Darren Pratley

Darren Pratley - Director
The Home Loan Group (NZ) Ltd

Glossary of Terms

Asset: Any saleable item in your possession.

Capital Value: The cumulative value of land and improvements.

Crosslease Title: Two or more persons occupy a clearly defined undivided share (by way of reciprocal leases) in a portion of land. This share is a division of the freehold property ownership.

Equity: The proportion of the value of your dwelling you own. The value of the property less the amount of any loan debt.

Freehold: The most common form of ownership. You own the land and buildings.

Certificate of Title: The Deed that sets out the legal description and ownership of land parcels in New Zealand.

Chattels: Moveable or removable items in the property, such as drapes and light fittings. Removable if not specifically listed in the Agreement for Sale and Purchase.

Conditional Agreement: An offer to purchase accepted by the vendor, subject to specified conditions being complied with within a certain timeframe.

Conveyancing: Legal work to transfer ownership of property, completed by your solicitor on your behalf.

Deposit: A sum of money paid by the purchaser at the time of acceptance of your offer. This is usually calculated at 10% of the purchase price.

Debt Servicing: The ratio of fixed financial obligations (i.e. home loans, HP or credit card debt) measured against income. Used by the lender to assess affordability.

Easement: The legal right for someone else to have access or right to use of a portion of your property. These often relate to stormwater drainage or sewerage pipes running across adjoining properties.

Establishment Fee: Set up costs for the loan advance as set by the lender.

Interest: The cost of borrowing the funds from the lender expressed as a percentage per annum, based on principal outstanding.

Liabilities: Debts incurred that require repayment either periodically or in a lump sum for which you are contractually liable.

Leasehold: The landowner charges you a rental to occupy the property for a specific time period. Any improvements belong to the occupant.

Loan Protection Insurance: Taken out by the borrower to cover death or disability, which would affect the ability to repay the loan.

Loan to Value Ratio (LVR): Loan debt against security value expressed as a percentage. Used by lenders to assess risk.

Market Value: Sale price agreed to between an informed willing buyer and an informed willing seller.

Mortgage: Security given by the borrower, which is registered on the property's title in favor of the lender.

Mortgage Indemnity Insurance: Taken out by the lender to protect the lender against loss in the event of default by the borrower. Generally this is required where borrowing exceeds 80%. The one- off premium cost is passed onto the borrower.

Principal: The sum advanced by the lender or the balance outstanding at a given point in time.

Settlement: The date on which the full funds are handed over to the vendor and possession is granted to the purchaser.

Term: The length of time provided in the loan agreement for repayment of the debt.

Unconditional: When all conditions in the contract are completed and the purchaser is legally required to purchase and the lender legally required to sell.

Vendor: The owner of the property being sold.