Glossary

Here are some of the most commonly used terms that home buyers and sellers should be familiar with.

A

Agreement

The written contract for the sale and purchase of the property between the vendor (seller) and purchaser (home buyer). See Conditional Agreement and Unconditional agreement.

ANZ National Bank Group

Means ANZ National Bank Limited and its related companies as defined in the Companies Act 1993.

Asking Price

The price the vendor initially asks for the property. It is often higher than the final price negotiated between the vendor and purchaser.

Asset

A major item you own – like a home, car, boat or investment.

Auction

A way to sell where all the buyers are in one place and make bids (or offers) until only one buyer is still bidding. An auctioneer runs 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.

BRANZ

Building Research Association of New Zealand.

Bridging Finance

A short term loan so you can buy your home while waiting for other money to become available (such as money from selling another place). Once the other money becomes available it’s used to pay back the bridging loan.

Buying Privately

Where the owners sell the house themselves without listing the property through a real estate agent. It means that the seller can avoid the real estate commission. If you are buying privately, ensure you consult your legal advisor prior to any major decision.

C

Capital Gain

The profit you make when the value of something you own goes up. If you buy something for $100,000 and it goes up to $150,000 – the extra $50,000 is your capital gain. Currently there is no tax on capital gains on your own home.

Capital Value

You’ll see this term on your Rating Valuation (RV). It’s the total value of your property, including land and building but not chattels (things like light fittings, carpets and curtains).

Certificate of Title

This is the ownership paper for your property. It shows information about the land and house as well as the legal description of the land.

Code Compliance Certificate (CCC)

A certificate from your Local Authority to say the building complies with the Building Act. Check all buildings and alterations have a certificate before you buy. The LIM (Land Information Memorandum) should contain details.

Commission

A flat fee or percentage of the sale price paid by the vendor to the real estate agent responsible for the sale.

Company Title

If you buy a flat with a company title, you buy ‘shares’ in the company that owns the property. The shares give you the right to live there (and you have a ‘licence to occupy’). The company administers and maintains the block of flats.

Conditional Agreement

A conditional agreement is a legally binding contract, but is subject to a certain condition or conditions detailed in the agreement being satisfied, usually by the purchaser (e.g. selling your existing home by a set date or arranging finance by a certain date).

Conveyancing

The legal process when you buy or sell property – including the checking and registration of documents to transfer the ownership over.

Covenant

If a covenant is recorded on the title for your property it means there is some legal restriction or agreement you have to keep. For instance you might have to pay for fencing, protect a native tree on your land, or can only build within certain restrictions.

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

Deposit

A percentage (usually up to 20%) of the purchase price paid by the home buyer when the agreement is signed. (Note: if paid to the real estate agent, the deposit will be held in trust by the agent and released to the vendor only when the contract becomes unconditional).

Depreciation

How much the value of something goes down as it gets older or more worn. It’s a term insurance companies often use.

Discharge of Mortgage

When you’ve paid everything back to the lender you can request that your mortgage be discharged. The mortgage is discharged so the lender’s name is taken off the title to your property.

E

Early Repayment Recovery

If you repay more than 5% p.a. of your Fixed Interest Rate Home Loan before the end of the fixed interest rate term, an administration fee of $250 applies. In addition, you may also need to pay an Early Repayment Recovery charge.

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.

Enduring Power of Attorney

A legal document that gives someone you name the power to act for you if you need them to, for instance if you are in a serious accident and not able to look after things yourself. There are two types – one that covers your care and welfare, and one for property matters.

Equity

The amount of cash (including the deposit) the purchaser puts into the property, (i.e. the purchase price less the amount borrowed).

Excess

If you make a claim on your insurance policy the excess is the amount that you have to pay. The insurance company pays the rest.

F

Fixed Interest Rate

The interest rate is set for a certain period of time and will not go up or down.

Fixtures and Fittings

Items that are considered part of your home because they are permanently attached in some way – by nails or wires for instance (such as the oven or build in cupboards or shelves).

Floating Interest Rate

Where the interest rate can go up or down as the market changes. Sometimes this is also called a variable interest rate.

Freehold

The closest thing to absolute ownership of land (sometimes known as a ‘Fee Simple Estate’). Buildings and fixtures on the land generally belong to the owner of the land.

G

No listings

H

Home Buyer

The person who buys a residential property: the purchaser.

Home Loan

The funds the home buyer has to borrow (usually from a bank or other financial institution) to purchase the property, generally secured by a registered mortgage to the Bank over the property being purchased.

I

Indemnity Insurance

Insurance for a ‘market value’, meaning replacement less an amount for wear and tear. It is not usually enough to rebuild a badly damaged home.

Instalments

The amount of the principal and/or interest repayments that you make on your home loan.

Interest

The amount the Bank charges for the money lent to you to purchase your property.

J

Joint Agency

The seller has listed their house for sale with two or more real estate agencies.

Joint Tenancy

This is the most common way to own a home together. It means you both (or all) own the home together and if one dies the other (or others) gets full ownership no matter what your Will says. Most couples own their homes together this way.

K

No listings

L

Land Information Memorandum (LIM)

When you’re buying a home you can get a report from your Local Authority which sets out everything they know about the property – things like consents, rate owing, and drainage and problems with flooding or erosion.

Leasehold

Occupation of the land under a lease whereby the land owner charges a rental on the land and the occupant (or lessee) obtains the right to occupy the land for a specified term at a specified rent. Any improvement on the land, (i.e. building of a house or additions) legally belongs to the occupant but the ownership is subject to the terms of the le

Lenders Mortgage Insurance (LMI)

This insures your lender for the extra risk they take if they lend over 80% of the value of the property (the percentage may vary).

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.

Loan Agreement or Facility Agreement

This is the contract between you and the bank for the money they are lending you.

Low Equity Premium

(Or Low Equity Margin) An up front charge which reflects the additional risk the bank is exposed to for higher levels of borrowing relative to the value of the property.

Lump Sum Payment

This is when you pay an extra amount, say $1000, off your loan on top of your normal payments.

M

Market Value

this is the price a home is likely to sell for. In the end it’s the amount a buyer is willing to pay.

Mortgage

The security the home buyer gives to the lender to be registered against the title to the property being purchased. The lender becomes the mortgagee of the property and the property owner is the mortgagor. This secures the home buyer’s debt to the lender (mortgagee).

Mortgage Protection Insurance

This insurance can protect you if you can’t pay your home loan. The insurance can repay the loan if you die, or makes payments for you if you are redundant or can’t work due to serious illness for instance. The terms, conditions and exclusions vary between policies. For full details see the policy documents.

Mortgagee

The organisation that lends the money to you and holds the mortgage over your property.

Mortgagee Sale

This is when the lender who holds a mortgage over your home has to sell your home to get their money back because you can’t repay your loan.

Mortgagor

You are the mortgagor if you have borrowed money to buy a home.

MREINZ

Member Real Estate Institute of New Zealand – all real estate agents should be a member. The Institute provides training for agents and sets the rules an ethics they should operate by.

N

Non Utilisation Recovery

If you agree to hold or reserve a fixed interest rate, and then later choose to cancel the fixed interest rate, or decide on a different interest rate or term, then a Non-Utilisation Recovery (NUR) fee will apply.

O

No listings

P

Possession

When you have paid for the home and have the right to move in, usually on the settlement date. Early possession is when it’s agreed you can move in before settlement date – you might have to pay rent until then.

Pre-approved Home Loan Certificate/Letter

A certificate/letter that confirms a home buyer is eligible to borrow a specified amount of home finance from a bank subject to the property satisfying the bank’s security and other requirements. A bank usually issues these before prospective buyers start looking for a home.

Principal

The total amount of funds you are borrowing before interest is added.

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 under a mortgagee sale.

Private Sale

If the home is being sold by the owner themselves instead of through an agent.

Project Information Memorandum (PIM)

If you’re building you can get a report from your Local Authority that sets out everything they know about the land and things that could affect your plans, such as consents you’ll need and problems like flooding or erosion.

Q

No listings

R

Rateable Valuation

The valuation done for you by your Local Authority. They use it to set your rates. It gives you a general idea of the value of your property. It used to be called Government Valuation.

Real Estate Agent

A specialist person who is licensed to negotiate and transact the sale or lease of real estate on behalf of the property owner. The most common way to buy and sell a home, the real estate agent goes between the buyer and seller with offers and counter offers.

Reserved Rate Agreement

Signing this agreement allows you to fix today’s interest rate in advance of settlement. (Terms and conditions may vary between lenders.)

S

Sale and Purchase Agreement

This is the contract between the buyer and seller of a property.

Security Value

The value the bank or lender gives a property, excluding chattels or other non-reality items, when assessing the amount of any loan to be secured by the property.

Settlement

This is the final stage when the property changes hands. It’s the bit when the money is paid, the new owner’s name and mortgage go on the title for the property, and the Certificate of Title and the keys are handed over. The day this all happens is called settlement day.

Sole Agency

When a home is listed for sale with one real estate agency.

T

Table Loan

With a table loan you have a set payment each fortnight or month. At first most of the money goes towards the interest you owe – but as your loan starts to go down more of each payment goes towards repaying the loan itself.

Tenancy in common

This type of ownership is useful if you are buying your home with friends or relatives. You each own part of the property, and if you die your share goes to whoever you leave it to in your Will.

Tender

A tender is when all interested buyers put in their offers (or bids) in writing for the seller to consider. A closed tender means offers must be in by a certain date, and open tender means there is no time limit. A tender can have conditions in it, unlike making a bid at an auction.

Term

The period of time over which the loan is to be repaid.

Title

The Certificate of Title (CT) is an electronic document conferring legal right of ownership to the property.

U

Unconditional Agreement

The legal contract that binds both the purchaser and the vendor to settle on the agreed date at the agreed price. It is either not subject to any conditions or those conditions have already been satisfied.

Unit Title

Form of ownership of apartments, flats and home units whereby each owner obtains full freehold ownership of his/her particular dwelling and any ancillary units attached to it (such as garage, parking space) as defined by the unit plan, referred to as a stratum estate.

V

Vacant Possession

This means that when you get ownership or possession of your home there will be no tenants living there, and no lease giving someone else use of the property.

Vendor

The person or entity legally authorised to sell a property (being the legal owner or ‘registered proprietor’).

W

Will

The legal document that sets out your last wishes and what you’d like to happen with your property. If you die without one it can take ages to get everything sorted, and cost a lot of money.

X

No listings

Y

No listings

Z

No listings