AIMS Home Loans
Australian Credit Licence
Number 389027
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Not quite sure what all those lending terms mean? We have put together a list of the most commonly used home loan words or phrases and what they mean in plain English.

Simply click on a letter from the list below or scroll down to find the word you're looking for.


ABA: Australian Bankers' Association.

ABIO: The Australian Banking Industry Ombudsman.

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 fees: Charged to cover or partially cover the lender's internal costs of administering the loan.

Accrued interest Interest you have earned or incurred that is yet to be paid or charged.

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.

Agent: 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.

Annual percentage rate (APR): The advertised rate of interest per annum.

Application fees: Charged to cover or partially cover the lender's internal costs of setting up a loan approval for a home buyer.

Appraised value: Estimate of the value of a property being used as security for a loan.

Arrears: An overdue account yet to be paid.

Assets: Money, property or goods owned. at call a bank account from which money can be withdrawn immediately.

ATM: Automatic Teller Machine

Auction: Public sale of property with ownership going to the highest bidder, subject to a reserve price being reached.


Bad debt: Debt with little chance of being recovered and which is written off as a loss.

Balance sheet: A statement of assets, liabilities and net equity for an enterprise at a point of time.

Balloon payment: A large loan repayment to clear a debt.

Bank cheque: A cheque that draws money specifically from funds you own held in a bank.

Banker's opinion: Enquiries made from one bank to another to check on a customer's reliability or credit worthiness.

Bankruptcy: When a debtor has his/her estate placed into the hands of a receiver who has the responsibility for its distribution.

Bearer: Person presenting a cheque to a bank. bill of sale a written agreement whereby ownership is transferred but the original owner is allowed to retain possession.

Body corporate: A corporation of the owners of units within a strata building. They form a self-elected council for the management of the building and common areas.

Bridging finance: A short-term loan that covers a financial gap between the purchase of a new property and the sale of an old property.

Building regulations: The standards formulated by local councils to control the quality of buildings.


Capital: The current value of your long-term assets - house, property or business as well as cash and securities.

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: Latin for"beware". Usually it is in the form of a contract clause that stipulates a particular requirement.

Caveat emptor: Latin for "let the buyer beware".

Certificate of title: This document details the land dimensions and ownership details of a property, and whether there are any encumbrances on it.

Chattels: Personal property. There are two types. Real chattels are buildings and fixtures. Personal chattels are clothes and furniture. cluster housing group of houses that share common space.

Commission: A fee payable to a real estate agent, by the vendor, for the sale of property.

Common property: An area used by many, not an individual. Owned by the tenants in common. company title a property title that applies when owners of units in a block form a company.

Comparison rate: A nominal rate per annum together with the compounding frequency as outlined in the Consumer Credit Code.

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

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.

Conveyancing: The legal process for the transferral 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.

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

Credit limit: 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.


Daily interest: Interest calculated on a daily basis - therefore varies according to daily account balance.

Debit: An account entry to charge a withdrawal to a specified account.

Debtor: Someone who owes money to someone else.

Deed: A legal document that states an agreement or obligation regarding a property.

Default: Failure to meet debt payment on a due date.

Deposit bonds: Guarantees the purchaser of a property will pay the full deposit by the due date. Institutions providing such bonds act as guarantor that payment will be made. They are often used as a surety when cash isn't available at short notice.

Direct credit facility: Regular electroninc debiting of funds whereby loan repayments can be made direct from a borrower's salary to the loan account.

Direct debit: Payments are made from a password protected savings or cheque account from a bank or building society directly to the loan account.

Draw down: To access available loan funds, particularly referring to lines of credit where the limit is set and funds can be used as required.


Early termination payment: The cost of winding up a loan early.

Easement: A right to use a corridor or passage of land which is owned by another.

Electronic Funds Transfer (EFT): Electronic transfer of funds from one account to another.

Encumbrance: An outstanding liability or charge on a property.

Endorse: To sign the back of a cheque to confirm or transfer its ownership to someone else.

Equity: The amount an asset owned is worth.

Equity loan: A loan usually secured by the proportion of the value of your house which you own.

Equity mortgage: A loan secured by the part of the value of an asset (usually house) which you own.

ERIC: Effective Rate of Interest plus Costs

Establishment fees: Lending body fees which may or may not be charged to set up a loan.

ETIA: Early Termination Interest Adjustments

Exchange of contract: The legal point of time when the vendor and purchaser swap documentation and start enquiries with a view to settlement.


Fittings: Items that can be removed from a property without causing damage to it.

Fixed interest: An interest rate set for an agreed term.

Fixtures: Items that would cause damage to a property if removed. Their removal must be stipulated in the contract of sale and any damage made good by the seller.

Freehold: The dwelling and the land on which it stands is owned by the owner indefinitely.

Frozen account: An account in which all transactions have been suspended.


Garnishee: To legally divert a part or whole of someone's money or property to someone else.

Gearing: The ratio of your own money and borrowed funds in an investment.

Guarantee: A promise made as bound by the terms of a contract.

Guarantor: A party who agrees to be responsible for the payment of another party's debts.


High start loan: A loan where the initial repayments are high and decrease over the term of the loan.

Highest bid: The top price offered by a bidder at auction. If the reserve price is not reached and the property is passed in, the highest bidder is given the first option to negotiate with the vendor.

Holding deposit: A refundable deposit demonstrating the goodwill of the buyer to go ahead with the purchase.


Indicator Lending Rate (ILR): The base rate on which interest rates for variable rate overdrafts and term loans are set.

Inclusions: Items included with the property e.g. light fittings, stove, etc.

Income statement: A statement of income and expenditure for a period, usually a year.

Interest: The lending body's charge for the use of funds or the return on deposited funds. See also daily interest.

Interest only: Usually a short-term arrangement whereby payments are made on the interest only, not the principal.

Interest only loan: A loan where the principal is paid back at the end of the term and only interest is paid during the term. The loans are usually for a short term of one to five years.

Internal rate of return: A measure of the return on an investment (or loan) which takes into account the time value of money by showing the rate of interest at which the present value of future cash flows is equal to the cost of the investment or loan.

Inventory: A list of items included with a property e.g. furniture, moveable items, etc.


Joint tenants: Equal holding of property between two or more persons. If one party dies, their share passes to the survivor/s.


Land tax: State Government tax charged to the owners of any property over a stipulated value, unless it is their principal place of residence.

Lease: A document granting a period of tenancy of a property under specific terms and conditions.

Liabilities: Someone's debts or obligations.

Lien: The right to hold property as security against a debt or loan.

Line of credit: A flexible loan arrangement with a specified ceiling to be used at a customer's discretion.

Loan pre-approval: The loan is approved before the borrower bids on or offers for the property.

Loan security duty: Mortgage stamp duty.

Loan to valuation ratio (LVR): The ratio of the amount lent to the valuation of the security (usually the house).

LoDoc loan: An AIMS loan product catering particularly for self employed borrowers who may not have all financial documentation available.

Low start loan: A loan where the initial repayments are low and increase over time.


Margin: This is the difference between the lender's interest indicator rate (or other reference rate) and the rate actually charged to borrowers.

Maturity: The date a debt or investment must be paid in full.

Maximum loan amount: The maximum amount that can be borrowed.

Maximum Loan to Valuation Ratio (LVR): The maximum allowable ratio of the amount lent to the valuation of the security (usually the house).

Maximum term: The maximum length of a home loan or a specific portion within that loan.

Minimum fixed amount: The minimum amount that can borrowed at a fixed rate of interest.

Minimum lump sum payment: The minimum amount that can be repaid as a lump sum.

Minimum redraw amount: The minimum amount that can redrawn from a loan.

Monthly fees: Fees charged to cover or partially cover the lender's internal costs of administering the loan each month.

Mortgage: A form of security for a loan usually taken over real estate. The lender, the mortgagee, has the right to take the real estate if the mortgagor fails to repay the loan.

Mortgage manager: A company responsible for managing every aspect of a borrower's loan.

Mortgage originator: A retail or wholesale lender who sources securitised funds in order to package them as loans.

Mortgagee: The lender of funds.

Mortgagor: The person borrowing money under the terms of a mortgage.


National Consumner Credit Proctection Act (NCCP) introduced 1 July 2010: An act of Parliament governing the relationship between borrowers and lenders.

Negative gearing: Where the return on an investment is insufficient to meet the interest costs of the loan used to fund the investment.


Offer to purchase: A legal agreement that details a specific price for the purchase of a specific property.

Old system title (common law title): Consists of a 'chain' of the title documents stretching back to the original owner.

Ombudsman: The Australian Banking Industry Ombudsman provides an avenue through which customers can make complaints about a bank and have them dealt with independently.

Ongoing fee: Any loan maintenance fee charged regularly over the life of a loan.

Option to buy: A legally binding document which gives a person, for a fee, the right to buy something usually within a specific time frame at a specific price.

Overdraft: A pre-arranged limit to which a person can exceed an account balance.

Overseas borrower program: An AIMS loan product enabling non-residents to invest in residential properties in Australia.


Passed in: A property is 'passed in' at auction if the highest bid fails to meet the reserve price set by the vend.

Payee: The person or entity to which a cheque is payable.

Plan: Detailed illustration of a house that shows the internal layout and dimensions and the position of the house on the land.

Portability: Where pre-approval can be transferred from one property to another, saving on government loan security duty.

Principal: The capital sum borrowed on which interest is paid.

Principal and interest loan: A loan in which both the principal and the interest are paid during the term of the loan.

Private sale: The sale of a property without an estate agent.

Private treaty sale: A property sale where the buyer negotiates on a price set by the seller.


Redraw facility: Indicates whether the loan allows the borrower to redraw funds.

Redraw fee: Charged to cover or partially cover the lender's internal costs of allowing the borower to redraw money.

Refinancing: To replace or extend an existing loan with funds from the same institution or another.

Requisitions on title: A process by which the buyer requests additional information about the title of the property from the seller.

Reserve price: Specified minimum price acceptable to a seller at auction.

Right of way: Either somebody's right to cross other property or a general pathway across your land.

Rise and fall clause: A building contract clause that allows the final pricing to move up or down according to the fluctuations of material prices or wages.


Search: An examination to confirm that a vendor is in a position to sell a property and that there are no encumbrances on it.

Securitisation: The process of taking a pool of diverse assets such as different home loans and converting them into a tradeable security such as a bond, which investors can then purchase and trade.

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

Semi-detached: Two houses that share a common wall or walls.

Settlement date: Date on which the new owner finalises payment and assumes possession.

Signatory: A person authorised to utilise an account.

Split fixed/variable: A split account is one in which different amounts of interest are paid on different portions of the account. e.g. the fixed rate on the first $1,000 and the variable rate on the second $1,000.

Stamp duty on transfer: A State Government tax assessed on the selling price of the property.

Stepped: A stepped account is one in which different amounts of interest are paid on different portions of the account. e.g. 2 percent on the first $1,000 and 3 percent on the second $1,000.

Strata title: This title gives you ownership of a 'unit' of a larger building which you may sell, lease or transfer at your discretion. Also entitles you to membership of the body corporate.

Stratum title: A title that records your ownership of a 'unit' of a larger property. Unlike a strata title, the owner becomes a shareholder in the company that manages the common area, not just a member.

Survey: A plan that shows the boundaries of, and any buildings' position within, a block of land.

Susceptibility report: Shows likelihood of future pest infestations.


Tenants in common: The equal or unequal holding of property by two or more persons. If one party dies, the property is divided according to law.

Term: The length of a home loan or a specific portion within that loan.

Term deposit: Often called a fixed interest account - a type of savings account where the size of the deposit, the interest rate and the length of time the money is deposited for are all fixed.

Title search: Process to ensure that the vendor has the right to sell and transfer ownership.

Torrens title: Records your ownership of a piece of property. You are lawfully entitled to lease, sell or dispose of the property as you desire. Also known as Certificate of Title.

Town house: Usually a two storey dwelling registered under a strata title.

Transfer: A document registered with the Land Titles Office that confirms the change of ownership as noted on the Certificate of Title.


Unencumbered: A property free of liabilities, encumbrances or restrictions.


Valuation: A report required by the lender detailing a professional opinion of a property's value.

Variable interest rate: A rate that varies in accordance with the rates in the marketplace.

Veda Advantage Information Services and Solutions Ltd: The corporation which holds credit related details on all people who have established a credit history.

Vendor: Party who offers a property for sale.

Vendor statement: A statement by the seller to the buyer detailing material particulars regarding the property in question.

Villa: Single storey attached dwelling.


Zoning: Local authority guidelines as to the permitted uses of land and buildings on that land.

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