Terminology

Mechanical Warranty

A major portion of vehicles sold in the NZ market are used Japanese imports. This aftermarket warranty usually is an extended version of the manufacturer’s warranty and covers any mechanical failure for the period the warranty is purchased. Various warranties are available and each operates on their documented terms and conditions that are generally easy to keep. This is a great tool that offers peace of mind and protects against unplanned mechanical failures.

Sales and Purchase agreement

A legal document signed between the seller and the buyer that forms a contract to sell the detailed property or item as per the conditions written, and signed as accepted by the two parties. It is important to read this well before signing. It is always better to stipulate “subject to finance approval” at the time of signing. In most case even if the loan is pre-approved the lender will need to know of the property before giving their go ahead. Once signed the two parties can only get out of the contract by either implementing it or by mutual consent.

Deposit

The deposit is the money put in by the buyer at the time of signing the S&P plus the total money the buyer will put from his side prior to the purchase of the property. The balance of the money will be paid by the lender who has given approval of the mortgage. Usually the lenders require proof that the deposit is not borrowed or is an amount of money available without any commitment to the buyer.

Loan to Value Ratio - LVR

This is a term used by lenders that is the ratio of the actual loan taken over the total value of the security offered. The rate of lending, approval conditions and some key deciding factors are linked to LVR by the lender.

Unconditional Offer

This is the statement in the S&P agreement that there are no open conditions to the contract and that the seller and the buyer agree unconditionally to go ahead with the transaction on the pre-agreed date. This will assume that finance is available, no more clarifications are required and all reports required for the assessment have been carried out and accepted by all parties.

Lawyer

The lawyer plays a key role by arranging the mortgage transaction. Lenders’ money is transferred to the lawyers trust account and then paid to the seller via their lawyer. This protects the buyer as well as the seller against any fraudulent activity and also ensures that all conditions of the sale are met before the transfer of property is legalized.