Finding all this technical jargon a bit overwhelming? We’ve got you! We’ve created a handy glossary to explain all the financial terminology you need to know.
An access bond is a type of home loan offered by certain banks that allows you to pay extra money into your bond each month – saving you interest in the long-term – while still giving you the option of withdrawing that money if you need to.
Act of God
A natural disaster or uncontrollable event, such as a flood, earthquake, lightning strike or tree falling on a car. You get the idea.
The guaranteed value an insurer will pay for a specific item if it gets lost or damaged.
Anything that safeguards your car against theft, or makes it easier to recover. Think alarms, immobilisers, wheel locks, anti-theft and tracking devices.
If your car needs to be repaired, it must be sent to a company that has been authorised by the insurer. Approved repair and maintenance services are a way for the insurer to keep track of your car maintenance by people they trust.
A paragraph in your insurance policy, stating that you and the insurer agree to use an external mediator or intermediary who will step in to help resolve conflict if you can’t agree on a settlement amount.
If you want to buy a house but can’t afford the whole amount, you’re likely to get a bond. It’s essentially an IOU – a home loan from the bank, where the house you’re buying serves as collateral for the loan. You pay it off monthly, typically with interest.
This is the process of activating a bond and is usually handled by your transfer attorney and the bank’s attorney. Prepare to sign lots of paperwork!
Also known as a mortgagor, a borrower is someone who is applying for a loan.
This is basically the middleman between you and your insurer – an independent agent licensed to sort out your insurance.
Also known as the home loan term, this is the period of time over which you’ll pay off your home loan – typically 20 to 30 years.
A short-term loan to cover certain costs while you wait for money to come in. Also known as a bridging loan or swing loan.
Capital gains tax (CGT)
If you make a profit from the sale of a house, you will need to pay CGT tax – unless it’s your primary residence (the place where you live).
An optional car insurance extra that covers the cost of a replacement car while your vehicle is being repaired. It will increase your monthly premium a little – but it could save you a lot of stress and money if your car is out of action for weeks. Unless you like cycling, then by all means give this a skip.
Class of use
A car-insurance term referring to the purpose of your car. Examples are everyday personal use, commuting to work, or other business travel.
An all-inclusive insurance policy covering a wide range of events.
The lawyer who prepares all the paperwork and facilitates the transfer of a property.
Also known as the lender, this is the company or person providing a loan.
When applying for a home loan, you might be offered a capped-rate bond by your bank. Essentially, it means that the interest rate on your bond is fixed, rather than fluctuating with the market. This may help you to stick to your budget, but the specified interest rate is typically higher than that of other bond types. A capped-rate bond is also known as a fixed-rate bond.
This is your track record when it comes to making insurance claims – also known as claim records. This will influence your monthly premium. The less you claim, the lower it will be.
When you take out a loan, you must pledge something you own as a guarantee or assurance that the bank will get its money back if you can’t settle your debt. This could be an existing asset or the property you are buying.
Compulsory third-party insurance (CTP)
This insurance provides compensation for people injured or killed when your vehicle is involved in an accident.
This is your track record of borrowing money and paying it off. Also known as your credit record.
When you take out a larger loan from a financial institution to pay off several smaller loans or debts. Also known as a debt merger or debt unification, it allows you to repay just one lender.
Also known as the borrower, this is the company or person who takes out a loan
Also known as the deeds registry, this is the government office that registers and records the ownership of a property.
This is the down payment you make to secure and guarantee the purchase of a property, car or other asset.
Debt repayment plan
A strategy drawn up by a debt counsellor to help you pay off your debts. Also known as a credit plan or a debt management plan.
Deed of sale
This is an important legal document that is used as proof of ownership of a property or piece of land. The document is signed by both the buyer and the seller of the property
This is when a debtor fails to make their monthly repayment.
This is a written update to your existing insurance policy to adjust your current coverage. It could be anything from changing your address, to adding cover for a specific item of value, such as jewellery or art.
The part of your insurance claim that isn’t covered by insurance (in other words, the surplus you will need to pay).
The difference between the value of an asset and the amount still owed – in other words, the amount you actually own.
These are specified risks, events and circumstances that won’t be covered by your insurer.
An insurance claim for an accident caused by you, the policyholder.
The selling of a bonded property to settle a home loan that you can’t pay off.
A formal document from the bank, assuring that they will pay you the home loan amount upon transfer of the property.
A once-off activation payment that you pay to the bank when setting up a home loan.
Your monthly loan repayment. This payment could be for your home, car, or any other asset that you’ve taken out a loan for.
This is the additional fee that you pay to the bank for providing you with a loan. It’s usually a percentage of the amount you still owe.
If you’re completely bankrupt and unable to settle any of your debts, you’ll be declared insolvent and your assets might be sold to cover the unpaid amounts.
The monthly instalment or amount you pay for insurance.
This is the person or organisation giving you a loan – typically a bank.
When the bank agrees to give you a loan of a certain amount. This can really come in handy when you’re looking to buy a house
This is the amount or instalment you pay back to the bank every month.
Loan to value (LTV)
This is the requested loan amount, expressed as a percentage of the property’s market value.
A formal document defining all the details of a proposed loan. This is a binding contract between two or more parties.
Loan protection insurance
Also known as Customer Protection Insurance (CPI), this type of insurance will cover your loan repayments if you pass away or can’t earn an income due to illness or disability.
Also known as the loan duration, this is the period of time over which you will pay off a loan.
The monetary value of a house, car or any other asset based on the current market.
A type of loan in which your existing property serves as collateral.
Any changes you made to your vehicle that aren’t classified as factory standard – think spoilers, fancy alloy wheels or a sunroof. Remember to declare these to your insurer from the start.
National Credit Act (NCA)
A legal document that governs access to credit and guarantees consumer protection.
This is an insurance claim for an accident that wasn’t caused by you.
No-claim bonus (NCB)
Insurers commonly offer a discount on your car insurance premium if you don’t claim for a year. Talk about a win-win!
An independent office that is appointed to regulate, evaluate and resolve disputes between insurers and policyholders.
The ability to withdraw more money than you have available in an account.
Also known as the balance due, this is the amount you still owe on a loan.
A loan taken out for your personal use – for example, to further your studies or get married. Also known as a consumer loan.
The person being insured (that’s you).
This is your insurance arrangement.
When a lender uses your financial information to calculate how much you can afford to borrow.
When you take out a second home loan (on the same property) to pay off your original one.
The current selling price of your car or house.
Your strategy for repaying a home loan over a period of time – typically in monthly instalments.
Also known as a certificate of insurance, this document summarises your insurance details.
The monthly admin fees that cover the maintenance of your loan.
If you need a loan but can’t provide the necessary assurance that you will be able to pay it back, someone else can sign surety on your behalf, which means that they commit to cover the debt if you can’t pay it yourself.
This is when you’re forced to sell your assets to pay off a loan.
This is the amount your vehicle insurer is willing to pay out for a claim.
When buying a property, this clause contains certain conditions that must be met before the contract comes into effect. Examples are selling another property or being approved for a bond.
A car-insurance term referring to someone who isn’t the insurer or the policyholder.
Third party-only cover
The minimum car insurance you can have, covering only injuries to third parties and damage to their property.
This is a legal document proving the ownership of a property or piece of land.
A type of car insurance that covers any damage to third parties and their property.
Third party, fire and theft insurance
Third party cover, plus cover for your own car if it is damaged by fire or stolen.
The amount you would get for your car if you traded it in.
When an insurer uses your financial information to calculate your risk factors – and the premium you should pay.
Insurers will write off a car if it can’t be repaired, or if repairing it will cost more than the agreed value.
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