A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

A

Access Bond

An Access Bond permits you to withdraw funds from your mortgage account up to an agreed amount.

Administration Fee

Monthly fee levied by the bank to administer your loan account

Ability to pay

Refers to the borrower’s ability to make interest and principal payments on debts , factors that determine a borrower’s ability to play include income and the other debt commitments.

Amortization

The process of gradually repaying a loan over an extended period of time through regular payments of principal and interest.

B

Balloon payment

A balloon payment is part of the vehicle finance payment structure and is owed by the client. It is larger than the regular monthly payments and is usually the final payment of the contract. The main purpose is to reduce the other equal monthly payments.

Basis point

One one-hundredth of a percent (0.01%). Changes in interest rates are often quoted in basis points. E.g.) 50 basis points or 50bps = 0.5%.

Bond Assurance

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Broker

A Representative responsible for negotiating and securing insurance on behalf of his/her clients.

Bond Costs

These are the conveyancer’s fees, stamp duty and VAT. They are payable by the buyer to the attorney handling the registration of the bond on behalf of the bank. Conveyancing fees and stamp duty are calculated on a sliding scale based on the bond registered.

Bond Term

This is the original term of the loan , typically 20 or 30 years.

Building Loan

This is a loan applied for to build a house.

C

Cancellation Figures

The bank advises the attorney of these figures. They comprise the outstanding capital amount and interest, plus any other costs required to settle the account in the bank’s books.

Car Allowance

A car allowance is part of your salary package, and it is the employers contribution paid to you for the use of your private vehicle, for business purposes.

Car Insurance

Car insurance protects a policyholder against damages or the loss of an insured car.

Cession

This occurs when a borrower’s policy is ceded to the bank as collateral on a loan . The Bank would hold the cession, while the insurance company would endorse their records to reflect the cession. The bank is entitled to any policy proceeds whilst the cession remains in force.

Collateral

This is the amount of security provided to secure a loan.

Close corporation (CC)

Type of business entity suited to small enterprises. The regulations and administration procedures are simple and flexible.

Company

Type of registered business often referred to as a Pty (Ltd). Shares in the company are privately owned.

Compounded interest

Interest paid both on principal and on interest earned during previous compounding periods. Essentially, compounding involves adding interest to the sum of principal and any previous interest in order to calculate interest in the next period - interest on interest.

Comprehensive insurance

A term used for a variety of policies providing broad protection.

Consolidation loan

A loan that combines several small loans into one bigger loan from a single lender. The consolidation loan is used to pay off the balances on the other loans.

Credit rating

An evaluation of the likelihood of a borrower to default on a loan. Credit bureaus and credit reporting agencies provide this information to banks and businesses to help them decide whether to issue a loan or extend credit. Your credit rating may include your payment history, a list of current and past credit accounts and their balances, employment and personal information and a history of past credit problems

Current assets

Cash and everything that is expected to be converted into cash within twelve months of the balance sheet date.

Current liabilities

Money owed by the business to creditors, bank overdraft, taxation within 12 months of balance sheet date.

Core CPI

Measures underlying inflationary pressure Headline CPI excluding:

1. Interest rates on mortgage bonds and overdrafts personal loans

2. Changes in VAT

3. Assessment rates

4. Fresh and frozen meat, fish, vegetables and fresh fruit and nuts

CPIX

A broader survey than ‘headline’ and ‘core’ CPI which covers not only retail outlets in 14 metropolitan areas but also in 39 other urban areas

Headline CPI excluding interest rates on mortgage bonds only

Used for inflation targeting purposes

CPIX target range set at 3% - 6% as an average in 2002

Cooling-Off Period

This clause is included in an offer to purchase a property under R250 000. It is based on a new law allowing first time home buyers the opportunity to change their minds within five days of signing the offer.