Glossary

The asking price is how much a property is advertised for. This gives buyers an idea of how much the seller would like for a property and can be a good starting point for negotiations.

The agreed price is how much the seller agrees to sell the property for. This can be more than, less than or the same as the Asking Price.

An auction is a form of sale where all the buyers are in one place and make bids on the property, with the highest offer taking the property. For more on auctions, check out our video on How Auctions Work from a real-life Real Estate Agent.

Body Corporate – A “body corporate” is a group made up of all unit owners in a unit title property, such as apartments, townhouses, or commercial offices. When you purchase a unit title property, you automatically become a member of the body corporate. The body corporate is responsible for making decisions about the management and maintenance of the building and property. Most day-to-day decisions can be made by elected representatives or a body corporate committee. The body corporate must hold an AGM at least once a year to discuss issues and vote on them. When buying a unit property, it’s important to look at the body corporate’s rules, fees, and finances, as these affect the cost of owning the unit and the quality of living there. The Bank will request this information to review if you are purchasing a unit title property.

A Builder's Report - sometimes known as a pre-purchase inspection - is a report from a builder on the state of a property that is used to identify any potential issues. If you are looking to buy a home you should usually list a builder's Report as a condition of sale in the Sale and Purchase Agreement to make sure the house is sound. Builder's Reports are also often required by the Bank for them to assess before they will confirm your finance for a property.

When signing a Sale and Purchase Agreement it is important to check if there is a Cash Clause. A Cash Clause is included at the request of the seller and means that if someone else makes a cash offer before you have gone unconditional the seller can choose to go with their offer instead. It's important to note that if someone does make a cash offer the seller has to ask you first if you will go unconditional before they accept the other offer.

A person's capital is another term for their total wealth. This is calculated by looking at the value of money and other assets (like property) that a person holds.

The former term for what is now called a Record of Title.

A Conditional Agreement is a sale and purchase agreement that has conditions that must be met before the sale is finalised. The buyer will usually put conditions in like getting a builder's report, having finance approved and reviewing the LIM or Record of Title, although a seller can also put in conditions.

If you have conditions in your offer, you will also have agreed to a date that you need to complete these tasks before - the seller can't wait around forever! Make sure that you have completed all of your to do's, including securing your lending, before this date so that you don't miss out on your home. If there are unforeseen delays you may be able to negotiate an extension through your solicitor, but it is much easier if you can avoid this by getting everything done on time.

Contents Insurance covers the cost of fixing or replacing the contents of your home in the case of loss, damage or theft. While it's not a requirement for lending, you should also look at getting contents insurance for your home to make sure you are completely covered. To find out more about what insurance cover you should consider check out our handy videos here, or give the friendly SBS Insurance team a call on 0800 002 002.

Conveyancing is what your solicitor (aka lawyer) does when you're buying your home. Essentially, it is the legal process behind the scenes. To find out more about conveyancing (and why you actually need a solicitor) check out our videos from Solicitor Liz Henry and understand how they cover the legal side of buying your home.

Your credit history is a record of your debt and repayments. Banks request a credit report on your credit history to help determine whether they should approve your lending.

A deadline sale is where a property must be sold by a set date. This is often used when the seller is moving into a new home themselves and need to have the funds for their own settlement by a certain date.

A deposit is the amount that you provide as a down payment for a home. The amount needed for a deposit is based on the percentage of the purchase price required by the Bank to be paid in advanced and is paid on settlement.

Disbursements are costs that a solicitor pays when acting on your behalf, and can include things like rates and printing costs. These are additional costs on top of the agreed amount you would pay for their services, so remember to account for these when budgeting.

Your disposable income is exactly what it sounds like - the money left over to spend on whatever you like after all your expenses have been met.

Drawdown is the day that your home loan officially starts and your first repayments and interest is calculated from. This is also the same day as settlement because you need to draw down on your mortgage before the funds can be paid to the seller and the purchase is settled.

An easement as where another party has the right to use your property for a set purpose. This might be to use a driveway or a path. Any easements for a property are recorded in the property's title.

Your equity is the amount of money you personally have in your home. For example, if you buy a home for $400,000 with a $20,000 deposit, you have 5% equity in your home on drawdown.

A fixed rate is where your interest rate will stay at the same amount for a certain length of time. Fixed rates are sometimes lower than floating rates, and there can be a break fee if you want to increase your payment amounts or pay lump sums onto your loan.

A floating rate is an interest rate that can change at any time. This gives you less certainty than a fixed rate and often has higher interest rates than fixed rates. However, if you are on a floating rate you can pay however much you want off your mortgage at any time without fees.

A freehold property (also known as Fee Simple) is where the property is owned entirely by the owner.

Your gross income is your total income before any taxes are deducted.

A guarantor is someone who agrees to repay the bank on a borrowers' behalf in the event that they fail to meet their repayments.

Your instalments are the regular payments you make on your loan. These might be weekly, fortnightly, or monthly.

Interest is an annual percentage rate that is calculated daily (by dividing rate by 365) on your outstanding loan balance and it is payable to the bank for being able to borrow with them.

An interest only loan is where your repayments only cover the interest that is owed to the bank.

A LIM (Land Information Memorandum) is a report that contains a summary of all the information that the local council holds regarding a property. A LIM report can be requested from the local council and usually has a cost associated.

Your loan structure covers the term that you will be repaying your mortgage over, whether you are going to be on a fixed or floating rate (or a little bit of both!), what rate you will be on, and the frequency of your repayments. Your Bank will walk you through each of these steps, so make sure you ask questions if you aren't sure.

Your Loan to Value Ratio is the percentage of your deposit compared to the overall cost of a property. This means that if you have a 5% deposit, your LVR will be 95%.

The Reserve Bank of New Zealand sometime imposes limits on Banks as to how many high LVR loans they are able to write each period.

The market value is estimated price that your home is worth to buyers. This is usually the price that a house will be listed at when for sale.

A mortgage is a legal document that gives the Bank the right to hold the Certificate of Title to your property until you repay your loan. It also allows the Bank to sell your property if you don't meet your ongoing loan repayments.

A mortgagee sale is where the Bank puts a property up for sale because the borrower has failed to meet their loan repayments. This is usually done as a last resort.

Your net income is your total income after you have paid all of your taxes (including Student Loan repayments).

The possession date is the date that you take ownership of your new home. This is usually the same date as settlement.

Pre-approval from you Bank is where they give you a conditional offer of finance for you to buy a property. Pre-approval is free to get and there is no obligation for you to lend with a Bank that gives you pre-approval. It is good to get pre-approval (especially for your first home) so that you have an idea of how much you can afford and can comfortably make an offer on a property.

The principal of your loan is the amount of money you've borrowed from the bank less any repayments you've made.

A property's rateable value is the amount that the local council has valued your property at for the purpose of deciding what your rates will be.

A Record of Title (formerly known as a Certificate of Title) is an official record that shows the ownership of a property and lists any conditions or mortgages the property holds. These records are held by Land Information New Zealand (LINZ), and are usually dealt with by your solicitor as part of the home buying process.

A registered valuation is a property valuation conducted by a registered valuer. This is often required by banks as a condition of finance to make sure that you are not paying significantly more than a property is worth. If the valuation on a property is less than the amount you have agreed to pay the bank may ask you to increase your deposit to make up the difference.

Security is the asset that is being used to secure your loan, which is usually the property itself. Security is needed because if you don't meet your mortgage repayments the bank needs to be able to get their money back. This is usually through a mortgagee sale.

Settlement is when the purchase price of the property is paid to the seller and you take ownership of your property.

Unconditional is when your sale and purchase agreement has no conditions, which for first home buyers is usually because all conditions have been met. Once an agreement has gone unconditional you are legally locked in to the agreement.

A variable rate is another term for a floating interest rate. 

A vendor is a person that is selling a property.