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Glossary Helpful explanations

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Affordability / Borrowing capacity

The amount of money available for you borrow, based on your current financial state as determined by a financial institution. This calculation takes into account your income, living arrangements and expenses, other loan repayments and any other regular recurring payments you make. Use our Borrowing Power calculator.

Borrowing Power calculator


Auctions

If you wish to purchase a property at auction, it’s important to be aware of a few key points:

  1.  there is generally no cooling off period;
  2.  the contract is usually unconditional with the exception of varying the settlement date; and
  3.  10% deposit is generally required on the fall of the hammer. A lesser amount may be negotiated with the vendor prior to the auction.

It is always best to apply for a pre-approval prior to the auction so that if you are the successful bidder you already have most of the legwork done.

Top Tips – Buying at auction


Anti-virus software

Is designed to detect and remove viruses from computers but can also protect against a wide variety of threats, including other types of malicious software, such as key loggers, browser hijackers, trojans, spyware and ransomware.

How anti-virus software works

Anti-virus software typically runs as a background process, scanning computers, servers or mobile devices to detect and restrict the spread of malware.

Antivirus software usually performs these basic functions:

  • Scanning directories or specific files for known malicious patterns and alerting you to the presence of malicious software.
  • Allowing you to schedule scans so they run automatically.
  • Allowing you to initiate new scans at any time.
  • Removing any malicious software, it detects. Some anti-virus software programs do this automatically in the background, while others notify you of infections and ask you if you want to clean the files.

In order to scan your computer systems, anti-virus software must be given a high level of access. This makes anti-virus software itself a common target for fraudsters.

So be sure to purchase anti-virus software from a trusted source and always keep it updated. PC Mag have trialled and tested over 40 programs, check out their recommendations.


Asset class

Asset class represents a group of investments that share common risk and return characteristics. The main asset classes are shares (both international and Australian), property, bonds, fixed interest and cash. Each asset class will offer a different level of return and therefore have varying degrees of associated risk. Shares and property are higher risk investments, while fixed interest and cash are lower risk.


All Ords

The All Ords is the All Ordinaries index which is made up of the weighted share price of about 500 of the largest Australian companies and provides the predominant measure of the overall performance of the Australian sharemarket.

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Bridging Finance

If you already have a home, in all likelihood you’re intending to fund the purchase of your new home with the sale of your existing one. But what if the perfect new property pops up before you complete your sale?

A bridging loan can be used to ensure that dream listing doesn’t pass you by and lets you purchase the new property before selling your current home. You can choose to make monthly interest payments or have the interest capitalised to your loan during the bridging period, keeping your costs at a minimum while you sell your existing home.

Loans


Building Insurance

In South Australia, building insurance is the responsibility of the purchaser of a property once a contract of sale is in place. Speak to your insurance company or agent to organise a policy as you will generally need one in place if you are financing your home. 

Insurance


Biometric security

Measures unique characteristics of a person, such as voice pattern, the iris or retina pattern of the eye, the shape and composition of your face, or fingerprint patterns. With biometrics, it can be extremely difficult for someone to break into a system.


Bitcoin

Is primarily a digital currency (cryptocurrency). Users in the Bitcoin network, known as bitcoin miners, use computer-intensive software to validate transactions that pass through the network, earning new bitcoins in the process. Bitcoin was originally developed as a decentralised global payment system; however, it has also been bought and sold in large volumes as a speculative investment. Learn more


Bear market

A financial market in which shares are currently falling in value. It’s arguable exactly how much a market has to fall in order to be considered a bear market, but a 10 per cent loss from a high point is usually considered a bear market.


Bull market

The opposite of a bear market. The term is used when share markets are increasing in value.

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Certificate of Title 

This document details the land dimensions and ownership details, and whether there are any encumbrances over the property. An encumbrance is a registered interest and can take the form of a mortgage, caveat, or easement.

Transfer

A document registered with the Land Titles Office that confirms a change of ownership. The change of ownership is noted on the Certificate of Title.


Comparison rate

A comparison rate is the most important rate to consider and the best way to compare different loan offers as it takes into account standard fees and charges. A lower rate isn’t necessarily cheaper if it comes with higher fees. All financial institutions must provide a comparison rate alongside any loan rate they offer. The standardised amount and term for home loans is a loan of $150,000 for 25 years. Check the disclaimers and terms and conditions of your chosen financial provider to ensure that you are choosing the right loan for your needs.

Compare Home Loans


Contract of Sale

A legally enforceable written agreement between individuals or entities. In real estate, a contract is entered into when contracts are exchanged and the deposit is paid.

“Under contract” / Contingencies / “Subject to”

If a property is described as being under contract, it means that the vendor and the buyer have agreed on a price for the property and signed a contract. But that contract is still subject to conditions and could fall through before the sale is completed

To put this another way, when you place an offer on a house, it is subject to specific requirements. For example, the offer may be subject to your ability to obtain home loan approval, to the satisfactory completion of a building inspection, or to the sale of your current home (if you are moving). If your home loan application is declined, if the building inspection reveals serious issues with the property, or if the sale of your current property falls through, you are well within your rights to withdraw from the deal.

Therefore it is important to not sign an unconditional contract until you are 100% certain that everything is in order, otherwise you run the risk of forfeiting your deposit and more.

Cooling-off

A 'cooling-off period' may also apply after contracts are exchanged. This refers to the period of time during which you may cancel the purchase contract, although you may still lose a portion of your deposit. The cooling-off period is generally not available for properties purchased at auction.


Conveyancer

A person qualified and licensed to handle all documentation for the sale and purchase of a property. You will generally need a conveyancer or solicitor if you are purchasing property.

Arrange a Conveyancer


Closed padlock symbol

A padlock icon, or lock icon, displayed in a web browser indicates a secure mode where communications between browser and web server are encrypted. This type of connection is designed to prevent anyone from reading or modifying the data you exchange with the website.

Padlock

Example of the icon in a web browser the address bar.

Typically, you would expect to see the padlock icon on websites where sensitive data may be transmitted, such as a banking website or online shopping site. In most browsers, you can click the padlock to learn additional information about the secure connection, including any permissions you have previously granted, information about the website and verification, the number of times you have visited the site, stored cookies, saved password and more.


Cryptocurrencies

Are also known as virtual currencies or digital currencies and are a form of electronic money. They don’t physically exist as coins or notes. A cryptocurrency unit, such as a bitcoin or ether, is a digital token created from code using an encrypted string of data blocks, known as a blockchain. There are usually only a fixed number of digital currency tokens available.

Cryptocurrencies are not only used as payment systems but can also be used to execute contracts and run programs. Anyone can create a digital currency, so at any given time there can be hundreds, or even thousands, of cryptocurrencies in circulation (at the time of writing there were 2,351 active cryptocurrencies).

Virtual currencies can be bought or sold on an exchange platform using conventional money. Some popular digital currencies, like Bitcoin can be bought or sold for cash through special ATMs.

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Data breach 

Is an incident where information is stolen or taken from a system without the knowledge or authorisation of the system’s owner. Data breaches can be suffered by small companies or large organisations. Stolen data may involve sensitive or confidential information such as credit card numbers, customer data (like order history or personal details) or trade secrets.

Protect your data


Diversification

A principal that means ‘not putting your eggs in one basket’. Diversifying your investments helps to minimise risk and maximise returns. Not all investments perform in line with each other, so investing in a variety of asset classes allows you to spread your risk.


Dividend

A payment made by a company to its shareholders, generally based on the company’s profits.

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Equity  

The difference between what you owe on a home loan and what your property is currently worth.

For example, if your property is worth $300,000 and you owe $210,000 you have $90,000 equity in your home.


Electronic funds transfer (EFT)

Is a system of transferring money from one bank account directly to another without any paper money changing hands. EFT refers to any transfer of funds initiated through an electronic terminal, including credit card, ATM and point-of-sale (POS) transactions. It is used for both credit transfers, such as payroll payments, and for debit transfers, such as mortgage payments.


Encrypted/ encryption

Despite some of the complicated maths involved, encryption simply locks your files and data away using a secret code, just like two people talking in a special language they created. If anyone else overhears that conversation, it sounds like gibberish, and it's the same with encrypted files.

Encryption is commonly used to protect data in transit and data at rest. Every time someone uses an ATM or buys something online with a smartphone, encryption is used to protect the information being relayed. Businesses are increasingly relying on encryption to protect applications and sensitive information from reputational damage when there is a data breach.

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First Home Owner Grant

The First Home Owner Grant (FHOG) is paid by the State Government to eligible first home owners to assist with the purchase or construction of a brand new residential property, including a house, flat, unit, townhouse or apartment that meets local planning standards anywhere in South Australia.

The payment is made only after an application has been submitted to and approved by RevenueSA or a financial institution authorised by RevenueSA to process applications. For eligibility criteria please visit ReveueSA’s website.


$5,000 First Home Buyers Grant

Currently the South Australian Government’s First Home Owners Grant is only available for people who are buying or building a new residential property.

Credit Union SA’s $5,000 First Home Buyer’s Grant is available when you borrow at least $250,000 to purchase or build a first home with a loan to value ratio (LVR) over 80%. All loans that are eligible for the First Home Buyer’s Grant will be subject to pay Lenders’ Mortgage Insurance.

First Home Buyers Grant


Lending criteria, fees and conditions apply. Offer is current as at 23/04/2018 and is subject to change. To be eligible, applicants must not have previously owned residential property in Australia. Available to natural persons only (i.e. not a trustee or a company).


Follow up scam

Fraudsters will often try to take advantage when you’re feeling vulnerable after being the victim of a scam, and try to extract more money from you through a follow up scam.

Some common follow up scams include:

- offers from a law enforcement agency to investigate your scam and retrieve your money for a fee. Law enforcement agencies do not charge for their services

- contact from lawyers who claim to specialise in recoveries from certain scam types, such as cryptocurrencies or investments

- a doctor calling you to alert you that the scammer urgently needs medical bills to be paid or they might die

- a woman contacting you to explain she is the fraudster’s wife and wants to escape him but needs money to do so.

These are only a few of the follow up approaches fraudsters may use try to get more money from you. New approaches could be quite different from the original scam and could come quickly or sometime later. Fraudsters may have passed your details to other fraudsters who use entirely different methods and the new approach may seem totally unrelated to the original scam.

How to keep safe from scams


Fraudster

A person who gets money by deceiving someone (committing fraud).


Franking credits

Taxation credits which are passed on to shareholders (including super funds) from companies which have already paid tax on profits before dividends are paid.


The FTSE

The FTSE is the UK’s performance index and contains 100 top companies

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Genuine savings

For home loan applications to be approved, you must have at least 5% of the purchase price from genuine savings. Genuine savings are defined as a demonstrated savings pattern established over a minimum period of 3 months in the name of at least one borrower prior to the loan application being received, including:

  1. funds held or accumulated in savings accounts for 3 months or more
  2. equity or redraw in existing loans
  3. term deposits or shares held for 3 months or more

Genuine savings does not include:

  1. gifts or inheritance
  2. First Home Owner Grant
  3. proposed savings plans
  4. sale of assets (other than real estate) e.g. motor vehicles
  5. the proceeds of a personal loan or credit card
  6. rebates or incentives
  7. funds held in a business or company’s account

Guarantor loan

Often called a 'Family Guarantee loan', involves using the equity in another person’s property, usually a parent, as security to purchase a house of your own. Guarantor loans are suitable for scenarios where the borrower doesn’t have enough deposit to avoid Lenders Mortgage Insurance.

Family Guarantee

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Hangout

Is a unified communications service that enables text, voice, or video chats, either one-on-one or in a group. Hangouts is built into Google+, Gmail, YouTube, and Google Voice, plus there's Hangouts apps for iOS, Android, and the web.

 

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Interest Rates and Variable vs Fixed

An interest rate is the rate of interest that a bank or other financial institution (the lender) sets on the cost of lending you money. There are two main types of interest rates to be aware of: variable and fixed.

Variable Interest Rate

A variable interest rate is one that can move up or down at any time. 

Fixed Interest Rate

A fixed interest rate on the other hand, is one that will remain the same over an agreed term. Unlike a variable interest rate loan, where minimum repayments vary according to the interest rate, the repayments for a fixed interest loan will always stay the same over the agreed period.

Honeymoon and introductory rates

Honeymoon rates or introductory rates, offer a lower interest rate for an introductory period, usually the first 1 – 3 years of the loan. Once this introductory period ends, the interest rate usually reverts to a higher rate.

Compare home loan interest rates


International telegraphic transfer

A telegraphic transfer (TT) is an electronic transfer of funds directly credited to a beneficiary’s overseas bank account. A TT is usually the quickest way to send funds overseas - normally reaching the beneficiary within one to two business days.

Learn more


Investment risk

The chance of incurring a loss from an investment. Generally the higher the potential return, the greater the risk of loss.


Indices/index

Indices provide a general measure of share market performance and are used as an indicator of the general health of the market.

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LMI (Lender’s mortgage insurance)

LMI is an insurance premium payable by you (the borrower) to insure against losses in the event you are not able to repay the loan and the lender is not able to recover the debt in full. You can choose to add the LMI premium to your loan (called capitalisation) so that you don’t have to pay it upfront.


LVR (Loan to value ratio)

Loan to value ratio (LVR) is the loan amount as a percentage of the total value of the property. For example if you are borrowing $270,000 to purchase a house valued at $300,000 then your LVR is 90%. The maximum LVR that you can borrow up to depends on several factors including the type of loan, the loan amount that you’re applying for and your capacity to make repayments.

Credit Union SA requires Lenders’ Mortgage Insurance (LMI) for all home loans where the LVR exceeds 80%.

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Malware

Is any piece of software which has been created to steal data and generally cause a mess. Viruses, trojans, spyware, and ransomware are all different kinds of malware.

Malware is often created by teams of hackers to make money, either by spreading the malware themselves or selling it to the highest bidder (usually fraudsters) on the Dark Web.

But no matter why or how malware is created, it’s always bad news when it winds up on your computer.

The following is a list of common types of malware:

Virus: Like their biological name, viruses attach themselves to files and infect other files. They can spread uncontrollably, damaging a system’s core functionality and deleting or corrupting files. They usually appear as an executable file (.exe).

Trojans: Named for the ‘Trojan horse’, this kind of malware disguises itself as legitimate software or is hidden in legitimate software that has been tampered with. It tends to act discreetly and create backdoors in your security to let other malware in.

Spyware: Is malware designed to spy on you. It hides in the background and takes notes on what you do online, including your passwords, credit card numbers, surfing habits, and more.

Ransomware: This kind of malware typically locks down your computer and your files and threatens to erase everything unless you pay a fee.


Managed fund

Managed funds are a way to achieve diversification. A managed fund pools your money with the money of other investors which is then managed by a professional fund manager. A managed fund may allow you to invest in a variety of asset classes.

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Non-concessional contributions

These are super contributions made from your after-tax income. These are not subject to contributions tax upon entry into your super fund (since they have already been taxed through your income tax).


Nikkei

Nikkei is Japan’s performance index and contains 225 top companies.

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Offset account

An offset account is used as a means of reducing interest costs on a loan. This is done by linking your home loan account to the offset account. Any balance in this linked account offsets the loan principal on your mortgage and means that subsequent interest payments will be less.

For example, if your home loan is $300,000 and you have an offset account with $15,000 in it, then you are only charged interest on $285,000 of the loan, rather than on the full amount. Credit Union SA offers a 100% offset account, whereas some institutions do not.

Home Loan Offset Account


Off the plan

When you buy a property from the plans only and not the finished building (common when purchasing an apartment or house from a development). The purchaser will not be able to inspect the property or see the standard of finishes, the practical layout, the size and dimensions or the outlook.


Owner-Occupied vs Investment Home Loans

Owner-Occupied

When you're buying or building a home or apartment you intend to live in, it's called an owner-occupied property. This includes holiday homes that you don’t rent out and purchases of land on which you intend to build a dwelling to live in. When you're applying for a home loan to help you buy a property, you'll need to specify whether you're applying for an owner-occupied loan or an investment loan. This distinction can change the interest rate options and loan features available to you.

Investment

When you're buying or building a home or apartment and plan on renting it to tenants or re-selling it in the near future, it's considered an investment property. When you're applying for a home loan to help you buy a property, you'll need to specify whether you're intending to live in the property (owner-occupied loan) or whether you intend to rent it out or re-sell it (investment loan). This distinction can change the interest rate options and loan features available to you.

Home Loans

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Pre-approval    

When a lender advises you in writing how much they will lend you. It is conditional upon the property you wish to purchase being acceptable security, and your lender confirming your income and other information provided in your application as correct.

Learn more about pre-approvals


Password manager

Think of a password manager like a book of your passwords, locked by a master key that only you know. Password managers don’t just store your passwords - they help you generate and save strong, unique passwords when you sign up to new websites. This means whenever you go to a website or app, you can pull up your password manager, copy your password, paste it into the login box, and you’re in. And because many of the password managers out there have encrypted sync across devices you can use the same password manager on your phone, laptop and tablet.


Pre-authorisation

A pre-authorisation is a temporary hold of a specific amount of the available balance on a credit or debit card that is usually provided when making a travel booking. The pre-authorisation is not a charge and no funds are debited from your account. A pre-authorisation is a security guarantee for payment only.


Prepaid cards

Need to be 'loaded' with money before you can make purchases. The amount of money you can use or withdraw generally is limited to how much you have available on the card.

Many prepaid cards can be used at a variety of locations. Some can be used with any retailer that takes credit or debit cards. They are available from financial institutions, retailers, foreign exchange merchants and post offices.

Because prepaid cards aren't attached to a bank account it means people who become fraud victims have no legal recourse and are unable to recover funds.


Preserved benefits

Preserved benefits are super benefits that cannot be accessed until a specified age and situation, for example when you are retired and aged between 56 and 60, depending on your date of birth, or you have reached age 65.

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Reverse image search

Takes an image file and returns results related to the image. Search engines that offer reverse image capability include Google and TinEye. To use Google's reverse image search, go to the image search page and upload an image file from your computer or enter the URL from an image online. This is a great tool to catch out would-be romance scammers.

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Settlement

The completion of the sale transaction. Final payments are made at settlement in exchange for the relevant documents. You can then take ownership of your new property from settlement.

Potential hidden costs


Stamp duty

At a basic level, stamp duty is a tax imposed on purchases. When buying real estate, it is paid by the purchaser. Stamp duty varies between different states in Australia. However, it is generally based on the greater of two factors – the market value of the property or the price paid (including any GST) for the property.

Buying and Selling Costs calculator


Scams

A type of fraud which involves confidence tricks by a dishonest third party (fraudster) to gain money and/or personal or identity information to be used for financial gain. Often, the victims unwittingly carry out the transactions or divulge the pass codes required to authorise transactions to the fraudster. Whereas, when we talk about fraud in a general sense, we are talking about a victim that hasn’t been explicitly involved in the transaction.

How to keep yourself safe from scams


Superannuation (super)

A system where you set aside funds during your working life to fund your retirement. The government supports this system by requiring employers to contribute super payments on your behalf and enforcing regulatory controls to keep your money safe.


Salary sacrifice

An amount of pre-tax salary that you decide to contribute to super instead of taking as cash salary. This is in addition to the compulsory super guarantee contributions that are made by your employer on your behalf.


Shares

Shares are also known as equities. When you buy a share you are buying a portion of that company. If that company performs well, as a shareholder, you benefit by growth in the value of the share and often also by receiving dividends.


S&P 500

S&P 500 is the United States performance index and represents 500 of the largest corporations in America.

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Two-factor Authentication (2FA)

Is a security process in which you provides two different authentication factors to verify yourself to better protect both your credentials and the resources you’re trying to access. 2FA provides a higher level of assurance than authentication methods that depend on single-factor authentication (SFA), in which you provide only one factor - typically a password. 2FA methods rely on providing a password as well as a second factor, usually either a security token or a biometric factor like a fingerprint or facial scan.

2FA adds an additional layer of security to the authentication process by making it harder for attackers to gain access to your devices or online accounts.

Protect your data

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Valuation

A report as often required by the lender detailing a professional opinion of the property’s value. In most cases they will be arranged as part of your loan application


Vendor

A party who offers a property for sale.

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WhatsApp

Is a free, cross-platform messaging and Voice over IP (VoIP) app owned by Facebook. It allows users to send text messages and voice messages, make voice and video calls, and share images, documents, user locations, and other media. WhatsApp runs on mobile devices but is also accessible from desktop computers, as long as the user's mobile device remains connected to the Internet while they use the desktop app.

This is general advice only and doesn’t take into account your objectives, financial situation or needs. Conditions, fees and lending criteria apply and are available on request.