Glossary of Terms

account balance – The amount of money you have in your account.
annual fee–The amount charged by the lender each year to cover the administration costs of the loan.
application – A standardised form used to apply for a loan and to record relevant information about the prospective borrower and the proposed property.
appraisal – A written analysis of the estimated value of a property.
appreciation – An increase in the value of property due to changes in the market conditions, ie – inflation.
asset – Anything of monetary value owned by an individual.

bad credit – The negative credit rating which appears when the debtor fails to make repayments, which in turn makes it harder for them to obtain new loans.
bad debt – A debt that is not collectible and is therefore worthless to the creditor.
bankrupt – A person or institution’s condition of being unable to repay the debts they owe to creditors.
business loan – A loan granted to fund a business and it’s proceedings.
budget – A detailed plan of income and expenses over a defined period of time in order to manage costs and profits.

cash advance – A quick loan received from a credit provider or lending institute.
collateral – A borrower’s pledge of their property as security for a debt.
commercial loan – A loan used to fund a company’s expansion, its projects or its working capital needs.
construction loan – A loan used to finance the cost of construction.
contract – An oral or written binding agreement between two or more parties.
conveyancing – A legal process of transferring ownership of property from one person to another or the seller to the buyer.
credit – An agreement which allows a borrower to receive something of value in exchange for a promise to repay the lender at a later date.
credit card – A card that allows you to buy goods, services and obtain cash advances on credit with the promise to make repayments later.
credit rating – An assessment of an individual or an organisation’s worthiness of credit depending on their borrowing and repayment history.
credit report – A report of a person’s past history from a credit bureau used that can be made available to a lender to determine a loan applicant’s worthiness.

debit – When money is taken out of your account for something you’ve bought or to repay money you owe.
debt – The obligation of the borrower to repay the amount owed for the borrowed funds.
debt agreement – An agreed debt settlement between the borrower and credit provider for a compromised amount of money.
debt consolidation – The combination of multiple loans into a single loan, often at a lower periodic payment and interest rate.
default – Failure to make the required debt payment when it is due.
deposit – Money paid in good faith to assure the performance of a contract.
depreciation – A decline in the value of a personal property or item.
direct debit – A regular monetary payment of one or various amounts, to an individual or a company from your account with your consent.

EFTPOS – (Electronic Funds Transfer at Point of Sale) An electronic payment system to buy goods and services using a fast cash savings, cheque or credit card.
equity – The difference between the market value and the outstanding mortgage balance on a property.

fixed interest rate – An interest rate which remains fixed for the entire term of the loan.

grace period – The period of time in which you are not required to make payments on a debt which also does not create any defaults.
gross income – Your income before any tax or other deductions have been made.

inflation – An increase in the value of goods or services available, causing a rise in the price level of such items.
installment – A scheduled payment that a borrower agrees to make to a lender on a regular basis.
insurance – A form of contract in which an individual or entity receives protection or compensation for specific losses in exchange for a periodic payment.
interest rate – The amount charged by the lender often as a percentage of the amount borrowed.
investment – The money paid to purchase a capital asset or a fixed asset in the hope of generating income.
investment property – A property that is not occupied by the owner and usually purchased to generate profit.

jargon – The linguistic terms of a particular profession, used predominantly in contracts and official proceedings.

lender – A person or company that supply funds to borrowers.
liability – The debts or financial obligations of a person or company.
liquidate – When a company shuts down from being unable to pay off its debts, selling assets to the open market.
loan – Money that is borrowed and usually repaid with interest.
loan term – A lender’s agreement to make a loan on particular terms, including interest rate, fees and charges.
low doc loan – A loan requiring a lower level of verification documents.

maturity – The life of a loan; the time it takes to repay the loan.

no doc loan – A loan requiring no documentation of verification.
no obligation – Non contractual process until otherwise advised.

obligation – A legal responsibility to adhere to the terms of a contract.

profit – The amount gained from an investment or business operation after expenses.
property – That which is legally owned by an individual or property.

rate – The annual interest on a loan, expressed as a percentage of 100.
refinance – When an individual or business revises a payment schedule to repay one or more existing mortgage loans with a new loan on better terms.
renovation loan – A loan used to make improvements to an existing property.
repayment plan – An arranged agreement between a lender and a borrower, made to help the borrower repay installments.
risk – The likelihood of loss or less than expected returns.

self employed – An individual who operates a business as the sole proprietor.
security – A negotiable financial instrument that represents some type of financial value that is pledged as collateral for a debt.
secured loan – A loan that is backed by collateral.
settlement – The time when loan and mortgage documents are formally signed and the loan transaction is completed.
short term business loan – A loan borrowed for business emergencies with fast repayment plans.
small business loan – A loan taken out to run a small business, often by small business entrepreneurs.
sole ownership – Ownership of property by a single person or entity.

term – The period of time during which loan payments are made. At the end of the loan term, presumably the loan must be paid.
title – A legal, written instrument that details an individual’s lawful possession of a property.

underwriting – The process of verifying data and approving a loan.
unsecured loan – A loan that is obtained without collateral.

variable rate – An interest rate that fluctuates with the market.

warranty – A promise or guarantee of services contained in a contract.
write off – When a loan is not collectible.

yield – The income return on an investment: the interest or dividends received from the investment.

zone – An area reserved for specific limited use, often subject to restrictions or conditions.

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