We try to keep industry jargon out of our conversations. Please let us know if there are any terms you're unsure of.
A- AAPR
- Average Annualised Percentage Rate. Sometimes referred to as the Compulsory Comparison Rate, this figure takes into account the other costs associated with the loan etc, and expresses them as an average interest rate, to create a level field with which to compare like loan product interest rates.
- Application fee
- The fee charged by a lender to cover or partially cover the lender's costs of setting up or establishing the loan.
- Asset Lender
- Lending institution that lends finance based on the value of the asset, which will be held as security.
- BayCorp Advantage
- The company which records and holds credit information on everyone, such as loan applications, credit defaults, and so on. Was originally known as CRAA, and may often be referred to as the 'CRAA Check'.
- Capital
- A notice of warning given to a public authority, e.g. Titles Office, claiming entitlement to an interest in certain land. The caveat is registered and remains on the books as a warning to anyone who contemplates dealing with the property. It therefore prevents any action being taken without the previous notice of the person entering the caveat (the caveator).
- Collateral Security
- Additional or supporting security given in addition to the principal security.
- Comparison Rates Schedule (CRS)
- Or CCR, is the figure expressed an interest rate, that takes into account some of the extra costs of a loan product. The formula used to calculate the CCR is regulated by the Uniform Consumer Credit Code and all Australian lenders are required to use the same formula.
- Consumer Credit Code
- Legislation designed to protect the rights of the individual (personal consumer) by ensuring banks and other financial institutions all adhere to the same rules when providing personal, domestic or household credit. It should provide borrowers with complete and honest information. Also known as the Uniform Consumer Credit Code or UCCC.
- COSL
- Credit Ombudsman Service Limited. Formerly known as MIOS (Mortgage Industry Ombudsman Service).
- Disbursements
- Solicitors incidental costs involved when dealing with client on behalf of the Lender, e.g. searches, certificates pest reports, etc.
- Equity
- Generally used to denote the financial interest of a person in a property or business enterprise, e.g. a person's equity in his house is the difference between its value and the amount still owed to a Lender. A person's overall equity refers to his net financial worth, or the difference between what he owns and what he owes (i.e. Assets - Liabilities = Equity).
- Exchange
- The legal point of time when the vendor and the buyer swap documentation with a view to settlement.
- Fixed Interest (Fixed Rate)
- An interest rate set for an agreed term.
- Interest
- The Lender's charge for the use of funds or the return on deposited funds.
- Interest Only Loans
- A loan where the principle is paid back at the end of the term and only interest is paid during the term. These loans are usually for a short period of time, 1 to 5 years.
- LVR
- (Loan to Valuation Ratio) the ratio of the amount lent, to the valuation of the property.
- Negative Gearing
- Gearing your investment so that the cost to maintain it (loan repayments, council rates, maintenance etc) out weigh the income produced by the investment, leading to a reduction in taxable income.
- Portability
- Where a new property can be used as security for an existing loan, i.e. when the loan is transferred to a new security property without needing to repay the loan, reapply, or restructure.
- 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.
- Serviceability
- Ability of borrower to make and meet repayments on a loan, based on the borrowers expenses and income(s).
- Settlement
- Finalisation of payment by the new owner, and assumption of possession. When you pick up the keys!
- Unencumbered
- A property free of liabilities, restrictions or mortgages.
- Valuation
- A report as required by the Lender, detailing a professional opinion of a property's value.
- Variable Interest Rate
- A rate that changes in accordance with the rates in the marketplace.