Glossary

A	Asking price	The price the person selling the house would like to get – this is often not the price they will get!
A	Appreciation	An increase in the value of a property due to changes in market conditions or supply and demand.
	Architrave	A decorative moulding around doors or windows.
	Assets	A major item you own, for example a home, car, boat or investment.
	Auction	A way to sell where all the buyers are in one place and make bids (offers) until only one buyer is still bidding. An auctioneer runs the auction. The person selling usually sets a reserve price and doesn’t have to sell if the bids are under that amount. If you buy at auction you’re committed to going through with the purchase, so you need to check everything out first and have your finance ready, including the money for your real estate deposit which is paid to the auctioneer on the day of the auction.
B	Body corporate	A group that all the owners in a block of flats or apartments belong to. It deals with the running of the building and shared areas like stairways, garages and access ways.
B	Body Corporate Fee	An amount you must pay annually if your property is governed by a body corporate.
	Boundary	The lines that define the perimeter of a property.
	Brick Veneer	A type of construction in which a structural timber frame is tied to a non-load bearing, single-brick external wall.
	Bridging Loan	A short term loan (usually at a higher rate) taken out to cover the financial gap between buying a new property and selling an existing property.
	Building Code	Local Council regulations that control design, construction and materials used in construction.
	Buyer’s Market	When the demand for property is less than supply so the advantages shift to the buyer.
	Building Act 2004	This law sets out standards and controls for the building industry and replaces the Building Act 1991. One of the main changes is that building contracts now come with an implied warranty that the work will be carried out properly, the materials used will be suitable and the building will be fit for occupation. It also introduces a licensing system and from 2010 certain work must be done or supervised by a licensed practitioner.
	BRANZ	Building Research Association of New Zealand, providing independent and unbiased research, testing, consultancy and information resource for the building and construction industry. See www.branz.co.nz.
C	Capital	Money used to create income, either as an investment in a business or an income property. The money or property comprising the wealth owned or used by a person or business.  The accumulated wealth of a person or business.
C	Capital Expenditure	The cost of an improvement made to extend the useful life of a property or added to its value.
	Capital Improvement	Any structure or addition to a property erected as a permanent improvement that adds to its value and useful life.
	Capital value	You’ll see this term on your Rating Valuation (RV) – also know as a Government Valuation It’s the total value of your property, including land and buildings but not chattels (things like light fittings, carpets and curtains).
	Caveat Emptor	A Latin phrase for “Let the buyer beware”, i.e.: the onus is on the buyer to be satisfied with any item before purchasing.
	Capped Interest Rate	A product offered by some banks where the interest can’t go over a certain level but can go down.
	Certificate of Insurance	A certificate from your insurance company to confirm that your house is insured – your bank will probably ask to see this.
	Certificate of Title	This is the ownership record for your property. It is an electronic record held by Land Information New Zealand (LINZ) It describes the property and shows the legal owner of the land and any mortgages or conditions on the title.
	Chattels	The removable items that come with your house such as carpets, curtains, light fittings and sometimes furniture.
	Clear Title	A title that is free of or legal questions as to ownership of the property.
	Code of Compliance Certificate	(CCC) A certificate from your local authority to say the building complies with building consent requirements. Check all buildings and alterations have a certificate before you buy. The LIM (Land Information Memorandum) should contain compliance details.
	Collateral	An asset (such as a car or a home) that guarantees the repayment of a loan. The borrower risks losing the asset if the loan is not repaid according to the terms of the loan contract.
	Common Property	Area of building, land or amenities within a strata title property that are shared by all owners, eg: a driveway.
	Conditional agreement	A sale and purchase agreement with conditions that must be met before everything becomes final. Both the buyer and the seller can put conditions in the agreement. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a builder’s report.
	Construction Loan	With a construction loan (for building new homes or doing major renovations), money is paid in stages to the builder as building progresses, and during the project you only pay interest on the money already paid out. This helps keep payments low while you’re paying other costs such as rent. You don’t start repaying the loan itself until the project is finished.
	Conveyancing	The legal process when you buy or sell property – including checking and registering documents for transfer of ownership.
	Covenant	A covenant is a record on the property title of a legal restriction or agreement the owner has to keep. For example you might have to pay for fencing, protect a native tree on your land, or can only build within certain restrictions.
	Cover Note	A document issued by an insurance company giving temporary insurance until a formal policy is issued.
	Credit Contracts and Consumer Finance Act 2003	A law covering consumer credit contracts. Among other things, it means when you borrow money the bank must disclose to you both your rights and the bank’s obligations.
	Credit History	A record of an individual’s current and repaid debts which is usually used by a lender to assess the risk of a potential borrower.
	Credit Report	A report of an individual’s credit history prepared by a credit bureau and used by a lender in determining a loan applicant’s creditworthiness.
	Cross-lease	This is where there are two or more homes on a cross-leased property. All the owners own the land together and each owner leases the land their home is on from the others. All owners of the common land must agree before improvements such as paths, fences or building alterations can be made.
D	Deed	A legal document conveying title to a property.
D	Dependants	Others who are financially dependent on a loan applicant
	Desk Top Valuation	A Valuation undertaken on line (ie property is not inspected.)
	Deposit	The Term Deposit has a double meaning. When it comes to buying a home. To the bank it’s the amount you put towards the home yourself. To a real estate agent it’s a payment you give them once you’ve agreed to buy the home (this money goes to the seller when your agreement becomes unconditional – or it’s returned to you if the sale doesn’t go through).
	Disbursements	Costs incurred by your solicitor on your behalf, which are paid by the solicitor to other entities.
	Disposable Income	Money left over after all expenses have been met.
	Door Jambs	The vertical sides of a door frame.
	Drawdown	The disbursement of mortgage funds provided by the Bank on settlement day.
E	Easement	If an easement is recorded on the title for your property it means someone else has a right to use your property in a certain way – such as the right to run pipes or cables under your land, or to use a drive or path. Or you may have a right over someone else’s property.
	Encroachment	Part of a house or establishment illegally overhanging the street or a neighbour’s property.
	Encumbrance	An impediment to the use or transfer of the property in the form of an interest or right in the property.
	Equity	The money you yourself have in your home. It’s what you’d end up with if you sold your home and repaid any loans you owe on it.
F	Fair Credit Reporting Act	A consumer protection law that regulates the disclosure of consumer credit reports by consumer/credit reporting agencies and establishes procedures for correcting mistakes on one’s credit record.
	Fidelity fund	A fund set up by a professional organisation to pay clients who lose money due to fraud or misconduct by one of the fund’s members. Lawyers, real estate agents and many other professionals belong to fidelity funds.
	First Mortgage	A mortgage that is the primary lien against a property.
	Fittings	Objects that can be removed from a property without causing damage to it.
	Fixed Interest	An interest rate set for a fixed term. Penalties may apply if the loan is repaid before the term expires.
	Floating Interest Rate	A rate which is not fixed for any term and can go up or down depending on market forces.
	Freehold	This is the most common type of property ownership. It means you own the land and house with virtually no restrictions on your ownership rights. The term freehold is also commonly used to mean that you don’t owe any money on the home.
G	Gable	The triangular part of a building’s end wall which extends up to meet the two slopes of a roof.
G	Gearing	The ratio of your own money and borrowed funds in the purchase of property.
	Gross Income	Income before taxes are deducted.
	Guarantor	A person who agrees to indemnify the holder of a loan all or a portion of the unpaid principal balance in case of default by the borrower.
H	HOBANZ	Home Owners & Buyers Association of New Zealand – HOBANZ is an emerging organisation established to represent the interest of New Zealand’s current and future home owners and to be the trusted source for information and guidance in all areas associated with buying, selling, maintaining and owning a home.
I	Instalments	Regular payments paid on your loan
I	Interest only loan	A loan where only interest costs are paid.
L	Laminated Timber	Layers of timer glued and pressed together to increase rigidity or to use as bench tops or cupboard doors.
L	Land Information Memorandum (LIM)	A report you can get from your local authority which sets out everything they know about the property – things like consents, rates owing, drainage and problems with flooding or erosion.
	Leaky Home	Having a ‘leaky home’ means a home that suffers from weather tightness problems. Thousands of houses and apartment buildings built in the 1990s and early 2000s in New Zealand suffer severely from this, and it has led to many houses becoming unhealthy to live in, or even decaying at fast rates. It’s recommended to get a builder’s report on any home you’re thinking of purchasing to check that it is not a leaky home. If you do have a leaky home, the Weather tight Homes Resolution Service may be able to help you resolve the issue.
	Lenders mortgage insurance	A one-off insurance payment many lenders charge if they lend you more than 80% of the value of the property (this percentage may vary). It’s to cover the extra risk to the lender when you are putting little or no money towards the home yourself.
	LIM Report (Land Information Memorandum)	Information on special land features or characteristics including potential erosion, avulsion (removal of land by water action), falling debris, subsidence, slippage, alluvion (the deposition of silt from flooding), inundation (flooding), presence of hazardous contaminants which are likely to be relevant to land and is known to Auckland City • Information on private and public storm water and sewerage drains as shown in Auckland City’s records • Information relating to any rates owing in relation to the land • Details of approved building, plumbing/drainage and resource planning permits and consents indicating where further action is required • As required by the Building Act 1991 details are included of • Code Compliance Certificates: a final certificate of approval for building consents • Compliance Schedule: required for certain systems or features of commercial and multi-residential properties • Warrant /Statement of Fitness: in conjunction with compliance schedule -issued annually to maintain compliance standard • Details of Dangerous Goods, Liquor, Hairdressing and Health Licences (mainly refers to commercial properties) • Details of Operative and proposed zoning, road widening, height restrictions, view and tree protection, and any Historic Places Trust listing • Any outstanding requisitions or notifications from Auckland City regarding any matters on that property that do not meet Auckland City specifications and which require action within a certain time frame. Satisfying requisitions is the responsibility of the owner of the property.The Memorandum may also include: • Such other information concerning the land which Auckland City considers, at its discretion, to be relevant. Line of Credit • An agreement by a lender to extend credit up to a specified amount for a specified time for a specified purpose. Leasehold With this type of ownership you lease the land and pay rent to the landowner. You own the house but your use of the land may be restricted and your rent can go up. You can sell the lease when you want to move but you will need to tell the landowner first. You can get a Certificate of Title for your leasehold interest.
	Lessee	A person leasing a property.
	Lessor	The owner of a property that is leased to another person.
	LEM – Low Equity Margin	When borrowing 85% or more of the property’s value lenders will often charge a Low Equity Fee or Margin which varies from lender to lender.
	LEF – Low Equity Fee	When borrowing 85% or more of the property’s value lenders will often charge a Low Equity Fee or Margin which varies from lender to lender.
	Licence to occupy	A licence to occupy lets you live in the home and use the land but you don’t own them. Many retirement villages operate this way.
	Lien	A legal claim against a property that must be paid off when the property is sold.
	Loan Structure	The way in which a loan is structured – Fixed or variable terms or combo.
	Lo-Doc margin	A margin that your lender may add to your interest rate if you get a home loan without supplying full proof of your income. For example if you’re self-employed and don’t have a current profit and loss statement you may be able to apply for a home loan by making an income declaration instead. The margin can be reviewed once you supply full documentation.
	LVR	Loan to value ratio (being the value of the deposit or equity as a % of the sum borrowed)
M	Market Value	Price a property is likely to sell for in the current market.
M	Mortgage	The legal document that gives the lender ‘security’ and the right to sell the property you’ve mortgaged if you can’t pay your loan. It means the lender can hold your Certificate of Title until you repay the loan.
	Mortgage Broker	An individual or company that brings borrowers and lenders together for the purpose of loan origination. Mortgage brokers typically require a fee or a commission for their services. Usually paid by the Lender.
	Mortgage Insurance	A policy that insures the lender against the borrower on a loan. Most lenders generally require insurance when borrowing more than 80% of the property value.
	Mortgagee	The bank or lender who has lent money on a property and holds the mortgage
	Mortgagor	Person or entity borrowing funds to purchase a property.
	Mortgagee Sale	When the lender (mortgagee) has to sell the property due to outstanding loan repayments.
N	Net Income	Income after taxes are deducted.
N	Nominee	A person who, in a limited sense, acts for or represents another.
	Notice of Default	A formal written notice to a borrower that has occurred and that legal action may be taken.
	Null and Void	That which cannot be legally enforced, as with a contract provision that is not in conformance with the law.
O	Ombudsman	The Banking Industry Ombudsman is the avenue through which a customer can make a complaint about their bank and have it dealt with independently.
O	Offset Mortgage	A non-interest earning account that is offset against a home loan to reduce the total interest payable.
P	PIM (Project Information Memorandum)	A report giving information on items such as potential erosion, subsidence, hazardous contaminants, storm water. It may also include classifications under organisations such as the Dept. of Conservation or Historic Places Trust, as well as authorisations required by the Resource Management Act.
	Possession Date	Usually date of the settlement – is the date when the purchaser takes ownership of the property.
	Power-of Attorney	The person who has authority to execute documents on behalf of the grantor of the power. Also a legal document which authorises another person to act on one’s behalf. A power of attorney can grant complete authority or can be limited to certain acts and/or certain periods of time.
	Pre –Approval	A conditional offer of finance for a property purchase
	Principal	The amount borrowed before addition of interest
	Priority amount	This is a term in the mortgage document that gives the bank first right to a certain amount of money if your home has to be sold.
Q	QV – Quotable Value	On Line Valuation.
R	Rafter	Part of the framework of the roof, the rafters slope down from the ridge to the eaves.
R	Rateable Value	Valuation undertaken by local authority and used to set annual land rates. Also known as a Government Valuation.
	Reducing loan	With a reducing loan you pay a set amount off the loan each payment, plus interest. It means your payments are much higher at the beginning of the loan but go down as time goes on.
	REINZ	Real Estate Institute of New Zealand. National representation body of real estate agents.
	Registered Valuation	Valuation of a property undertaken by a Registered Valuer who will generally inspect the property
	Resource Consents	Resource consents are necessary when a group or individual wishes to carry out an activity or development that may have some effect on the environment. Resource consents relate directly to the rules set out in the District or Regional Plans and the Resource Management Act and are different to Building Consents.
	Reverse mortgage	A home loan for seniors generally used to help fund retirement. The special feature of these loans is that they don’t require regular loan repayments. Instead the interest and fees are added to the loan and repaid later, usually when the home is sold or no longer needed.
	Requisitions on Title	A process where the buyer requests additional information about the title of the property from the vendor.
	Reserve Price	The minimum price which a seller will accept at auction.
	Right of Way	A right of one property or the general public for access to or across another property.
	Roof Pitch	The slope of the roof.
S	Sash	The frame in which a pane of glass is set to form a window.
S	Second Mortgage	A mortgage that, on the sale of a property, is paid off only when the first mortgage is paid.
	Security	Refers to the asset used as security for the loan – usually the property being purchased.
	Settlement Date	Date when the funds are paid for the purchase and ownership changes hands.
	Semi-detached – Also called Duplex	A type of construction where two buildings are attached together by a common wall.
	Shingles	Thin pieces of wood or other material set in overlapping rows to form a roof or wall cladding.
	Skillion	A roof shape consisting of a single sloping surface without a ridge.
	Special Conditions in a Sale & Purchase Agreement	• Cash out • Conditional upon a Specialist Report • Conditional upon the sale of the purchaser’s property • Conditional upon an existing agreement • Conditional upon a LIM report • Conditional upon Finance
	Split Home Loan	refers to a home loan that has been split into a combination of terms and or a combination of fixed and floating rates. Strata Title – A title to a unit or lot on a plan of subdivision associated with townhouses, units and blocks of flats and based on the horizontal and vertical subdivision of air space. Owners have a certificate of title, are absolute owners of a freehold flat and have an undivided share of the common property.
	Studs	The uprights in the wall of a building.
T	Table Loan	Table loans have a set payment amount – as first most of the money goes towards the interest owed but as the principal amount starts to decrease more of the money paid goes towards repaying the principal(amount borrowed).
	Tenancy in Common	A type of ownership of a property – each person owns a share of the property – if a party dies that share is given to a beneficiary as provided in the persons will.
	Tender	Type of property sale method – all interested buyers put in their offers or bids in writing for the seller to consider. A closed tender means all offers must be in by a certain date. An open tender has no closing date. An offer can be made with conditions attached.
	Term	Generally refers to the length a loan is documented over – (i.e. 30/25/20 years)
	Title Search	A check of the title records to ensure that the seller is the legal owner of the property and that there are no other claims or outstanding.
	Townhouse	A dwelling unit, generally having two or more floors and attached to other similar units via party walls. Can be Strata or Cross lease titled.
U	Unconditional	Means a sale and purchase agreement made on a property either has no conditions attached or conditions have been met. An unconditional agreement is legally binding on both the buyer and seller.
	Underpinning	Supports placed under an existing wall to provide added strength.
	Utilities	The private or public service facilities such as gas, electricity, telephone, water and sewer that are provided as part of the development of the land.
V	Vacant Possession	means the property will be vacant when ownership is transferred at settlement.
V	Variable Interest Rate	another term for a floating interest rate.
	Vendor	Person selling a property.
W	Wall cavity	The space between the inner and outer sections of a wall.
Y	Yield	The interest earned or return by an investor on an investment, stated as a percentage of the amount invested.
Z	Zoning	Local authority guidelines for the permitted use of land.

Glossary

The First Home Buyers Club, New Zealand