Glossary of Terms

account balance – The amount of money you have in your account.
annual fee–The amount charged by the lender each year to cover the administration costs of the loan.
application – A standardised form used to apply for a loan and to record relevant information about the prospective borrower and the proposed property.
appraisal – A written analysis of the estimated value of a property.
appreciation – An increase in the value of property due to changes in the market conditions, ie – inflation.
arrears – Having overdue debts or late payments.
asset – A resource of monetary value owned and controlled by an individual.

bad credit – The negative credit rating which appears when the debtor fails to make repayments, which in turn makes it harder for them to obtain new loans.
bad debt – A debt that is not collectible and is therefore worthless to the creditor.
bankrupt – A person or institution’s condition of being unable to repay the debts they owe to creditors. (Use: “Declaring bankruptcy”)
business loan – A loan granted to fund a business and it’s projects and proceedings.
budget – A detailed plan of income and expenses over a defined period of time in order to manage costs and profits.

cash advance – A quick loan received from a credit provider or lending institute.
collateral – A borrower’s pledge of their property as security for a debt.
commercial loan – A loan used to finance a company’s expansion, its projects or its working capital needs.
construction loan – A loan used to finance the cost of construction.
contract – An oral or written binding agreement between two or more parties.
conveyancing – A legal process of transferring ownership of property from one person to another or the seller to the buyer.
credit – An agreement which allows a borrower to receive something of value in exchange for a promise to repay the lender at a later date.
credit card – A card that allows you to buy goods, services and obtain cash advances on credit with the promise to make repayments later.
credit rating – An assessment of an individual or an organisation’s worthiness of credit depending on their borrowing and repayment history.
credit report – A report of a person’s past history from a credit bureau used that can be made available to a lender to determine a loan applicant’s worthiness.

debit – When money is taken out of your account for something you’ve bought or to repay money you owe.
debt – The obligation of the borrower to repay the amount owed for the borrowed funds.
debt agreement – An agreed debt settlement between the borrower and credit provider for a compromised amount of money.
debt consolidation – The combination of multiple loans into a single loan, often at a lower periodic payment and interest rate.
debt management – Creating and following the terms and repayment plan of a loan with its agreed time frame.
default – Failure to make the required debt payment when it is due.
deposit – Money paid in good faith to assure the performance of a contract.
depreciation – A decline in the value of a personal property or item.
direct debit – A regular monetary payment of one or various amounts, to an individual or a company from your account with your consent.
down payment – The first payment of a home loan, usually a small sum of the total amount owed.

EFTPOS – (Electronic Funds Transfer at Point of Sale) An electronic payment system to buy goods and services using a fast cash savings, cheque or credit card.
equity – The difference between the market value and the outstanding mortgage balance on a home.
extra repayment – The choice to make extra payments earlier than the required date on some loans, allowing the loan to be paid off sooner and lowering the total cost.

first home owner grant scheme – (FHOG) One off $7000 minimum payment to eligible first home buyers.
fixed interest rate – An interest rate which remains fixed for a particular period of time or the entire term of the loan.

grace period – The period of time in which you are not required to make payments on a debt which also does not create any defaults.
gross income – Your income before any tax or other deductions have been made.
guarantee – A promise to pay a certain amount of funds at the presentation of a claim.

home loan – A special loan to buy a residential property.

inflation – An increase in the value of goods or services available, causing a rise in the price level of such items.
installment – A scheduled payment that a borrower agrees to make to a lender on a regular basis.
insurance – A form of contract in which an individual or entity receives protection or compensation for specific losses in exchange for a periodic payment.
interest rate – The cost of borrowing money expressed often as a percentage of the amount borrowed.
investment – The money paid to purchase a capital asset or a fixed asset in the hope of generating income.
investment property – A property that is not occupied by the owner and usually purchased to generate profit.

jargon – The set of languages and terms of a particular profession, used predominantly in contracts and official proceedings.

lender – A person or company that supply funds to borrowers.
liability – The debts or financial obligations of a person or company.
loan – Money that is borrowed and usually repaid with interest.
loan term – A lender’s agreement to make a loan on particular terms, including interest rate, fees and charges.
low doc loan – A loan requiring a lower level of verification documents.

mortgage – A legal document that pledges a borrower to pay back a property to the lender as security for the payment of a debt.

no doc loan – A loan requiring no documentation of verification.
no obligation – Non contractual process until otherwise advised.

occupancy rate – Percentage of units that are rented out in a building, neighbourhood, complex, or city.
owner finance – A property purchase transaction where the seller provides the financing if he or she is having difficulty selling the property.

personal loan – A sum of money borrowed for personal reasons.
profit – The amount gained from an investment or business operation after expenses.
property – That which is legally owned by an individual or property.
purchase agreement – A written contract signed by the buyer and seller stating the terms and conditions under which a property will be sold.

quick cash – Fast and easy cash on hand and assets readily convertible to cash.

rate – The annual interest on a loan, expressed as a percentage of 100.
refinance – When an individual or business revises a payment schedule to repay one or more existing mortgage loans with a new loan on better terms.
renovation loan – A loan used to make improvements to an existing property.
repayment plan – An arranged agreement between a lender and a borrower, made to help the borrower repay installments.
risk – The likelihood of loss or less than expected returns.

self employed – An individual who operates a business as the sole proprietor.
second mortgage – A loan taken after the first mortgage and is secured against the same assets as the first.
security – A negotiable financial instrument that represents some type of financial value that is pledged as collateral for a debt.
secured loan – A loan that is backed by collateral such as a property or other assets.
settlement – The time when loan and mortgage documents are formally signed and the loan transaction is completed.
short term loan – A loan scheduled to be repaid in less than a year.
sole ownership – Ownership of property by a single person or entity.

term – The period of time during which loan payments are made. At the end of the loan term, presumably the loan must be paid.
title – A legal, written instrument that details an individual’s lawful possession of a property.
trade equity – Equity from a buyer giving existing property as trade for all.

underwriting – The process of verifying data and approving a loan.
unsecured loan – A loan that is obtained without any collateral as security.

variable rate – An interest rate that fluctuates with the market.

warranty – A promise or guarantee of services established in a contract.

yield – An income received from an investment.

zone – An area reserved for specific use, often subject to restrictions or conditions.

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