Annuity - A payment at regular intervals of a certain sum of money for a term of years or during the life of an individual.

Assets - Everything that a person or company owns or has a right to, from which a benefit can derive. Net assets are assets in excess of liabilities. Liquid assets are assets either in the form of cash or readily convertible into cash.

At call - Funds which can be withdrawn on demand or without notice.

Balanced Trust- Balanced Trusts invest in the broadest spectrum of investment markets, including shares, listed property trusts and government securities. The main advantage in making this type of investment lies in the flexibility afforded to their fund managers in being able to alter the investment composition of the trust in the light of changing economic and investment conditions to pursue the best results.

Blue Chip Stock - Shares in a well established company highly regarded in financial circles.

Capital Growth- The increase in value of an asset or investment i.e. the difference between the current values and the original purchase price. (Provided the result is positive, not negative)

Capital Guaranteed - An investment where your money (principal) is guaranteed safe; usually by a bank, government body, or life insurance company.

Cash Management Trust - A unit trust where investors (unit holders) pool their money into money market instruments which are normally only available to professional investors with hundreds of thousands of dollars to invest in the money market. Cash trusts operate with a trust deed, a trustee overseeing activities and a management company responsible for the investment strategy.

Compound Interest - Interest which is paid on accumulated interest as well as the original principal invested.

Consumer Price Index (C.P.I) - Measures the national inflation rate. The index is measured quarterly (December, March, June and September quarters) and reflects changes in prices (up or down) of a fixed "basket" or list of goods and services.

Debenture - A type of fixed interest security, issued by companies (as borrowers) in return for medium and long term investment of funds. Debentures are issued to the general public through a prospectus and are secured by a trust deed which spells out the terms and conditions of fund-raising and the rights of debenture holders. typical issuers of debentures are finance companies and large industrial companies.

Deferred Annuity - An annuity where income payments do not commence i.e. are deferred until a specified date in the future.

Dividend - The share of profits distributed to shareholders of a publicly listed company.

Dividend Imputation - A tax system, where dividends paid by a taxpaying Australian company to its shareholders, carry a credit for the tax the company has already paid on its profits. This means that shareholders receive a reduction to the tax normally payable.

Eligible Termination Payment (ETP) - This is the term used to describe lump sum funds received when retiring or changing employment that can be rolled over into an Approved Deposit Fund or Deferred Annuity. ETPs can include payments from a superannuation fund, approved deposit fund, deferred annuity, commutation of an annuity / pension , unused sick leave and ‘golden handshakes.'

Franked Dividend - A dividend distributed by an Australian company out of profits on which company tax has been paid.

Investment Bonds - A lump sum investment product. Technically, an investment or insurance bond is a single premium lump sum investment, life insurance contract.

Maturity - The date on which a debt or other borrowing is due to be repaid.

Negative Gearing- A way of obtaining tax advantages through an investment where the deductible expenses (typically including interest) exceed the income derived from the investment.

Pension - A regular payment made to a person from a superannuation fund or from the Department of Social Security or Department of Veterans Affairs.

Rollover - The renewal of a loan facility or continuation of a deposit at each maturity date, usually including a revision of the interest rates. (The term is also used to describe the transfer of Eligible Termination Payments to an acceptable superannuation or rollover fund.)

Shareholder - A person who buys a portion of a public or private company's capital. By doing so that person becomes a shareholder in that company's assets and receives a share of the company's profit in the form of dividends.

Superannuation - An investment vehicle which operates primarily to provide benefits for retirement. Superannuation savings are usually made through trust funds and if these funds meet prescribed government standards they are eligible for tax concessions.

Term Deposit - Money invested for a fixed term at a fixed rate of interest which applies for the duration of the deposit.

Unit Trust - A unit trust is an investment which operates under the unit principle enabling investors to share in a pool of professionally managed investments. The success of a unit trust depends on the expertise and experience of the management company which is responsible for the trust's investment strategy. Common types of investment undertaken by unit trusts are property, shares, mortgages, and the Short Term Money Market.

Adjustments - Amount of property taxes, council and water rates prepaid by the vendor and adjusted at settlement for amounts for which the purchaser will be liable.

Agent's Commission - This fee (usually a percentage of the sale price) is payable to a real estate agent for selling a house.

Amortisation period - Time taken to reduce the value of the debt through payment of regular instalments until the loan has been paid off in full. For ANZ Home Loans the maximum amortisation period is 25 years.

Appraised value - An estimate of the value of property offered as security for a home loan. The appraisal is undertaken for financial lending purposes and may not reflect the actual market value.

Architrave - A decorative moulding around doors or windows.

Assets - Everything that a person or company owns or has a right to, from which a benefit can derive. Net assets are assets in excess of liabilities. Liquid assets are assets either in the form of cash or readily convertible into cash.

Awning window - A window with sashes that open out horizontally.

Body Corporate - A strata corporation incorporated in relation to land subdivided wholly or mainly for residential purposes under a law providing for strata, cluster, precent or other subdivision of land or whose issued shares give a right to occupy land for residential purposes. The Body Corporate usually has the responsibility for the management and upkeep of common areas of the property.

Brick veneer - A type of building in which a structural timber frame is tied to a single brick external wall.

Bridging finance- Short term finance used when buying and selling houses to cover the gap between receipt of funds from sale of existing house and the payment of funds to purchase another house.

Building regulations - Designed to uphold the standards of public safety, health, and construction, these regulations are in place and have been formulated by responsible authorities to control the quality of buildings.

Capital gain - Profit from sale of a particular asset at a higher market price than it cost. Investors often buy for the sale of an expected increase in value of an asset rather than of the income it may generate during the time they own it.

Casement window - A window with sashes that open out vertically.

Caveat Emptor - Latin for " Let the Buyer Beware " . This means that buyers of goods (in this case, landed property) are responsible to examine the goods ( the property being purchased) closely or read the fine print (to the contract) carefully before completing the purchase. Under common law this means that if someone is sold faulty goods he or she has no right to obtain compensation.

Ceiling joists - Parallel lengths of timber/steel which support the ceiling.

Certificate of Title - The document of title to the estate or interest in land. It sets out the Crown description of the land, proprietorship and shows any registered interests such as mortgagees, charges and caveators. It also shows any restrictive covenants and easements which affect the estate or interest.

Chattels - Chattels are personal property. There are two types - the first type are real chattels (buildings and fixtures) and the second type are personal chattels (clothes, furniture etc.).
Cluster Title - Each Cluster Title holder has a Certificate of Title which specifies ownership in terms of a particular area for which the owner is responsible, and defines the common property. Unlike Strata Title, it does not subdivide "airspace".

Commission - See Agent's Commission.

Common area - An area which is for use by many, not an individual. For example, home units have common areas such as stairs and driveways.

Company Title - This Title applies when a company owns the whole of the property. By purchasing shares in the company, the purchaser obtains an entitlement to occupy a particular part of the property. See your solicitor before buying.

Comparison Rate - The Comparison Rate provides an indicative interest rate that takes into account certain costs associated with setting up a loan. This rate includes the nominal interest rate/s, loan approval fee, any other up front fees and known ongoing fees. The Comparison Rate does not include government and statutory fees, since these are standard across all loans regardless of the lender. It also doesn't include other fees and charges that are 'event based' and which may or may not apply throughout the term of your loan (for example, redraw fees and early repayment costs).

Contract Note - The first document signed on buying a house is sometimes a Contract Note, instead of a Contract of Sale. This document, when signed by both parties, is as legally binding as a Contract of Sale and the buyer and seller should treat it with the same importance.

Contract of Sale - A written agreement which details the terms and conditions regarding the purchase or sale of a property. It is usually prepared by the vendor's agent, solicitor or conveyancer.

Conveyancing - The legal process where ownership of real estate is transferred from one party to another.

Cornice - A horizontal decorative moulding usually positioned where the wall meets the ceiling.

Cover note - This is a document giving temporary insurance cover over a property until a formal policy is issued by the insurance company.

Deposit - An amount of money placed in trust or paid to the vendor directly as evidence of intention to buy. In most cases, it is 10% of the purchase price.

Door jambs - The vertical sides of a door frame.

Drawdown - The disbursement of loan funds provided by the Bank.

Easement - A right that an individual enjoys over land belonging to another. e.g. rights of way, rights of light, rights of support.

Encumbrance - A legal claim on a particular property. e.g. easement or mortgage.

Equity - The part of an asset (house) which you own over and above the amount borrowed from the Bank which has a mortgage over the house property.

Fibro cement - Building material made of compressed fibres cemented into rigid sheets.

Fitments - Built-in equipment such as the bath and stove.

Fittings - Things that can be removed from a property without causing damage to it, such as drapes.

Fixed rate loan - A loan priced at a fixed rate of interest for a set term. Interest rate and payments remain the same during the fixed term of the loan regardless of interest rate changes in the market.

Fixtures - Things that are affixed to and form part of the property. e.g. built - in air conditioning.

Footing - The footing supports the building on its foundation.

Foundation - The compact sand, gravel, hard clay or rock upon which the footings rest.

Freehold - Common term used for an 'estate in fee simple'. This means that the proprietor of the land has absolute ownership of the property.

Gable - The triangular part of a building's end wall which extends up to meet the two slopes of a roof.

Home units - A grouping of residential dwellings. They share common areas (e.g. gardens, storerooms) and are commonly registered under Strata Title.

Interest - A charge on borrowed money or the return earned on funds invested.

Inventory - A listing of items that could be included with a property, e.g. furniture, furnishings, dishwasher and other moveable items.

Joint tenants - The holding of land by two or more persons where there is a right of survivorship i.e. on the death of one joint owner, the land as a whole vests in the survivors and can only be disposed of by will by the last surviving owner.

Laminated timber - Layers of timber glued and pressed together to increase rigidity or to use as bench tops or cupboard doors.

Land tax - Based on the property value, it is a State Government tax which is payable by the owners of the property.

Lease - An agreement between two parties under which one is granted the right to use the property of the other for a specified period of time in return for a series of payment by the user to the owner.

Leasehold - The right to use and have exclusive possession (but not ownership) of real estate for a specified period and subject to the fulfilment of certain conditions as recorded in a lease agreement.

Liabilities - Debts owed by a company or individual

Loan Repayment Capacity - Your monthly fixed debt commitments divided by your monthly gross income expressed as a percentage.

Loan to Valuation Ratio - The amount of the loan financed as a proportion of the property value, expressed as a percentage.

Manhole - An opening which permits access to the space between the roof and the ceiling, or below the floor.

Mortgage - A document drawn up between a borrower and lender, giving the lender a conditional right to property as security for the money lent.

Mortgagee - The one who lends the money to purchase the goods or property.

Mortgagor - The one who borrows the money to purchase the goods or property.

Multiple listing - This happens when a person selling a property gives it to more than one agent. The first agent who has a buyer ready, willing and able to meet the price and terms acceptable to the vendor, receives the commission for the sale.

Offer to purchase - A written offer of a specified price for a specified property. The offer may be firm (no conditions attached) or conditional (certain conditions apply).

Plan - This shows the ground plan design, elevation of house, number and size of rooms, kitchen, bathrooms, laundry layout and position of the house on the land.

Principal - The face value amount of a loan on which interest is calculated.

Private treaty sale - Sale of property via an agent through private negotiation and contract.

Rafter - Part of the framework of the roof, the rafters slope down from the ridge to the eaves.

Render - A coat of cement or plaster to brickwork or stone.

Reserve price - The minimum price a seller has specified he/she will accept at auction.

Ridge - Usually horizontal, this is the peak of the roof where the top end of each rafter is attached.

Right of Way - A person may have the right to cross your property to gain access to their own property, or there may be a general pathway across the land. This is an example of an easement.

Rise and Fall clause - This clause may be contained in a building contract. It provides for an upward or downward contract price which correlates to the movement of prices, wages or other factors specified in the clause.

Roof pitch - The slope of the roof.

Sash - The frame in which a pane of glass is set to form a window.

Security - Something given or deposited as surety for the payment of debt. In the case of home loans, the property which is to be bought with the loan money usually acts as the security.

Semi-detached - Two houses joined together with a common wall or walls; they are usually registered under Torrens Title.

Settlement date - The date on which the sale of the property is finalised; money and security changes hands and the new owner takes possession.

Shingles - Thin pieces of wood or other material set in overlapping rows to form a roof or wall cladding.

Sill - The horizontal section of material at the base of a window opening.

Sole agency - One agent or agency has the exclusive rights to sell a property.

Stamp duty - Revenue raised by governments on written instruments such as agreements, conveyances, transfers of land. When buying a home, the most common types of stamp duty payable are stamp duty on transfer of land and stamp duty on mortgage.

Strata Title - Most commonly used for flats and units, this title gives you the ownership of a small piece of a larger property. You have sole right to a particular unit and can lease, sell or legally dispose of your unit as you desire. You also have an undivided share of the common land. You also become a member of the Body Corporate which controls maintenance.

Stratum Title - This title gives you legal ownership over a piece of property and also gives you a share in the company set up to look after the common areas of the flats or units you live in. It does not include "air space".

Studs - The uprights in the wall of a building.

Survey - Shows boundaries of the land and location of the building.

Tenants in common - Each tenant (or owner) owns a specified share of the land. Shares can be equal or unequal. Unlike joint tenants, there is no right of survivorship. Each share may be dealt with by sale, bequest, gift etc., as for sole ownership.

Term - The time length of a loan.

Title search - A Search undertaken of records registered at the land titles office to confirm interests in land of a particular land property. A title search show interests such as proprietor, mortgagees, charges, and caveators. The search also reveals any restrictive covenants and easements which affect the estate or interest.

Torrens Title System - Title is under a system given the name of its South Australian author in 1858. The principles of this system are expressed in State Land Title and Real Property Acts and any act or acts amending or re-enacting them. This system gives a registered proprietor of an interest in land a perfect and unchallenged titles, subject only to the encumbrances and conditions mentioned on the title certificate.

Townhouse - Detached or attached housing forming part of a cluster of homes sharing some common grounds. Normally has own private entrance and private areas. Can be single or multi storey.

Transfer of Land - A document registered in the Land Titles Office which recognises and acknowledges change of property ownership. This is also noted on the Certificate of Title.

Uncommitted Monthly Income - Your available net income once all monthly expenses including loan repayments have been taken into consideration.

Underpinning - Supports placed under an existing wall to provide added strength.

Unencumbered - A property free of encumbrances, convenants, restrictions.

Valuation - A report written by a registered valuer, detailing their opinion of the property value.

Variable Rate Loan - A loan for which the interest rate changes as conditions in the money market change.

Vendor - One who offers a property for sale.

Wall cavity - The space between the inner and outer sections of a wall.

Zoning - Zonings fall into many categories, the two most common being commercial and residential. Local Councils and/or Planning Authorities control the use of land and designate it as such.

What are the real estate advertisements really saying?

Acronym Definition
ac airconditioning
alc alcove
bi built-in
bics built-in cupboards
bir built-in robe
br bedroom
bt brick walls with tile roof
bv brick veneer
cnr corner
crm cream
crpt carpet
cpds cupboards
ctl cement tile
dble double
dblefr double fronted
dbl gar double garage
dbr double bedroom
dep deposit
det detached
din rm dining room
elf electric light fittings
elhws electric hot water service
encl enclosed
ens ensuite
estab established
ext external
fib fibro cement
fitts fittings
fl covs floor coverings
f/furn fully furnished
f tld fully tiled
ghws gas hot water service
grge garage
htr heater
incl include
ingr pl in-ground pool
int interest
intl internal
k’ette kitchenette
kit kitchen
ldr Lounge dining room
lge large
l/fitt light fittings
liv living
lnge lounge
lug lock up garage
mais maisonette
mstr master
mtge mortgage
ofp open fire place
oil/htr oil heater
ono or nearest offer
ophws off peak hot water system
osp off street parking
oyo own your own
pa per annum
p mth per month
pol flr polished floor
posn position
p wk per week
qual quality
rc reverse cycle
rec recess
rend rendered
rf roof
rm room
row right of way
sb solid brick
sc self-contained
semi semi detached
sep separate
shr shower
shwr rcs shower recess
sgle fr single fronted
s’out sleepout
spac spacious
sss stainless steel sink
stca subject to council approval
tc tile terracotta tile
tf timber frame
tld rf tiled roof
tmbr timber
t’out throughout
umr under main roof
ven blds venetian blinds
ver veranda
vp vacant possession
wb weatherboard
wc water closet
wi wrought iron
wi pant walk-in pantry
wir walk-in robe
ww wall to wall
yo years old

A | B | C | D | E | F | G | H | I | J | K | L

M | N | O | P | Q | R | S | T | U | V | W

A

Account - See 'Bank account'. 

Account balance - See 'Balance'

Administration fees - Ongoing monthly fee that is charged by a bank for managing the bank account and providing the bank account services used by you.

Advocate - A person who supports, acts or speaks for you or another person or assists to communicate with authorities.

AML-CTF (Anti-Money Laundering and Counter-Terrorism Financing Act) - The AML-CTF Act is the law that requires information to be collected by specified organisations, including banks, from their customers. For example, to open a bank account, the AML-CTF Act requires Australian banks to perform a Customer Identification Process (CIP) on the customer and to keep that information. The AML-CTF Act requires the specified organisations to report large and suspicious transactions to a government department. The AML-CTF Act supersedes the Financial Transactions Reporting Act (FTRA), under which customers were identified using the "100 point check". See also 'Customer Identification Process'.

Amount due - The amount of money that has to be paid on an outstanding account.

Annual percentage rate - The rate at which interest is charged over a yearly period in respect of money that is owed. Interest is usually calculated on a daily basis and may be charged monthly, quarterly or annually.

ANZ - Australia and New Zealand Banking Group Limited.
ANZ is one of the largest companies in Australia and New Zealand and a major international banking and financial services group. ANZ is one of the top 50 banks in the world and is Australia's leading bank in Asia.

Arrears - The amount you have not paid in respect of scheduled repayments for a debt owed (i.e. past the due date). This is different from the balance owing.

Asset - Interest which is paid on accumulated interest as well as the original principal invested.

Asset (secured) - An asset that has been offered by you to secure the repayment of a loan. For example, if you take out a loan to buy a car, you will usually be required to provide the lender (a bank or another creditor) the car as security for that loan. If you fail to repay the loan, the lender may claim the security (in this case the car) and sell it to recover some or all of the outstanding money owed by you. A secured asset cannot be sold by the borrower (debtor) without the written permission of the lender. When a secured asset is sold, the lender holding the security gets paid first, to the value of the outstanding balance of the loan plus fees. Only the loan that is secured can be cleared by this security.

ATM - See Automatic Teller Machine.

ATM card - A card that allows you to access your account via an ATM and EFTPOS facility. See Debit card, ATM and EFTPOS.

Australian business number (ABN) - A number issued to registered businesses in Australia by the Australian Tax Office (ATO). Each business has its own ABN and must use it on official paperwork and transactions and for tax (GST) purposes.

Australian Securities & Investments Commission (ASIC) - ASIC is an Australian government body that regulates banks and other financial services companies. ASIC is responsible for, among other things, consumer protection in superannuation, insurance, banking and credit. ASIC also regulates and enforces laws that promote honesty and fairness in financial products and services, in financial markets and in Australian companies.

Automatic deduction - See Direct Debit.

Automatic Teller Machine (ATM) - A machine placed in supermarkets, outside banks and other public places that can be used to withdraw money from your account. Some ATMs accept cash deposits and cheques, provide current account balances, transfer money between your accounts and repay credit cards. Many ATMs can be accessed 24 hours a day.

 

B

Balance - The amount of money in your bank account. The balance can be positive/in credit or negative/debit.

Balance (closing/final) - The amount in a bank account at the end of a period of time or at a certain point in time after all the transactions are taken into account up to that date.

Balance (opening/prior) - The amount of money in your account at the beginning of a period of time. The closing balance from the previous period becomes the opening balance for the next period.

Bank - In Australia, banks are financial institutions authorised under the Banking Act 1959. They offer a variety of financial products and services. For example, for individual customers they offer bank accounts, payments services, credit cards, home loans, car loans, investments and some times insurance. For companies they also offer a large range of products and services. In Australia one bank can usually meet all of your financial and insurance requirements.

Bank account - A financial product which allows you to deposit your money and gives you easy access to your money in the future. In Australia there is a large range of bank accounts that are designed to meet different customer requirements.

Bank cheque - A cheque issued by a bank for you that is in the bank's name. No individual or company name appears on the cheque. You can buy the cheque for cash and a small fee.. For example, at times that you need to pay cash, but it is not convenient to use cash, you can use a bank cheque instead.

Banking and Financial Services Ombudsman (BFSO) - A free and independent dispute resolution service that considers complaints about banks in Australia.

Bank fees - Charges made by a bank in return for the products and services provided.

Bank draft - This is similar to a bank cheque but is usually drawn in a foreign currency for payment overseas.

Bankruptcy - A legal process that people go through when they can not pay their debts. A bankrupt person gives control of most of the debts and assets to a bankruptcy trustee. The trustee decides which (if any) of the assets can be sold to pay off the debts.

Baycorp Credit Advantage- A company that holds the largest source of credit information about Australian people.

Borrower - A person using money that has been loaned to them by a bank or other lender or a person. Another name for a borrower is a debtor.

BPAY® - BPAY® is a service that allows people in Australia to easily pay their bills using their credit cards or from their bank accounts. BPAY® can be used on internet banking or phone banking. Most BPAY® payments are made over the Internet. BPAY® is registered to BPAY Pty Ltd ABN 69 079 137 518

Branch - A branch is like a bank shop where a bank's products and services are provided to their customers. In Australia bank branches are open for business during normal business hours (usually 9am to 4pm) and some also open on Saturdays.

BSB - A BSB is a number which is like an electronic bank address in Australia. A BSB identifies both the bank and the branch of the bank in Australia. Each bank branch will have a BSB. Every bank account will have a BSB associated with it. When you are transferring money in Australia the BSB of the sending and receiving bank should be provided.

Building society- A financial services organisation which is similar to a bank but it is owned by members. Building societies were first developed so that they could lend money to their members for purchasing property or a business.

Bureau de change - This is the name of one of the ANZ branches which provides services for exchanging foreign cash and travellers cheques.

C

Card issuer - The bank, building society or other financial institution which offers or issues credit cards and debit cards.

Cash - Money in the form of notes and coins.

Cash advance - This is a cash loan which is withdrawn from a credit card. Credit card issuers charge interest from the date when the cash advance is taken until it is paid back. A transaction fee may also be charged.

Cheque - A slip of paper that instructs a bank to pay a sum of money to the person (usually) named on the cheque. If you have a cheque account then you can write a cheque for a specified amount of money and give it to someone else, who will give it to a bank. That bank will ask your bank for the money from your cheque account and give it to the person (or company). If a cheque is made out to 'cash' or 'bearer', then whoever hands the cheque to a bank can exchange it for cash. A cheque crossed 'Not Negotiable' must be deposited into the bank account of the person named on the cheque.

Cheque account - An account offering you access to your money by writing cheques. You must make sure you always have enough money in your cheque account to cover the cheques that you have written. If you do not have enough money the cheque may be dishonoured (not paid) and you and the person who you gave your cheque to will be charged fees. In some cases this is considered illegal with serious penalties.

Chosen obstacle - An obstacle to saving money that occurs as a result of a choice that you have made. For example, choosing to reduce your working hours from full-time to part-time, or deciding to trade in an old car for a new car.

Cleared funds - The amount of money in an account that is available for you to use. Cheques deposited into your account may take up to five working days before they become cleared funds and you can use them. During the five days the cheque funds are called uncleared funds.

Co-borrower - A person who borrows money jointly with you. Each individual is jointly and separately responsible for the repayment of the loan. This means that if one person does not pay the other person will be required to pay the full amount of the loan.

Commission - A reward or sum of money paid to a salesperson.

Comparison rate - The interest rate on a loan that includes interest and most (but not all) fees and charges for the loan. For example, if a bank advertises an interest rate for a home loan of 5.49%pa, the comparison rate (once fees and charges have been included) might actually be 6.75%pa.

Compound interest - Interest earned on money that is invested over a period of time that is added to the original amount invested (the principal) and interest is then paid on the entire amount. Over a long time compound interest can be a good way to increase your savings.

Consumer - A person who buys or uses products or services.

Consumer Credit Code - The Consumer Credit Code is a set of rules that regulate certain types of lending and borrowing transactions in Australia. Lenders such as banks must tell you what your rights and obligations are in any transaction. Credit transactions made for business or investments are not governed by the Consumer Credit Code.

Contract - A written agreement that shows terms and conditions.

Cooling off period - A period of time, which may vary between 24 hours and 14 days (depending on the type of contract), during which a person/organisation can decide not to continue with a contract. There are conditions to the cooling off period - it is important to always read the contract and to not give away rights to a cooling off period. Cooling off periods are different in different states in Australia.

Credit - Credit can have different meanings.
It can be a transaction on a bank account that shows money going into the account.
It can mean the amount of money you have. If your bank account is $200 in credit, it means you have $200 in the account. Credit also means buying goods and services now, but paying for them later. For example, buying something with your credit card and paying it back later, or taking out a home loan to buy a house. See 'Credit card', 'Credit limit' and 'Debit'.

Credit card - This is a plastic card that gives you access to money that the bank has agreed to lend you for a short period of time. It is important to manage the amount of money that you owe on your credit card and be aware of the interest that you are paying on the outstanding balance of your credit card. See 'Credit limit' and 'Credit'.

Credit file - A file or report that is kept by an agency such as Veda Advantage which shows your credit history such as loan applications you have made, credit you hold, defaults on loans, how you have repaid credit in the past and bankruptcy. Credit files or reports are kept and maintained by credit agencies and may be accessed by banks and financial organisations to help them assess any application for credit you make with them. Credit reports can hold both negative and positive information about your credit history. If you have always paid your bills on time and you have never defaulted on a loan or credit repayments, your credit report may assist you to secure credit. In contrast, a negative credit file may make it difficult for you to borrow money from a lender.

Credit history - See Credit file.

Credit limit - The maximum amount that a bank will lend you for a loan or a credit card.

Credit rating - A person's credit rating is based on their credit file or credit history. A person who has a credit file or a bad credit history is likely to have a poor credit rating. Banks and financial organisations refer to credit ratings when considering applications for loans and credit cards. A person with a poor credit rating may find it very difficult to obtain a loan or a credit card. Credit providers obtain this information through credit reporting agencies, such as Baycorp Credit Advantage.

Credit Report - See Credit file.

Credit union - A co-operative organisation that provides loans to its members.

Creditor - Someone who is owed money. The opposite to debtor. For example, a bank that lends money, a department store that lends money to customers in the form of store credit cards, or a telephone company that is owed money from customers are all called creditors.

Creditor (secured) - A creditor who holds an asset belonging to the borrower/debtor as security for the repayment of the loan. Loans for the purchase of property are usually secured by the property. If the borrower/debtor fails to repay the loan, the secured creditor has the right to sell the secured asset in order to recover some or all of the money owed. Any assets or property which is provided as security for a loan must be listed in the loan contract.

Creditor (unsecured) - A creditor who has provided a loan to a debtor and there is no security. Credit cards are usually unsecured. Therefore, if the debtor fails to repay the loan, the creditor may need to take the borrower/debtor to court to recover the money owed.

Customer Identification Process - All individuals or entities seeking banking services need to verify their identity through a Customer Identification Process (CIP). Identification documents individuals could be asked to provide include passports, birth certificates, driver licences, utilities bills, Medicare cards etc.. The types of documents you might be asked to provide to verify your identity may vary for different legal entities, e.g. companies will be verified using a company search. See also 'AML-CTF'.

D

Date of issue - The date a bill or account was prepared.

Debts (liabilities) - A debt is money that is owed. Another name for a debt is a liability.

Debtor - Someone who owes money. The opposite of creditor.

Debit - Most commonly, a debit is a withdrawal from a bank account.

Debit card - A card that gives direct access to a bank account through ATM machines and EFTPOS. See also ATM card.

Direct debit - A payment that is made directly from a bank account and is usually an electronic payment. A direct debit is usually a transaction that has been requested by the account owner to take place at a specified time and on a specified date. For example, in Australia companies often use direct debit for payroll processing.

Debt to Equity Ratio - This is the amount of the loan compared to the value of the property or asset purchased with the loan funds, expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in a debt to equity of 80%. Banks will place a limit on the debt to equity ratio depending on things such as the type of property, the location and the financial position of the borrower. Also known as Loan to Value Ratio (LVR).

Default - When you fail to meet the terms or requirements of a signed contract there is a default. For example, not making your scheduled repayments on a loan or not making them on time.

Deposit - An amount of money put into a bank account or money that is left with someone or a company to secure the purchase of an item.

Draft - See 'Bank draft'. A draft may also refer to a written item, such as a letter or contract, that is still being worked on, being reviewed, and is not finished.

Drawdown - This is when the approved loan funds are provided to you and deposited in your bank account, or used by you. For example, when you borrow money to buy a house, and the loan is approved, the drawdown occurs when you pay for the house using the money borrowed from the bank.

E

Electronic banking - A way of banking that allows withdrawals, deposits and transfers to be completed and account information to be obtained electronically using processes such as telephone or Internet banking, ATMs or EFTPOS.

EFTPOS (Electronic Funds Transfer at Point of Sale) -This facility lets you use your ATM card (debit card) to purchase goods, pay for services, and withdraw cash at a supermarket, shop, or restaurant. Money is taken out of your bank account immediately to pay for the services.

Equity - Equity can mean shares in a company. For example, owning equity in a company is having an ownership interest in a company. Where you have borrowed money to buy an asset, equity also means the difference between the value of an asset and how much you owe on it. If your property or asset is worth $300,000 and you owe $100,000 on your home loan, you have $200,000 in equity.

Excess usage charge - Some bank accounts limit the number of free EFTPOS or ATM transactions that may be used each month. If you use EFTPOS or ATMs more than a certain number of times in a month, you may have to pay an excess usage charge. Excess usage charges do not apply to all bank accounts.

Expenses - The amount it costs you for your everyday living including food, transport, housing, clothing and entertainment.

F

Fast deposit - This service allows you to drop your cash and cheques off at a branch for counting and processing at a later time, without having to wait to be served.

Finance company- A company which provides loans to customers, usually at interest rates which are higher than banks, building societies and credit unions.

Fixed interest- An annual percentage rate, or an interest rate that does not change for a specified fixed period.

Fixed term loan - A loan that you must repay within a certain time called the term.

Floating loan - See 'Variable interest' and 'Fixed interest'.

Foreign exchange - A foreign exchange service changes one currency into another currency. The currency can be in cash or cheques, or as part of a payment.

Frequent flyer program- A Frequent flyer program is a product or service offered by many airlines to reward customer loyalty. Sometimes points are also called "miles". Normally, once membership of the program has been obtained, the further you fly and the more money you spend with an airline or a group of airlines, the more points you earn. You can sometimes earn points when you hire a car and when you book hotels. Some credit cards also give you points for the money you spend with your credit card. Your points may be redeemed to receive free flights, to get into airport lounges, and to book hotels.

Funds transfer - Moving funds from one bank account to another.

G

Guarantee - With regard to a warranty: a promise or an assurance, especially one given in writing, about the quality or durability of a product or service. With regard to a loan: a legally binding promise given by a person (the guarantor) to pay a debt, if it is not paid by the borrower. It can be a secured or unsecured guarantee.

Guarantor - A person or company that provides a guarantee.

H

Home loan - A loan to finance the purchase of property/real estate to be used for the purposes of your home. It is important to only commit to a home loan amount that you are comfortable you can pay back, even if interest rates rise and/or property prices go down. See also 'Mortgage'.

Honeymoon rate - An initial special low interest rate for a specified period on a loan. It gives you an opportunity to make further repayments during the honeymoon period to reduce the amount owing on your loan. The loan will usually change to a higher variable interest rate at the end of the honeymoon period.

I

Income - The amount of money you earn, such as wages and salaries, rental income, interest and government allowances. For a business or a company, income is equal to revenue less expenses.

Interest - The amount a lender charges a borrower for the use of the lender's money. For example, if money is borrowed from a lender in the form of a loan, the lender will charge interest for the use of that money.

Interest only - An 'interest only' loan means that your repayments only go towards repaying the interest for a specified period, rather than repaying the principal amount of the loan. For example, paying your loan "interest only" means that the principal balance stays the same. Paying interest only can be good if you need extra money for buying furniture or improving your home. It is also popular for investment loans.

Internet banking - Using the internet to manage your banking and for conducting transactions. In Australia the internet is very popular for checking bank account and credit card balances and making transactions such as transferring money, changing your personal details, paying bills and applying for new products and services. You will need to register with your bank to use their internet banking.

Investor - A person who lends money or buys assets or businesses and with the intention of making a profit.

Invoice - In Australia an invoice is a bill that needs to be paid. After a bill has been paid a receipt will be issued/received. See BPAY®.

Invoice (tax) - A bill that needs to be paid and also includes tax.

J

Joint debt - When two or more people borrow money together or incur a debt together. A lender can recover payment of the whole amount from either party, unless the contract limits the amount each party must pay. This is not affected by any private agreement held between the borrowers, nor is it affected by any family law property agreement.

K

KYC (Know your customer) - This is the process that a bank should generally undertake so that it is providing the best service and advice to its customers. KYC is most important for private and premium bank customers that may have more complicated banking and investment needs. In order to meet KYC requirements banks may ask for information such as your employment details, salary, assets and liabilities.

L

Lease - An agreement between two people/parties where one party is granted a legal right to use or occupy the property of the other party for a specified period in return for payment.

Liability - See 'Debt'.

Life events - These are important events or milestones in your life. Some life events are predictable or planned, such as starting a family or retiring, whereas others are not, such as sudden illness or losing your job.

Loan - Money lent to a person for an agreed period of time (called the term). By the end of the term, the money must be repaid, often with interest added. See mortgage, interest and term.

Loan approval fee - This is a fee payable once in relation to the approval of a loan by a lender. The fee usually relates to document search costs, valuations and loan processing.

Lump sum payment - A single payment of money towards repaying a loan, usually for a larger amount. This is in addition to your regular scheduled repayments.

LVR (Loan to Value Ratio) - See Debt to Equity Ratio.

M

Managed funds - An investment fund that pools together money that has been contributed by many investors for the purposes of investing the total amount in different investments such as shares, listed property trusts, bonds and cash.

Maturity - The end or expiry of an investment or a loan.

Minimum repayment - The minimum amount to be paid on an invoice or a loan.

Money plan - A 'big picture' financial plan that maps out how your income and investments will be used to reach your financial goals. It shows what money will be earned, spent and saved. Most banks can help you put together a money plan.

Money order - Similar to a bank draft, a money order is an order for the payment of a specified amount of money, usually issued and payable at a bank or post office.

Mortgage - A document drawn up between a borrower and lender, giving the lender a conditional right to the property held as security for the repayment of the money lent.

Mortgage broker - A person or company that will assist you to find the most appropriate home or residential investment loan for your situation. Mortgage brokers may charge you a fee for their services or be paid a commission from the lender.

N

Needs - The basic things that you must have in your life so you can live comfortably such as food, clothing, and a home.

Net worth - Your assets less how much you owe on your assets is your net worth. In order to meet basic needs and life events, an increase in your net worth should be a basic financial goal of most people.

Not negotiable - Words written on a cheque or bill of exchange to ensure that the proceeds of the cheque or bill of exchange are only paid to the person named.

O

Offset account - A bank account that is linked to a nominated home or residential investment loan. The balance of the offset account reduces the amount of interest payable on your linked loan. This does not mean that the loan does not have to be repaid, only that the amount of interest that is otherwise payable may be reduced. You will be able to access your money in an offset account

Offshore account opening (Overseas account opening) - The process of opening an account in another country. An example of offshore account opening is opening an account in Australia when you live overseas or before you move to Australia.

Online account opening - The process of opening an account on the internet. In Australia, most bank accounts, credit cards and loans can be opened or applied for over the internet if you are already a customer of the bank which is offering the product or service. If you are not a customer of that bank, you may have to visit a branch in order to conduct the Customer Identification Process (CIP). See 'Customer Identification Process' and 'Offshore account opening'.

Original documents - Paperwork or documents that are not a copy or reproduction ie. not photocopied or faxed and all signatures on the document are original.

Overdrawn - When an amount of money is taken out of a bank account which is greater than the balance of the account. Fees will usually be charged for overdrawn accounts and dishonoured cheques.

Overdue - An amount of money that has not been paid by the due date and is still owed.

Over-the-counter - Any banking activity that is done in a bank branch.

Overseas account opening - See 'Offshore account opening'.

P

Pay anyone - A term that means to transfer funds to another person or a business by using internet or phone banking.

Per annum (pa) - This means for the year. For example, if the interest rate on a personal loan is 9% pa the borrower must pay 9% in interest each year on the balance that is still owing.

Period - The same as time or term.

Periodical payment - Regular transfers or debits from your account which you instruct your bank to make to the account of another person or business. Setting up periodical payments with your bank is a very easy and convenient way to manage your money and payments.

Personal Identification Number (PIN) - A number used as a security access code for your bank accounts when you use internet banking, phone banking, an ATM or EFTPOS. You should be very careful with your PIN and never write it down, never give it to someone else, and change it often.

Personal loan - A type of loan that is used for things like buying a car, a boat or furniture. Money is lent to you for a fixed period, at a variable or fixed rate of interest with repayments calculated at the start of the loan. Personal loans are popular for both secured and unsecured loans of $2,000 and more and should be considered instead of using your credit card for expensive purchases.

Phone Banking - In Australia, phone banking is another popular way to check bank account and credit card balances and perform transactions, transfer money, change your personal details, pay bills and apply for new products and services. You will need to register with your bank to use phone banking.

Principal - For an investment, the principal is the amount of money invested. For a loan, the principal is the amount of the loan (the face value of the loan) upon which interest is then calculated and charged.

Private banking - A service that most banks provide to their high net worth customers with more demanding, sophisticated or complicated banking requirements. Most banks will provide their private bank customers with relationship managers which have a personal knowledge of their customer's financial position and banking requirements. See also 'Retail banking'.

Q

Quarter - 1. A period or duration of three months. 2. One fourth of an amount.

R

Rebate - An amount that is given back, returned or refunded.

Receipt - A record showing that a payment has been received or an invoice has been paid. Receipts are usually paper but may also be in electronic form for things that are bought using the internet or over the phone. Receipts usually have a reference number and show the amount of tax that is included in the payment. A receipt is important proof that goods and services have been paid for. See also 'Invoice'.

Records - Any documents and paperwork.

Redraw - A redraw facility gives you easy access to the money that you have repaid on your loan in excess of your scheduled repayment amounts. This facility may not be offered by all banks and may not be automatically available. Fees may apply. It is a convenient way to borrow money back from a bank without having to apply for another loan. See also 'Equity'.

Reducible - Something that can be brought down, or prices or costs that can be lowered.

Reducible interest - Loan interest that is calculated on how much you owe each day. As the amount you owe gets less you pay less interest.

Refinance - Paying off an existing loan with the proceeds from a new loan usually provided by a different lender, and may be done to obtain a lower interest rate or to consolidate debts into one loan.

Render - To present or to give a bill or invoice for payment.

Repossession - A lender may be able to claim or take possession of any property, assets or investments that have been provided as security for the repayment of a loan in circumstances where the borrower cannot repay the loan.

Retail banking (personal banking) - Services provided to meet your personal banking requirements. See also 'Private banking'.

Risk grade - When lending money, a 'risk grade' is calculated so that a bank can assess how secure or risky a loan or investment is likely to be. The higher the risk grade given to an investment or the loan or the borrower, the higher the annual percentage rate that may be charged by the bank.

S

Savings - Money that you put away for use at a later time. For example, you may save to buy a car or a house in the future. When a bank lends you money, they like to see a long history of steady saving. Saving is a good way to make sure you are able to meet your needs and the requirements of different life events. See also 'Term deposits'.

Savings account - An everyday bank account where your savings can be deposited and easily withdrawn.

Scams and scammers - A person or an organisation that is not honest, lies or cheats customers or consumers. For example, internet banking fraud, door-to-door con artists and the Nigerian letter scam.

Secondary cardholder - If you allow another person to use an ATM card or credit card that is linked to your account, they are a secondary cardholder. The secondary cardholder is not responsible for any money owed on a credit card. The credit limit on the card does not change or double when an extra card holder is added.

Security - An asset offered by a borrower to a lender as security for the repayment of a loan. The security is aimed at ensuring that the lender is able to recover the full amount of the loan (selling the asset) if the borrower can't repay the loan. See 'Assets (secured)'.

Simple interest - Interest is paid on a set principal only and not re-invested.

Spending leak - Money that you spend but you don't notice. For example a daily cup of tea or coffee only costs $3 a day but over a year this would cost you $600.

Staff-assisted withdrawals - When you withdraw money from your bank account with the help of a teller in a bank branch.

Stamp duty - A duty (like a tax) charged by Australian states on certain transactions. For example, stamp duty will be payable on the purchase of a property or the transfer of certain other assets. The rate of stamp duty payable is different in each state.

Statement - A record summarising all the transactions that have occurred on your bank account (or any other account) and any fees charged or interest paid each month or each quarter. In the past, statements were on paper and mailed to customers, but most Australians now prefer to use the internet to check their accounts and print statements at home or at the office. Bank books are not often used in Australia.

Superannuation - This is Australia's mandatory pension scheme, or saving for retirement. An employer is required to contribute a proportion of a person's salary or wage to a superannuation fund on behalf of the employee. The money in the superannuation fund is invested with the aim of generating returns. When Australians retire the money that is in the superannuation fund is made available to them in a lump sum or in small amounts over their planned retirement.

T

Teller - The person in a bank branch that is there to help you with your banking.

Term - A period of time. For example, the length of time for which a deposit is made, or the time in which a loan must be repaid.

Term deposit - A banking product that offers a slightly higher annual percentage rate than savings accounts payable on the amount invested. A term deposit has a fixed term (which can vary) during which the amount invested cannot be accessed.

Terms and conditions - Terms and conditions set out the specific obligations of each party in respect of a transaction or product. They outline how a bank product or service can be used and should be read and understood before the product or service is used. Terms and conditions are available from your bank and may also be provided in booklets called Product Disclosure Statements.

Transactions - The name given to movements of money such as deposits and withdrawals or transferring money between bank accounts.

Tax file number (TFN) - A nine digit number issued by the Australian Taxation Office to individuals and companies to identify them for taxation purposes. Every Australian resident, and registered company should have a TFN. A TFN is different to an ABN. See also 'ABN'.

Transfer - To move money from one bank account to another bank account.

Trust account - An account that is usually used by lawyers, accountants and other professionals such as stockbrokers to identify and control their clients' money.

U

Unconscionable conduct - Behaviour that is considered unreasonably excessive, unfair or unjust.

Utilities - A business that provides an essential service, such as the provision of electricity, water or public transport, generally under government regulation. Utility bills or invoices are often paid by using BPAY®.

V

Variable interest - A type of interest where the rate may go up and/or down during the term of the loan.

W

Wants - The things that are not essential to your survival, such as a mobile phone, candy and chocolate, a CD or DVD or designer clothes for example. See 'Needs'.

Will - A legal document stating how you wish your possessions to be distributed after your death.

Withdrawal - To take money out of a bank account, for example, using an ATM, EFTPOS or by cheque.