Glossary of Terminology

Assets
 
Any money, property, goods or other items of economic value that you own.
 
Auction 

Public sale of a property to the highest bidder.

Body corporate 

A corporation of the owners of units within a strata building. Part of its role is to manage the building and common areas.

Bridging finance 

A short-term loan taken out by people who are buying a new property and need finance for settlement while they are waiting for their existing property to be sold.

Committed elsewhere 

You have bought a new property, and need to sell your current property to fund the purchase.

Common Law or Old System Title
 
System of land title where title is established by looking at a chain of transactions and events dating back to the original owner. Most old system title has been converted to Torrens Title and any remaining will usually be converted to Torrens Title on the sale of the property.

Community Title
 
A form of subdivision, where owners receive a Torrens Title for the lot they own and are members of body corporate. They also share ownership of the common facilities.

The new compulsory comparison rate (CCR) legislation came into effect July 1, 2003. The aim of the new legislation is to give prospective borrowers a single figure expressed as percentage rate to simplify the process of comparing one home loan to another.

How is the comparison rate calculated? 



Confused? Don’t be.  

In simple terms this formula factors in the interest rate, including any introductory rates, ascertainable lender fees, such as establishment fees, settlement fees and admin fees, the loan amount, term and repayment frequency to determine a single percentage figure.

The rationale behind the new CCR legislation is that many home loans hook prospective borrowers into a home loan which offers a low introductory rate, but have higher on-ongoing interest rate after the honeymoon period expires, as well as a raft of hidden fees and charges.

In other words the legislators want to give consumers a simple tool which can be used to compare one home to another, however many experts have reserved their judgement as to how effective the new comparison rate will be in achieving this aim.
 

Company Title
 
This title applies when unit owners are actually shareholders in a private company. As a shareholder, they are entitled to exclusive occupation of a particular unit. However, if an owner wants to change the occupancy in any way (for example, by leasing the unit or selling its share holding) it must be approved by the company. You might want to see your solicitor before buying a company title.

Contract of sale
 
Written agreement outlining the terms and conditions of a property sale.

Conveyancing
 
Legal process of transferring ownership of a property from one person to another.

Deposit
 
Usually 10 percent of the purchase price of a property used to indicate an intention to buy. It is non-refundable after the exchange of contracts.

Deposit bond (also known as a deposit guarantee bond)
 
A written guarantee from an insurance company on behalf of the buyer to the seller guaranteeing payment of all or part of the deposit.

Draw down
 
Access available funds.

Early repayment fees

Fees payable when a loan is repaid before the end of its term.

Easements
 
A right held by someone to use land belonging to someone else for a specific purpose. For example, mains, drains and water pipes are usually covered by an easement.

Equity
 
The value of a property minus the owner's outstanding mortgage balance. It is usual for the equity to increase as the outstanding principal of a mortgage is repaid.

Establishment fees
 
Fees charged by a lender for setting up a loan.

Exchange of Contracts
 
Process prior to settlement where the purchaser and vendor enter a binding contract by each signing a copy of the contract and then exchanging those copies with each other.

First Home Owner Grant
 
A national government scheme to assist first home buyers. The scheme provides a $7,000 grant to people buying or building their first home. It is not means tested.

Fixed rate
 
An interest rate that does not alter, regardless of any variations in the market's interest rates, for the fixed term.

Gazumping
 
Where the vendor and buyer have verbally agreed on a price, but the property is sold to someone else who has offered a higher price.

Honeymoon period
 
Where the interest rate is lower than the standard rate for a period (usually six to 12 months) when a new loan is started.

Interest only loans
 
A repayment option in which, during a specified term, only the interest accrued on the home loan is paid. This normally converts to Principal and Interest repayments at the end of the Interest Only term.

Investment property
 
A property that the owner does not live in. A property purchased for earning a return on investment.

Joint tenants
 
Joint Tenancy is the equal holding of property by two or more people. When one party dies, his/her share goes automatically to the other partner/s, regardless of what is written in any will.

Leveraging
 
Using an asset as security for borrowing.

Liabilities
 
Your outstanding debts or what you owe.

Line of credit loan
 
A revolving line of credit, lending a specified amount and allowing that amount to be borrowed again once it has been repaid.

Mortgagee

One who lends money and takes a mortgage over the property of the borrower or a guarantor.

Mortgagor
 
One who borrows money and gives a mortgage to the lender.

Mortgage duty

A state government tax based on the loan amount.

Owner occupied - property

A property in which the owner lives.

Passed in
 
A property is 'passed in' (i.e. not sold) at auction if bidding does not reach the vendor's reserve price.

Portable loan

A loan that enables the borrower to move properties without having to refinance, subject to credit approval.

Principal

The actual amount of money that has been borrowed to buy a property.

Principal and Interest repayments

A repayment option in which both the amount borrowed and the interest accrued on that amount are repaid over an agreed term.

Private sale

The owner of a property does not engage a real estate agent, but deals directly with buyers, to market their property.

Private treaty

Sale of a property via a real estate agent through private negotiation and contract, rather than by auction.

Redraw / Redraw facility
 
A facility that allows additional repayments made on a loan to be accessed, or drawn on by the borrower, at any time.

Refinance
 
To pay off a loan and arrange for a new loan, sometimes with a different lender.

Remortgage

Loan taken out by a borrower to replace another one secured on the same property. Typically taken out by borrowers switching lenders to achieve a better rate.

Reserve price
 
The lowest price at which a vendor is prepared to sell a property.

Security
 
Any mortgage, charge or other rights given as security for the performance of an obligation (including the payment of money).

Settlement

Completion of a sale when the balance of the contract price is paid to the vendor and the buyer becomes legally entitled to take possession of the property.

Stamp duty

A state government tax paid on the purchase of properties. It is determined by the sale value and varies between states/territories.

Strata Title

Most commonly used for units, villas and townhouses. Gives ownership of a 'unit' of a larger building and membership of a body corporate. Owners can lease or sell their unit as they please (which contrasts with the rights of a shareholder under Company Title).

Structural survey
 
A detailed survey of the structure of a building carried out by a Structural Engineer or Chartered Building Surveyor. Surveyors are liable for negligence.

Tenants in common
 
A type of co-ownership where two or more people own distinct interests (which may be equal or unequal) in the same piece of property. When one party dies, their share of the property can be left to beneficiaries other than their co-owners, as stated in their will.

Title deeds
 
Set of documents containing information on the present and past ownership of a property. Details names of owners and institutions that have registered a charge against the property.

Title search

The process of investigating title to land to check that the seller has the right to transfer ownership. A title search provides the names of the owners and other details of the property such as a restrictive covenant, mortgage or caveat on the title.

Transfer

A document that needs to be registered with the relevant land titles office so that the change in ownership is recorded on the certificate of title.

Torrens Title
 
The most common and simplest form of title to property ownership (as opposed to common law or old system title).

Underpinning
 
Building work undertaken to support or underpin a building.

Variable rate
 
An interest rate that may rise and fall, in conjunction with variations in the market's interest rates.

Vendor
 
Person selling a property.

Vendor bid
 
A bid made by a vendor at the auction of their property. It may be used to start the bidding process.