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Lending terminology explained

The following is a list of terms and their meanings that you may come across when purchasing a home and arranging a home loan.

This is the person who acts on your behalf for the purchase of the property. They will attend the settlement and ensure that you get clear and unencumbered title or ownership of the property. They may also conduct various searches of the title to ensure that everything is in order as well as collect and disburse all funds in the transaction and provide you with your detailed settlement statement. A solicitor can also perform this function.

Any contract to purchase property, may have conditions imposed on it by either the vendor or purchaser; however a contract for a property purchased at auction usually cannot have any conditions, These could be conditions such as subject to a satisfactory building or pest inspection, or subject to finance. In fact, any condition can be placed on a contract but it must be agreed to by both vendor and purchaser. If a condition is not met by the nominated date or time then either party can cancel the contract, usually without penalty.
The purchase contract will specify a deposit amount that must be paid prior to the end of the cooling off period, or in the case of an auction, on the fall of the hammer. This amount is usually 10% of the agreed purchase price; however it is open to negotiation. The money is held by the selling agent in their trust account until settlement. You should ensure that you are issued with a receipt for the deposit paid.

When you sign a contract to purchase a property, you then have until midnight two clear business days later to cancel the contract without penalty. Any deposit paid will be refunded in full.

A property purchased at auction does not have cooling off rights. Cooling off rights can also be waived by signing the appropriate document prepared by a solicitor. This is generally done for a property going to auction and purchased prior to the auction.

This is a once only premium payable by the borrower at establishment of the loan. Most lenders will insist on LMI cover whenever the loan is greater than 80% of the value of the property. It protects the lender (only) in case of default on the loan. If the lender takes possession of a property after a borrower defaults and there is a shortfall on sale of the property, the insurer will cover that shortfall. The insurer will then seek reimbursement from the borrower.
This is the document that is lodged with the Land Titles Office (LTO) detailing the change of ownership of the property. This is usually prepared by the conveyancer for the purchaser.
Is the legal document that registers the lender’s financial interest in the property, and gives them the legal power to sell the property if the Mortgagor is in default on the loan.

The lender who is providing the loan and therefore holds the mortgage on the property.

The lender will register their financial interest in the property by way of a notation on the title. This is done by the LTO and they will charge a fee for this.
This is you, or the person borrowing the money to fund the property.
This is the process by which the conveyancer acting on your behalf lodges the Memorandum of Transfer with the LTO to transfer ownership of the property. The LTO charges a fee for this based on the contract price of the property.
This is a fee levied by the State Government on all property transactions. It is calculated on the contract price, or fair market value of the property and is payable on settlement.