Tired of Mortgage Lending Terms?
Are the Lending Terms and Jargon putting you off?
The Mortgage Girls like to explain things in a way that is easy to understand in real terms! You don’t know what you don’t know, and we don’t expect you too. We are here to answer all your questions big and small about purchasing property and investments!
We want to make the whole process simple and easy to understand!
Below is a bit of a glossary on some on the jargon and lending terms you may come across when purchasing a home;
The Mortgage Girls Lending Jargon Glossary;
When a property is sold publicly often done in an auction room where all willing/approved purchasers are welcome to bid on the property.
Government Valuation The rateable value set by the local council (also known as rateable value) – this is what determines the annual rates payable by the property and/or land owner
Fixed Interest Rate – An interest rate locked in for a period of time normally between 6 months and 5 years, during this locked period the rate is not subject to market impacts whether the market rates go up or down.
Variable Interest Rate – An interest rate subject to the markets impacts if rates go up in the market your monthly interest charge on the facility (a variable loan in effect is like a giant overdraft facility where you can re draw monies anytime) if the rates go down the monthly interest cost will also go down.
Floating Interest Rate – An interest rate subject to the market impacts if the rates go up in the market your repayments will go up, if they go down your repayments will go down.
Lending to Valuation Ratio (how much lending you have against the property value e.g. $100,000 lending against a $200,000 property would be 50% (100,000/200,000 x 100) )
The Mortgage is the lending used to purchase the asset (property)
Multi offer occurs when a property is put on the market and there a several purchasers whom state they wish to put an offer on at the same time. (The Real Estate Agent helping the vendor sell the property is not allowed to advise you on what price to offer, nor should they advise you what the other offers are it should be completely secret and put in a signed and sealed envelope, so all the offers are opened at one time together giving all purchasers a fair chance)
The Official Cash Rate, is the base interest rate set by The Reserve Bank of New Zealand. (In effect it is the amount the Reserve Bank charges on overnight loans to commercial banks)
The offer is usually known as the dollar amount along with the conditions on a sale and purchase agreement presented to the vendor (seller of property / asset), for example you may present a $300,000 purchase price with a condition subject to confirming finance approval and Insurance (being able to
The purchase price of the asset (property)
Rateable Valuation – The rateable value set by the local council (also known as Government valuation)
Registered Valuation – A valuation done by a Registered Valuer to determine the property value in the current market.
Sale and Purchase Agreement - The entire agreement between vendor (seller) and vendee (purchaser) to purchase the asset (property)
The asset (property) is known as the security
Tender is where the vendor (seller of property / asset) sets date to have all offers submitted by. (An offer would be a fully completed sale and purchase agreement stating sale price and conditions)
This simply means a Sale and Purchase Agreement has been written up and accepted by the vendor (seller of the property / asset) and the vendee (purchaser) now has a set time frame to meet all the terms and conditions set out in the agreement in order to become an unconditional sale which in effect means the sale is confirmed
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