Buying your first home or investment property comes with a flood of new terms-LIM reports, equity, LVRs, CCCs, and more. This comprehensive glossary helps New Zealand home buyers understand essential mortgage and property terminology.
Key Mortgage Terms
Asking Price - The advertised cost of a property in private treaty sales.
Body Corporate - Unit owners' group managing shared apartment spaces and enforcing building rules through annual fees.
Builder's Report - An inspection assessing property condition; banks may require one if concerns emerge.
Code of Compliance Certificate (CCC) - Local council confirmation that building work meets approved plans and Building Code standards.
Cross Lease - Multiple property owners sharing land under lease agreements; requires careful legal review.
Debt-to-Income Ratio (DTI) - Mortgage amount compared to annual income; determines borrowing capacity.
Deposit Hurdle - Insufficient deposit limiting access to standard lending options.
Equity - Portion of home owned outright; example: $150,000 equity on $600,000 home with $450,000 mortgage.
Fixed Interest Rate - Rate locked for set term (6 months to 5 years) ensuring repayment certainty.
Floating Interest Rate - Rate fluctuating with market conditions; typically higher than fixed rates with unlimited repayments.
Gifting Declaration - Legal document confirming deposit portion is a gift, not a repayable loan.
Income Hurdle - Insufficient income to service mortgage despite adequate deposit.
Interest-Only Mortgage - Paying interest only; principal balance doesn't reduce without extra payments.
LIM Report (Land Information Memorandum) - Council report detailing permits, consents, hazards, and property zoning.
Loan-to-Value Ratio (LVR) - Percentage of property value mortgaged; 20% deposit equals 80% LVR.
Member Tax Credit - Government KiwiSaver contribution up to $261 annually based on personal contributions (from July 2025).
Registered Valuation Report (RVR) - Formal bank-ordered valuation by registered valuer.
Reserve Price - Minimum acceptable auction price; property passed in if bidding doesn't reach it.
Revolving Credit - Mortgage functioning like overdraft; deposit and withdraw up to set limit with daily interest calculation.
Sale and Purchase Agreement - Binding legal contract between buyer and seller once conditions are met.
Settlement Date - Day legal ownership transfers and buyer receives keys.
Tender - Sale method where buyers submit best offers by deadline; vendor selects preferred offer.
Title - Legal document proving ownership and listing mortgages or restrictions.
Vendor - Legal term for property seller.
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