• Home loan terms and mortgage definitions

  • The language and jargon used in purchasing a property can be very confusing. Here's an A-Z glossary of commonly used words and phrases, with easy-to-understand definitions for each one.
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    • ABA

      Australian Bankers' Association. The ABA is the national organization of licensed banks in Australia.

    • Accelerated payment

      The option to make higher repayments to pay off the loan faster.

    • Acceptance

      To agree to the terms of an offer or contract.

    • Account keeping fees

      Account keeping fees are charged to cover or partially cover the lender's internal costs of administering the loan.

    • Accrued interest

      Interest accounted for but not yet due for payment.

    • Add securities

      An asset that guarantees the lender their loan until the loan is repaid in full. Usually the property is offered to secure the loan.

    • Adjustments

      The process of allocating expenses (Council, electricity, phone, water rates) on settlement day that the seller has paid for but not used, and which the buyer has not used but will be billed for.

      When a property is sold, the vendor (seller) is normally entitled to all income (eg. rent) and is responsible for all expenses (eg. council rates, water rates, etc) up until the date of settlement, which normally takes place four to eight weeks after the exchange of contracts. Settlement is the day on which you finalise payment and take possession of the property.

      The purchaser, meanwhile, is entitled to all income and is responsible for all expenses from the date of settlement onwards. Therefore, prior to settlement, the balance of the purchase price of the property needs to be ‘adjusted’ to allow for expenses that have been paid in advance or will be owing at the date of settlement.

      Items for adjustment

      Adjustment items typically include council rates, water rates and strata levies – but may include other charges. Adjustments are calculated by applying a daily rate to each of the relevant items, with the balance of the purchase price adjusted depending on whether the items are paid in advance or are unpaid at the date of settlement.

      Let’s consider two examples of adjustments made to the purchase price of a property, based on a settlement date of 1 June.

      Example: Council rates paid in advance

      The vendor has paid the quarterly council rates of $455.00 for the April – June quarter (ie. up to 30 June) so the purchaser owes the vendor for 1 month of the quarterly bill.

      To calculate the adjustment, a daily rate must first be established. From 1 April to 30 June there are 91 days, which is equal to $5 per day ($455 / 91). Therefore, the purchaser owes the vendor $150 (30 days x $5) for council rates applicable to the month of June. The purchase price of the property will therefore need to be increased by that amount.

      Adjustments on settlement

      If you’re buying a home and would like to know more about adjustments, contact your legal representative. Your solicitor or conveyancer is responsible for identifying and making adjustments prior to settlement.

      Fees, conditions, limitations and lending criteria apply. This information is of a general nature only and is not to be relied upon as being appropriate or suitable for your particular circumstances.

    • Agent

      A person or body authorised to act on behalf of a client in the sale, purchase or management of property.

    • Allotment

      A block of land created out of a larger area.

    • Amortisation period

      The period of time one has to repay a loan at the arranged terms.

    • Application fees

      Fees charged to cover or partially cover the lender's costs of processing a loan approval for a home buyer.

    • Appraised value

      The estimate of the value of a property being used as security for a loan.

    • Arrears

      An overdue amount yet to be paid.

    • Assets

      Money, property or goods owned.

    • At call

      Money in a bank account that can be withdrawn immediately.

    • ATM

      Automatic Teller Machine.

    • Auction

      A public sale of property with ownership going to the highest bidder, subject to a reserve price being reached.