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Let my experience and knowledge help you work through the jargon often used in the home buying and loan application process.

Here are a few of the more common terms you will come across.

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Fixed Rate Interest Loan - Your interest rate on your loan is fixed for a set period of time (usually between 1 and 5 years) so your repayments stay the same during that time. You may incur a fee or penalty if you repay your loan before the fixed term expires.

Floating Interest Rate Loan (Variable) - Your interest rate can be changed/reviewed by the lender an any time (usually done in line with the Reserve Bank 6 weekly review of the Official Cash Rate (OCR)) Your repayments are therefore change when your interest rate changes. No early repayment penalties apply, so  makes this a very flexible option.

Revolving Credit Facility (Flexi) - Like a bank account with a huge overdraft. You can easily make lump sum repayments to pay your loan off faster. It is on a floating rate. You only pay the interest on the outstanding balance you use. Ideal for people who have large fluctuating incomes.

Interest Only Loan - You are paying only the interest and not any of the principal amount. Payments will be less allowing you to use your money elsewhere. Usually only approved for a short time (like between 1 - 5 years) . Repayments are then calculated based on the remaining loan term. Mostly popular with rental property investors.

Mortgage - The piece of paper which gives the lender the right to sell your home should you not meet your home loan repayments. It is the security document supporting your Home Loan

Conditional Agreement -This is any agreement made between you and the seller that is subject to conditions such as Arranging Suitable Finance, Solicitors approval, Builders reports, (plus many other possibilities)

Unconditional Date - This is the date after which any offer made contractually bound no exceptions. In simple terms, the date by which all previous conditions have been satisfied (as above, finance, solicitor, builder etc) This is often occurs around 10 working days after the Offer is accepted. This is also the date when the agent will require the deposit to be paid.

Deposit - (on Sale and Purchase Agreement) -A deposit is an agreement between you and the seller that you will purchase the property. The amount that you pay and when you pay it can be negotiated, but it is usually 10% of the purchase price and paid when the contract becomes unconditional

Deposit - (Your funds to go towards the purchase) - The lender wants to know the total amount and original of all the funds you are putting into the purchase. These funds are usually made up from Savings, gifts, kiwisaver, selling of previous house etc

Equity - The difference between the value of your home and the amount you borrow. - it is your part of the property that you own. Your equity

Home Loan Agreement - The document provides the outline for what the lender will provide, the interest rates, terms and conditions. This is usually signed at the lawyers office just before settlement

Interest - This is what the lender charges you in return for you borrowing the money

Principal - This is the initial amount you borrow without adding interest payments

Sale and Purchase Agreement - This is the legally binding contract that records the agreement between the seller and purchaser so has all the details of the property, price, conditions, purchaser and seller

Settlement Date - This is the date the property is transferred into your name. The day you must pay the vendor the remaining sale price. It is usually the day the loan is drawn down

Land Information Memorandum (LIM) - Is a report by the local council identifying details of a property such as plumbing, drainage, building consents, licences, permits, Code of Compliance etc. Basically a copy of the Council file. This is often sourced by your lawyer

Fixed Price Building Contract (Scope of Works) - Is a detailed breakdown of what is going to be done and at what cost and when payments are expected to be made to the builder (progress stage payments) It would normally include the full Plans and Specifications for the build project

Government Valuation (Rateable Valuation) - The Council estimates the value of your property once evry 3 years and uses the figures to charge you rates. There is no physical inspection of your property undertaken.

Registered Valuation - A registered valuer is engaged (usually via a valuation ordering service such as Valocity or CoreLogic) to produce a report that independently determines the current market value of a property. The valuer will inspect the property and take into account recent sales of similar properties. The report can also include rental assessments, replacement value or if building or renovating, the expected value upon completion

Building Report - A thorough inspection report carried out and certified by a qualified inspector to determine the condition of the property. These reports are very detailed and can be scary to read, but need to be put into perspective as the the age and price of the property. Remember if the property was perfect and had no issues, what would the price be

Low Equity Margin/Fee - This can apply when a buyer has less than 20% deposit. The lender may choose to apply a one off fee or add an interest rate margin to your loan. This is to cover the additional risk the lenders take when lending to customers who have less than 20% equity.

Loan to Value Ratio (LVR) - The percentage being borrowed in relation to the house price/value.

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