property. By accepting a mortgage on the real property, the lender creates security in the full repayment of the loan in the future

Mortgagor

An individual or company who borrows money to purchase a piece of real property. By granting the lender an interest in the property, which allows it to lend the funds with an accurate assessment of risk, the mortgagor provides the lender with a guarantee for the full repayment of the loan. Also known as a "chargor".

New Business

A business which is started from scratch.

Newstart (Unemployment Benefit)

A Commonwealth Government payment for people who unemployed but are actively seeking work. Most lenders will not take Newstart allowance into consideration for serviceability as it can easily be revoked if the person receiving Newstart does not actively continue to seek work.

No Doc Loan

Similar to a Lo-Doc loan, a No-Doc loan is even more flexible as they generally don't have any minimum requirements for self employment. No-Doc loans are generally capped at 70% or 75% of the property value. Like a Lo-Doc, conventional forms of proving self employed income are not required.

Non Conforming Lenders

Otherwise known as specialist lenders, these lenders are not deposit taking institutions like Banks and as such, are not regulated by APRA. This means that they can do loans secured against property that banks won't do. These could include lending to credit impaired people, doing hi LVR Lo Doc loans and refinancing people who are behind on regular payments such as mortgage repayments, rates, tax and consumer debt.

Non-bank Landers

A vague term used on occasions to describe lenders who will do the loans that mainstream lenders won't. It can also be used to describe securitized lenders and is most often used as an alternative description for Specialist or Non-Conforming lenders

Novated Lease

A novated lease is a complex set up where the employee chooses the vehicle, The employee then novates the lease to their employer, who assumes all the employee's rights and obligations under the lease, including responsibility of meeting the lease rentals. The contract is in the name of the employee who remains the registered owner throughout the lease and keeps effective control of the vehicle at all times. If the employee leaves the company, the vehicle remains with the employee. In this situation, generally the employee takes over the payments or gets another employer to make the payments. This means, the original employer is not left with an unwanted car and the employee keeps the vehicle.

Offset account

An offset account is a savings account linked to your mortgage. The idea is that the savings you have will offset the interest to the same value when deducted from your mortgage. For example, if you have a $100,000 mortgage and $10,000 in an offset account, you would only pay interest on $90,000. They are great in principle but there can be many hidden traps. The first is that they are generally on the standard variable interest rate rather than a basic rate so you might be paying more interest than what you're offsetting! Others are only partially offset and some have fees and charges which also make them less attractive.

Old System Title

A system of land title where a purchaser receives a title that is only as good as that which the vendor has to sell. Old System transactions require examination of a series of deeds and documents relating to all dealings in the land back to what is recognised in law as 'good root of title' (for example, a conveyance for value more than 30 years ago). In Australia, Old System land theoretically dates back to an original Crown grant. Old System titles require considerable time-consuming research to establish satisfactory title and necessitate the storage of large volumes of documents. Torrens title has simplified the procedures needed to prove title to land. Old System and Torrens systems are both in operation in Australia, although the proportion of land under Old System titles is rapidly declining

Option (to buy)

An agreement whereby you lease or rent a property with an option to buy it at a later date. The option to buy price is usually agreed at the time of signing the lease

Over Capitalization

A situation where a home owner has spend more on purchasing and renovating a property than they would receive back from the sale of that property

Overtime

Overtime is the amount of time someone works beyond normal working hours

Owner Occupied

A principle place of dwelling, the owner of the property lives in the property

Parenting Payment

A Government payment administered by Centrelink to provide a source of income for a sole parent or parents who have children under the age of 6. It is means tested

Part 10 of Bankruptcy

Part X of the Bankruptcy Act provides a process by which a debtor may make a proposal to their creditors which they consider and vote upon at a formal meeting. It is an alternative to bankruptcy. Once accepted, the proposal is binding on the debtor and all creditors in respect of their unsecured provable debts. It enables the debtor and creditors to come to a mutually agreed compromise in a relatively simple way without reference to the court - ITSA

Part 9 of Bankruptcy

A debt agreement is a negotiated arrangement between you and your creditors governed by government legislation and administered by a trustee. A debt agreement is an alternative to bankruptcy for individuals on a lower income with few or no assets. Debt agreements are available to debtors with under $72,543 of personal debt and net income below $52,907. Technically, a part 9 debt agreement is a form of bankruptcy and will affect your credit rating for up to 7 years.

Part Time Employment

Being employed for a set amount of time every week. The amount of time is less than full time but the hours are more regular than casual employment

Partnership

A business organization in which two or more individuals manage and operate the business. Both owners are equally and personally liable for the debts from the business.

Passed In

At an auction, an object or property that doesn't reach the owner's reserve price and which consequently fails to sell "under the hammer" is passed in to the highest bidder who may then buy the object or property for the reserve price. If the highest bidder refuses to buy the object or property at the reserve price, the object or property reverts to a private treaty sale at a set price.

Personal Loan

An unsecured loan for personal use, mostly used to fund purchases below $25,000 such as cars, furniture, white goods, boats etc.

Portability

The ability to transfer a home loan from one property to another. The property being sold will almost certainly need to settle at the same time as the property being purchased.

Pre-payment

Paying more than required on a home loan or paying a loan in advance of the repayment arrangement

Privacy Act

Government legislation regulating the use, storage and collection of personal information

Private Sale

The sale of a property without the use of a real estate agent

Private Treaty Sale

A method of selling a property using an agent where the property is sold by negotiation. Usually the property is listed at a price or price range and the buyer is encouraged to make an offer.

Probate

The process of legally establishing the validity of a will before a judicial authority

Probation Period

A period at the beginning of employment where the employee is on probation to verify whether they are suitable for the job. Usually 3 to 6 months

Professional pack

A discounted home loan product for larger loan amounts which usually has additional benefits such as credit cards and multiple loan split facilities

Property

Something owned a possession.

Pty Ltd Company

Proprietary Limited - a company structure that limits the liability of its shareholders.

Qualified Title

A form of title used when a property title is being transferred from an Old System title to a Torrens title but the Old system title hasn't bee fully investigated yet

Real Estate

Land with or without improvements, dwellings or any other structure on it

Real Property

Land, including all the natural resources and permanent buildings on it

Redraw

The facility in a loan where you can redraw extra money from the loan from payments made in advance of the scheduled payment arrangement

Refinance

To change a loan to a new lender, often to have more money advanced or consolidate other debt.

Rent

Payment, usually of an amount fixed by contract, made by a tenant at specified intervals in return for the right to occupy or use the property of another

Rent Assistance

A government allowance, administered by Centrelink which provides financial aid to people who rent a property to live in.

Repossession

To reclaim possession of for failure to pay installments due. Usually on property or vehicles

Reserve Price

The minimum price the seller will accept when selling at auction. Usually confidential between the Auctioneer and the seller

Residential

A zoning which limits the use of the property for residential purposes rather than commercial or rural for example

Right Of Way

An easement that permits one to travel across the real property of another, or the strip of land subject to such an easement. A right-of-way may confer rights to an individual (such as a neighbor), entity (such as a railroad) or the public as a whole

Rural

Relating to people who live in the country or engage in farming or agricultural activity. Can also refer to a zoning of property for the use of farming or agricultural activity

Rural/residential

A zoning of property, usually situated on the outskirts of a town or city which are zoned a mixture of rural and residential land. The blocks are often larger than residential properties and can often be described as "hobby Farms". They are general not big enough to be able to sustain an income from the agricultural output of the land

Seasonal Employment

Employment that is irregular due to seasonal requirements. For example fruit picking, where employment might be for 3 months of the year

Second Mortgage

A mortgage taken out on property that already has one mortgage, with priority in settlement of claims given to the earlier mortgage

Securitization

The process of creating a financial instrument by combining other financial assets and then marketing them to investors

Self Certify Declaration

A declaration of income, used instead of tax returns and financials to verify income on Lo-Doc loans

Self Employed

Earning one's livelihood directly from one's own trade or business rather than as an employee of another

Semi-detached

Two buildings attached by a common wall or walls.

Serviceability

A word used mainly by lenders referring to the borrower's ability to pay back the loan. Determined by the lender's serviceability calculator.

Servicing

The borrower's ability to make repayments on a loan when they fall due

Set-back

The distance a wall or structure is away from the boundary of a property

Settlement

The completion of a conveyance where the balance of the contract price is paid and ownership of the property passes from seller to buyer. Also used in a refinance where the incoming lender replaces the outgoing lender as the Mortgagor

Sickness Benefit

A government benefit administered by Centrelink. Benefits are paid to people who are temporarily incapacitated for work due to sickness or accident and who have consequently suffered a loss of income. A medical certificate and proof of loss of income are required

Sinking Fund

Part of a Body Corporate administration levy, the purpose of the sinking fund is to provide sufficient funds to meet expenses of a capital nature, e.g. painting, carpet replacement in the stairwells, guttering replacement, landscaping upgrading, etc.

Sole Parent Pension

The Sole Parent Pension has been replaced by the Parenting Payment

Sole Trader

A sole trader is the simplest business structure and consists of an individual trading on their own. That person controls and manages the business.

Specialist Lenders

Otherwise known as non conforming lenders, these lenders are not deposit taking institutions like Banks and as such, are not regulated by APRA. This means that they can do loans secured against property that banks won't do. These could include lending to credit impaired people, doing hi LVR Lo Doc loans and refinancing people who are behind on regular payments such as mortgage repayments, rates, tax and consumer debt.

Stamp Duty

Stamp Duty may be described as a general revenue that is imposed on various types of instruments such as transfers and agreements for the sale of real estate, documented gifts, policies of insurance, mortgages, hire of goods (rental), and the transfer and issue of motor vehicle licences

Standard Variable

An interest rate, usually on a property mortgage where the interest rate can fluctuate up or down depending on the cash rate set by the reserve bank

Store Card

Like a credit card, a store card comes with a set limit but can general only be used at the stores in that chain or group.

Strata Title

A system of ownership of property based on the horizontal and vertical subdivision of air space of a building into lots with separate titles where rights of transfer, lease or mortgage are unrestricted. Strata Title are similar to community title where there is common property as well as individual lots and is therefore necessary to have a body corporate

Sub-Contractor

A self employed person who sub contracts to a contractor such as a carpenter (sub contractor) to a builder (contractor)

Summons

A notice summoning a defendant to appear in court or a notice summoning a person to report to court as a juror or witness

Superannuation

An organizational pension program created by companies for the benefit of their employees

Superannuation Release

Superannuation can be released early in times of extreme financial hardship; the money released can be used to bring mortgages up to date in the case of a foreclosure.

Tenancy

The right to occupy a property, usually by way of a contract, on the basis of agreed terms and conditions

Tenants in Common

Two or more purchasers who own a property in equal or unequal shares - if one dies, his/her shares pass to his/her beneficiaries under his/her will, the property doesn't automatically revert to the surviving party/s as with a Joint Tenancy arrangement.

Term

The length of time over which a loan is repaid, for mortgages on property this is usually between 15 and 30 years. For personal and car loans it's usually 3 to 7 years

Terrace

A row of buildings attached together by common walls

Title Buy Out

Where one or more owners of a property buy out someone else's share of the same property

Torrens Title

A system of recording ownership of properties where registration on the certificate of title guarantees ownership

Town House

Strata titled building which consists of two story attached property. Townhouses are a community title scheme and as such have a body corporate

Transfer

A document registered at the land title office which verifies the change of ownership of a property

Trustee

One, such as a bank, that holds legal title to property in order to administer it for a beneficiary

UCCC

Uniform Consumer Credit Code - A scheme which was brought in to standardize credit practice in Australia

Unencumbered

A property free of encumbrances, covenants and restrictions

Unsecured Loan

A loan which has no security in the way of property or chattel for the lender to recover if the borrower defaults on the loan. The most common unsecured loan is a personal loan

Valuation

A written report from a licensed valuer giving an opinion as to the worth of the property.

Valuer

A person licensed to carry out a valuation of a property

Variable rate loan

An interest rate, usually on a property mortgage where the interest rate can fluctuate up or down depending on the cash rate set by the reserve bank

Vendor

A seller of goods or property

Villa

A single story attached residence

Warrant

(Law) A form of authorization, such as a writ authorized by a judge

Widow Pension

This pension is paid to compensate widows, widowers and dependent children of veterans whose death has been accepted as related to war or Defence rendered service before 1 July 2004

Winding up

A method, either voluntary or involuntary where company ceases to be in business

WorkCover Payments

A replacement income paid to an employee if they are unable to work caused by an injury at work

Yield

The income or earnings from a property usually expressed as a percentage of the value or cost of the investment

Zoning

The allowable use of a property as described in the local town planning of councils and shires.