Jargon Buster
Acceleration clause
A provision that gives the lender the right to collect
the balance of a loan if a borrower misses a payment.
Accident, Sickness and Unemployment insurance
Income protection incorporating cover for loss of earnings
arising from accident, sickness or unemployment. Usually
paid out in the form of a monthly tax-free income to cover
a portion of lost earnings and restricted to two years
from the date of the first payment.
Addendum
An addition or change to a contract.
Additional principal payment
Extra money included in the monthly payment to help reduce
the principal and shorten the term of the loan.
Add-on interest
The interest a borrower pays on the principal for the
duration of the loan.
Adjustment date
This is the date on which the interest rate changes for
a variable rate mortgage.
Affiant
A person who makes a sworn statement.
Alienation clause
A provision that requires the borrower to pay the balance
of the loan in a lump sum after the property is sold or
transferred.
Annual Percentage Rate
This is an indicator used to compare interest rates. It
takes into account the costs involved in setting up the
mortgage, any discount periods, how often interest is
calculated and calculates what the average rate of interest
will be over the life of the loan. All lenders that comply
with the consumer credit act must ensure that the the
borrower is informed of the APR.
Application
A document detailing a potential borrower's income, debt
and other obligations to determine credit worthiness.
Application fee
The fee a lender charges to process a loan application.
Applied or nominal interest rate
The rate used to calculate the interest due.
Appointed representative
Salesperson, company or organisation that advises on the
investment products specific to one life assurance or
investment company.
APR
This is an indicator used to compare interest rates. It
takes into account the costs involved in setting up the
mortgage, any discount periods, how often interest is
calculated and calculates what the average rate of interest
will be over the life of the loan. All lenders that comply
with the consumer credit act must ensure that the the
borrower is informed of the APR.
Arrears
Arrears occur when the borrower misses one or a series
of monthly payments. Arrears can lead to the repossession
of the property.
Arrears fee
This is charged on a monthly basis to cover additional
administrative costs where your loan account is one or
more monthly payments in arrears.
ASU
A form of income protection incorporating cover for loss
of earnings arising from accident, sickness or unemployment.
Is usually paid out in the form of a monthly tax-free
income to cover a portion of lost earnings and is usually
restricted to two years from the date of the first payment.
