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Asking price
The price the person selling the house would like to get – this is often not the price they will get.
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 (offers) until only one buyer is still bidding. An auctioneer runs the auction. The person selling usually sets a reserve price and doesn’t have to sell if the bids are under that amount. If you buy at auction you’re committed to going through with the purchase, so you need to check everything out first and have your finance ready, including the money for your real estate deposit which is paid to the auctioneer on the day.
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.
Building Act 2004
This law sets out standards and controls for the building industry and replaces the Building Act 1991. One of the main changes is that building contracts now come with an implied warranty that the work will be carried out properly, the materials used will be suitable and the building will be fit for occupation. It also introduces a licensing system and from 2010 certain work must be done or supervised by a licensed practitioner.
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 a home you own and live in yourself.
Capital value
You’ll see this term on your Rating Valuation (RV). It’s the total value of your property, including land and buildings but not chattels (things like light fittings, carpets and curtains).
Capped interest rate
Westpac has a home loan where the interest rate can go up or down – but it can’t go over a certain level for a set time.
Certificate of insurance
A certificate from your insurance company to confirm that your house is insured – your bank will probably ask to see this.
Certificate of Title
This is the ownership record for your property. It is an electronic record held by Land Information New Zealand (LINZ) It describes the property and shows the legal owner of the land and any mortgages or conditions on the title.
Chattels
The removable items that come with your house such as carpets, curtains, light fittings and sometimes furniture.
Code of Compliance Certificate (CCC)
A certificate from your local authority to say the building complies with building consent requirements. Check all buildings and alterations have a certificate before you buy. The LIM (Land Information Memorandum) should contain compliance details.
Commission
The fee the seller pays the real estate agent when the property sale becomes unconditional.
Company title
If you buy a flat with company title, you buy ‘shares’ that give you the right to live there (and you have a ‘licence to occupy’). The company administers and maintains the block of flats or units.
Conditional agreement
A sale and purchase agreement with conditions that must be met before everything becomes final. Both the buyer and the seller can put conditions in the agreement. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a builder’s report.
Conveyancing
The legal process when you buy or sell property – including checking and registering documents to transfer the ownership over.
Covenant
A covenant is a record on the property title of a legal restriction or agreement the owner has to keep. For example you might have to pay for fencing, protect a native tree on your land, or can only build within certain restrictions.
Credit Contracts and Consumer Finance Act 2003
A law covering consumer credit contracts. Among other things.
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.
Deposit
This term has two meanings when it comes to buying a home. To the bank it’s the amount you put towards the home yourself. To a real estate agent it’s a payment you give them once you’ve agreed to buy the home (this money goes to the seller when your agreement becomes unconditional – or it’s returned to you if the sale doesn’t go through).
Depreciation
This means 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
This is what happens when you’ve paid everything back. The mortgage is discharged so the bank’s name is taken off the title to your property and the Certificate of Title is returned to you.
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 where you give someone the power to act for you if you need them to, for example if you’re in a serious accident and can’t look after things yourself. There are two types – one that covers your care and welfare, and one for property matters.
Equity
The money you yourself have in your home. It’s what you’d end up with if you sold your home and repaid any loans you owe on it.
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.
Fidelity fund
A fund set up by a professional organisation to pay clients who lose money due to fraud or misconduct by one of the fund’s members. Lawyers, real estate agents and many other professionals belong to fidelity funds.
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 built in cupboards or shelves).
Fixed interest rate
This means the interest rate is set for a certain period of time and will not go up or down during that time.
Floating interest rate
Where the interest rate can go up or down as the market changes. Sometimes called a variable interest rate.
Freehold
This is the most common type of property ownership. It means you own the land and house with virtually no restrictions on your ownership rights. The term freehold is also commonly used to mean that you don’t owe any money on the home.
Home loan
The loan you get to buy your home, where the home is used as the ‘security’ for the loan – meaning the lender can sell the home if you can’t repay the money.
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
Regular fortnightly or monthly payments off your loan. Usually some money goes towards repaying the money you owe and some towards the interest on the loan.
Interest
The amount you pay for money you borrow, or what you earn on money you invest. This is a percentage worked out on the daily balance of what you owe or have invested.
KiwiSaver
KiwiSaver is a voluntary, long-term savings plan with government incentives to help people save for retirement. Savers can choose the scheme they want to save in.
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.
Land Information Memorandum (LIM)
A report you can get from your local authority which sets out everything they know about the property – things like consents, rates owing, drainage and problems with flooding or erosion.
Leasehold
With this type of ownership you lease the land and pay rent to the landowner. You own the house but your use of the land may be restricted and your rent can go up. You can sell the lease when you want to move but you will need to tell the landowner first. You can get a Certificate of Title for your leasehold interest.
Lenders mortgage insurance
A one-off insurance payment many lenders charge if they lend you are putting little or no money towards the home yourself.
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 lend you.
Lo-Doc margin
A margin that your lender may add to your interest rate if you get a home loan without supplying full proof of your income. For example if you’re self employed and don’t have a current profit and loss statement you may be able to apply for a home loan by making an income declaration instead. The margin can be reviewed once you supply full documentation.
Low Equity margin
A margin added to your Westpac home loan interest rate if you need to borrow more than 85% of the value of your home. This can be reviewed once your loan falls under 85% of the home’s value – this could be because you’ve paid some of your loan off or if the value of the home goes up.
Lump sum payment
This is when you pay an extra amount, say $1000, off your loan on top of your normal payments. It can also mean an amount you pay into an investment on top of other regular savings.
Market value
The value of an asset (such as a home) according to what the market will pay – in other words the price a willing buyer will pay a willing seller. A valuer works out a market valuation by taking into account recent sales of similar properties or assets.
Mortgage
The legal document that gives the lender ‘security’ and the right to sell the property you’ve mortgaged if you can’t pay your loan. It means the lender can hold your Certificate of Title until you repay the loan.
Mortgage protection insurance
This insurance protects you if you can’t pay your home loan. The insurance repays the loan if you die, or makes payments for a time if you are redundant or can’t work due to serious illness for instance.
Mortgagee
The organisation that lends the money and holds the mortgage.
This is when the lender 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
This stands for 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 and ethics they should operate by.
Possession
When you have paid for the home and have the right to move in. Early possession is when it’s agreed you can move in before settlement date – you might have to pay rent until then.
Principal
The amount of money you borrow, 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.
Private sale
If the home is being sold by the owner 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.
Rateable Valuation (RV)
The valuation done for 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 the Government Valuation (GV).
Reducing loan
With a reducing loan you pay a set amount off the loan each payment, plus interest. It means your payments are much higher at the beginning of the loan but go down as time goes on.
Registration
When your name and the mortgage are added to the title of the property. This is done electronically with Land Information New Zealand, using Land Online. Your lawyer must hold a licence from LINZ to do the work.
Replacement insurance
This type of insurance could replace your home – or lost or damaged items with new ones.
Retirement Villages Act 2003
A law to provide more certainty and financial security for residents who buy into a retirement village. It sets standards for village operators and requires them to disclose important information about the management and finances of the village, amongst other things.
Reverse mortgage
A home loan for seniors generally used to help fund retirement. The special feature of these loans is that they don’t require regular loan repayments. instead the interest and fees are added to the loan and repaid later, usually when the home is sold or no longer needed.
Sale and purchase agreement
This is the contract between the buyer and seller of a property.
Security
Security has several meanings. When you get a home loan your home is the security for the loan – meaning the lender can sell the home if you can’t repay the money. The term is also used to mean certain types of investment such as bonds or shares.
Settlement
Settlement means payment. When you buy a home it’s 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, joint or general agency
A sole agency is when the property is listed with just one real estate company. A joint agency is when it’s listed with two or more companies – or if it’s listed with a lot of companies it’s called a general agency.
Statutory supervisor
A type of trustee – when someone is appointed to look after the financial interests of others, such as investors or residents of a retirement village.
Strata title
This is when you own part of a building, or airspace, instead of the land it is built on. This can relate to units, apartments and town houses. There is no lease, but each owner belongs to the body corporate, which manages common areas like stairways and lifts.
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
Term has several meanings. When you get a loan it means the time you take your loan out for – many home loans are for 20 or 30 years. It can also be how long your lease is for if you have a leasehold property. And it can mean the length of time an investment is for.
Unconditional
This means that the sale and purchase agreement has no conditions attached to it, or all the conditions have been met. An unconditional agreement is legally binding on both the buyer and the seller. It means the home must change hands on the agreed date for the agreed price.
Unit title
You own your flat or apartment but common areas (like stairways, car parks and garages) are managed by the body corporate – a group all the owners belong to.
Vacant possession
This means that when you get ownership and possession of your home there will be no tenants living there, and no lease giving someone else use of the property.
Valuation by registered valuer
An independent assessment by a registered valuer of the market value of a home. A buyer may get one to help them decide what to offer (and they usually have to get one to get a loan). A seller may also decide to get one to help them decide what price they should accept for their home.
Vendor
The person selling the property.
Weathertight Homes Resolution Services Act 2006
This act was introduced to help resolve disputes about leaky homes. It is administered by the Weathertightness Service of the Department of Building and Housing who provide information, assessment, claims and mediation services. The Weathertightness Tribunal supported by the Ministry of Justice provides adjudication services if needed.
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.
