• 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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  • C

    • Capital gain

      The monetary gain obtained when you sell an asset for more than you paid for it.

    • Capital gains tax

      A Federal tax on the monetary gain made on the sale of an asset bought and sold after September 1985.

    • Capped loan

      A loan where the interest rate is not allowed to exceed a set level for a period of time but, unlike fixed rate loans, is allowed to drop.

    • Caveat

      A warning. An entry made in a land registry or court to prevent a certain step being taken (eg. the transfer of land) without notice to the person who lodged the caveat.

    • Caveat emptor

      Latin for 'let the buyer beware'.

    • Certificate of title

      A document that details the title or ownership details of a property, and whether there are any encumbrances on the title. Not all States and Territories have Certificates of title.

    • Chattels

      Any property other than freehold land. Personal chattels are movable, tangible articles of property such as clothes and furniture. Real chattels included leasehold interest in land.

    • Cluster housing

      A group of houses or villas that share common space.

    • Commission

      A fee payable to a real estate agent, by the vendor, for the sale of property, or by a lender or client for arranging a loan.

    • Common property

      An area used by many, not an individual. Owned by the Owners’ corporation.

    • Company title

      A form of right of occupancy that applies when owners of units in a block form a company and each holds units that entitle them to occupy a defined area of land.

    • Comparison rate

      A nominal rate per annum calculated based on certain fees and charges together with the compounding frequency as outlined in the Consumer Credit Code.

      A nominal interest rate incorporating certain fees and charges to help consumers identify and compare the true cost of a home loan When shopping for a home loan, people often focus on the advertised interest rate. While this is a useful guide to what you’ll pay, it’s doesn’t reflect the true cost of the loan because it excludes associated fees and charges, which can vary widely between lenders. A comparison rate is a tool that helps consumers identify the true cost of a loan because it includes both the interest rate and fees and charges relating to a loan, reduced to a single percentage figure. It excludes government fees and charges that are standard across all loans. According to the National Credit Code, comparison rates must be provided for any form of fixed term credit. This includes home loans that must be repaid within a specified time period (eg. 25 years). A comparison rate allows you to compare ‘apples with apples’ and make a more informed decision when choosing a home loan. This table summarises what is considered when calculating a comparison rate.

      Inclusions  Exclusions 
      The amount and term of the loan Government and statutory fees (eg. stamp duty)
      The repayment frequency Event-based fees and charges that may or may not apply (eg. redraw fees)
      The nominal interest rate Fee waivers or discounts that may apply
      Upfront and ongoing fees and charges Fees and charges that are not ascertainable when calculating the comparison rate

      Advertised comparison rates

      Because different loan amounts and terms produce different comparison rates, comparison rates in advertisements must be based on a standardised amount and term that is typical of the loan being advertised. For home loans, that’s a loan of $150,000 for 25 years.

      Comparison rate schedules

      Credit providers including lenders, finance brokers and linked suppliers, must also provide consumers with comparison rate schedules, which detail the various comparison rates for a range of standard loan amounts and terms. Comparison rate schedules can be used to compare the comparison rates across the lender’s home loan range as well as against loans of other lenders. 

      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.

    • Compound interest

      Interest that is paid on both the accumulated interest as well as on the original principal.

    • Consumer Credit Code

      An act of Parliament governing the relationship between borrowers and lenders.

    • Contents insurance

      A policy insuring household contents against theft and damage.

    • Contract

      A legally enforceable agreement between individuals or entities. In real estate, contracts are exchanged when the deposit is paid.

    • Contract of sale

      A written agreement outlining the terms and conditions for the purchase or sale of property.

    • Conveyancer

      A person qualified and licensed to handle all documentation for the sale and or purchase of a property.

    • Conveyancing

      The legal process for the transferal of ownership of real estate.

    • Countersigned

      Additional signature or signatures to guarantee the validity of a document.

    • Covenant

      Terms and conditions that specify the usage of a block of land or the buildings on it.

    • Cover note

      A note of temporary property insurance before the implementation of a formal policy.

    • CRAA

      Credit Reference Association of Australia. The body which holds credit details on all people who have established a credit history.

    • Credit

      Borrowed money to be paid back under an arrangement with a lender. Also, a sum of money paid into an account.

    • Credit limit

      The maximum amount a borrower can use at any one time.

    • Creditor

      A party to whom money is owed.

    • Crossed cheque

      A cheque with two parallel vertical lines across it to specify that the cheque must be paid into an account and cannot be cashed.