Accrued Interest - Interest you have earned or incurred that is yet to be paid or charged. For Example: If interest is normally charged on the last day of the month and the loan is discharging on 12th of the month, the accrued interest is the amount of interest for the 12 days.

Add Back - The value of an expense listed on a Profit and Loss Statement that is added back to the Net Profit figure when assessing serviceability.
 
Additional Repayment - Extra funds paid into the loan in addition to the minimum monthly payments.
 
Amortisation period - The period of time one has to repay a loan at the arranged terms. When a loan is principal & interest, the repayments are calculated to ensure that the loan is amortised over the remaining term of the loan.
 
Application Fee - The fee charged by a lender to cover or partially cover the lender's costs of setting up or establishing the loan.
 
Annual percentage rate - The annual rate of the mortgage, which is the interest rate that is incurred during the contract period.
 
Arms Length Transaction - Where there is no family or financial relationship between the parties involved in a transaction. ie. The vendor and the purchaser are not related or business partners.
 
Arrears - Debts unpaid at the due date.
 
Assets - Money, property or goods that are legally owned by a person.
 
ATM - Automatic teller machine.
 
Available Funds - Any extra funds paid into a loan over and above the required minimum payments. 

BAD Tax - A Government tax charged on all withdrawals from an account that has a cheque facility.
 
Bankruptcy - When a debtor has his/her estate placed into the hands of a receiver who has the responsibility for its distribution.
 
Base Stage or Slab - Means the stage when the building’s floor is finished. (Construction stage)
 
Body Corporate - A corporation of the owners of units within a strata building. They form a self-elected council for the management of the building and common areas.
 
Borrower - A person, persons, or entity borrowing money to purchase, payoff, or refinance a product or effect.
 
Break Costs - A penalty charged if a loan is on a fixed rate for a certain term and that fixed rate is changed, the loan is paid out or a certain amount of extra repayments are made before the expiry of the fixed rate period.
 
Bridging Finance or Go Between Loan - Short term finance provided to assist an applicant to purchase a new property when they have not yet sold their existing property.
 
Capital gain - 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.
 
Capital Gains Tax - A federal tax on monetary gain made on the sale of an asset bought and sold after September 1985.
 
Caveat - A caveat is registered on the title and is to suspend any dealings on the land and to give notice to anyone searching the Titles Register. No instrument can be lodged on the title until the caveat is withdrawn, removed, cancelled or has lapsed.
 
Certificate of Currency - A short form of the house insurance policy provided by the borrower's insurance company when the borrower pays the insurance premium in full.
 
Commercial Lending - A mortgage on a non residential building occupied by a business.
 
Comparison Rate - Legislation introduced in July 2003 that requires a comparison rate to be noted whenever an annual percentage rate is quoted. The comparison rate is the annual percentage rate, plus any known establishment and ongoing fees calculated on a set loan amount and term. (Also known as AAPR – Average Annualized Percentage Rate).
 
Consolidation - Where a borrower combines multiple debts into one loan.
 
Contract of Sale - A written agreement outlining the terms and conditions of the purchase or sale of property.
 
Conveyancing - The legal process for the transfer of ownership of real estate.
 
COSL - Credit Ombudsman Service Ltd (formerly MIOS -the Mortgage Industry Ombudsman Scheme). Dispute resolution service for clients to refer issues, complaints about parties in the mortgage industry (members covered by the MIAA). This is a free service to the public.
 
CRAA - Credit Reference Association of Australia. This body holds credit details on all Australians. They are now known as Veda Advantage Information Services and Solutions Ltd.
 
Credit Check - An inquiry made via Veda Advantage which shows an individual’s credit history including past applications, default listings or judgments, bankruptcy status and if the applicant is a company director.
 
Credit - Borrowed money to be paid back under an arrangement with a Lender. Also, a sum of money paid into an account.
 
Credit Limit - Maximum amount a borrower can redraw up to at any one time.
 
Daily Interest - Interest is calculated each day on the daily account balance then debited to the loan monthly in arrears. Interest will vary each month depending on the balance and the number of days in the month.
 
Debit - An account entry to charge a withdrawal to a specified account.
 
Debit Card - Used to access available/surplus funds from a loan account through EFTPOS or ATM’s. This is not a Credit Card.
 
Debtor - Someone who owes money to another and can be compelled to perform an obligation.
 
Deed - A legal document that states an agreement or obligation regarding a property.
 
Deed of Priority - Sets a limit on drawings available under a First Mortgage. It provides the holder of the First Mortgage the ability to re-draw up to the Deed of Priority limit whilst maintaining first recourse on the proceeds of sale of the security property in the event of a mortgagee sale.
 
Default - Failure to carry out the terms of a contract, especially failure to repay a debt.
 
Depreciation - 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.
 
Direct Debit - Where the Lender debits (deducts) a payment from a client's bank, credit union or building society account.
 
Disbursements - Solicitors incidental costs involved when dealing with a client on behalf of the Lender. For Example: searches, certificates, pest reports etc. 
 
Drawdown - Act of transferring money from lending institution to the borrower after the loan has settled.
 
DSR - (Debt Service Ratio) a ratio used to calculate the maximum of the borrowers income that will support loan repayments over the agreed loan term. Indicates the ability of the borrower to repay the loan.
 
Early Repayment Fee - A fee charged if a client repays a loan in full within a certain timeframe after the original settlement date. (Can also be called an Exit Fee or Deferred Establishment Fee or Postponed Establishment Fee). May also be charged on some loans for a partial discharge.
 
Easement - A right to use a corridor or passage of land which is owned by another.
 
EFTPOS - Electronic Funds Transfer Point of Sale. Electronic transfer of funds from one account to another.
 
Enclosed Stage or Lock Up - For a building this means a stage when the roof covering is fixed, external wall cladding is fixed, structural flooring is laid, external doors fixed and external windows are fixed. (Construction stage).
 
Encumbrance - Includes any liens. I.e. Legal claims against a property filed by creditors as a means to collect unpaid bills. Encumbrances are noted on a property title and can be obtained via a title search.
 
Equity - Generally used to denote the financial interest of a person in a property or business enterprise. For example: 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 net financial worth, or the difference between what is owned and what is owed (i.e. Assets - Liabilities = Equity).
 
First Mortgage - When a mortgage is taken out over a property ranked in front of other mortgages or is the only mortgage. The finance provider who holds the First Mortgage has first recourse on the proceeds of sale of the security in the event of a mortgagee sale.
 
Freehold - Property that the owner holds unencumbered. ie. No mortgage or liabilities are registered against the property.
 
Fixed Interest Rate - An interest rate set for an agreed term. If global variable interest rates increase or decrease, the fixed rate remains the same. Break costs may be payable for changes to a loan when on a fixed rate.
 
Fixing Stage - Means the stage when all internal lining, skirtings, doors, baths, wet area tiling, built in cabinets are fitted and fixed into position. (Construction stage)
 
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. For Example: Oven and bath etc. 
 
FHOG - First Home Owners Grant. A grant that is paid by the Commonwealth Government when a borrower is purchasing their first home. The base grant is $14,000 for established property and an additional $7,000 for construction.
 
Frame Stage - Means the stage when a building’s frame is finished. (Construction stage) 
 
Global Interest Rate Change - An interest rate change that affects all financial institutions. When the Reserve Bank of Australia announces an interest rate increase or decrease, all financial institutions in Australia will then decide whether to increase or decrease their rates by the same percentage.
 
Government Fees - State and government charges at the time of settlement. For example: stamp duty. 
 
Gross Income/Profit - Income from a person or company, before tax, superannuation or payroll deductions.
 
Guarantor - A party who agrees to be responsible for the payment of another party’s debts. This may be in the form of a promise to repay a debt if the borrower does not or cannot. Alternatively, a guarantor may provide a personal asset as security for a loan to a third party.
 
Holding Deposit - A refundable deposit based on the goodwill of the buyer to go ahead with the purchase.
 
Home Insurance - The Borrower organizes this insurance to cover the house in the event of a fire. Contents Insurance is a separate insurance but is often taken out in conjunction with Home Insurance.
 
Honeymoon Rate - Interest rate applied to a loan for a specified period of time (usually the first 12 months) and then reverts to the standard variable rate. Also known as an Introductory Rate.
 
Instrument - Formal legal document in writing. For Example: a deed of conveyance.
 
Interest - The Lender's charge for the use of funds or the return on deposited funds.
 
Interest Capitalisation - When the bank allows the interest to be charged to a loan, without repayments being made, thus increasing the loan balance.
 
Interest Only - Usually a short-term arrangement whereby the borrower’s repayments only cover the amount of interest charged to the loan. The payments do not reduce the principal balance of the loan.
 
Joint Tenants - All borrowers to the loan are equally liable to repay the debt. If one borrower does not pay, the other borrower will be liable for the full debt and vice versa.
 
Lenders Mortgage Insurance (LMI) - This insurance is paid as a one-off premium by the borrowers and covers Pioneer in the event the borrower defaults on their loan.
 
Liability - A debt which one is liable for; being responsible only to a limited amount.
 
Liens - Are legal claims noted on a property title filed for non-payment of taxes.
 
Line of Credit - A flexible loan arrangement with a specified credit limit. Any additional funds deposited can be redrawn at any time by use of a debit card. As the additional funds are in the Line of Credit, the interest calculated daily is minimized. It's like a term loan and savings account together.
 
Loan to Valuation ratio (LVR) - The ratio of all loans in relation to the value of the security property. Calculated by dividing the loan amount by the security value.
 
Maturity - The date the debt or investment must be paid in full.
 
Mortgage - A legal contract between the borrower and the bank which formalizes the act of signing over an asset as security on a loan. The Lender, the mortgagee, has the right to take the real estate if the mortgagor fails to repay the loan.
 
Mortgagee - The lender who provides the funds for the purchase of the property.
 
Mortgagor - The purchasers of the property. Usually the borrowers are the mortgagors. This will be stated on the Mortgage.
 
Mortgage Insurance - See LMI.
 
Negative Gearing - Where the return on an investment is insufficient to meet the interest costs of the loan used to fund the investment.
 
Net Income - 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.
 
OBK - Other bank account with an external financial institution.
 
Off The Plan Purchase - Buying a property from the plans only, not the finished product.
 
Partial Discharge - Where more than one property secures a loan, and one of those securities is released due to the property being sold or the loan significantly reduced.
 
Partially Secured - Where an asset is provided as security for a loan, but the loan amount exceeds the value of the security, (thus the need for additional security).
 
Permanent Principal Reduction (PPR) - A lump sum that is made to a loan account and is not available for redraw. The lump sum amount permanently reduces the principal amount owing.
 
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.
 
Power of Attorney - (POA) A document which authorizes a person to act on behalf of another. These are common for clients that are located overseas and they authorize a party, or family member, in Australia to handle their financial affairs.
 
Practical Completion - Means the stage when the works have been completed in accordance with this contract and all relevant statutory requirements apart from minor defects or minor omissions. The property is suitable for habitation. (Construction stage)
 
Principal - The capital sum borrowed on which interest is charged.
 
Principal and Interest Loan - A method of repayment of a loan where the borrower reduces the loan by regular installments made up of the interest charged during that period plus a portion of the principal. This will enable the full debt plus interest and fees to be repaid within the agreed term.
 
Product Conversion - Changing a loan type to another loan type. For Example: Term Loan to a Line of Credit 
 
Redraw - Is the process of drawing back the additional funds that borrowers may have made to their loan. They can only redraw to the credit limit.
 
Refinancing - To replace or extend an existing loan with funds from the same institution or another.
 
Regulated Loan - A loan that is regulated by the UCCC (Uniform Consumer Credit Code). Applies to Owner Occupied loans.
 
Renewals - Renewing the repayment type, i.e. changing from Interest Only to Principal and Interest and vice versa. Or renewing the Interest Rate Type, i.e. changing from variable to fixed and vice versa.
 
Renegotiations - Renegotiating the terms of the loan. Same as Renewals.
 
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.
 
Second Mortgage - A mortgage that is taken over a property where a mortgage already exists. In the event that the borrower cannot repay the loan, whoever holds the second mortgage cannot gain recourse from the proceeds of sale until loans secured by the First Mortgage plus interest, fees and costs have been recovered.
 
Securitisation - Is the packaging of cash flow producing assets into a marketable security, For Example: 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.
 
Security - An asset that guarantees the lender their borrowings until the loan is repaid in full. Usually the property is offered to secure the loan.
 
Serviceability - Determines the ability of the borrower to make and meet repayments on a loan, based on the borrowers expenses and income(s).

Settlement - Finalisation of payment by the new owner, and assumption of possession. When you pick up the keys!
 
Signatory - A person authorized to access and use an account.
 
Switching Fee - A fee that may be charged when a borrower chooses to change a feature of their loan. For Example: Variable Interest Rate to a Fixed Interest Rate. 
 
Tenants in Common - Where borrowers state the portion of the debt that they will each be liable for. For Example: One may be liable for 90% and the other 10%. (This is stated on the Certificate of Title)
 
Term - The length of the loan. Usually 25 or 30 years.
 
Term Loan - A loan that normally requires regular principal and Interest repayments to fully repay the debt within a set term.
 
Title Deed - A title is a legal document evidencing a person's right to or ownership of a property. A check of the title records (title search) confirms the legal owner of the property and it will indicate if there are any ‘encumbrances’, ‘liens’ or other claims outstanding.
 
Title Search - An examination of land title documents to confirm the owner (and any other rights holders) of the property.
 
Trust - Assets invested with a third party (the trustee) to administer on behalf of others (the beneficiaries of the trust). A trust is not a legal entity in its own right.
 
Trustee - A person who has charge of money in a Trust. The Trustee maintains ownership of the Trust’s assets on behalf of the beneficiaries and ensures guidelines of the Trust Deed and legal requirements are complied with.
 
UCCCL - (Uniform Consumer Credit Code Legislation). A Federal Act of Parliament to ensure uniformity by credit providers. Pioneer Mortgage Services must comply with the UCCC. Unregulated loans are not regulated by the UCCC.
 
Unencumbered - Where there are no restrictions or registered interests on a Certificate of Title. Property owned under unencumbered Certificate of Title is also referred to as freehold property.
 
Unregulated Loan - An Investment loan and is not regulated by the UCCC.
 
Unsecured - Where credit is provided to a borrower and no security is taken. Unsecured lending restricts the Bank’s ability to recover debt in the event the borrower cannot repay the debt within the agreed arrangements and therefore a higher interest rate usually applies.
 
Valuation - A report as required by the Lender, detailing a professional opinion of a property's value.
 
Valuation Fee - A fee that may be charged to cover the cost of valuing a security property.
 
Variable Interest Rate - An interest rate that changes when the global interest rates increase or decrease.
 
Variation - Changing any part of the original loan contract.
 
Vendor - Person selling a property who is the current owner.