Glossary of terms Part 3

Low Doc or No Doc Loans Also could be known as ‘Self Cert’.

Commonly used for self-employed people who do not have their financials readily available and self-declare what their income is. ‘No Doc’, also known as Asset Lend where no proof of income is required, is also used for bridging finance. Both options require the owner to have a minimum amount of equity or deposit.

Market Value

This is the price a home is likely to sell for. In the end it is the amount a buyer is willing to pay.

Mortgage

The legal document that gives the lender ‘security’ – the right to sell your property if you are unable to pay your loan. It means the lender can have a hold your Certificate of Title until you repay the loan.

Mortgagee

The organisation that lends the money and holds the mortgage.

Mortgagor

You are the mortgagor if you have borrowed money to buy a home.

Mortgage Protection Insurance

This insurance protects you if you cannot pay your home loan. The insurance repays the loan if you die, or makes payments for you if you are redundant or cannot work due to serious illness for instance.

Mortgagee Sale

This is when the lender has to sell your home to get their money back because you cannot repay your loan.

MREINZ

Member Real Estate Institute of New Zealand – check out www.reinz.co.nz

Negative Gearing

Where an investment is geared to produce a book loss. This loss can be deducted from other taxable income.

Possession

When you have paid for the home and have the right to move in. Early possession is when it is agreed you can move in before settlement date – you might have to pay rent until then.

Principal

The amount of money you borrow, before interest is added.

Principal and Interest

A loan where both the principal and interest are repaid together on a regular basis, mostly by monthly or fortnightly instalments (P & I).

Rateable Valuation

The valuation done for your local authority. They use it to set your rates. It gives you a general idea of the value of your property. It used to be called the Government Valuation.

Reducing Loan

With a reducing loan you pay a set amount off the loan each payment, plus interest. It means your payments are much higher at the beginning of the loan but go down as time goes on.

Sale and Purchase Agreement (S&P)

This is the contract between the buyer and seller of a property.

Security

When you get a home loan your home will be the security. This means the lender can sell the home if you cannot pay the money.

Settlement Date

This is the final stage when the property changes hands. It is the bit when the money is paid, the new owner’s name and mortgage go on the title for the property, and the Certificate of Title and the keys are handed over. The day this all happens is called Settlement Day.

Sole Agency

When a home is listed for sale with one real estate agency.

Strata Title or Unit Title

This is when you own part of a building, or airspace, instead of the land it is built on. This can relate to units, apartments and town houses. There is no lease, but each owner belongs to the Body Corporate, which manages common areas like stairways and lifts.

Table Loan

With a table loan you have a set payment each fortnight or month. At first most of the money goes towards the interest you owe – but as your loan starts to go down more of each payment goes towards repaying the loan itself. Usually paid as principal and interest.

Tenancy in Common

This type of ownership is useful if you are buying your home with friends or relatives. You each own part of the property, and if you die your share goes to whoever you leave it to in your will.

Tender

A tender is when all interested buyers put in their offers, or bids, in writing for the seller to consider. A closed tender means offers must be in by a certain date and an open tender means there is no time limit. A tender can have conditions in it, unlike making a bid at an auction.

Term

This is the time you take your loan out for. Many home loans are for 25 or 30 years. It can also be how long your lease is for if you have a leasehold property.

Unconditional

This means that the sale and purchase agreement made on a home has no conditions attached to it, or the conditions have been met. An unconditional agreement is legally binding on both the buyer and the seller. It means the home must change ownership on the agreed date for the agreed price.

Vacant Possession

This means that when you get ownership or possession of your home there will be no tenants living there, and no lease giving someone else use of the property.

Valuation

An independent assessment by a registered valuer of the market value of a home. A buyer may have to get one as a condition of the loan. A seller may also decide to get one to help them decide what price they should accept for their home in a private sale.

Vendor

The person selling the property.