Glossary of terms Part 2

Conditional Agreement

An agreement with conditions that must be met before everything becomes final. Both the buyer and the seller can put conditions in the agreement. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a builder’s report for example.


If a covenant is recorded on the title for your property it means there is some legal restriction or agreement you have to keep. For instance you might have to pay for fencing, protect a native tree on your land, or only build within certain restrictions.


The legal process when you buy or sell property, including the checking and registration of documents to transfer the ownership over.


This is where there are two or more homes on a cross-leased property. All the owners own the land together and each owner leases the land their home is on from the others. All owners of the common land must agree before improvements such as paths, fences or building alterations can be made.


This means how much the value of something goes down as it gets older or more worn. It is a term insurance companies often use.


These are costs, due to bodies other than the lenders or solicitors, which are incurred by the purchaser/borrower.

Discharge of Mortgage

This is what happens when you have paid everything back. The mortgage is discharged so the bank’s name is taken off the title to your property.

Enduring Power of Attorney

A legal document that gives someone you name the power to act for you if you need them to, such as if you are in a serious accident and not able to look after things yourself. There are two types – one that covers your care and welfare, and one for property matters.


If an easement is recorded on the title for your property it means someone else has a right to use your property in a certain way – such as the right to run pipes or cables under your land, or to use a drive or path. Or you may have a right over someone else’s property.


The amount of an asset really owned. For example, on a home worth $230,000 with a loan of $100,000, the equity is $130,000.

Fixed Interest

An interest rate set for a fixed term. Penalties usually apply if the loan is paid out before the term expires.

Finance Date

Date when all finance conditions on the offer must be met.

Floating Interest Rate

Where the interest rate can go up or down as the market changes. This is sometimes called a variable interest rate.


This is the most common type of ownership. It means you own the land and house with virtually no restrictions on your ownership rights. Freehold is also commonly used to mean that you do not owe any money on the home.


The ratio of your own money and borrowed funds in the purchase of a home or an investment.


Regular weekly, fortnightly or monthly payments off your loan. Usually some money goes towards repaying the money you owe (principal) and some towards the interest on the loan.


The amount you pay for the money you borrow. This is a percentage that is worked out each day on the amount you owe that day.

Interest Only Loan

A loan where the principal is repaid at the end of the loan term and interest only is repaid during the term of the loan. These loans are usually short term, say 1 to 5 years.

Land Information Memorandum (LIM)

When you are buying a home you can get a report from your Local Authority which sets out everything they know about the property, such as consents, rates owing, drainage and problems with flooding or erosion.


With this type of ownership you lease the land and pay rent to the landowner. You own the house but your use of the land may be restricted and your rent can go up. You can sell the lease when you want to move but you will need to tell the landowner first. You can get a Certificate of Title for your leasehold interest.

Lender’s Mortgage Insurance

This insures your lender for the extra risk they take if they lend over 80% of the value of the property. The percentage may vary and could be a one off fee or margin added to the interest rate.

Loan to Valuation Ratio

The ratio of the amount lent to the valuation of the security, commonly c