A
Account
See Bank account.
Advantage Loan
The Advantage Loan is designed to give HomeStart customers who may be on a lower income more power to purchase the home they want without increasing loan repayments. The Advantage Loan interest rate is significantly lower than the standard home loan rate. And if the loan is repaid within a nominated period - usually around five years - you will only pay the amount borrowed with no interest.
Advocate
A person who supports, acts or speaks on another person's behalf or assists them to communicate with authorities.
Amount Due
The amount of money that the debtor has to pay on an outstanding account.
Annual Percentage Rate of Interest
The rate at which interest is charged over a yearly period. Interest is usually calculated on a daily basis and may be charged monthly, quarterly or annually.
Arrears
The amount you are behind with regular payments (i.e. past the due date). This differs from the balance owing.
Asset
Property that a person owns or has a right to from which a benefit can derive. A net asset is owned outright. A liquid asset is in the form of cash or readily convertible into cash.
Asset (secured)
An asset that has been offered by a debtor as security on a loan. For example, if a person takes out a loan to buy a car, they may offer the creditor the car as security for that loan. If the person fails to repay the loan, the creditor may claim the security (in this case the car) and sell it to recover some or all of the outstanding debt. A secured asset cannot be sold by the debtor without the written permission of the creditor. When a secured asset is sold, the creditor holding the security gets paid first, to the value of the outstanding balance plus fees. Only the loan that is secured can be cleared by this security.
ATM Card
A card that allows people to access their accounts via ATMs and EFTPOS.
Australian Business Number (ABN)
A number issued to registered businesses in Australia by the Australian Tax Office (ATO). Each business has its own ABN and must use this as an identifier on official paperwork and transactions and for GST purposes.
Australian Securities and Investments Commission (ASIC)
ASIC is the consumer protection regulator for financial services in Australia. It protects investors, superannuation members, depositors and insurance policy holders. It also regulates and enforces laws that promote honesty and fairness in financial products and services, in financial markets and in Australian companies.
Automatic Deduction
See Direct debit.
Automatic Teller Machine (ATM)
A machine placed in supermarkets, outside banks and other public places that can be used to withdraw money from an account without going into a bank. Some ATMs accept cash deposits and cheques, provide current account balances and can be directed to transfer money between accounts. Many ATMs can be accessed 24 hours a day.
B
Balance
Tells how much money is in an account (the balance can be in credit or debit).
Balance (closing/final)
The final amount owing on an account after all the transactions are taken into account up to the date shown on a statement.
Balance (opening/prior)
The closing balance from the previous account becomes the opening balance for the next month's account.
Bank
In Australia, banks are financial institutions authorised under the Banking Act 1959. They offer a variety of financial products and services and generally receive fees from customers in return.
Bank Account
A product offered by banks that provide a secure facility for depositing and withdrawing money. For example, transaction accounts are for day-to-day banking needs.
Banking and Financial Services Ombudsman (BFSO)
A free and independent dispute resolution service that considers complaints about banking organisations operating in Australia.
Bank Fees
Charges made by the bank in return for the products and services provided.
Bankruptcy
A legal process that deems a person unable to pay their debts. A bankrupt person/organisation hands over control of most of the debts and assets to a bankruptcy trustee. The trustee decides which (if any) of the assets can be sold to pay off the debts.
Borrower
A person using money that has been loaned to them by a bank or other finance company or a person. Another name for a borrower is a debtor.
BPAY®
BPAY® allows people to pay their bills using their credit cards or from their cheque or savings accounts. Most BPAY® payments are made over the internet.
® BPAY is registered to BPAY Pty Ltd ABN 69 079 137 518
Branch
The customer service outlet of a financial organisation. Branches are open for business during normal business hours and some are also open on Saturdays.
Breakthrough Loan
This home loan allows customers to borrow more money without increasing monthly loan repayments through a shared appreciation arrangement with HomeStart.
Customers may be able to borrow up to 35% more through this loan with no additional monthly repayments required. However, HomeStart will share a portion of the homeÃs capital gain once the property is sold.
Building Society
A member based financial institution, originally developed for members to borrow money for building purposes.
C
Cash
Money in the form of notes and coins.
Cheque
A form that instructs a bank or other money provider to pay a sum of money to someone else. If a cheque is made out to 'cash' or 'bearer', then whoever hands the cheque to the money provider can exchange it for cash. A cheque crossed 'Not Negotiable' must be deposited to an account.
Cleared Funds
The amount of money in an account that is available for the customer's use. Cheques deposited into an account may take up to five working days before they are available for use by the customer. During the five days the cheque funds are called uncleared funds and the customer is usually not able to access the amount of money the cheque represents.
Co-borrower
A person who joins another to borrow money. Each individual is jointly and separately responsible for the loan. If one does not pay the other will be required to pay the full balance.
Commission
Is a reward or sum of money paid to a salesperson.
Comparison Rate
The interest rate on a loan that includes interest and ascertainable fees and charges associated with the loan. For example, if a bank advertises an interest rate on a home loan of 5.49%pa, the comparison rate (once fees and charges have been taken into account) might actually be 6.75%pa. Some fees, like Lenders Mortgage Insurance, are not included in the comparison rate.
Complainant
Someone who is making a complaint.
Compound interest
Interest earned over a given period is added to the original sum invested (the principal) and interest is then paid on the entire amount. Over longer time frames, compound interest can be a significant savings booster.
Consumer
Someone who is buying a product or service.
Consumer Credit Code
The Consumer Credit Code governs all credit transactions that are undertaken for personal purposes in Australia. Credit providers must tell you what your rights and obligations are in any credit arrangement. Credit transactions made for business or investment purposes are not governed by the Consumer Credit Code.
Contract
A written agreement that shows the terms and conditions regarding the purchase of a product or service.
Cooling Off Period
A specified period, varying between 24 hours and 14 days depending on the type of contract, during which a person/organisation can decide not to make a purchase and to undo a credit contract that has already been signed. There are conditions to the cooling off period. It is important to always read the contract and to not give away rights to a cooling off period. Cooling off periods differ between states in Australia.
Credit Ombudsman Service Limited (COSL)
The Credit Ombudsman Service is a free and independent External Dispute Resolution scheme. It provides consumers with an alternative to legal proceedings for resolving disputes with COSL Members operating in the Credit marketplace.
Credit
Refers to the amount of money a person has. If their bank account is $200 in credit, it means they have $200 in the account. 'Credit' also means obtaining goods and services now and paying for them later. This is usually by taking a loan from a financial organisation. For example a mortgage can be taken out to buy a house, or a credit card can be issued by a credit card provider to make purchases. Interest is usually charged on any credit provided.
Credit Card
A person can pay for goods and services using a credit card which is linked to accounts that provide a specific amount of credit.
Credit File
Also called a credit history. Credit files are records showing a history of a person's loan enquiries and directorships, defaults on loans, bankruptcy. Credit files are kept and maintained by credit agencies and may be accessed by banks and financial organisations if a person gives their permission and has made an application for a loan or credit card. Note that credit files only contain records of negative events. If a person has always paid bills on time and has never defaulted on loan or credit repayments, there will be no adverse file on that person.
Credit History
See Credit file.
Credit Limit
An amount quoted by a financial institution as the maximum amount that can be borrowed on a loan or credit card account.
Credit Rating
A person's credit rating is based on their credit history. A person who has a history of mismanaging debts and failing to make payments on time is likely to have a poor credit rating. Banks and financial organisations refer to credit ratings when considering applications for loans, credit cards etc. A person with a poor credit rating might find it very difficult to obtain such services. Credit providers obtain this information through credit reporting agencies, such as Veda Credit Advantage.
Credit Union
A credit union is a co-operative financial institution that is owned by its members.
Creditor
Someone who is owed money. For example, a bank that lends money, a department store that lends money to customers in the form of store credit cards, or a telephone company that is owed money from customers for their quarterly utility bill.
Creditor (secured)
A creditor who holds an asset belonging to the debtor as security over a loan. If the debtor fails to repay the loan, the secured creditor has the right to sell the secured asset in order to recover some or all of the money owed. Any assets acting as security must be stipulated in the original loan contract.
Creditor (unsecured)
A creditor who has provided a loan to a debtor for which no security has been obtained. Therefore, if the debtor fails to repay the loan, the creditor may need to begin court proceedings against the debtor in order to recover any money owed.
D
Date of Issue
The date a bill or account was prepared.
Debts (liabilities)
Another name for a debt is a liability. A debt is money that is owed.
Debtor
Someone who owes money.
Direct Debit
An amount that has been authorised to be electronically deducted from an account on a specified time/date and sent to an authorised person or company.
Debit Card
A card issued by a financial organisation that allows payment for goods and services to be subtracted directly from an authorised account.
Default
When a person fails to meet the terms of a signed contract e.g. the person fails to make the repayments on a loan.
Deposit
An amount of money put into an account.
E
Electronic Banking
A way of banking that allows withdrawals, deposits and transfers to be completed and account information to be obtained electronically using processes such as telephone or internet banking, ATMs or EFTPOS.
Electronic Funds Transfer at Point of Sale (EFTPOS)
Enables a person/organisation to purchase goods and services and to withdraw cash, if the retailer agrees, using an ATM card.
EquityStart Loan
EquityStart is a subsidised home loan designed to assist current Aboriginal Housing Rental Program, Housing SA and Office for Community Housing tenants into home ownership. An initiative of the State Government of South Australia, EquityStart is a subsidised loan of up to $50,000 that you take out in addition to a HomeStart Home Loan. EquityStart can be used to purchase the property that the tenant is living in if it is for sale or otherwise a property in the private market.
Excess Usage Charge
Refers to EFTPOS cards and their rate of usage. Some bank accounts specify that a certain number of EFTPOS transactions may be used each month. If the account holder uses EFTPOS more than this number of times in a month, they may have to pay an excess usage charge. Charges vary depending on the organisation and the account, as does the number of transactions permitted before an excess usage charge applies. Excess usage charges do not apply to all accounts.
Expenses
The amount it costs for a person's everyday life including food, transport, housing, clothing and entertainment.
F
Family Assist
Family Assist is a limited guarantee. This solution enables the customer to take a regular HomeStart loan and borrow the purchase price of the home plus fees and charges. A parent or relative who own their own home, either outright or with an existing mortgage, would then assist the family member to buy their home by providing a limited guarantee secured against their property, without having to pay any HomeStart fees or loan instalments.
Finance Company
Provides loans to customers that are usually at higher interest rates than banks, building societies and credit unions.
Fixed Interest
A type of interest where the interest rate stays the same throughout the term of the fixed rate contract
Fixed Term Loan
A loan that the borrower must repay within a specified time called the term. For example, a personal loan that must be repaid within three years.
G
Graduate Loan
HomeStart loan for graduates. Eligible graduates with a successfully completed degree, diploma or higher qualification through a university, TAFE or other Registered Training Organisation may be able to borrow up to 100% of a property value or purchase price, whichever is less. South Australian police officers and enrolled nurses may also be eligible for the loan.
Guarantee
With regard to a warranty: a promise or an assurance, especially one given in writing, about the quality or durability of a product or service. With regard to a loan: a promise given by a person (the guarantor) to pay a debt, if it is not paid by the debtor. It can be secured or unsecured.
Guarantor
The person who gives the promise to pay a debt, if it is not paid by the debtor.
H
Home Equity Loan
Home equity is personal wealth. People have equity if the value of their current property is worth more than what they owe on it. Home equity can be used to make improvements, renovate the house or for any other worthwhile purpose.
HomeStart Finance
HomeStart Finance is an initiative of the Government of South Australia and was established as a statutory corporation in 1989. HomeStart is committed to helping people fulfill their home ownership dreams, and enjoy both the financial and social benefits that come with home ownership. HomeStartÃs mission is to be the leading provider of affordable home finance and housing solutions for South Australians.
Honeymoon Rate
An initial special low interest rate for a set period on a loan. It gives borrowers an opportunity to reduce the principal quickly if they are able to make extra repayments during the honeymoon period. The loan reverts to a higher variable interest rate at the end of the honeymoon period.
I
Income
The money coming into a household, such as wages and salaries, rental income, interest and government allowances.
Interest
The amount a borrower pays to a lender for the use of the lender's money. For example, if money is borrowed from a bank in the form of a loan the bank will charge interest for the use of that money. On the other hand, if money is lent to a borrower by opening a bank account or a term deposit, the bank pays interest to the account holder on the money in the account.
Internet Banking
Used to do your everyday banking via the internet. For security purposes, a person/organisation might be required to register with a financial organisation in order to use Internet banking.
Invoice
A bill that needs to be paid.
Invoice (tax)
A bill that needs to be paid and also includes tax. It is a legitimate tax receipt.
J
Joint Debt
When two or more people borrow money or incur a debt together. A creditor can recover payment of the whole amount from either party, unless the contract specifically limits the amount each party must pay. This is not affected by any private agreement held with the other debtor, nor is it affected by any family law property agreement.
L
Liability
See Debt.
Life Events
These are important milestones in life. Some life events are predictable, such as starting a family or retiring, whereas others are not, such as sudden illness or unexpected retrenchment.
Loan
Money lent to a person for an agreed period of time (called the term). At the end of the term the money must be repaid, often with interest added.
M
Minimum Repayment
The minimum amount to be paid on a bill or a loan. For credit cards this can be as little as two per cent of the total debt and is usually not enough to pay off the loan within a reasonable timeframe.
Money Plan
A 'big picture' financial plan that maps out how income will be used in order to reach financial goals. It shows what money will be earned, spent and saved during a given period. Used on a broad scale by governments and organisations and extremely helpful for people managing personal finances.
Money Order
An order for the payment of a specified amount of money, usually issued and payable at a bank or post office.
Mortgage Broker
A person or firm that will attempt to find you the best mortgage for your financial situation. Could be unregulated or not accredited. May also charge a fee direct to the borrower. To check if a broker is accredited contact the Mortgage & Finance Association of Australia (MFAA).
Mortgage Company
A lending institution that lends money to a person and uses the person's property as collateral.
Mortgage & Finance Association of Australia (MFAA)
The MFAA is a provider of service and representation to mortgage brokers, finance brokers, mortgage managers, lenders (bank and non-bank), and originators to assist them develop, foster, and promote the mortgage and finance industry.
N
Needs
The basics that a person must have in their life in order to live, such as food, clothing, housing etc.
Net Worth
A person's financial assets minus their debts equal their net worth.
Nunga Loan
The HomeStart Nunga Loan has been designed to assist more Indigenous people to own a home. The loan is open to all Indigenous South Australians who are interested in home ownership. There are benefits associated with the Nunga Loan, such as being able to include the deposit, fees and charges associated with purchasing a home into the loan. Also, other outstanding debts may be consolidated into this loan to make repayments more affordable.
O
One Hundred Point Check
When a person applies to open an initial bank account, they must show proof of identity totalling 100 points.
Original Documents
This paperwork has not been photocopied or faxed and all signatures are real.
Overdrawn
When more money is taken out of an account than is actually available. Fees might apply to overdrawn accounts and dishonoured cheques.
Overdue
Amount of money that has not been paid by the required date and is still owed.
Over-the-counter
Any banking activity that is made in a branch or at an agency of a financial organisation e.g. Australia Post.
P
Pawn Shop
A place where money can be borrowed against goods a person or organisation owns and leaves in the care of the shop. The money borrowed is usually a small percentage of the item's value and the item can be reclaimed, according to the shop's terms and conditions. There is usually a very high charge for this type of loan.
Per Annum (pa)
This term essentially means by the year. For example, if the interest rate on a personal loan is 9% pa, the debtor must pay 9% in interest each year on the balance outstanding.
Personal Identification Number (PIN)
A number used as an access code for a nominated account when using ATMs or EFTPOS. Only an individual or authorised individuals should know the PIN for an account.
Principle
With regard to an investment: the amount of money invested with the hope of earning more money over time. With regard to a loan: the amount of the loan (the face value of the loan) upon which interest is then charged.
Pro Rata
This means offering to pay several creditors in instalments in proportional amounts over a period of time. For example if a debtor has two creditors, one with a debt of $4000, the other $2000, the first creditor would get two-thirds (4000/6000) of any money available to be paid. The creditor who is owed the most gets the biggest repayment.
Q
Quarter
- A period or duration of three months.
- One fourth of an amount.
R
Rebate
An amount that is given back or returned as a concession e.g. the pensioner rebate.
Receipt
A record acknowledging that a payment has been received. Receipts are usually issued as printed pieces of paper or can be given as a specific reference number. A receipt is proof that goods and services have been paid for.
Records
Any documents and paperwork such as letters, notations of telephone calls etc and evidence of medical procedures such as doctor's letters, x-rays and scans.
Reducible
Something that can be brought down. Prices or costs that can be lowered.
Refinance
Paying off an existing loan with the proceeds from a new loan, usually to obtain a lower interest rate or to consolidate debts into one loan.
Render
To present a bill for payment.
Repossession
A creditor may obtain the legal right to reclaim the goods for which an agreement was made if the creditor fails to make the payments or meet the terms of the loan or financial agreement.
Risk Grade
When lending money, a risk grade is calculated in order to assess how secure a loan or investment is likely to be. Some financial institutions use risk grade to determine loan eligibility and pricing.
S
Savings
Money that someone puts away for use at a later time. For example, a person may save to buy a car in the future.
Scams and Scammers
A person or an organisation that misrepresents their products to customers and the general public. For instance, internet banking fraud, door-to-door con artists and the Nigerian letter scam.
Secondary Cardholder
A person given use of another person's credit card. The secondary cardholder is not responsible for the debts.
Security
An asset can be offered by a debtor as security on a loan. This reduces the risk to the creditor because he may be able to sell the asset to recover the debt if the borrower fails to repay the loan. See Assets (secured).
Seniors Equity Loan
HomeStart's Seniors Equity Loan enables customers who own or nearly own their own home the opportunity tap into their home equity. Customers over 60 years of age have the luxury of choosing when to repay their loan. Regular or one off repayments can be made, or customers can choose to defer payments so the loan only becomes repayable on sale of the house or when the last co-borrower moves out permanently.
Simple Interest
Interest is paid on a set principal only.
Spending Leak
Money that is spent unnoticed, for example a daily cup of take-away coffee at $3 a day.
Staff-assisted Withdrawals
When a person withdraws money from their account with the help of a teller in a branch.
Statement
A record summarising all the transactions of an account and any fees charged or interest paid over a given period. Depending on the type of account, a person might receive statements monthly, quarterly or less frequently.
Statute-barred Debt
A debt that cannot be collected through the Court system as State legislation regulates that it is too old for legal action to commence.
Superannuation
A form of pension and/or lump sum payment paid to a person who has contributed to a superannuation fund.
T
Term
The period of time a deposit is to be held or over which a loan must be repaid.
Terms and Conditions
Opening an account means, in effect, that a contract has been entered into with a financial organisation and that a series of terms and conditions are agreed to. These outline how the account can be used. Terms and conditions are available from any financial organisation. Booklets outlining terms and conditions are also called Product Disclosure Statements.
Transactions
The name given to activities, such as making deposits and withdrawals or transferring money from bank accounts.
Tax File Number (TFN)
A unique nine digit number issued by the Australian Taxation Office to individuals and organisations to identify them for taxation purposes. The number is specific to a person or an organisation.
Transfer
To move money from one account to another account.
U
Unconscionable Conduct
Behaviour that is deemed to be unreasonably excessive, unfair or unjust.
Utilities
An essential service such as electricity, water or telephone.
V
Variable Interest
A type of interest where the rate may go up and/or down during the term of the loan.
Veda Credit Advantage
A company that holds the largest source of credit information about Australian consumers.
W
Wants
The desirable items not essential to survival, such as mobile phones, cakes, chocolate bars, DVD players, designer clothes etc.
Will
A legal document stating how a person wishes their possessions to be disposed of after death.
Withdrawal
To take money out of an account. For example, using an ATM, EFTPOS or by cheque.