Glossary

Below is a glossary of terms you may encounter when obtaining finance or insurance. The list is by no means exhaustive, and definitions and terms may be interpreted differently to those included below.

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. Also see Comparison Rate.

ABA - Australian Bankers' Association. The Australian Bankers' Association (ABA) is the national organisation of licensed banks in Australia. The ABA is funded by its 23 Member banks ranging from traditional retail, trading bank-style organisations to regional banks, foreign and wholesale banks and contributions to its operational expenditure are based on individual member bank liabilities in Australia.

ABIO - Australian Banking Industry Ombudsman. The ABIO exists as a means through which customers can make complaints about a bank, and have them dealt with independently of the particular bank. The Banking Ombudsman, also known as the Banking and Financial Services Ombudsman (BFSO), is a free and independent dispute resolution service. The Banking Ombudsman considers complaints about banks and their affiliates operating in Australia. The Banking Ombudsman is able to investigate disputes and make decisions that are binding on the financial services provider. As far as investigations are concerned, the Banking Ombudsman is bound by his terms of reference.

ACCC - The Australian Competition Consumer Commission promotes competition and fair trade in the market place to benefit consumers, business and the community. It also regulates national infrastructure services. Its primary responsibility is to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws.

Accelerated Approval - This is a means by which you can have your loan approved quickly and without some of the usual checks a more expensive option than standard.

Accelerated Repayment - Allows the borrower pay off more of the loan than the minimum set out in the loan agreement.

Acceptable Referee - Must be a person listed on the "Who is an Acceptable Referee" section of the "Proof of Identity Details" form, which is used to establish proof of identity. Examples of Acceptable Referees are accountants, solicitors, magistrates, teachers of at least 5 years' standing, vets, doctors, dentists and justices of the peace, who have known you for at least 12 months.

Acceptance - Agree to the terms of an offer or contract or agreeing to be bound by the terms and conditions of an offer. Once an offer has been accepted, an agreement is formed.

Accident - An unplanned and unexpected event which occurs suddenly and at a definite place. Accident rental car - Accident rental car service can provide you with a rental car at a low daily rate while your car is being repaired.

Account fee - Fee charge by lenders for the cost of setting up and maintaining mortgages.

Accountant - The professional whose role it is to examine and record the income and expenditure of a business. The accountant is the professional whose role it is to examine and record the income and expenditure of a business. According the Macquarie Dictionary, accounting is the theory and system of setting up and looking after the books of a business, so that its financial position can be examined and the owners can find out how well it is doing. An accountant is like a doctor for the business. The accountant "keeps a finger on the pulse" of a business, and lets the business owner know what to do to maintain the health of the business. Anyone who is considering embarking on any type of business venture, or investment strategy, should consult an accountant before making any binding decisions.

Accrued interest - Interest earned, but yet to be paid or charged.

Actuary - A specialist in risk analysis, especially as it relates to insurance calculations such as premiums, reserves, dividends, and insurance and annuity rates. They usually work for insurance companies, particularly Life companies, to evaluate applications based on risk.

Additional Excess - This excess may be imposed in special circumstances, for example on high performance cars. It is payable in addition to any other excesses.

Additional Payments - Extra loan repayments made, above the minimum repayment amount, and paid during the loan term.

Additional Repayment - Extra funds paid into the loan in addition to the minimum monthly payments. Also see Special Repayments.

Adjuster - Also known as an assessor, is a representative of the insurer who seeks to determine the extent of the company's liability for loss when a claim is submitted.

Adjustment of Rates - Council, water rates and land tax (where applicable) are adjusted at the date of settlement. They are shared by the buyer and seller in proportion to the amount of time each owns the property in the period for which the rates are charged.

Adjustments - Apportionment of rates and charges, whereby the vendor pays the rates etc., and the purchaser bears the cost of them beyond the settlement date. The Statement Of Adjustments is the document that sets out the rates and any other charges that have to be apportioned as between the vendor and the purchaser. The Statement of Adjustments will show the full purchase price, the amount of deposit deducted from the full purchase price, and then the balance owing. The amount due for the full year's council rates, and amounts due for water rates and body corporate fees, if applicable, are also stated. If penalty interest has been incurred, this too will be stated. It is a standard contractual requirement that the vendor must pay the full year's rates, and then the purchaser is required to reimburse the vendor for the amount paid for the period from settlement to the end of the rating year.

Administration Fund - See Sinking Fund.

Affordability - A measurement made on the basis of an index which is the ratio of average household disposable income to the income required to meet payments of a typical dwelling. The higher the figure, the more affordable property..

Age Excess - This excess is additional to the standard excess if the insured car is being driven by a person in the age ranges specified on the insurance schedule and renewal notice.

Agent - A person authorised to act on behalf of the person selling, purchasing, letting or managing a property. A typical example is a Real Estate Agent who acts on behalf of a person selling a property. The law of agency is a branch of the law of Contract. Basically "agency" is a relationship whereby one person, known as the "principal", authorizes another person, called the "agent", to act on behalf of the principal. The agent is appointed by the principal for the purpose of bringing a third person into a contractual relationship with the principal.

Agreed Value - A car's agreed value is set at the beginning of each period of cover. It is based on the fair value given then for the cars make and model in the motor trade's most commonly accepted price handbook. The value doesn't change for the period of cover.

All-in-one facility - Facility that allows the borrower to deposit all funds into the loan account, and then draw on those funds for smaller expenses. In all in one facility allows you to combine your home loan with your normal personal accounts, such as savings account, cheque account, and credit card account. An all in one facility provides one of the best mortgage strategies available, if managed properly.

Amortisation period - The period of time a loan is calculated over (and repaid). Time over which the loan is to be repaid at the agreed rate. Amortisation is the payment of debt in regular, periodic instalments of principal and interest, as opposed to interest only payments. Amortisation can also be described as the process of reducing principal and interest, in equal instalment payments, at specific intervals over a set period of time. Over time, the interest portion of the loan decreases as the loan balance decreases, in the amount applied to the principal increases, so that the loan is paid off in the specified term. Also see Loan Term.

Annual percentage rate - The advertised rate of interest per annum. The annual percentage rate is a figure that states the total yearly cost of a mortgage, as expressed by the actual rate of interest paid. The annual percentage rate includes the base rate of interest, and any other add-on loan fees, costs and charges. Because it also incorporates other costs and charges, the annual percentage rate will be higher than the rate of interest quoted by the lender for the mortgage product, to which it relates. However, it does give a more accurate indication of the true cost of the loan. Borrowers should be in mind the fact that most home loans do not run for their full term, as the majority of home loans are paid out before they have run their full term. This may result in the effective annual percentage rate being higher than the quoted annual percentage rate, because the loan fees and charges are spread out over fewer years. An interest rate expressed as a percentage per annum. The APR on a loan account is applied to the unpaid balance of the account to calculate the interest payable on the loan. An interest rate that attempts to reflect the true cost of a loan, including fees and charges. Annual Percentage Rate is an American term but is sometimes misused by Australian companies - the Australian equivalent is Comparison Rate.

Annuity - A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement.

Application fee - The fee a lender may charge for setting up a loan approval for a home buyer. While some lenders do not charge application fees, they usually charge higher interest rates. The application fee is a fee charged by the lender in order to cover the initial costs of processing a home loan application. The application fee may include the cost of obtaining a property valuation, a credit report, and other costs associated with a home loan application process. In some cases, these fees may be charged separately, and the application fee charged as a stand-alone fee or the fee charged by a lender to cover or partially cover the lender's costs of setting up or establishing the loan.

Appraisal - "Appraisal" is just another term for valuation, but is used instead of the word "valuation" because estate agents are not permitted to provide true valuations on real estate. Only an accredited valuer can provide a genuine property "valuation" or an estimate of property value as stated by a professional valuer.

APR - Acronym for Annual Percentage Rate. See Annual Percentage Rate.

APRA - Australian Prudential Regulation Authority- is the prudential regulator of banks, insurance companies and superannuation funds, credit unions, building societies and friendly societies.

Arrears - Amount overdue on an account. Arrears is the term used to describe money which has not been paid on time. For example, if a borrower has not made the last two mortgage payments, then that borrower is said to be "in arrears" with the mortgage payments. Similarly, where money is payable at the end of the year, rather than at the beginning, it is referred to as being money "due in arrears", rather than money due in advance" or an overdue account yet to be paid.

Arson - Any unlawful setting fire to property.

ASIC - The Australian Securities and Investments Commission enforces and regulates company and financial services laws to protect consumers, investors and creditors.

Assessor - See adjuster

Asset Lease - See Finance Lease.

Asset Lender - Lending institution that lends finance based on the value of the asset, which will be held as security.

Assets - Any property, money or goods you own. The items a person or company owns and which are worth money in the open market. Assets include real estate and other items that can be sold anything from which a person may derive a benefit. Assets are any property or resources which have a monetary value. Assets include cash on hand in cheque accounts and savings accounts, stock, bonds and other securities, real estate, income producing property, and business equipment. Intangible assets include goodwill (the value of the company's name in the market), patents and other intellectual property that are owned by a company and given financial value in the company's balance sheet.

Assignment - Legal transference of a right or a title to a property, to another party.

At call - An account from which money can be withdrawn immediately.

ATM - Automatic Teller Machine. Most bank customers are familiar with electronic banking through the use of automatic teller machines. Automatic teller machines are accessed with a plastic card that automatically debits or credits a nominated account whenever cash is withdrawn or deposited.

Auction - A public sale at which property is sold to the highest bidder above a reserve price. An auction is a form of sale where potential purchasers make competing offers or "bids", with the person offering the highest bid being declared as the purchaser. Unfortunately, the auction concept is falling into disrepute with regard to the sale of real estate. This is because many of those who promote real estate auctions tend to resort to tricks and deceptions in order to make the concept work.

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B

Balance Sheet - Statement of assets, liabilities and net worth for an individual or a business. The balance sheet is a financial statement that lists the company's assets and liabilities as at a specified date. The balance sheet presents a company's financial position by listing what the company owns (including cash, infantry, planned, equipment, and accounts receivable), and what the company owes (liabilities such as short-term and long-term debt, and the accounts payable). The difference between assets and liabilities is known as equity or book value.

Balloon - See Residual Value.

Balloon payment - Large loan repayment to clear a debt. A balloon payment is where a lump sum, usually representing the balance of the loan principal, is paid before the end of the term. Similarly, a balloon mortgage is where the balance of the loan principal is paid as a lump sum at the end of the term.

Bank cheque - Cheque purchased from a bank, usually on a cash basis, and regarded as being almost as acceptable as cash in a sale transaction.

Banker's Lien - The right of a Bank to retain a customer's securities until a liability to the Bank is discharged. (See also 'General Lien').

Bankruptcy - Situation where a debtor is unable to repay debts, and his/her estate placed into the hands of a receiver who has the responsibility for its distribution or the legal financial state and individual is in, when unable to meet debts (for Companies it's known as being 'wound up'). A debtor may be declared bankrupt by the Federal Court at either the debtors or the creditors instigation, and the debtors estate will be placed in the hands of an official receiver who will distribute the estate in accordance to the provisions of the Bankruptcy Act.

Basic/Standard variable - Variable home loan at an attractive rate, but without all of the features of a loan at the standard variable rate.

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'.

Bearer - A person who holds a document. In the case of a cheque, it is the person presenting the cheque (may or may not be the owner of the cheque).

Body Corporate - A body corporate comes into existence when a plan of subdivision, allowing the creation of a body corporate, is registered at the Land Titles Office. Owners of the Lots specified on the plant of subdivision become members of the body corporate. A group consisting of the owners of each strata property, established to maintain the common areas of flats or units and to take out insurance for the common areas. Or see Owners' Corporation.

Bond - Money paid by a tenant and held by Rental Tenancy Board to help ensure against losses from non-payment of rent or damage to the property or Money paid by the tenant and held by the Residential Bond Authority as security against damage or rent default by the tenant.

Borrower - A person, persons, or entity borrowing money to purchase, payoff, or refinance a product or effect.

Breach of Contract - Breaking the conditions of a contract. This occurs where a party fails comply with the terms/conditions of a contract.

Break Costs - Costs payable by a borrower where a loan is paid in full before the end of the term of the loan. Generally applies to fixed loans.

Bridging Finance - A short term loan usually taken out to purchase a new property prior to sale of an existing property or finance used to "bridge" the gap between the purchase of a new property, and receipt of funds from the sale of purchaser's existing property.

Broker - An intermediary, who acts on behalf of a person who is applying for insurance. They earn a commission from the insurer, however, they have a responsibility to obtain the best cover for the best price possible. In certain circumstances a broker can also act as an agent for the insurer in terms of issuing a policy or collecting a premium.

Building inspection - Inspection carried out by a purchaser (usually by engaging a professional building inspection service) to discover any defects in a building which may affect the preparedness of the purchaser to buy the property at the asking price.

Building Insurance - See Home Building Insurance.

Building society - An institution which takes deposits and provides loans just like a bank, but without the Reserve Bank oversight given to banks.

Bullion - Precious metals, such as gold, in the form of ingots or bars.

Burglary Insurance - Covers theft of your stock or contents as a result for forcible entry to your property.

Business Interruption Insurance - Covers you for the loss of any potential income as a result of damage or loss of your property. EG: you are running a restaurant, which got extensively damaged by fire. This insurance will compensate you for any loss of sales or your potential income whilst the restaurant is being repaired.

Buyer's Agent - Person to act on behalf of the buyer to find and negotiate on properties the buyer wishes to buy. The buyer's agent is simply an estate agent who "spots" properties for people who cannot afford the time to seek out a suitable property in person. Unfortunately, the term is also used to describe estate agents who falsely pretend to provide a service in terms of "negotiating" on behalf of inexperienced purchasers.

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C

Cancellation - The termination of a policy before the expiry date.

Capital Gain - Profit realised from the sale of an asset, when it is sold for a higher market price than the owner initially paid for it or the financial gain you get when you sell something for more than you bought it. Maybe subject to the capital gains tax, which is paid on the gained amount or the profit made when a property is sold for more than the original purchase price.

Capital Gains Tax - A Federal Government tax on the monetary gain made on the sale of an asset or liability to pay tax on the Capital gain (See Capital gain above) made on the sale of an asset. Usually a taxpayer's principal place of residence is exempt from capital gains tax. For further information, please refer to the Australian Taxation Office web site.

Capital growth - The difference between the value of an asset when purchased, and its current value.

Capital - The current value of your assets, including car, property, business, or money etc.

Capitalising interest - When interest that has accrued is added to the total debt rather than being paid when due.

Capped Loan - A loan where there is a ceiling on the interest rate.

Car Finance - See Vehicle Finance.

Car Lease - See Finance Lease.

Car Loan - A personal finance product where the financier lends the customer funds for the purchase of a car or other vehicle, and secures the loan against that vehicle.

Carrier - Sometimes used to describe the insurer. Not generally used because of confusion with carriers of freight.

Caveat emptor - 'Let the buyer beware' - the principle that puts the onus on buyers to be satisfied with any item before buying.

Caveat - 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) or a caveat lodged upon a title warns a person buying the property that a third party (generally the person who lodged the caveat) has some right or interest in the property. A caveat prevents the Registrar Of Titles from registering another interest against the title without first giving notice to the person who lodged the caveat. Generally speaking, once a caveat has been lodged against a property, nothing else can be lodged against the property without the consent of the person who lodged the caveat.

Certificate of Currency - A certificate issued by an insurer showing that a building is insured.

Certificate of Insurance - A certificate that acts as proof that a policy has been issued. Usually requested by a financial institution.

Certificate of Occupancy - As the name implies, the Certificate of Occupancy certifies that a home can be lived in. It is a requirement of most local government or shire councils that an occupancy certificate be issued prior to the purchaser of a home taking occupation.

Certificate of Rating or No Claim Bonus - A certificate that acts as proof that a person has earned an insurance rating or no claim bonus entitlement.

Certificate of Title - This is the document of title to land or real property. It identifies ownership of the land, registered mortgages, and any encumbrances or easements. The Certificate of Title is usually held by the lender as security for a loan.

Certification - The planning authority "certifies" a plan of subdivision when it is satisfied that the plan is in compliance with the all requirements. Upon certification the plan of subdivision is lodged at the Land Titles Office.

Charge (Over Property) - The term used to describe any right established over a borrower's property to secure a debt or performance of an obligation.

Chattel Mortgage - A commercial car finance product under which the customer takes ownership of the vehicle at the time of purchase, and the financier takes out a mortgage over the vehicle (chattel) as security.

CHP - Acronym for Commercial Hire Purchase. See Commercial Hire Purchase.

Claims Ratio - The ratio of the cost of claims to earned premiums.

Clear Title - Where there are no charges for example, mortgages or caveats on title.

CLERP - Corporate Law Economic Reform Program

Collateral Security - Additional or supporting security given in addition to the principal security.

Collateral - An asset (such as a car or a home) which the borrower must give to the lender if the loan is not repaid. In a home loan, the home itself is usually the main collateral.

Collection or Set - A group of items of sufficiently common type, appearance or nature that they reasonably belong together and that is devalued if one or more of the group is lost or damaged.

Combination loans - Also known as "cocktail loans or "split" loans. Different types of loans combined to form one loan product. For example, the loan may have a portion variable, fixed or even a portion as a line of credit.

Combined Interest Rate - See Fixed and Variable Rate Loan.

Combined Ratio - A combination of the claims ratio and the expense ratio.

Commercial Hire Purchase - A commercial finance product where the customer hires a car or commercial vehicle from the financier for a fixed monthly repayment over a set period of time.

Commission - A fee charged by a broker or agent for services in the sale of an insurance contract or the fee or payment made to a Real Estate Agent for selling your home. Commission is the way in which estate agents are paid for their services, and is probably the most unfair and unethical form of payment imaginable. Real estate commissions have been described as a form of "wealth tax" levied by estate agents.

Common Law Title - Also known as "Old System Title", it is established by tracing an unbroken series of dealings with the property over the life of the property rather than by a register of titles.

Common Law - The principles of law arising from court decisions.

Common Property - An area within a Strata Title complex which is used by many people, e.g. stairs, driveways, etc. This is the land on a plan of subdivision that does not form any of the lots, but is the subject of shared ownership by the Lot owners as members of the body corporate. Common property may take the form of land, air space, space below the ground or buildings.

Community Title - Planned communities may be created through registration of a combination of schemes and plans. These consist of "community property lots", which are common areas owned by an association for use by owners, and other lots held by specific owners.

Company Share Scheme - This was the first type of "unit" development. While it appears to be similar to a strata unit development, is really quite different.

Company Title - Where the unit holders are actually share-holders in a private company that owns the property.

Comparison Rate Schedule - This is a schedule of the comparison rates based on different loan amounts and terms. To view a comparison rate go to Rates and then View Schedule for the rate you wish to view.

Comparison rate - The comparison rate is a standard to be used in advertising material. It is used to compare the actual rate of a loan, taking into account nominal interest rate per annum, the compounding frequency and upfront and ongoing fees. A "Comparison Rate" is an attempt to express some of the costs of a loan into a single interest rate. These "costs" include the nominal interest rate, some 'up-front' fees and ongoing charges. It does not include fees and charges based on future events, which may not occur, e.g. redraw fees, progress payments, etc, which are not typical of all loans. The aim of the Comparison Rate is to help consumers make a more informed judgement of the costs of a loan, and in so doing, help them to compare various like loan products and services offered by the various lending institutions. The Uniform Consumer Credit Code (UCCC) has been amended to require a "Comparison Rate" to be quoted on all advertising for home loans where an interest rate is stated.

Comparison Rates Schedule (CRS) - Comparison Rate Schedule. The schedule displayed by a lender that give the annual percentage rate and the respective Comparison Rate, for the lender's loan products for specific amounts over specific terms.

Compound interest - This is interest that is paid on the accumulated interest as well as the principal amount of a loan.

Comprehensive Insurance - Provides specified cover for damage to the insured car as well as damage the insured car may cause to the property of others.

Compulsory Comparison Rate - 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.

Conditioning - Conditioning the vendor is the term used to describe the process where an estate agent strives to convince the vendor to lower the asking price on a property so that the estate agent can secure a sale.

Conditions - Conditions are the "rules" of the contract. They tell the parties who is responsible for what, the dates by which things must be done, and what will happen if things are not done as agreed.

Conflict of Interests - A conflict of interests occurs when a person who has a duty to act in the interests of a client also has a duty to act against the interests of that same client. A conflict of interests also occurs when a person who has a duty to act in the interests of a client is in a position where he/she may be tempted by money or some other motive to act against the interests of that same client.

Consequential Loss - A subsequent loss that results from the direct damage e.g. public transport costs incurred when a car is off the road due to and accident.

Construction Insurance - Cover provided for any loss or damage to the property, which is undergoing constructions. E.g., you are building a house and it got damaged by storm or fire or malicious damage. This cover will compensate for the reconstruction.

Construction Loan - A loan used to fund the building of a new property. This is a loan for the purpose of building a dwelling. Funds are usually drawn down on a staged basis, upon completion of each building stage.

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. The Uniform Consumer Credit Code (UCCC) was passed by the Commonwealth government, with identical legislation passed by most states, to provide uniform consumer credit law throughout Australia. The Code governs the relationship between borrowers and lenders.

Consumer Loan - See Car Loan.

Contents Insurance - Covers the contents for loss or damage caused by, fire, storm damage, malicious damage, theft, etc. See Home and Contents Insurance.

Contract Note - This is another nasty device used by estate agents (see also the "Exclusive Sale Authority"). The name of the document is the first trick - Contract Note. To most people the term "Contract Note" suggests that the document is something less than a Contract, and that a real Contract will be drawn up later. In fact a "Contract Note" is a full contract, but the terms and conditions are hidden.

Contract of Sale - A written agreement outlining the terms and conditions for the purchase or sale of property. The Contract of Sale is the term used to describe the document prepared by a lawyer, and used to formalise the sale of real estate. However, the word "Contract" has more than one meaning: 1. Contract can mean an agreement; or 2. Contract can mean the document that sets out the agreement.

Conveyancer - The Legal Practice Act 1996 states, at Section 326: "conveyancer" means a person, other than a current (legal) practitioner or registered (legal) practitioner, who carries on a business in the course of which conveyancing work is carried out directly or indirectly for fee or reward;". Conveyancer's attend to the clerical work associated with conveyancing matters, but are prohibited from performing legal work or giving legal advice.

Conveyancing Kits - In their promotional material, conveyancing kit-writers don't emphasise that those who use the kit will still have to pay for rate and planning certificates, title searches, postage, transport to settlement, etc. There is also an assumption that kit-users have plenty of spare time, and that their time is of no value. Otherwise, the amount of time needed for reading and learning about conveyancing has to be taken into account.

Conveyancing Work - The Legal Practice Act 1996 states, at Section 326: "conveyancing work" means work, other than legal work, carried out in connection with the transfer...of...interest in land. In effect, "conveyancing work" is confined to the clerical tasks associated with arranging for the transfer of ownership from one person to another.

Conveyancing - The legal process for the transferral of ownership of real estate or the legal transfer of ownership of property from the vendor's name to the buyer's name.

Cooling Off - In certain circumstances, the Purchaser of real estate is permitted to cancel the Contract and walk away from it all together, within 3 days of having signed it.

COSL - Credit Ombudsman Service Limited. Formerly known as MIOS (Mortgage Industry Ombudsman Service).

Cost Price Depreciation Limit - See Depreciation Limit.

Council Rates - An annual charge in relation to a property by the local council for the area where the property is located. The charge is to pay for local council services.

Covenant - A covenant is a way in which the use of one person's land can be controlled by another, and is commonly to protect the "amenity" or value of an area. A developer, for example, could prevent the building of front fences, the parking of heavy vehicles or the building of low-quality homes in a new estate by placing a special condition in the Contract of Sale, requiring the Purchaser to register a restrictive covenant on the Purchaser's new title or a requirement to adhere to certain terms, conditions or restrictions regarding a property.

Cover and covers - Means the protection provided by the policy.

Cover note - A Cover Note informs the insured that coverage is active - often interim cover or the arrangement of temporary insurance until a formal policy is issued by the insurance company or a temporary insurance policy, designed to be issued at short notice to provide cover between the time the cover note is issued, and the issue of a full insurance policy.

Coverage - The scope of the protection provided under a contract of insurance.

Credit Limit - This is the maximum amount a borrower can use on a credit facility. For example, the maximum amount that can be used on a credit card.

Credit unions - Also known as credit co-operatives, these are finance groups owned and controlled by the people who use it. Usually based on common employment e.g. VTU Credit Union or Victoria Police Credit Co-Operative.

Creditor - The party to whom the debtor owes money.

Crossed cheque - A bank cheque or personal cheque with two parallel vertical lines across it to specify that the cheque must be paid into an account and cannot be cashed. Usually includes the words "Not Negotiable" written or printed between the two parallel lines.

CRS - Comparison Rate Schedule. The schedule displayed by a lender that give the annual percentage rate and the respective Comparison Rate, for the lender's loan products for specific amounts over specific terms.

CTP Insurance - Compulsory Third Party insurance (CTP Green slip in NSW) is the insurance that is needed when registering a vehicle. CTP insurance is intended for the situation where another person is injured or killed in an accident, which is caused by the driver of the insured vehicle.

Current Market Value - The current market value of a property is determined according the following standard: The price at which a willing but not anxious vendor would sell, and at which a willing but now anxious purchaser would buy. Theoretically, if someone bought the property at current market value as an investment, then decided to sell it again, they should be able to find someone else who is prepared to pay the same price in the same market, and so on.

Comparison Rate - Also known as the true interest rate, a comparison rate is a tool to help consumers identify the true cost of a loan, including the interest rate and some fees and charges relating to a loan. In Australia the term Comparison Rate is defined under law in the Consumer Credit Code, and includes the amount of the loan, the term of the loan, the repayment frequency, the interest rate and all fees and charges except government charges (such as stamp duty), fees which may or may not be charged (such as early payout fees) and fees not ascertainable at the time the comparison rate is provided. Comparison Rates are designed to provide an effective way to compare different loans as come close to reflecting the "real" interest rate of the loan, however it is important to remember that they do not include variable charges such as payout penalties and fees.

Contract of Sale (or Offer of Acceptance in WA) - An agreement in writing setting out the terms and conditions the vendor and purchaser enter into for the sale and purchase of a property.

Cooling Off Period - Federal law provides that you can cancel your policy within 14 days of its purchase date. Where applicable, it's a period after exchange of contracts during which time the contracts may be cancelled.

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D

Daily Interest - Interest calculated on a daily basis - varies according to daily account balance or interest that is calculated on a daily basis, varying in accordance with the account balance as at the end of each day.

Debtor - Someone who owes money to another and can be compelled to perform an obligation or the borrower the party who owes money to the creditor.

Deed - A document in writing, which is signed, sealed and delivered by the parties thereto, to prove and testify the agreement of the parties whose deed it is, to the things contained in the deed or a document recording an agreement, obligation or conveyance of property formally executed as required by law.

Default - Failure to meet a debt payment or other requirement of a contract by a due date or where the borrower fails to meet payments by the agreed due date.

Default rate - This is the rate to which a loan reverts or automatically adjusts to at the end of any fixed period.

Deposit - A deposit is an amount of money, usually 10%, paid by the purchaser to secure the contract of sale. Generally, if the purchaser repudiates the contract, the deposit will be forfeited. A deposit is normally paid by the buyer at the time of exchanging contracts or on "fall of the hammer" at auction. It is normally 10% of the purchase price.

Deposit bond - A deposit bond is a form of guarantee, usually provided by an insurance company, that a purchaser will pay the full deposit when it becomes due (i.e. at settlement, or upon rescission of the contract).

Depreciation - A decrease in the value of any type of property over a period of time resulting from use, wear and tear, or obsolescence or the accounting practice where the cost of a fixed asset of a business is spread over the life of the asset. Depreciation is a non-cash expense which allows the money to be retained by the business, thus technically allowing the business the capacity to replace the asset over time.

Depreciation Limit - The maximum asset value that is allowed by the Australian Tax Office when depreciating a motor vehicle. For the 2008-2009 financial year, this value stands at $57,180.00.

Direct Debit - Where the Lender debits (deducts) a payment from client's bank, credit union or building society account.

Direct insurer - Is an insurer which deals direct with the consumer rather than through an intermediary or agent.

Disaster - A disaster is said to have occurred when the normal community and organisational arrangements cannot cope with a hazard impact.

Disbursements - Disbursements are the out-of-pocket costs associated with a matter, as opposed to the legal costs charged for the service being provided. For example, in a conveyancing matter the legal costs include checking of the contract and preparation of documents. Disbursements include the amount paid to the Land Titles Office for the title search, and amounts paid to rating authorities for certificates. Solicitors incidental costs involved when dealing with client on behalf of the Lender, e.g. searches, certificates pest reports, etc., or various fees and charges, additional to solicitors' or conveyancers' professional costs associated with the sale or purchase of a property. Disbursements include search fees, enquiry fees, survey costs and inspection costs.

Discharge fee - See 'mortgage discharge fee' below.

Disposable income - This is the part of a person's income that is not committed to on-going living expenses, and is available spending on non-essentials or for saving.

Down payment - Similar to a deposit. Usually paid when the sale agreement is made, with the balance due at a later dated.

Draw Down - Act of transferring money from lending institution to the borrower after the loan has settled or the debiting of the loan at settlement or funding or the term used to describe the issuing of funds from the lender for the purposes for which they have been borrowed. Also used to describe access to loan funds, e.g. in a line of credit where the funds are available as needed.

DSR - Debt Service Ratio. This is the amount of a borrower's income which will support loan repayments. It is usually expressed as a percentage, with the majority of lenders setting a maximum DSR of between 30% to 33%.

Due date - The date a policy is in force to and by when a renewal premium must be paid.

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E

Early termination charges - These are costs a borrower may be required to pay upon the early repayment of the loan.

Early Termination Fee - A fixed dollar fee applied by some lenders if you payout (end) a vehicle finance contract early. An Early Termination Fee should not be confused with a Retained Interest Payout Penalty.

Effective Interest Rate - An interest rate that attempts to reflect the true cost of a loan, including all fees & charges. When we refer to an effective interest rate in an example loan scenario we calculate it by the same formula used for a Comparison Rate, but include any extra fees applicable only in the example. This is different to a Comparison Rate as Comparison Rates do not include fees that vary dependent on a specific loan scenario.

Earned Premium - The amount of the premium that has been "used" during the term of a policy. For example, if a twelve month policy has been active for six months, half of the total premium has been earned.

Easement - An easement is a right that allows one person's land to dominate another person's land by exercising some right of the dominated land. The land that benefits from the easement is called the dominant land, while the land affected by the easement is called the servient land.

Effective date - The date on which the cover of an insurance policy commences.

EFTPOS - Electronic Funds Transfer Point of Sale. A facility that allows cardholders to access funds held in an account at the point of sale (i.e. shop or supermarket checkout) to pay for goods or to withdraw cash.

Encumbrance - A charge on a property, i.e. mortgage caveat or easement or a charge or liability, e.g. a mortgage. This is the term used to describe a claim that one person has against another person's land. It is important to remember that an encumbrance is against the land and NOT the owner of the land. This means that if the land changes hands, the new owner takes both the land AND encumbrances attached to it.

Endorsement - Means a special condition that applies to a policy. For example, an endorsement may state that drivers under a nominated age are not covered under the policy.

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) or the amount of ownership you have in your property - i.e., the difference between what you owe and what it is currently worth. This is the term used to describe that part of the property that can be identified as belonging to the borrower. Equity represents the value of the property after debts secured by the property are paid.

Equity loan - This is a loan secured by the borrower's equity in the asset offered as security.

Establishment Fees - Fees charged to cover, or partially cover, a lender's costs in setting up a loan or the term used to describe the fees charged by lenders to cover the costs associated with the arranging of a new mortgages and the preparation of loan documents.

Estate - An interest in land.

Estate Agent - See Agent above.

Exchange - The legal point of time when the vendor and the buyer swap documentation with a view to settlement.

Exchange of Contracts (Exchange) - The Contract of Sale or Offer of Acceptance (in WA) is prepared in duplicate, usually by the seller's solicitor or conveyancer. The original is signed by the seller and a copy is forwarded to the buyer for their signature. Once both copies are signed, contracts are exchanged and the buyer and seller each receive a copy signed by the other. Each party is then legally bound to proceed with the purchase of the property, subject to the terms of the Contract of Sale or Offer of Acceptance.

Exclusive Sale Authority - This is the document by which an estate agent is able to exclusively secure the Vendor, the property being sold, and all persons who enquire about the property for a set period of time, and then indefinitely until the Vendor cancels in writing. Devised by estate agents, and distributed through the Real Estate Institute of Victoria, it is one of the most complex and deceptive documents a consumer will ever encounter.

Exit fees - See 'break costs' above.

Expense ratio - A measure of an insurers expenses in operating its business.

Expired policy - See lapsed policy.

Expiry date - The date coverage ceases.

Extra Cover for personal valuables - For most people, their home contents include portable valuables which they often wear or take with them when they are away from their home. Additional cover for accidental loss or damage to items such as jewellery, spectacles, clothing and certain personal vision and sound equipment (not mobile phones) is available by extending your contents insurance to include 'Extra Cover' , which is available by payment of an additional premium.

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F

Family - Means the following people who normally live with you: your spouse or partner, your children, parents, grandparents, grandchildren, brothers and sisters, the children, parents, grandparents, grandchildren, brothers and sisters of your spouse or partner. Also means your spouse or partner living with you and your children who ordinarily live with you.

Family Rating - When your children insure their cars for comprehensive cover, we give them a no claim discount for each year they've been driving claim free. Our normal insurance acceptance conditions apply to the driver and the car.

Fee Simple - The estate in fee simple is the highest estate in the land, and it is the closest the law comes to recognising absolute ownership for all practical purposes. However, while we refer to a proprietor of an estate in fee simple (who is the owner for all practical purposes), their ownership is not legally absolute, for absolute legal ownership of all and rest with the Crown.

FID - Financial Institutions Duty. This is a government tax levied on the receipts of financial institutions.

Fidelity Insurance - Fidelity insurance protects the clients of professionals against theft or misappropriation of funds by the professional person or an employee while the client's funds are under the control of the professional person. Simply put, if your lawyer had a secret gambling problem and took the proceeds of your property sale to a casino and lost it, there would be little point in trying to sue the now bankrupt lawyer.

Fiduciary Relationship - A fiduciary relationship is one where a professional representative owes the highest duty to the client, and must always act in the utmost good faith. The law requires that the professional representative must never allow his/her own interests conflict with those of the client.

Finance (Subject To Finance) - Signing "subject to finance" simply means that the Purchaser is not yet sure as to whether their home loan has been approved by the bank, and wants to be able to cancel the Contract if the bank fails to approve their loan application.

Finance Lease - A commercial car finance product under which the financier purchases the vehicle on the customer's behalf, and then leases it back to them for a specified period of time.

Finance - In the context of cars and vehicles, see Vehicle Finance.

Financial planner - Also known as "Financial Advisers", financial planners find out about a client's needs and circumstances, and provide plans and recommendations to assist and benefit the client.

Fine Print - A reference to imaginary small type in a policy document purportedly containing exclusions, reductions, exemptions, and limitations of coverage. It is now a requirement for policy documents to comply with minimum type size.

Fire - Means burning with flames.

Fire Insurance - Covers against fire, Storm damage, malicious damage, lighting, impact by objects, etc, caused to the building, contents, stock and customers goods.

First Home Owner's Grant - This is a government grant $7000 payable to purchasers who are buying their first home. Conditions and qualifications apply.

Fittings - Items that can be removed from a property without causing damage to it e.g., carpet and curtains.

Fixed and Variable Rate Loan - A loan where the interest rate for part of the loan is fixed for a specific period and the interest rate for the rest of the loan is variable.

Fixed interest - This is where the interest rate on a loan is fixed for an agreed period of time.

Fixed Interest (Fixed Rate) - An interest rate set for an agreed term.

Fixed Rate - An interest rate that is fixed for a set period of time. Generally, loan repayments remain fixed for the term of the fixed rate period.

Fixed Rate Loan - A loan on which the interest rate is fixed for a specific period.

Fixtures - Items that would cause damage to the property if removed. Their removal must be stipulated in the contract of sale, and damage made good by the seller e.g. oven and bath etc.

Fixtures & Chattels - Fixtures are things that are permanently attached to the land so as to become part of the land. Chattels are things that are not part of the land. When land is sold, all fixtures (the house, and things permanently attached to the house) will pass to the Purchaser as part of the land. If a chattel is to be included in the sale, it must be specifically listed in the Contract. If a fixture is to be removed from the property by the Vendor and therefore not included in the sale, then this must be specifically mentioned in the Contract.

Flat interest rate - Interest calculated on the original amount of the loan for the full term of the loan.

Flood - Means the inundation or covering of normally dry land by water which: escapes or overflows from, or cannot enter, because it is full or has overflowed, or is prevented from entering, because other water has already escaped or been released from it, the normal confines of any watercourse or lake, including any that may have been modified by human intervention, or reservoir, canal, dam or storm water channel. Flood does not mean storm water run off from areas surrounding the site or water escaping from any water main, pipe, street gutter, guttering or surface.

Formal Loan Approval - When the home lender provides confirmation that a loan is formally approved and all conditions of the Loan Offer have been satisfied. Fraud - Fraud is the gaining of an advantage by improper or unfair means. At present, fraud is a major problem in the real estate industry.

Fraud - The term "fraud or dishonesty" encompasses all those risks of loss that might arise through dishonest acts or omissions.

Frozen account - This is where an account is rendered inoperative, and no activity permitted. Accounts are often frozen a short time prior to settlement of a borrower's sale if the borrower has a redraw facility. This allows the lender to determine a "payout figure", which will not change through activity on the loan account. (See also "payout figure" below).

FSRA - Financial Services Reform Act

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G

Garnishee - The legal process by which a creditor is able to arrange for the diversion of funds. Often used where a debtor's employer can be required to pay part of the debtor's salary to the creditor.

Garnishee Order - A court order taken out by a creditor on a person's employer or banker for the deduction of funds from his wages or bank account to repay a debt.

Gearing - The ratio of your own money versus borrowed money in an investment. Positive gearing is when you borrow to invest in an income producing asset and the returns (income) from that asset exceed the cost of borrowing. Negative gearing is when you borrow to invest in an income producing asset and the cost of borrowing exceeds the returns (income) from that asset. This is the term used to describe the ratio of a borrower's contribution to an investment purchase, and borrowed funds for investment purposes. Where a property is 'highly geared' it has a high ratio of borrowed funds compared to ownership. (See also "negative gearing" below.)

General Insurance Code of Practice - The General Insurance Code of Practice is a commitment by the general insurance industry to aim for the best standards of service possible, and to promote better relations between customers and insurers. The Code describes standards in the areas of employee training, plain language policy documentation, claims handling and dispute resolution. It was introduced in 1995 with the backing of consumer groups, the federal government, insurers and the Insurance Council of Australia. More information on the Code can be obtained from the Insurance Ombudsman Service. You can contact the Insurance Ombudsman Service on 1300 780 808.

General Law Land - This is land that is not under the operation of the Transfer of Land Act. Ownership of general law land is determined by examination of the "chain of title", a collection of documents showing that the land has been transferred from one person to another over many years. A chain of title must show every dealing associated with the land for the past 30 years, if good title is to be established. These days, the purchase of any general law land must be converted so that the land is brought under the operation of the Transfer of Land Act.

General Law System - System whereby all dealings on a property are made in the form of conveyances, whether the transaction is a sale, a mortgage, a reconveyance, etc. Under this system the mortgage is in fact a transfer of ownership. When a conveyance is prepared it forms part of the chain of title and must be carefully preserved in order to prove the "root? to title.

General Lien - Sets out in writing the Bank's right to retain property until a debt is paid. Includes Power of Attorney and other clauses generally contained in Bank security forms.

Glass Insurance - Covers the cost of replacement of damaged glass.

Government Fees - State and government charges at the time of settlement, e.g. stamp duty.

Green Slip - See CTP insurance.

Gross Income - Income before tax.

Gross Income/Profit - Income from a person or company, before tax, superannuation or payroll deductions.

Gross Premium - The net premium plus operating expenses, commissions and other expenses.

GST - A Federal Government tax on sales of all goods and services, set at 10 per cent. The tax is levied against the supplier of the goods or service, but is paid by consumers in the form of higher prices. A purchase contract may contain a condition that requires a purchaser to add an amount equal to the GST to the purchase price.

Guarantee - In the context of a home loan, a guarantee is the promise made by a person who will guarantee the lender that the home loan will be repaid. The person giving the guarantee (known as the "guarantor") is legally responsible for the repayment of the loan. If required by the lender to do so, the guarantor must honour the guarantee by repaying the loan in full on behalf of the borrower.

Guarantor - A person/s who agree to be responsible for the payment of another person's debts also the person who provides a formal guarantee to a lender, that the guarantor will repay the borrower's debt if the lender cannot secure payment from the borrower. If required to repay the loan on the borrower's behalf, the guarantor may stand in the shoes of the lender in order to sue the borrower and recover the funds paid on the borrower's behalf.

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H

Hazard - A situation that increases the probability of the happening of loss arising from a peril, or that may influence the extent of the loss. For example, accident, fire, flood, liability, burglary, and explosion are perils. Slippery floors, flammable liquids, unsanitary conditions, unlocked and unguarded premises and poor roads are hazards.

Hire Purchase - See Commercial Hire Purchase.

Holding Deposit - A small amount paid to the seller's agent to indicate your interest in the purchase of the seller's property or a refundable deposit based on the goodwill of the buyer to go ahead with the purchase. It does not prevent the property from being sold to other interested buyers. Home buildings insurance - Is insurance for the buildings at the site used for domestic and residential purposes.

Home contents insurance - Is insurance for certain items used primarily for domestic purposes.

Home equity loan - A loan account that gives the borrower access to a revolving line of credit.

Home Insurance - Covers the building for loss or damage caused by insured events like fire, storm damage, malicious damage, lighting, impact by objects, etc.

Honeymoon rate - This is a reduced loan rate, usually offered for period of 12 months before reverting to the standard rate.

House & Land Packages - A house and land package is where a home is sold together with the land on which it is to be built. Usually, the process of purchasing a house and land package involves the selection of a display home, and matching it with a block of land from an estate being developed by the vendor.

Housing Affordability Index - Ratio of average disposable income to income needed to make payments on a typical residential property.

HP - Acronym for Hire Purchase. See Commercial Hire Purchase.

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I

IBNR - Incurred but not reported, is the liability that an insurer has for losses that have happened but not yet reported as claims.

ICA - The Insurance Council of Australia represents the interests of the Australian general insurance industry.

Income Protection Insurance - Provides for a lump sum or periodical payment if a borrower becomes incapacitated and is unable to continue working.

Incurred claims ratio - The percentage of claims costs incurred to premiums earned (see earned premiums).

Indemnity - Security against damage or loss; sum paid in compensation for loss incurred.

Indemnity insurance - Type of insurance that restores the individual as close as possible to the financial position that they enjoyed before the loss.

Independent Legal Advice - When a person needs legal advice it is important that the person providing that advice not only knows the law and how to apply it, but is also in a position to provide that advice without bias. The lawyer must always be totally "independent" of the matter. In other words, the lawyer should never be personally involved in the matter, and should not be acting for, or advising anyone else who is involved in the matter or who stands to gain anything from it. See "Legal advice" below.

Inexperienced Driver Excess - See excess

Instructions - This is the term used by lawyers to describe what the client wants done. However, it goes beyond this. Taking instructions is not just a matter of doing as the client directs. The proper taking of instructions requires the lawyer to use his or her legal knowledge and skills to ensure that the client is in a position to make the best decision. This is part of the lawyer's fiduciary duty. After finding out what the client wishes to do, the lawyer will advise the client as to the legalities involved, and the options available to the client as the client pursues his/her goal. A client is entitled, not only to make the final decision, but also to be in a position to make the best possible decision, based on the best possible advice. Only after the lawyer has listened, considered, advised, and then been told which direction the client wishes to take, can the lawyer regard him/herself as having been properly instructed.

Instrument - Formal legal document in writing, e.g. a deed of conveyance.

Insurance - A device for transferring specified risks of individual persons to an insurer. The insurer agrees, for consideration (usually payment of a premium), to assume, to a specified extent, certain losses that may be suffered by the insured.

Insurance Ombudsman Service - Any insurance policyholder who is dissatisfied with the outcome of his or her dealings can contact the Insurance Ombudsman Service on 1300 780 808. See General Insurance Code of Practice.

Insurance schedule - Sets out the information given to an insurer upon which the decision to offer cover is made. It also displays the individual details of a policy.

Insured - The party to an insurance arrangement to whom the insurer agrees to provide cover against specified losses, or to render services, subject to the terms of the insurance contract.

Insured event - Occurrences which cause loss and damage which are listed in the relevant policy.

Insurer - The party to an insurance arrangement who undertakes to provide cover or to render services, on the happening of specified events.

Interest - A charge for money lent or the Lender's charge for the use of funds or the return on deposited funds. This is the cost of the home loan. Interest is the charge the lender makes in return for allowing the borrower to have the use of the borrower's funds for the period of the loan.

Interest only loan - A short-term loan, often used by investors. Allows for payment of the interest payable on the loan, without the loan itself being repaid. The borrower pays the full amount of the loan principal at the end of the agreed term.

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.

Interest Only Payment - Monthly payments are equal to the interest and fees charged to a loan account and there is no reduction to the principal loan amount.

Interest Rate - The amount of interest charged on a loan, normally expressed as a percentage per annum.

Introductory loan - Similar to "honeymoon rate' above.

Investment - The purchase of an asset for example, real estate or shares in order to produce income, or to produce capital gain on resale/maturity.

Investment Income - The return received by insurers from their investment portfolios. Investment loan - Loan used to purchase an investment property. Often in the form of an "interest only" loan (see above).

Item - Means an individual piece of home contents, such as an item of jewellery.

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J

Joint and Several Liability - The Bank's joint account authorities, guarantee forms, etc are framed to ensure that joint account holders with debts due to the Bank of joint guarantors liable to the Bank shall be SEVERALLY liable, (i.e. individually), as well as JOINTLY. With Joint and Several Liability a creditor has as many rights of action as there are debtors; he can sue them jointly or severally until he has obtained payment, and an unsatisfied judgment against one debtor will not be a bar to an action against the others.

Joint Tenancy - Property in the names of two or more persons, where all persons have an equal interest in the whole property. When one person dies his interest passes to the survivor(s). They are known as Joint Tenants or Joint Proprietors of that property or the holding of property by two or more people in equal shares where, if one dies, his/her share goes to the survivor/s. Most couples buy property under joint tenancy.

K

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L

Land Subsidence Area - An area where land movement is possible. Special council certificates can tell you whether a property is in a land subsidence area.

Land Tax - A State Government tax payable by owners, based on the value of the land.

Landslip Area - See Land Subsidence Area.

Lapsed Policy- A policy which has been allowed to expire because of non payment of premiums.

LCT - Acronym for Luxury Car Tax.

Lease Agreement - A document granting possession of a property for a given period without conferring ownership. The Lease Agreement specifies the terms and conditions of occupancy by the tenant.

Leasehold - An agreement which gives a person the right to exclusive possession of a property.

Legal Advice - The giving of good legal advice involves the obtaining of an understanding of what the client wants to achieve, the checking of relevant documents, having a sound understanding of relevant principles of law or researching finer points of law, and then explaining to the client what options are available.

Lender- Term used to describe a bank, building society, credit union, or other lending institution which derives loan moneys deposits. May also be used to refer to a specialised home lender which provides borrowers with access to funds raised on the professional money markets.

Lenders' Mortgage Insurance - This insurance protects the lender should the borrower default and the property is sold for less than the outstanding amount on the loan. The borrower remains liable to the mortgage insurer for the amount it has to pay the lender.

Lender's mortgage insurance (LMI) - Insurance premium charged to the borrower, but by way of a one off payment for the protection of the lender, allowing the lender to recover any unpaid loan principal in the event of the borrower's default. The borrower's debt is transferred to the Mortgage Insurer.

Lessee - The person who leases the property in terms of the Lease Agreement.

Lessor - The person who owns the property and allows another person occupancy.

Letter of offer - Insurance premium charged to the borrower, but by way of a one off payment for the protection of the lender, allowing the lender to recover any unpaid loan principal in the event of the borrower's default. The borrower's debt is transferred to the Mortgage Insurer.

Liabilities - Outstanding debts or obligations.

Liability - A debt which one is liable for; being responsible only to a limited amount.

Liability Insurance - Covers you for your legal liability in respect to your business.

Licence Agreement - Sometimes a purchaser may wish to occupy the property before settlement; or a vendor may wish to continue to occupy the property beyond settlement. A Licence Agreement is a simple contract whereby one party grants another party the right to occupy the property. The difference between a licence and a lease is that the lease is a form of "ownership" of the property for a period of time, and the lessee is entitled to remain in occupation for the period of the lease. The licence, on the other hand, can be revoked at any time. If the licence is revoked, the occupier must leave the property and rely on whatever remedies are provided for in the licence.

Limited cover specified items - Are home contents with limited cover under our contents policy which you have described to us, told us their current replacement value, we have agreed in writing to cover and you have paid us any additional premium we requested to insure them.

Line of credit - Borrowing arrangement by which the borrower may access any amount up to a specified limit, with the value of the borrower's property as security for the loan.

Listing - This is the term used to describe the arrangement between a Vendor and an estate agent, whereby the agent is appointed to act on behalf of the Vendor to sell real estate. Estate agents rely on a contract called the Exclusive Sale Authority to bind the vendor, the property and all enquirers, to the agent. This document is so heavily biased in favour of the estate agent that obtaining a listing with it is almost as good as "money in the bank" for the agent. (See also "Exclusive Sale Authority")

Living with you - means any person normally living or staying in your home or at the site.

Loan - An advance of funds from a lender to a borrower on the agreement that the borrower pays interest on the loan, plus paying back the initial amount of the loan at or over an agreed time.

Loan Offer - An offer of finance which sets out the full terms and conditions of the credit contract, including any special conditions you must satisfy before a lender will advance you the credit.

Loan Pre-approval Letter - A letter a home lender can provide, which based on information you give them, tells you how much they would be prepared to lend you, and some of the terms and conditions that would apply. It is generally not an absolute guarantee of loan approval.

Loan Service Fee - The fee charged by your home lender to administer the loan, normally charged monthly.

Loan Term - The period of time over which a loan is to be repaid.

Loan to Valuation Ratio (LVR) - The amount of the loan expressed as a percentage of the property's value.

Loan-to-value ratio - Often referred to simply as the LVR, this is the ratio derived from the amount being borrowed, as against the valuation of the security (usually the property being purchased).

Loss - Generally refers to the amount of reduction in the value of an insured's property caused by an insured peril. In an insurance sense it usually does not mean "misplacing" an item.

Lot - A lot is simply a separately identifiable piece of land, part of a building, or air space, that is created when a plan of subdivision is registered.

Low docs loans - Low document loans do not require the support of pay slips, tax returns, etc. and are often used by self-employed borrowers. These loans are well suited to borrowers who have substantial equity and serviceability capacity, but are unable to provide traditional forms of income verification. Because proof of income is not required, the amount of paperwork is significantly reduced.

Luxury Car Tax - A tax paid on new passenger vehicles whose sale price exceeds the Luxury Car Tax Threshold. Luxury Car Tax is calculated as 33% of the GST exclusive portion of the vehicle's purchase price over the Luxury Car Tax Threshold.

Luxury Car Tax Limit - See Luxury Car Tax Threshold.

Luxury Car Tax Threshold - The minimum value (price) at which Luxury Car Tax must be paid on vehicles that meet Luxury Car Tax criteria. The Luxury Car Threshold is set at the same amount as the Depreciation Limit. For the 2008-2009 financial year, the threshold is $57,180.00.

LVR (Loan to Valuation Ratio) - The ratio of the amount lent, to the valuation of the property.

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M

Machinery Breakdown Insurance - Covers you for any electrical or mechanical damage to your equipment, such as freezers, air conditioning units, etc. You can also extend this cover to include loss of frozen goods as a result of breakdown of the refrigeration units.

Margin - Term used to describe the difference between the lender's interest indicator rate and the rate actually charged to borrowers.

Market Value - An estimate of the highest price a buyer would pay for a property or the fair price for which something can be sold in its current condition.

Maturity - The date a debt or investment must be paid in full or the date by which a debt or investment must be repaid/renegotiated in full or this is the date a debt or investment matures, and is to be paid in full.

Maximum No Claim Bonus for Life - Recognition of a good driving record. Once you've held a Maximum No Claim Bonus for three consecutive years with any insurer, we'll give it to you for life, at no extra cost. No matter how many accidents you have in the future.

Maximum No Claim Bonus Protection - Protection of maximum discount level for one at-fault claim during the period of cover when you have been a No Claim Bonus policyholder for less than three years, and pay an extra amount on your premium when you renew your policy.

Money Insurance - Covers loss of money either from the premises, at your home, in the safe or whilst in transit.

Moral Hazard - A condition of morals or habits that increases the probability of loss from a peril. An example would be an individual who had previously arranged for the theft of his own car to collect the insurance.

Mortgage - A form of security for a loan usually taken over real estate. The Lender, the mortgagee has the right to take (repossess) the real estate if the mortgagor fails to repay the loan or a mortgage is a contract between the mortgagor (being the person who owns the real property) and the mortgagee (being the person or lender to whom the property is mortgaged) which secures the repayment of a loan. A mortgage is basically a scheme or an arrangement whereby one person borrows money from another, and promises to pay the money back in return for offering land as security for the loan. The offer of land as security becomes an interest in the land for the lender. The land itself becomes encumbered by the mortgage.

Mortgage broker - An individual or an organisation, such as Oasis Home Loans, who provides consumers with access to a variety of loan products offered by a panel of lenders. The role of the mortgage broker is to assist the customer to select the most appropriate loan for the borrower's purpose, and to assist the borrower in his/her dealings with the lender.

Mortgage comparison rate - See "comparison rate" above.

Mortgage Discharge Fee - Charged by the home lender when they prepare a discharge of the mortgage they hold over your property or a fee charged by a lender for the administrative services associated with the finalization of a loan.

Mortgage document - The mortgage document is the means by which the lender's rights or "interest" in the property is registered on title.

Mortgage insurance - Insurance premium charged to the borrower, by way of a one off payment, for the protection of the lender. It allows the lender to recover any unpaid loan principal in the event of the borrower's default. The borrower's debt is transferred to the mortgage insurer.

Mortgage intermediaries - Term used to describe mortgage managers who are positioned between the lenders and the mortgage originators.

Mortgage manager - Term used to describe the company responsible for managing a loan. The mortgage manager liaises with the panel lenders, and co-ordinates the mortgage originators.

Mortgage offset account - This is a savings account associated with a home loan, the contents of which are paid into the borrower's home loan, thereby reducing the amount to be repaid. A 100% offset is achieved where the interest rates earned and paid are the same. A partial offset occurs where the interest rate earned on the offset account is only a portion of the rate paid on the home loan.

Mortgage originator - This is the term used to describe a wholesale lender whose role it is to source securitised funds that are then provided to consumers through loan brokers in the form of loan products.

Mortgage protection insurance - Unlike "mortgage insurance" (see above), mortgage protection insurance is cover that protects the borrower by meeting repayments in the event of the borrower's death, illness or loss of employment.

Mortgage Registration Fee - A State or Territory Government fee charged when a mortgage is established or discharged over your property or a fee paid to the Land Titles Office for registration of the mortgage. The mortgage is usually registered by the lender or the lender's solicitors together with the Transfer of Land after settlement.

Mortgage stamp duty - This is a state government tax, determined by reference to the amount of the mortgage. It is usually paid on the borrower's behalf to the State Revenue Office by the lender, and deducted from the loan funds or see Stamp Duty on Mortgage.

Mortgagee - The lender in a mortgage contract or the person or lender to whom a property is mortgaged, to secure the repayment of a loan or the Lender of the funds. The mortgagee is the person to whom a mortgage is given the lender.

Mortgagor - The borrower in a mortgage contract or the person who mortgages an asset to secure a loan or the person borrowing money in the terms of the mortgage. The mortgagor is the person who gives a mortgage over their property as security for a loan the borrower.

Motor Vehicle Insurance - Either insure comprehensively or just Third Party Property damage. It could be a single vehicle or a fleet of vehicles.

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Negative Gearing - Negative gearing on a rental property occurs when the annual interest payable on the loan used to acquire the property plus other expenses incurred in maintaining the property exceed the annual rental income that the property generates or 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. The term used to describe the situation where an investor buys the right property in the right location, and then has the tenant and the taxman partially fund the repayments. The investor sits back and counts the profit from the appreciating property value. The property is purchased using borrowed funds, and the interest payable on the borrowings exceeds the income produced by the asset (after expenses), resulting in a negative cash flow.

Negligence - Failure to use a degree of care which an ordinary reasonable person would use under the given or similar circumstances. A person may be negligent by acts of omission or commission or both.

Negotiation - Negotiation involves conferring or discussing matters with another person, with a view to reaching some form of compromise or agreement. To be effective as a negotiator, your representative must be well informed about the rules and laws associated with the matter under negotiation, and must have precise instructions as to their capacity to negotiate on your behalf.

Net Income - Gross income less income tax or the income received by an individual AFTER TAX has been taken out.

Net Profit - The profit remaining in a business after all expenses have been taken out, but BEFORE TAX.

New for Old (Home Insurance) - Replacing your existing old damaged items or equipment with new ones.

No Claim Bonuses - see rating

Non-conforming loans - Term used to describe loan products designed for borrowers who do not meet the criteria for regular lending due to impaired credit history, insufficient income or business start up finance.

Novated Lease - A method of salary packaging a car or other vehicle, under which an employee leases a car and the employer agrees to take on the employee's obligations under the lease, paying the monthly lease rentals from the employee's pre-tax income.

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OEM - Original equipment manufacturer. Means the original manufacturer of the car or part.

Off the Plan - Buying a property, usually an apartment, from seeing plans, before it is even built. This term describes the sale of land that does not yet exist as a separate "Lot". The land is described as a proposed Lot only. The Vendor of an "off the plan" lot is obliged to complete the subdivision process or building of units, and to have the Lots individually created through registration of the plan of subdivision.

Off the Plan Purchase - Buying a property from the plans only, not the finished product.

Offer - For the average consumer, the term offer has a simple and straight-forward meaning. However, when applied to the law of Contract, it has a very specific meaning. The confusion between these two meanings is often manipulated, and used against consumers.

Offer of Acceptance - See Contract for Sale.

Offer To Hire - See Commercial Hire Purchase.

Offer to Purchase - A written offer of a specified price for a particular property. The offer may be conditional or unconditional.

Old System Title - See Common Law Title.

Ombudsman (Banking) - See ABIO (above)

Ongoing fees - Any fees charged in association with the loan on a regular basis over the life of the loan.

Option to Buy - A legal document giving a person the right to buy. The document outlines the required price and applicable period, with a fee being applicable. If the property is bought, the fee is deducted from the purchase price; if the purchase does not proceed, the fee is non-refundable.

Overcapitalising - Term used to describe the situation where a property owner spends more money in improving the property than can be recovered upon sale.

Overdraft - Prearranged limit to which an account holder can access funds in excess of the account balance.

Overinsured - A term used to describe the condition that exists when an insured has purchased coverage for more than the actual value or replacement cost of a subject of insurance. It is also used to describe a situation where so much insurance has been obtained it constitutes a moral hazard.

Owners' Corporation - The owners of a block of units. The Executive Committee (which is elected by the members of the Owners' Corporation) is responsible for the administration and upkeep of the common property.

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Passed In - A property is "passed in" at auction if the highest bid is less than the vendor's reserve price. The person making the highest bid has the first option to negotiate further with the vendor.

Payee - The person to whom payment is to be made. E.g. the person to whom a cheque is payable.

Payout Fee - See Early Termination Fee.

Payout figure - This is a figure provided by a borrower's lender to confirm the amount of sale proceeds to be applied to repayment of the borrower's mortgage upon the sale of the security property. Usually, the lender will "freeze" the borrower's loan account, to ensure that the payout figure will not be changed through the use of any redraw facility.

Payout Penalty - A monetary penalty for paying out (ending) a vehicle finance contract early. Technically a Payout Penalty is a retained interest penalty, but the term can sometimes be incorrectly used to refer to a Early Termination Fee.

Penalty Interest - Condition 4 of Table A, Schedule 7 of the Transfer of Land Act provides for the payment of penalty interest if either party delays the payment of money. The most common form of delay is the postponement of settlement.

Peril - The cause of a possible loss. Not to be confused with hazard.

Period of cover - means the current period for which we have agreed to provide you with insurance cover. The current period is shown on the most recent of your insurance schedule and renewal notice and any receipt we may send to you. When we make a write-off payment, the period of cover comes to an end.

Personal lines - This term is used to refer to insurance for individuals and families, such as private car insurance and home insurance. Contrast with business insurance and commercial lines.

Personal Loan - A personal finance product where the financier lends the customer funds which can be used to purchase a car or other vehicle, but does not hold any security over the loan.

Personal Property Insurance - Any portable items such as jewellery, electronic equipment, push bikes, etc. These items are covered on the premises and away from the premises.

PIN - Personal Identification Number

Plan of Subdivision - Basically, the plan of subdivision is a map of a large area of land that has been divided into small blocks of land or "Lots". The plan shows the dimensions of each Lot, and its location in relation to every other Lot in the subdivision. Each Lot is separately numbered. When the plan of subdivision is registered, each lot is identified in terms of its Lot number and the number of the plan of subdivision. Each Lot is registered by way of a Certificate of Title bearing distinct Volume and Folio numbers to identify the title, and the title itself records the Lot and Plan Number of the Lot it represents.

Policy - means the Product Disclosure Statement and the policy schedule.

Policy schedule - a notice showing the particular details of a policy.

Policyholder - Generally use to describe the policy owner and/or insured. See Insured.

Portability - A loan facility that provides for the substitution of one security property for another in relation to an existing loan.

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.

Portable Loan (portability) - Allows you to change an existing security property with a new security property without repaying the loan.

Power of Attorney - A written authorisation to another person, or persons, to perform certain acts for the signer, as if they were the signer.

Pre-Approval - If you're thinking of buying a home, then obtaining pre-approval for a mortgage is a good idea. This determines the size of the mortgage you qualify for, and therefore, decides the price range for the homes you can look at.

Pre-Contract Legal Advice - Advice provided by a qualified lawyer prior to the signing of a Contract to buy or sell real estate. By obtaining pre-contract legal advice a consumer is able to consider what matters should be investigated before deciding to buy, what responsibilities have to be fulfilled before selling, and what special conditions may have to be inserted into a Contract to protect his/her interests. See also "Independent Legal Advice" above.

Premium - The price of insurance cover for a specified risk for a specified period of time

Price Ranges - Also called a "buyer enquiry range" this is a trick that involves the invention of two figures: one much lower that the vendor intends to accept, and the other much higher than the vendor expects the property to make. Purchasers are expected to make offers somewhere in between the two false figures. Any form of marketing that involves "invented" figures is fraudulent. The Northern Territory government recently wrote to all estate agents in that State, warning them that price ranges and buyer enquiry ranges amount to misleading and deceptive conduct.

Principal - Term used to describe the actual amount of money borrowed. The term is used to distinguish this component of a repayment from the "interest" component. (See "interest" above) or the amount of money lent by the lender or the capital sum borrowed on which interest is paid during the term of the loan.

Principal & Interest Loan A loan in which both the principal and the interest are paid during the term of the loan. The most common form of home loan, where both the principal and the interest are repaid during the term of the loan. (Compare with "interest only" loan above.)

Private Sale - The seller (vendor) does not engage a Real Estate Agent, but acts for him/herself, thereby avoiding a Real Estate Agent's commission.

Private Treaty Sale - Sale of property by private negotiation and contract, with or without a Real Estate Agent.

Private use - see Use

Professional Indemnity Insurance - Professional indemnity insurance is held by a professional person to ensure that any claims of professional negligence made against the professional person can be met. To put it another way, there is not much point in suing a professional person if they do not have enough money to pay for your loss - so professional indemnity insurance comes in to cover the cost. It covers the professional negligence of the insured, such as Accountants, Lawyers, Doctors, etc.

Property - A person's property is "what is he or she owns to do what they like with." It may be tangible or intangible, and may be given a monetary value (e.g. house, car, goodwill). Property may be classed 'real' which relates to land or interests in land (except leaseholds) and buildings, etc or 'personal', which relates to other kinds of property such as cars, bank accounts, leasehold interests in land.

Property Title - See Certificate of Title.

Property Valuation - See Valuation.

Property Valuer - See Valuer.

Proximate cause - The direct, real, or operative cause of loss or damage, as determined by applying common sense standards.

Purchase Price - The price the seller and the buyer agree on exchange of Contracts of Sale.

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Rate - The cost of a given unit of insurance. This is the term used to describe amounts payable to the local council and the water authority for services provided to a property. Rates are adjusted on a pro-rata basis, together with any other outgoings that are payable as a consequence of land ownership.

Rating One for Life - Recognition of a good driving record. Once you've held a Rating One for three consecutive years with any insurer, we'll give it to you for life, at no extra cost. No matter how many accidents you have in the future.

Rating One Protection - Protection of maximum discount level for one at-fault claim during the period of cover when you have been an policyholder for less than three years, and pay an extra amount on your premium when you renew your policy. Rating, no claim bonuses and no claim discounts all describe essentially the same thing - a discount off your car insurance premium. The discount increases each year providing no claim that reduces your rating/discount is made on your policy. It keeps on increasing until it reaches the maximum discount level, called 'rating one' or 'maximum no claim bonus'.

Real property - This is another term for real estate, or land. It is used to distinguish land (which is permanent in nature) with personal property (which is not permanent and can be destroyed).

Rebate - Term used to describe a situation where money paid is refunded as a form of incentive. E.g. where a vendor pays a rebate of $3,000 if the purchaser can settle prior to a specified date.

Redraw - Borrower is able to draw on pre-paid funds or see Repayment Redraw.

Redraw facility - A facility which allows the borrower to make mortgage repayments beyond those required in the loan agreement, and "redraw" them as needed.

Refinancing - This is the term used to describe the situation where a borrower decides to change lender or loan product by repaying the existing loan and then obtaining another or to replace or extend an existing loan with a new loan from the same or another financial institution or to replace or extend an existing loan with funds from the same institution or another.

Registrable Documents - These are the documents, usually collected at settlement in return for the payment of the balance of the purchaser price, that are lodged at the Land Titles Office to transfer ownership of the property to the purchaser. They must be property signed or endorsed so as to allow registration.

Reinsurance - A position whereby one insurer transfers all or part of its risk of loss to another insurer. The other insurer is called the "reinsurer" or reinsurance company.

Renewal Certificate - A certificate which is used to renew a policy. It refers to the original policy, keeping all of its provisions, without restraining all of the insuring agreements, exclusions, and conditions.

Renewal Premium - The premium paid for a renewed policy.

Repayment - Principal and interest repayments require you to make payment of both the interest and the amount borrowed.

Repayment Redraw - Repayment Redraw allows you to access repayments which were previously made, in addition to the required regular repayments, on your loan.

Requisitions On Title - These are a series of questions formally served on the Vendor of a property by the Purchaser, by which the Purchaser discovers any issues relating to "title" (i.e. the right or capacity of the Vendor to legally sell the property). Requisitions often include a variety of other questions that are not related to "title", and can run to many pages. Many lawyers now replace the right to submit requisitions on title with warranties in the Contract of Sale.

Reserve Bank - The Reserve Bank of Australia is responsible for independently maintaining Australia's financial system, and for setting the official short-term interest rates on which many variable-rate home loans are based.

Reserve Price - The minimum price to be accepted by the vendor at auction.

Residential Tenancy Agreement - A document that sets out the details of a property to be leased.

Residual Value - A lump sum owed to the financier at the end of a loan's term, expressed either as a dollar value or a percentage of the amount borrowed.

Retained Interest - Unpaid future interest included in an early payout figure. Also colloquially known as a Payout Penalty.

Retaining Wall - Means a wall that supports or confines a mass of earth or water.

Retirement Villages - While most people understand the term "Retirement Village" as meaning a form of unit accommodation, it often comes as a surprise to find that there are different ways of "owning" or "occupying" a retirement unit.

Risk management - Management of the risks to which a company might be exposed. It involves analysing all exposures to the possibility of loss and determining how to handle these exposures through such practices as avoidance, reducing the risk, retaining the risk, or transferring the risk e.g. see reinsurance.

Risk - General meaning is a thing or person insured. Residential Investment Loan - A loan obtained for the purpose of purchasing real estate for investment purposes (for example, to be rented out) rather than for owner-occupier purposes.

Rule of 78 - A method of amortising interest across the payments made over the life of a loan, used by almost all Australia vehicle financiers for commercial car finance facilities. Under the Rule of 78, the interest component of payment n is equal to the number of remaining payments (including payment n) divided by the sum of the sequence of terms between 0 and the total number of payments, multiplied by the total interest for the loan. For example, with a 3 year loan paid monthly, there are 36 monthly payments. Therefore, the amount of interest applied in month 7 is equal to 30 (remaining months including current) divided by 666 (sum of the sequence of terms between 0 and 36), multiplied by the total interest to be paid over the term of the loan. The "78" in Rule of 78 comes from applying the above formula to a 1 year loan paid monthly, where the sum of the sequence of terms between 0 and 12 equals 78.

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Salary Packaging - Incorporating a vehicle in an employee's enumeration package, normally by way of a Novated Lease, Operating Lease or company car.

Salvage - Property taken over by an insurer to lower its loss.

Search - An examination to confirm that the vendor is in a position to sell the property and that there are no encumbrances on the property or the process of investigating title to land to ascertain if the vendor has the right to transfer ownership.

Secured Car Loan - See Car Loan.

Secured Loan - A loan which is secured by a mortgage over your property.

Securitisation - Is the packaging of cash flow producing assets into a marketable security, e.g. property, roads, bridges, etc. The process where mortgage backed securities (in the form of bonds) are sold directly into the capital markets. Investors in the bonds comprise of Superannuation funds as well as other major institutions. This is the term used to describe the process of taking a pool of various assets, such as different home loan products, and converting them into a tradable security such a bond which investors can then purchase and trade.

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. This is the term used to describe an asset that is put forward by a borrower on the basis that the lender will be able to sell the asset or convert it to the lender's use in the event that the borrower fails to repay the loan in full.

Security Property - The property provided as security for a loan. That is, the mortgaged property that a financier can claim in case a borrower defaults on their loan obligation.

Selling Price - See Purchase Price.

Serviceability - Ability of borrower to make and meet repayments on a loan, based on the borrowers expenses and income(s). This is the term used to describe the borrower's ability to make regular repayments of an agreed amount.

Servicing Your Loan - This refers to the day to day management of your loan, including repaying your loan. For example, changing your repayments or requesting a duplicate loan statement.

SES - The State Emergency Service is an emergency and rescue service dedicated to assisting the community.

Settlement - Finalisation of payment by the new owner, and assumption of possession. When you pick up the keys or the transaction that completes the sale. Monies are handed over in exchange for relevant documents. The purchaser can then take legal ownership of the property. Settlement is the term used to describe the moment when all of the parties involved in a sale of real estate meet together and exchange documents and cheques to complete the matter. Often there are four parties at settlement: the Vendor, the Vendor's Mortgagee, the Purchaser and the Purchaser's Mortgagee. Usually each of these is represented by a lawyer or other representative.

Signatory - Term used to describe a person who has authority to operate an account.

Sinking Fund - A special levy, held in trust and administered by a Body Corporate, to cover any major repairs or maintenance that may have to be carried out on the building or grounds the Body Corporate administers.

Site - Those parts of the land at the insured address which are used solely for domestic purposes but not 'common property' which is land or areas that others are entitled to use, for example common property in a strata development, retirement village or any other type of residential property development.

Skilled Drivers course - A free one-day driving course designed to improve young drivers road skills. On completion they receive discounts on comprehensive insurance until they're 25 (available in Adelaide, Brisbane, Canberra, Hobart, Melbourne, and Sydney).

Solicitor - The terms "solicitor" or "legal practitioner" or "barrister" are just other terms used to describe a lawyer. The term "barrister" is used to describe a lawyer who appears in court on behalf of clients. Barristers usually avoid accepting clients direct, and prefer to act on behalf of lawyers in a form of "sub-contacting" capacity. Many law firms described their lawyers as "Barristers & Solicitors". In the State of Victoria, all lawyers can describe themselves as "barrister and solicitor", and all are equally entitled to represent their clients in court. We prefer the term "lawyer" because it is readily understood by everyone as meaning a person whose role it is to advise and assist clients in matters of law.

Solicitor supervision - The Legal Practice Act prohibits unqualified people from giving legal advice or performing legal work. This means that conveyancers are not permitted to offer any form of legal services to their clients, even though conveyancing matters essentially involve legal issues. Because most consumers would be reluctant to use conveyancers if they knew that their conveyancer could not perform the legal work associated with a conveyancing matter, the concept of "solicitor supervision" has been developed to make conveyancers appear more credible.

Solicitors mortgages - These are mortgages offered through solicitors firms, utilising funds offered by clients for this purpose.

Special Levies - Levies determined by a Body Corporate in addition to the Annual Levy.

Special Repayments - Any money paid into the loan in addition to the required minimum repayments. The amount of special repayments may be available for redraw, depending on your loan option.

Split loan - See "Combination loans" above

Stamp duty - This is a government charge incurred by the Purchaser of real estate, and payable to the State Revenue Office prior to lodging of the Transfer of Land at the Land Titles Office. It is usually paid by the Purchaser's lender after settlement, with funds retained from the loan moneys. If there is no lender involved, a cheque will be obtained from the Purchaser and paid to the State Revenue Office by the Purchaser's lawyer.

Stamp Duty on Contract (also know as Transfer Stamp Duty) - A State or Territory Government tax (based on where the property is situated) payable by the purchaser of real estate and assessed on the purchase price of the property. Depending on the individual State legislation, the duty is payable to the Office of State Revenue anywhere from the day of settlement to three months after the date of exchange of contracts. Some first home buyers may be eligible for a concession on the stamp duty.

Stamp Duty on Mortgage - A State or Territory Government tax (based on where the property is situated) payable by the borrower and assessed on the amount secured by the mortgage. The higher the amount secured by the mortgage the greater the Stamp Duty on Mortgage that is payable.

Standard Variable Rate Loan - See Variable Rate Loan. Stamping and lodging - This is the term used to describe the process of taking the registrable documents (obtained at settlement) to the State Revenue Office, payable stamp duty and having the Transfer of Land "stamped" to show that stamp duty has been paid, and then lodging the documents at the Land Titles Office for registration.

Standard Excess - See excess

Standard variable home loan - As compared with a "basic variable" loan (see above), a standard variable home loan, usually includes a suite of features, and is charged at the standard variable rate.

Standard variable rate - This is the rate a lender will apply to its 'premium' home loan product.

Statement of Adjustments - This document sets out the way in which rates and other outgoings have been apportioned as at the day of settlement. It shows the purchase price, the deposit paid, the amount of rates paid for the rating period and the proportion of those rates to be paid by the Purchaser for the period beyond the settlement date.

Statute of Limitations - A law that specifies a time limit for which a person can bring a legal action for a claim.

Storm - Means violent wind (including a cyclone or tornado), thunderstorm or a heavy fall of rain, snow or hail

Strata Fees (Levies) - The fees payable to the Body Corporate for up keep and maintenance of common property.

Strata Inspection - A certificate that will disclose information about the management committee of a Body Corporate, including insurances, cost of levies and strata policies.

Strata Insurance - Physical loss of damage to the property, either residential or commercial strata.

Strata Title - A form of title commonly used for units (i.e. apartments, flats). Strata title relates to the subdivision of land where parts of the land and building are divided into lots. It gives you membership of the Owners' Corporation, and the ownership of a defined part of the whole building. Strata titles are registered under the Torrens Title system. A system of title that allows the owner of a unit, in a block of units, to have a separate title for that unit. This is the term used to describe a title where there is a building on land. The title covers not only depth and width, but also the height between upper and lower boundaries. In a stratum subdivision the building is subdivided into lots, with common land, i.e. driveways, stairwells, gardens being owned by a service company and appearing on the subdivision as an additional lot. Stratum units are regarded as unattractive because of difficulties and complexities involving the operation of the company, Corporations Law obligations, and a reluctance on the part of lenders to accept them as security.

Studio Apartments - A studio apartment is the term used to describe a small unit, usually comprising one open-plan room. Care should be taken when considering the purchase of a studio apartment!

Subject To Finance - Where the purchaser had not yet received formal home loan approval, and wants to be able to end the contract in the event that the home loan is rejected, the contract can be made "subject to finance". This means that a condition is added to the contract that allows a fixed period of time, by which the home loan must be approved. If the home loan is not approved, then the purchase may elect to end the contract. Purchasers should always ensure that the finance condition is drafted by their lawyer, or at least with advice from their lawyer. It is often the case that estate agents draft finance conditions such that the purchaser can't help but breach the terms, and risk losing the deposit.

Surety - Person who makes themself responsible for another's payment of debt; also knows as the guarantor.

Survey - Shows boundaries of the land and location of the dwelling to ensure that there are no encroachments onto, or from, adjoining properties.

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TAP - Acronym for To Approved Purchasers. See To Approved Purchasers.

Tenancy - The right to occupy land or buildings as provided by the terms of a lease or other agreement. Tenants in Common

Tenants in Common - Property in the names of two or more persons and in which each has a separate and distinct share. When one person dies his share is not passed to the survivor(s) but becomes part of his estate for disposal according to his will or this is the holding of property by two or more people in equal or unequal shares. If one person dies, his/her share passes to the

Term - The length of a home loan or a specific portion within that loan or under insurance law it means the period of time for which a policy is issued. The term of the loan is the period over which the loan is to be repaid or the length of a loan, normally expressed in months or years.

Theft rental car - Provides a rental car for up to 14 days if the insured car is stolen (subject to the terms and conditions).

Third Party Property Damage Insurance - Provides specified cover in respect of damage a vehicle causes to another person's property.

Third Party Security - Security provided for a mortgage by a third party (some one different from actual borrowers) who is legally different from the borrower or debtor.

Title - See Certificate of Title.

Title Deed - Registration showing the ownership of property or see Certificate of Title.

Title Search - Process to ensure that the vendor has the right to sell and transfer ownership or the process of investigating a title of a property, to ascertain if the vendor has the right to transfer ownership or if there are any prior encumbrances on the title.

To Approved Purchasers - A disclaimer indicating that an offer (often an advertised offer) is subject to approval (normally finance approval).

Torrens System - System whereby ownership and all dealings on a property are detailed on the one document, i.e. a Certificate of Title or Deed of Grant. Under this system a mortgage is a charge or encumbrance on the title. Registrations is compulsory to effect legal transfer of an interest in property and each time the property is sold, mortgaged, or a mortgage discharged, the transaction is recorded on the Certificate of Title.

Torrens Title - Torrens Title is the name given to the system of registration of ownership and dealing with property. Under this system title to a property is established by a statutory title issued by the Registrar General. It is the most common form of residential property ownership.

Total loss - A loss of sufficient size so that the property cannot be economically repaired or it can be said there is nothing left of value. The complete destruction of the property. The term is also used to mean a loss requiring the maximum amount a policy will pay. (For car see write off).

Transaction fees - These are fees charged by the lender on particular transactions, such as withdrawals, transfers, deposits etc., usually on an item by item basis.

Transfer - A document registered in the Land Titles Office which records the transfer of ownership from the vendor to the buyer.

Transfer of Land - This is the document by which the Vendor and the Purchaser direct the Registrar of Titles to transfer ownership of the property from the Vendor to the Purchaser. It may also direct the Registrar to include a covenant or other encumbrance on title.

Transfer Stamp Duty - See Stamp Duty on Contract.

Transit Insurance - Covers you for actual loss or damage of your goods whilst it is being transported from one place to another. It could be carried by you or anyone authorised by you, like couriers, etc.

True Interest Rate - Normally synonymous with Comparison Rate.

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UCCC - See "Consumer Credit Code" above.

Underinsurance - A condition in which not enough insurance is held to cover the value of the insured property. This is particularly common with home contents insurance.

Underwriter - A technical person trained to evaluate risks and determine premium rates.

Unearned Premium - General meaning is the premium that is owed to the insured if the policy is cancelled

Unencumbered - Describes a property free of mortgages, caveats or charges or a property free of liabilities, restrictions or mortgages.

Uninsured motorist extension - The amount covered for the uninsured motorist extension is the current market value of your car up to $3000.

Unoccupied - means not lived in by you or any other person with your consent.

Unsecured Car Loan - See Personal Loan.

Use - means the private or business use of your car. ? Private use: Use of your car for social, domestic and pleasure purposes and incidental business use where you are not using your car during your full-time, part-time or casual working period as an integral means of earning your income. ? Business use: Use of your car during your full-time, part-time or casual working period as an integral means of earning your income that you have told us about and we have agreed to cover. Business use also includes social, domestic and pleasure use. ? Private use and business use both cover the private use of your car in conjunction with repairing, servicing, testing, free driving lessons, private car-pooling and demonstration for sale provided you are the driver or a passenger during the demonstration.

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Valuation - A report as required by the Lender, detailing a professional opinion of a property's value or a report detailing a property's value or an estimation of the value of an item, usually by appraisal e.g. Jewellery appraisal.

Valuer - A valuer is a professional person whose role it is to determine the current market value of a property. Valuers are tertiary trained, and accredited by the Australian Property Institute (API).

Valuer (Property Valuer) - A qualified person who determines the value of a property based on his/her knowledge of the area, property type and historical sales.

Variable Interest Rate - A rate that changes in accordance with the rates in the marketplace or an interest rate that varies in accordance with the rates in the marketplace.

Variable Rate Loan - A loan where the interest rate can increase or decrease at any time depending on market conditions.

Variation - Changing any part of the original loan contract.

Vehicle Finance - A general term referring to borrowing money to purchase cars or other vehicles. Generally "car finance" (as opposed to "car loan") refers to commercial car finance, such as Car Lease (Finance Lease), Commercial Hire Purchase (CHP or HP), Chattel Mortgage and Novated Lease.

Vehicle Lease - See Finance Lease.

Vendor - A person who offers a property for sale or a person selling a property who is the current owner.

Vendor finance - Vendor finance (also known as a "wrap") is where the owner of a property offers to finance the purchase of that property. The person who buys the property does not gain legal ownership of the property until the final instalment on the property has been paid.

Vendor terms - Vendor terms may be used to describe a terms contract, but may also be used to describe vendor finance.

Vendor terms contract - A vendor terms contract arises in two ways. The first is where the contract provides for occupation or possession of the property by the purchaser before settlement has been effected (i.e. before the balance of the purchase price has been paid).

VIN - Vehicle identification number.

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W

Water Rates - The yearly water usage charge paid to the local water supply authority where the property is located (usually paid in quarterly instalments).

Workers Compensation Insurance - Anyone employing any staff must have a workers compensation policy. This is to protect their employees should they get injured at work.

Write - To underwrite, or to accept an application for insurance.

Write-off - Your car is declared a write-off when in our opinion, it is so badly damaged that it would not be either safe or economical to repair or when it has not been found within 14 days of you reporting its theft to us.

Written premiums - The total premiums on all policies written by an insurer during a specified period of time, regardless of what proportion has been earned. See earned premiums.

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X

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Y

Yield - Term used to describe the income derived from real estate, ordinarily expressed as a percentage of the value or cost of the investment.

You/your - Generally refers to the named insured.

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Z

Zoning - Statutory description of the allowable uses of land as set out by local councils or planning authorities.

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