Mortgage Glossary: Common Terms Every Home Buyer Should Know
Buying your first home or investment property comes with a flood of new terms—LIM reports, equity, LVRs, CCCs, and more. It can feel like a whole new language. So we’ve put together a plain-English glossary to help you understand the most common mortgage and property terms in New Zealand. Bookmark this page and refer back whenever the jargon gets confusing.
Asking Price
The advertised price of a home. Often used in private treaty sales, but not typically disclosed in auctions.
Bill Shock
When a regular bill—like power or phone—is unexpectedly much higher than normal.
Body Corporate
The group of unit owners (usually in apartment blocks) responsible for maintaining shared spaces and enforcing building rules. Funded by annual fees from owners.
Builder’s Report
An inspection report prepared by a builder, assessing the property’s condition. Some banks may require one if concerns are raised during due diligence.
Code of Compliance Certificate (CCC)
A certificate issued by the local council confirming that building work complies with the approved plans and Building Code.
Conservative Fund
A low-risk KiwiSaver or investment fund made up mostly of cash and bonds. It’s designed to avoid major losses but offers lower returns.
Cross Lease
A type of land ownership where multiple property owners share the land under lease agreements. Requires early legal review due to its complexity.
Debt-to-Income Ratio (DTI)
A measure of your mortgage amount compared to your annual income. Some lenders use it to determine how much you can borrow.
Deposit Hurdle
When your deposit isn’t large enough to access standard lending (e.g., you’re below 20%). Raising your deposit can increase your borrowing power.
Equity
The portion of the home you own outright. For example, on a $600,000 home with a $450,000 mortgage, you have $150,000 in equity.
Fixed Expenses
Regular, recurring costs that stay the same—like insurance, rent, or gym memberships.
Fixed Interest Rate
An interest rate locked in for a set term (usually 6 months to 5 years), giving certainty over repayments.
Floating Interest Rate
An interest rate that can move up or down with market conditions. You can make unlimited repayments without penalty, but it’s typically higher than fixed rates.
Gifting Declaration
A legal document confirming that part of your deposit is a gift and not a repayable loan.
Gross Income
Your income before tax and deductions (KiwiSaver, student loans, etc.).
First Home Grant
A government grant for eligible first home buyers using KiwiSaver. Amount depends on income, house price caps, and contribution history.
Income Hurdle
When your income isn’t high enough to service the mortgage, even if your deposit is sufficient.
Interest-Only Mortgage
You only pay the interest, not the loan principal. The mortgage balance doesn’t reduce unless you make extra payments.
Interest Payments
The cost of borrowing money. For example, 5% interest on a $100,000 loan = $5,000 per year.
KiwiSaver Significant Financial Hardship Withdrawal
Allows early withdrawal of KiwiSaver funds if you’re experiencing genuine financial hardship (with strict criteria).
LIM Report (Land Information Memorandum)
A report from the local council outlining permits, consents, hazards, and zoning for a property.
Loan-to-Value Ratio (LVR)
The percentage of the property’s value that is mortgaged. A 20% deposit equals an 80% LVR.
Member Tax Credit
Government contribution to your KiwiSaver (up to $521 annually), based on your personal contributions.
Net Income
Your “take-home” pay after tax, student loans, and other deductions.
Net Worth
Your total assets minus your liabilities. What you’d be left with if you sold everything and paid off all your debts.
Owner-Occupied
A property that you live in yourself, as opposed to an investment property.
Per Annum (p.a.)
Latin for “per year”. Interest rates are typically quoted per annum.
Principal Payments
The part of your mortgage payment that reduces the loan balance (not the interest portion).
Rate Shock
A sharp increase in interest rates, leading to unexpectedly high mortgage repayments.
Registered Valuation Report (RVR)
A formal valuation by a registered valuer, often required by the bank. Must be ordered through the bank’s system.
Reserve Price
The lowest price a vendor will accept at auction. If bidding doesn’t reach this, the property may be passed in.
Revolving Credit
A type of mortgage that acts like a giant overdraft. You can deposit and withdraw funds up to a set limit. Interest is calculated daily.
Risk Tolerance
How comfortable you are with fluctuations in investment value—essential when choosing KiwiSaver or other investments.
Sale and Purchase Agreement
The legal contract between buyer and seller. Becomes binding once all conditions are met.
Settlement Date
The day legal ownership transfers from the seller to the buyer and the buyer receives the keys.
Tender
A sale method where buyers submit their best offer by a deadline. The vendor chooses the preferred offer without negotiation.
Title
The legal document proving ownership of the property. It also lists any mortgages or restrictions.
Variable Expenses
Costs that change from month to month, like groceries, petrol, or entertainment.
Vendor
The legal term for the property seller.
Understanding these terms will give you more confidence during the home buying process—whether you’re purchasing your first property or adding to a growing investment portfolio.
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