Common terms used in "Loan Speak"
Everything that a person or company owns or has a right to, from which a benefit can derive. Net assets are assets in excess of liabilities. Liquid assets are assets either in the form of cash or readily convertible into cash.
Costs incurred when a loan is paid off before the end of its term. Generally applies to fixed loans.
Short term finance used when buying and selling houses to cover the gap between receipt of funds from sale of existing house and the payment of funds to purchase another house.
Profit from sale of a particular asset at a higher market price than it cost. Investors often buy for the sale of an expected increase in value of an asset rather than of the income it may generate during the time they own it.
Certificate of Title
The document of title to the estate or interest in land. It sets out the Crown description of the land, proprietorship and shows any registered interests such as mortgagees, charges and caveators. It also shows any restrictive covenants and easements which affect the estate or interest.
Where various loans come under the same banner to form one loan. May have a portion variable, fixed or even a portion as a line of credit. Also known as split loans.
This Title applies when a company owns the whole of the property. By purchasing shares in the company, the purchaser obtains an entitlement to occupy a particular part of the property. See your solicitor before buying.
The first document signed on buying a house is sometimes a Contract Note, instead of a Contract of Sale. This document, when signed by both parties, is as legally binding as a Contract of Sale and the buyer and seller should treat it with the same importance.
Maximum amount the borrower can use at any one time.
Interest calculated on a daily basis - therefore varies according to daily account balance.
The rate a loan rolls/moves to automatically at the end of any fixed period.
Lending body fees which may or may not be charged to set up a loan.
Loan to Valuation Ratio (LVR)
The ratio of the amount lent to the valuation of the security (usually the house).
A form of security of 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.
A person or organisation marketing numerous loans from a panel of lenders. They offer a service where they will select the best loan or loans for borrowers from this selection.
(Lenders) Mortgage Insurance
A form of insurance taken out by the lender to cover themselves in the event that the borrower defaults on their loan and the sale of the property is unable to cover the outstanding amount. Mortgage insurance premiums are usually payable by the borrower when the amount borrowed is over 80 percent of the property value and sometimes at lower loan to valuation ratios.
Where the return of an investment is insufficient to meet the interest costs of the loan used to fund the investment.
Off The Plan
The purchase of property, often an apartment, before it has been completed ie after only having seen the plans, not the finished product.
Any loan maintenance fee charged regularly over the life of a loan.
Where a new property may be substituted as security for an existing loan.
A loan facility whereby you can make additional repayments on your loan and then access these extra funds when necessary. They will often have limitations such as a minimum redraw amount and a fee for each withdrawal.
Residential Investment Loan
A loan granted to purchase a property intended for investment purposes (for example, to be rented out) as opposed to owner-occupied purposes.
An asset that guarantees the lender their borrowing until the loan is repaid in full. Usually the property is offered to secure the loan.
Date on which the new owner finalises payment and assumes possession.
Stamp Duty on Transfer
A State Government tax assessed on the selling price of the property.
A variable home loan, usually with comprehensive features (as opposed to a basic variable). This is often the variable rate fixed rates roll to at the end of their term.
This title gives you ownership of a 'unit' of a larger building which you may sell, lease or transfer at your discretion. Also entitle you to membership of the body corporate.
A title that records your ownership of a 'unit' of a larger property. Unlike a strata title, the owner becomes a shareholder in the company that manages the common area, not just a member.
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.
A report as required by the lender, detailing a professional opinion of the property's value.
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