Glossary of Terms

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:

  • have a right or interest in the land or lease used for the purpose of farming activities;
  • contribute at least 50 per cent of their labour and capital to the farming enterprise;
  • derive at least 50 per cent of their gross income from the farming enterprise;
  • are registered with the Australian Taxation Office (ATO) as a primary producer and have an Australian Business Number (ABN).

Note:  definition may vary in individual scheme criteria.

Fixed Interest Rate - An interest rate that stays the same for a set period. Accordingly, your repayments also remain the same.

Government Charges - Charges levied by the government (including stamp duty, mortgage registration fees etc.

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.

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.

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.