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People who rely financially on a borrower such as children or a spouse or family member who is unable to work.
When the value of a property goes up because of changes in the market, including (but not limited to) supply and demand.
The frame around a door, window or archway.
The price the seller would ideally like for their house.
A high-value object that you own (you don’t have to own it outright), like a vehicle or property.
A method of selling a home, where the property is presented to a group of potential buyers, who all have the opportunity to bid on it. An auction is run by a person called the ‘auctioneer’. They open the bidding at a certain price. Whoever is in the crowd can choose to bid as many times as they like. The bidding then goes up and up until nobody wants to bid any higher. The seller usually sets a reserve price. If that reserve price isn’t met in the auction, they don’t have to sell their property. If it is met (or exceeded), the highest bidder wins and is legally obligated to follow through with the sale. The deposit must be paid to the auctioneer on the day of the auction. If you go to an auction with the intention of buying, you should have checked out the property thoroughly first, and have all your financial ducks in a row.
A body that takes care of the running and maintenance of an apartment building or block of flats. They typically take care of shared areas like garages, stairs and elevators.
An annual fee that is paid to a body corporate (when applicable).
The perimeter of a property.
Building Research Association of New Zealand, an independent organisation that offers unbiased resources, research and testing to the construction industry.
A technique used to give the appearance of a brick house, without the structure actually being made of bricks. The external wall is made of bricks but isn’t load bearing. This is connected to a structural timber frame.
A high interest (usually), short term loan that people get to help manage their financials when they haven’t yet sold their current property, after buying a new one.
This is the latest legal act controlling the construction industry. It replaced the Building Act 1991 and now has stricter policies around the materials and processes used for building, ensuring that construction is now completed to a higher standard. The Building Act 2004 also has a licensing system that wasn’t present in the 1991 version, outlining a number of jobs that have to be completed or supervised by a licensed professional.
A set of construction, design and material regulations outlined by the local council, which every building must adhere to.
When the property market benefits the buyers rather than sellers—usually because there are more properties on the market than there is the demand to buy them.
Money used to create income, either as an investment in a business or an income property. The money or property comprising the wealth owned or used by a person or business. The accumulated wealth of a person or business.
Money spent on maintaining or improving a property to prolong its life or increase its value, such as painting the house, adding insulation or fixing gutters.
Permanent additions that increase a property’s value such as an extension or a new kitchen.
The total value a property, including both the land and the actual building. Capital value doesn’t include chattels, which are the cosmetic things like curtains, carpet, fittings and fixtures.
When the interest rate can’t increase above an agreed percentage, but can still decrease. Some banks will offer this to certain customers who take on a mortgage with them.
When the responsibility lies with the buyer to ensure they’re happy with the property in its current condition before pushing forward with the sale.
Proof that your house is insured—your insurance company will supply this. Some lenders will make insurance a condition of giving you a home loan.
An electronic record of property ownership, containing details about the owner, the property and whether there is a mortgage or any conditions attached to the title ownership. This record is held by Land Information New Zealand (LINZ).
Anything that comes with the property but can be removed, like curtains, carpet, fittings and fixtures. Sometimes furniture and appliances may be included in the chattels, for example if the owners decide to sell the house with the dishwasher.
A Certificate of Title free of encumbrances (see definition further down). Essentially this is a title with clear, straightforward ownership, meaning there isn’t a lien (security interest created by a mortgage) or levy (unpaid tax, fines or fees) that may call the legal ownership of the property into question.
Otherwise known as a CCC, this is a certificate that proves a house complies with building consent requirements. If you’re considering buying a home, it pays to check that the building (and any modifications) has a CCC. You should be able to access this through Land Information Memorandum (LIM).
A high-value asset like a house or a vehicle that acts as security for a lender. Essentially, if you’re unable to make your loan repayments, they can take the asset from you as payment instead.
Any areas of a building or land that is shared by all owners of a strata title property (cross lease or sub-divided section, or apartment building). Common property might include driveways, lobbies, or a shared garden.
A legally binding contract between the buyer and seller of a property with conditions—this is also known as a conditional sale and purchase agreement. Conditions may be put forward by either the buyer or seller (or both) and must be met before the sale can be finalised. Common conditions include securing finance, selling an existing property, seeing the results of a LIM report, or checking the Certificate of Title.
A loan specifically for building a new home or doing significant renovations to an existing home. It’s designed to keep repayments low for the borrower while they are unable to live in their house (and are usually paying to live elsewhere). Rather than getting the loan all at once, it is paid to the builder in various stages of the project. The borrower only pays interest on the money that has been paid to the builder. Once the project is complete, they start paying the actual loan back.
The term given to the legal process of buying or selling a property. This process includes submitting, checking, and registering any documents, such as the transfer of ownership.
A legally binding condition that is recorded on a property’s title, such as having to protect a native tree on the land or having to build within a list of restrictions.
Proof of temporary insurance offered by an insurance company until the final policy has been created.
A piece of legislation that was created to ensure people who borrow money from banks and lenders go into the agreement with their eyes open. It states that lenders must make the rights and obligations of both parties clear before they can provide a loan.
The recorded history of a person’s debts, both current and past. Lenders will often look through a person’s history when deciding whether to approve their loan application.
A report outlining a person’s financial history including any previous loans taken out, whether repayments have been missed, whether they pay their bills on time etc. The person will be given a credit score, which indicates how financially reliable they are. This information is often used by banks and lenders when assessing a loan application. Learn more about credit reporting here.
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. An arrangement where multiple home owners share a single piece of land, which they own as a collective, leasing their section of the land off the others. Cross-leases have shared spaces like driveways and fences. Before anything in the shared spaces can be modified, all owners of the cross-lease must agree to it
A legal document that grants its holder ownership to a property—it may or may not include conditions.
Depending on the situation, deposit may have a slightly different meaning. When a bank or lender talks about a deposit, they’re referring to the money a borrower is contributing to the purchase of a property. When a real estate agent talks about a deposit, they’re referring to the initial payment made to the seller before the agreement becomes unconditional. If the sale falls through, the deposit will be returned to the buyer in full.
A property valuation that is completed online rather than inspected in person.
Any payments your solicitor must make to third parties on your behalf. These could include LIM reports and building inspection reports.
Whatever money remains after all expenses and bills have been paid.
The side-post or vertical lining of a doorway.
Another type of disbursement, this is the portion of the mortgage paid by the bank on settlement day.
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. An agreement recorded on a property title that allows a specified person (who isn’t the owner) to use the property in a certain way. Examples of easements include using the driveway or running pipes and cables underground.
A section of a house or building that is illegally on someone else’s property, including public property, like the street. Examples of this are when pergolas or fences are built over the boundary line.
A restriction or limitation recorded on the Certificate of Title, which calls the true ownership of the property into question. Examples include mortgages, changes, easements and covenant. Certain encumbrances may be taken of the Certificate of Title in time (such as a mortgage), which others will remain permanently.
The amount of money that you have personally invested in your property. If you were to sell your house and pay off your mortgage, the money remaining would be your equity.
A piece of protective legislation that controls how and when a person’s credit report may be shared and with whom. It also covers how to go about correcting any mistakes on a credit report.
A fund created by a professional organisation, such as a real estate or law firm, which is used to pay their clients if someone in their company loses the clients’ money as a result of fraud or misconduct.=
The fundamental lien against a property. A lien is a legal claim to a property. Essentially, if the buyer is unable to make the repayments to the lender, the First Mortgage is the lien that allows the lender to legally take the property.
Anything that can be removed from a property without damaging it, like carpet, curtains and light fittings.
An interest rate that remains fixed—it won’t go up or down for the duration of the loan term. With these types of loans, you’re likely to be charged fees if you make early, or bigger repayments. Find out more about fixed and floating interest rates here.
An interest rate that fluctuates, going up and down depending on what the market is doing. Find out more about fixed and floating interest rates here.
A type of home ownership without restrictions—usually a person who owns a home freehold owns the home outright, meaning they don’t owe any money for the property.
The triangular portion of a house’s wall that sits under the edges of intersecting roof pitches.
The ratio of the money a buyer has borrowed and what they have personally contributed when buying a property.
Total income before any tax is deducted.
A person who takes responsibility to pay all or a portion of someone else’s loan in the event that the borrower can’t make their repayments. Often a relative will act as a guarantor for a first home buyer who hasn’t been able to save the full 20% for a deposit.
Home Owners & Buyers Association of New Zealand. HOBANZ is an independent organisation that was established in 2007 to help New Zealanders be better informed about the many aspects of homeownership.
Regular scheduled loan repayments.
A type of loan where only the cost of interest is paid initially. Eventually the actual loan will need to be repaid, either as one lump sum or in higher instalments.
Layers of engineered timber that are glued together with structural adhesives. This allows builders to create different sizes and shapes that wouldn’t be possible, or at least easily accessible, with natural wood.
A report that details everything known about the property, including building consents, information about drainage, flooding and erosion, and any outstanding rates. You can request a LIM report from your local council.
A home that isn’t sufficiently weathertight, leading to decay and unhealthy living conditions. Many buildings that were constructed in New Zealand in the 90s and early 2000s are leaky homes. Before purchasing any property of this era, it’s best to get a builder’s report to ensure it isn’t one of them. If you currently own a leaky home, you may be eligible for support under the Weathertight Homes Resolution Services Act 2006.
When a borrower has a deposit that’s 15% or less, they may be required to pay the lender a Low Equity Margin. This is also known as a Low Equity Fee and will be vary in size depending on the lender.
A one-off fee you may be required to pay your lender if your deposit is less than 20%. This is an insurance payment that is needed to mitigate the increased risk the lender is taking.
A person who is leasing a property.
A property owner who leases the property to someone else.
The right to live in the home and use the land without having ownership of either. This is a model often used by retirement villages.
A legal claim to a property such as a lender’s claim when the owner has a mortgage. Other liens may include unpaid taxes or fines.
Information on special land features or characteristics including potential erosion, avulsion (removal of land by water action), falling debris, subsidence, slippage, alluvion (the deposition of silt from flooding), inundation (flooding), presence of hazardous contaminants which are likely to be relevant to land and is known to Auckland City • Information on private and public stormwater and sewerage drains as shown in Auckland City’s records • Information relating to any rates owing in relation to the land • Details of approved building, plumbing/drainage and resource planning permits and consents indicating where further action is required • As required by the Building Act 1991 details are included of • Code Compliance Certificates: a final certificate of approval for building consents • Compliance Schedule: required for certain systems or features of commercial and multi-residential properties • Warrant /Statement of Fitness: in conjunction with compliance schedule -issued annually to maintain compliance standard • Details of Dangerous Goods, Liquor, Hairdressing and Health Licences (mainly refers to commercial properties) • Details of Operative and proposed zoning, road widening, height restrictions, view and tree protection, and any Historic Places Trust listing • Any outstanding requisitions or notifications from Auckland City regarding any matters on that property that do not meet Auckland City specifications and which require action within a certain time frame. Satisfying requisitions is the responsibility of the owner of the property. The Memorandum may also include: • Such other information concerning the land which Auckland City considers, at its discretion, to be relevant. Line of Credit • An agreement by a lender to extend credit up to a specified amount for a specified time for a specified purpose. 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.
A margin that may be added to a borrower’s interest rate if they’re unable to provide the documentation needed to prove their income. This is common for borrower’s who have recently become self-employed and aren’t able to provide a profit and loss statement. Lenders can review the margin once sufficient documentation has been provided.
Whether a loan is structure with fixed or floating interest rates, or a mix of both. Find out more about fixed and floating interest rates here.
Loan to value ratio—this is percentage of the property’s value that you need to borrow from your lender. If your deposit is 20%, the LVR is 80%.
The price a home will likely sell for based on the current property market trends.
A legally binding document outlining an agreement between lender and borrower. A mortgage gives the lender the right to hold onto the Certificate of Title until the loan is fully repaid, with interest. If the borrower is unable to make their loan repayments, a mortgage gives the lender the right to sell the property.
A person or organisation that matches borrowers with lenders so that they can enter into a mutually beneficial mortgage agreement. A mortgage broker will help the borrower apply for the loan and negotiate the loan terms on their behalf. For this service, most brokers charge a fee which is usually paid by the lender. However, Lending People don’t charge broker fees.
An insurance policy, paid by the borrower when their deposit is less than 20%. This is to cover the increased risk for the lender.
The lender holding the mortgage and Certificate of Title to a property, until the borrower pays off the loan.
When a property is sold by the lender because the borrower was unable to fulfil their loan payments.
The person borrowing money from a lender to buy a property.
The income remaining after taxes are deducted.
A person or entity, such as an agent or trustee, who is named by the buyer in the purchase and sale agreement to act on their behalf.
A formal written notice informing the borrower that they have missed at least one loan repayment. They are usually advised that legal action may follow.
Formal written notice informing the borrower that they have missed at least one loan repayment. They are usually advised that legal action may follow.
Contract conditions that can’t be legally enforced as they are not in accordance with the law.
A bank account that doesn’t earn interest, opened by the borrower with the understanding that the interest they owe to the bank for their home loan will be reduced.
An independent organisation that investigates complaints against government agencies, like banks. If a borrower wants to lay a complaint against their bank, the Ombudsman will investigate the issue.
A property report containing information about things like erosion, dangerous contaminants and subsidence. It will also list any authorisations required by the Resource Management Act. If the property is subject to any classifications from organisations like the Department of Conservation or the Historic Places Trust, this information will also be in the PIM report.
The date when a buyer takes possession of their new property. Often this is the same day as settlement.
The person who has the power to make decisions or complete documentation on the behalf of another person. A power of attorney is also a legal document that gives a named person (often a spouse or family member) authority to act on another person’s behalf, usually in the event that they are no longer fit to make these decisions for themselves. A power of attorney can give a person complete authority, or it can be restricted to specified acts or periods of time.
When a lender offers a borrower conditional finance approval. This allows the borrower to bid on or make an offer on a home. The loan will go ahead providing the property meets the lender’s criteria.
The value of a loan before interest is added.
The amount of money listed in the mortgage document that must be repaid to the lender first if the property needs to be sold.
An online report about that includes a real-time estimate of a property’s value as well as recent comparable sales.
A section of the sloped structural frame of a roof. Often it is a steel or wooden, which extends from the ridge to the wall plate.
Otherwise known as a Government Valuation, this is a property valuation carried out by the local council to determine the annual land rates.
A loan where the scheduled repayments start high and get smaller over time.
The market worth of a property, as assessed by a registered valuer who has inspected the property.
Real Estate Institute of New Zealand—a nationwide membership organisation representing over 16,000 real estate agents.
When the buyer asks for more information about the property’s title from the seller or real estate agent.
The minimum price a seller will take for their property when selling at an auction.
Permission needed from the local council to do an activity or development that has the potential to affect the environment. Resource consents follow the regulations outlined by Resource Management Act—they are not the same as building consents.
A type of home loan where the borrower gets finance from a lender using their home as security. Just like any other loan, it incurs monthly interest. The difference is that instead of making regular repayments, the loan (and interest) is paid back when the borrower sells their home, using the proceeds from the sale. This kind of loan is usually taken on by seniors who want to free up their money to use in retirement, rather than having it tied up in an asset. It’s a big decision and comes with risks, so most lenders will require a person to seek legal advice before taking on this type of loan.
An access way to one property that goes through another property.
The measurement of the angle, or the steepness of the roof’s slope.
A type of window where a pane of glass is set inside the frame, sliding up and down, rather than opening out.
If there is more than one mortgage on a property, the first mortgage must be paid off as a priority when the property is sold. Once that mortgage has been paid, the second mortgage can be paid off with the money from the sale after that.
The asset that the lender can sell if the borrower is unable to make their home loan repayments. Generally, the security is the property itself.
A type of building where two homes are attached by a single wall.
The date when money changes hands between the buyer (and/or lender) and the seller. This is the date when all legalities have been completed and the sale becomes official.
Thin, overlapping pieces of building material that form cladding, usually on a roof but sometimes on external walls.
A roof that consists of a single flat surface, with a slope of at least 10–15º.
There are a number of conditions that may be included in a sales and purchase agreement, some of which include: • Cash-out • Favourable results from a specialist or LIM report • The sale of the buyer’s current property • An existing agreement • Getting finance
A home loan that has been split to have a mix of fixed and floating interest rates, or a mix of loan terms. Whether a loan is structure with fixed or floating interest rates, or a mix of both. Find out more about fixed and floating interest rates here.
A form of home ownership created for multi-level apartment blocks and horizontal subdivisions with shared areas. Each owner holds the Certificate of Title to their lot, unit or apartment whilst sharing ownership of the land it’s built on.
Vertical structures that form the frame of a wall, often made of timber.
A type of loan where the regular repayments are the same each week, fortnight or month, unless the interest rate changes. Every repayment goes towards both the interest and principal (the amount borrowed), but the initial payments are weighted more heavily towards interest. As the amount the borrower owes gets smaller, the repayments will put towards interest less and principal more.
A type of home ownership where multiple parties have shares in a property. If one party passes away, their share is transferred to whoever they’ve listed in their will—this may or may not be one of the other property owners.
A way of selling property where any interested buyers can submit their offer to the seller—with or without conditions attached. An open tender has no closing date, whereas a closed tender has a cut-off date that all offers must be submitted by.
The time the loan spans. ‘Term’ may refer to the total length of the loan, for example 30 years. Or it may refer to the time where a certain interest rate has been agreed to—a borrower may choose to fix an interest rate for a term of 5 years.
When a Certificate of Title is checked to see whether the seller has a clean title (owns the property outright) or whether there are liens attached to it (claims to the property by a lender, for example).
A type of home, that is often tall and narrow, made up of two of more floors. Usually townhouses are attached to other townhouses by one or more shared walls. The owners may have a strata title or cross lease title, where they own their potion of the building, but have joint ownership of the land and common areas shared by their neighbours.
When a sale and purchase agreement has no conditions attached to it, or all conditions have been met. This is the point of no return, where the agreement is legally binding for both the seller and buyer. In other words, the sale is now a done deal!
The process of adding structural support to reinforce the existing foundations of a building.
Services like gas, electricity, water, internet, and waste management that are all made available to the occupants of a development.
When a purchased home is already empty by the scheduled settlement date.
Another way to describe a floating interest rate. Find out more about fixed and floating interest rates here.
The person selling the property—often a real estate agent.
The empty gap in between the outer sides of the wall.
The measure for a return on investment, expressed as a percentage.
The rules outlined by the local council which dictate how you can use the land.