Caveat - A warning or notation on title. Please refer to NSW Land and Property Information (LPI) for further details.
Default Interest - Additional interest that may be charged to your loan if payments are not made by the agreed date (see Repayments).
Equity - Equity is that part of your property that belongs to you and not the bank (i.e. the value of your property, less the outstanding loan amount).
Farmers - are Primary producers who:
Note: definition may vary in individual scheme criteria.
Financial Assessment - what the Rural Assistance Authority can ask for - The Rural Assistance Act 1989 ("the Act") provides for the Rural Assistance Authority (RAA) to administer programs of assistance for individuals (s.5). To determine eligibility for assistance the Act allows the RAA to decide what information and documents it requires in order to determine an application for assistance (s.15). This means that, by law, the RAA can ask for financials from individuals where it is required.
To be eligible for RAA assistance, guidelines require that the applicant must earn more than 50% of their gross income from the primary production enterprise for which they are making the application. The intention of setting a requirement of 50% is to provide assistance to those individuals who rely most heavily on their farming enterprise for their income.
To assess whether, on aggregate, the applicant meets the 50% test, the RAA will ask to look at the financials of the individuals who are part of the applying farming operation. This means that the RAA can ask for financials for all individuals involved in a company, partnership, estate, or trust, and also can ask for financial information relating to all shareholders, directors and beneficiaries.
Fixed Interest Rate - An interest rate that stays the same for a set period. Accordingly, your repayments also remain the same.
Formal interest - when describing an applicant's formal interest in relation to business entities, this is taken to refer to all companies, partnerships, trusts and self-managed super funds of which an applicant is a beneficiary, director, share-holder, trustee or partner.
Government Charges - Charges levied by the government (including stamp duty, mortgage registration fees etc.
Gross income - total income and revenue from all sources
Guarantee - An undertaking by a third party to pay your loan if you are unable to.
Guarantor - The third party who provides the guarantee.
Interest Only - When you only pay interest on a loan (no principal payments) over a set time.
Loan Determination - The final amount of a loan that is released in stages (Progess Payments).
Loan to Value Ratio (LVR) - A loan to value ratio is the amount of debt secured by a mortgage taken over a parcel of land expressed as a percentage.
Off-Farm Income - Income from non-farm sources such as wages, pensions, superannuation payments, contracting, investments etc.
Note: Agistment income will be regarded as off-farm income where it is shown that the majority of income 'under normal circumstance' is from this source.
On-Farm Income - Income from the sale of farm products and services (e.g. crops, livestock etc) produced by the farm. The Australian Government's Farm Household Allowance is treated as on-farm income.
Note: Agistment income will be regarded as on-farm income if it can be demonstrated that the majority of income 'under normal circumstances' is earnt from other on-farm sources unless it is excluded in individual scheme criteria.
Mortgage/Charge - Document used as security for a loan.
Mortgagee - The person who makes the loan (e.g the RAA) and holds a mortgage as security.
Mortgagor - The person who gives the mortgage as security for a loan.
Priority Agreement - An agreement between lenders detailing the priority or ranking of debt.
Principal - The amount owing on a loan (note: interest in calculated on the principal).
Principal and Interest Loan - A loan where you repay both principal and interest.
Progress Payments - When loan funds are released to a client in stages up to the agreed value of the loan.
Property Value - Your property value as determined by the RAA. This can be the purchase price, an external valuation, or your own assessment of the value.
Refinancing - Where an existing loan is repaid by a new loan.
Registration - The noting of a mortgage or other charge on your Certificate of Title.
Repayments - The amount you must repay at an agreed time (e.g. monthly, 6 monthly) in accordance with your loan contract.
Security - An asset (e.g. property) that is used to secure your loan.
Settlement - The process where you finalise either selling, or buying a property.
Small Business - A business, other than a farm enterprise, that employs fewer then 20 full-time equivalent staff. That is, the sum total of all standard hours worked by all employees (whether full-time or part-time) is less than the number of standard hours that would be worked by 20 full-time employees.
A small business does not include a sole trader where 50% or less of the sole trader's income comes from that business.
Tax Invoice Requirements - When the RAA asks for tax invoices, it requires that they:
Term - The length of your loan (e.g 10 years).
Third Party - Someone not directly involved in your loan who has provided security (e.g a mortgage) for the loan.
Title Search - A check of your Certificate of Title to see if there are any encumbrances (e.g mortgage, Caveat etc). The search is also used to check that details on the Certificate of Title are correct.
Valuation - The value of your property as determined by the RAA, or by an independent valuer.
Variable Interest Rate - Where your loan's interest rate can move up or down. Your minimum repayments may change in line with these interest rate movements.