Glossary and Privacy Policy

Arrangement fees
When lenders charge for the effort of providing financing to a borrower, this fee can vary from one lender to another.

Auction
An auctioneer conducts a sales process in public.

Auctioneer
A profession that oversees the sale of real estate or other items whereby persons become purchasers by competition in public view, the sale favours the highest bidder.

Australian Bureau of Statistics
A federal statutory agency, the Australian Bureau of Statistics (ABS), collects and analyses statistical data and provides evidence-based advice to federal, state and territory governments.

Business activity statements (BAS)
BAS is used to reconciling the tax collected by a business is known as Good and Services Tax (GST), paid to the government monthly, quarterly, or annually.

Balance
A statement begins with your last statement’s balance, which is the amount you had within your account at the end of the previous report.

Bankruptcy
A legal concept that you would be best to avoid. Also known as Insolvency, this occurs when an individual cannot meet their financial obligations within a reasonable time frame or if their liabilities exceed their assets.

Bid
A method of purchasing real estate at auction is by an offering.

Caveat
A property caveat is a claim to a property as a legal document. Creating a caveat allows both parties to claim their share of interest. Until the caveat is settled, no further transactions can be registered against the title.

Capital Gains Tax
If you sell an asset such as investment property for a profit, you are subject to capital gains tax (CGT). At the end of the fiscal year, they add the capital gain to your income tax.

Cheque
Cheques detail any amount of money that’s withdrawn since account holders often write the cheque to pay someone. This includes the number on the cheque and the amount taken out.

Court judgement
If a person cannot repay their creditors, creditors can get a judgment in court.

Commercial tenants
Commercial, industrial, and retail properties are standard in arranging long-term leases. In addition, outgoings are negotiated but passed onto the tenant.

Commitment fee
They add a fee onto a loan to compensate a lender for their commitment to offering to fund.

Company secretary
A secretary’s responsibility is to circulate agendas and other documents to directors, shareholders, and auditors and make correct minutes of shareholder and directors meetings and resolutions.

Contract of sale
An agreement includes the terms, conditions signed, dated and witnessed by all related parties.

Conveyance
When real estate is transferred from one party to another, in real estate, this could be when a seller transfers the ownership of a property to a buyer.

Collateral
Collateral is protection to mitigate the risks involved with lending.

Credit
While this refers to several aspects of lending, most used to describe a contract agreement where an individual receives money and repays the lender by a predetermined date (usually with an additional interest fee).

Credit score
Used by lenders to decide whether to accept funding applications based on the risk associated with the borrower. Also referred to as a credit rating.

Development Approval
Local town planning authorities offer written approval for a project, prepared by the developer’s or landowner’s consultants, allowing the project to move forward as per the development plan.

Deposit
The amount of money needed to be paid upfront as part of the loan agreement. The amount specified can often vary depending on a variety of circumstances.

Division of Property
fair distribution, or property division, divides property rights and obligations between divorced or De facto spouses and business partners.

Director
An individual that manages a company’s operations, with the ability to exercise the business’ powers for whatever needs it may have.

Economy
A summary of goods, services produced, distributed and sold within a region or country.

Equity
Property equity is the difference between the remaining debt and the asset’s capital value in question.

Exchange of Contracts
When a seller and buyer sign a copy of the sale contract and then exchange these documents, create a binding agreement for the sale of real estate on agreed terms. They then bound the parties to proceed to settlement, subject to any cooling-off period that may apply.

First mortgage
When a borrower uses the property as security for the first time as collateral for a loan, as usual, if they do not meet the mortgage repayments as agreed, the lender can seize the security.

Financial position
An organisation’s financial position refers to its assets, liabilities, and equity balances. In a broader sense, the concept can describe the financial condition, which is determined by analysing and comparing its financial statements.

GSA (General Security Agreement)
They register GSAs on a National Register to secure the lender’s interest against the relevant security entity/asset. As part of the Register, lenders can also negotiate a priority system to ensure that their interests are protected and prioritised.

Guarantor
In property development transactions, lenders could require additional security to reduce their risk should the developer default on a loan. This guarantee can take various forms, from cash to property.

Gross Realised Value
In property construction, the Gross Realisation Value is the gross sales (or GST exclusive value of the property) upon the completion of the project. Also known as GRV.

Initial Public Offering
When a company raises capital from public investors by offering shares of a corporation in a public share issuance, we often abbreviate it to IPO.

Interest rate
The amount of interest charged on a loan, in proportion to the amount borrowed, allows a bank or lender to profit when distributing funds.

Investment property
A real estate buy intends to earn rental income or capital gain.

Indicative offer
Lenders often show or suggest that the offer may proceed if they meet conditions, also known as a conditional offer.

Joint and severally
Where all parties are equally accountable for the full terms of the agreement, they have entered. For example, in a personal liability case, each party will pursue to repay the entire amount owed.

Land tax
Whether you own or jointly an investment property, you will pay land tax. The amounts vary from state to state.

Lawyer
A lawyer is someone who practices law and deals with legal issues. A lawyer provides legal advice and represents people in court.

Land Banking
Usually refers to financing secured for the acquisition and holding of developmental sites with no certainty of rapid development.

Legal fees
Upon completing the buy, the solicitor or conveyancer will charge a fee for the legal work carried out during buying. Most solicitors charge a flat fee regardless of the property’s value.

Letter of Offer
When a lender issues a finance offer to a borrower, it can be accepted or rejected depending on the borrower in question acceptance.

Lease agreements
They make lease agreements between the property owner and tenant to occupy real estate.

Loan to Value Ratio
All lenders use a Loan to Value Ratio to assess risk when they consider funding and can have a tremendous impact on the terms offered, abbreviated to LTV (loan to values) or LVR (Loan to Value Ratio).

Litigation
When disputes are resolved in court through litigation, unless the parties settle before trial, a judge may make the final decision for the parties in litigation.

Liabilities
Liabilities are obligations between two parties that have not yet been completed or repaid.

Mortgage
A debt passed onto a borrower from a lender secured by a property.

Mortgagee sale
In the event of a default by the mortgagor, the mortgagee claims the security and resells to avoid economic losses.

Mortgagor
A borrower (individual or company) has an interest in a property through a mortgage as security for credit advancement.

Net Realised Value
They reduced the asset value realised on the sale because of standard deductions. Therefore, it is often abbreviated to NRV.

Non-conforming loans
The term non-conforming loan refers to lending that does not meet the criteria for bank financing. There are a variety of reasons for this.

Non-recourse loan
When a lender can seize the security if a borrower defaults on their payments, the difference from standard scenarios is that the lender cannot get further compensation, even if the collateral covers the total unpaid loan.

Offshore
Ideal for overseas investors, most offshore financing options are available for competitive prices and offer enticing sums of money. The general, the applications to be considered are company borrowers.

Passed in
If the owner’s reserve price has not been met and they do not sell a property at auction; therefore, passed in.

Periodic lease
Typical with residential, a tenant continues to rent and occupy the property beyond the expiration of the lease agreement.

Private treaty sale
The terms and conditions of a private sale between a seller and buyer to buy the real estate vary from state to state.

Presales
A lender will want a certain number of presales to reduce their risks. While the percentage of pre-sold units is not set, funding can vary slightly from one lender to another.

Principal and interest mortgage
A standard mortgage, with the difference that monthly repayments are part capital and part interest.

Property Acquisition
When legal ownership or rights over real estate are transferred, the rules may vary from one state to another.

Property Maintenance
Property owners will need to decide about building works and maintenance. The agent managing your property will manage and looking after the property. This includes marketing your property, collecting rent and fixing any issues.

Progress Payments
As the construction progresses, lenders drawdown payments in stages. Therefore, the lender needs to report the work completed by its Quantity Surveyor to compare the completed work as part of the loan agreement.

Property Settlement
A legal process facilitated by the legal and financial representatives of the purchaser and the seller. Settlement occurs when ownership is passed from the seller to the buyer. Typically, the settlement date is determined in the contract of sale by the vendor.

Profit
When the financial earnings of a business activity exceed the amount needed for the costs, taxes, etc., this could be when a company buys something and sells it for a higher price.

Preferred equity
Investments or loans exceeding the level associated with project and deemed debt but not taking part in equal ranking equity.

Rescind
To discontinue a contract of sale.

Reserve Price
The vendor agrees upon the minimum acceptable price before the Auction.

Residential tenants
In most cases, residential leases last for one year; any shorter would be costly for the property owner for re-tenanting costs such as marketing, rental income delays and re-letting fees to the agent.

Recourse
If the debt obligation is not honoured, a lender may get a borrower’s security. A full recourse is when a lender can take additional assets to repay the entire unpaid debt.

Receipt
A note of any money that is deposited into your account. It also known as paid-in or credits.

Reserve Bank of Australia
The Australian central bank publishes and controls monetary policy. This can have a varying, underlying effect on mortgage rates.

Settlement Date
The last part of the process is whereby the purchaser completes the payment of the contract price to the seller, and they transferred legal possession to the purchaser.

Share certificates
A share certificate is a document that is issued by a company that sells shares. An investor receives a share certificate upon purchasing a certain number of shares and as a record of ownership.

Stamp duty
All Australian States and Territories impose stamp duty. The amount varies from state to state. Taxes on business purchases differ from taxes on real estate. It arises from the sale or transfer of a wide range of personal and business assets.

Joint tenants
Joint tenancy is the default type of shared ownership. There is no property division between the joint owners; each owns one hundred per cent of the property. Legal ownership of the property passes to the surviving joint owner when a joint owner dies.

Statement of Position
According to their assets and liabilities, companies or individual positions show the current net equity position.

Security
Security on a mortgage is essential because it reduces the risk a lender takes on when providing a loan. Suppose a loan is backed by property, for example. Then, if the borrower defaults on repayments, the lender may seize the property to claim the outstanding debt.

Share certificates
Whenever a company sells shares on the market, it issues shares certificates. As proof of ownership and as a record of the purchase, they issue shares certificates to shareholders.

Shareholders
A person or business that owns a share in a company’s stock. They can receive capital gains, take capital losses, and they may receive dividend payments. They are equity owners and have the same benefits and drawbacks as Directors.

Second mortgage
A borrower can offer their real estate as collateral a second time to another lender while the first still has finance secured. As a result, the subsequent lender takes a second charge over the property.

Senior Debt
The registered mortgage holds the property’s first ranking for a primary mortgage or principal debt. Developers often prefer senior debt as the margins are lower since banks or significant mortgage funds typically offer senior debt.

Tax returns
Tax authorities use this process to assess a taxpayer’s liability based on their annual income personal circumstances and include corporate entities.

Tenants in common
A joint ownership arrangement exists when mulitple individuals own the same property, but neither has the right of one hundred per cent ownership of the property. For example, if you do not make a will, you can “will” your share of the property to a beneficiary of your choice.

Valuer
A company appointed to conduct the assessment of the current market value of the real estate.

Variation
To change or alter the conditions of the contract of sale.

Valuation
Not to be confused with make sure an appraisal, as a valuation provides a more correct and recognised property value.

Vendor
In a real estate transaction, a person(s) or entity sells the property.

Quantity Surveyor
A qualified individual that examines costs associated with the building costs. Market conditions impact labour costs and material suppliers with the DA (development approval). Lenders also keep them to make sure that the project is correctly costed.

Yield
A sign of income by percentage earned on real estate. It is Calculated by the received net income and the market value of the real estate.

Zoning
The local council planning controls current and future development, including residential, business, and industrial uses.

 

 

For further information about the company call us 1800 743 796 – head to the website www.sherwoodfinance.com.au  follow us on Facebook, Instagram, and twitter

This summary sets out the key points about how Sherwood Finance Australia handles personal information.

Finance may collect, hold, use and disclose personal information to carry out our functions or activities in compliance with the Privacy Act 1988  (Privacy Act) and in particular the Australian Privacy Principles (APPs) found in that Act.

• Department of Finance Privacy Policy

Personal information (including sensitive information) about you may be collected by Sherwood Finance from you, from your agent, or from a third party.

Sherwood Finance may also collect personal information through our website and social networking services such as Facebook, YouTube and Twitter. We use this information to help us communicate with you and the public.

Sherwood Finance Australia may use and disclose collected information, including personal information, for the primary purpose for which it was collected. Sherwood Finance Australia may also use and disclose your personal information for a secondary purpose where an exception in the APPs applies.

Under the Privacy Act you have the right to ask for access to personal information that we hold about you, and ask that we correct that personal information.

You can ask for access or correction by contacting us and we must respond within 30 days. If you ask, we must give you access to your personal information, and take reasonable steps to correct it if we consider it is incorrect.

You can complain to us in writing about how we have handled your personal information. We will respond to the complaint within 14 days.