Mortgage Jargon A-E
Assets
Items of ownership that are convertible into cash are known as assets. The resources of a person or business like cash, notes and accounts receivable, securities, inventories, goodwill, fixtures, machinery, or real estate are assets.
Bad Credit
A term used by financial institutions to categorize instances of poor financial management.
Bridging Loan
An interest servicing short term loan (up to 6 months) to help bridge over the period between the completion of purchase of a new property and the receipt of proceeds from the sale of an existing property.
Building Under Construction
Also known as BUC, it is property that is normally sold by the plans while the physical building is under construction. For such properties, the Temporary Occupation Permit (TOP) and/or Certificate of Statutory Completion (CSC) has not been issued.
Capital Gains
An amount by which proceeds from the sale of a particular asset exceed the original cost. An increase in the value gives it a higher worth than the purchase price. The gain is not realized until the asset is sold.
Certificate of Title
A written statement by an attorney that sets out the status of a property title. It will give the legal description of the land and list any registered interests in the property like mortgagees, charges and caveators.
Combination Interest Rates
Also known as Fusion package, some financial institutions have a hybrid package where the customer can have part of the loan under the fixed rate and another part under the variable rate.
Completion Date
Date on which the new owner finalizes payment and assumes legal ownership and possession of the property.
Construction Loan
Granted for the sole purpose of financing the construction of a new property, or reconstruction, addition / alteration of an existing property.
CPF Minimum Sum
A statutory requirement for all CPF members to set aside a minimum sum in their CPF Ordinary account and Special account upon reaching age 55. The minimum sum is currently set at S$94,600 as at year 2006 and will gradually increase annually by $4,000 till it reaches S$120,000 by year 2013.
Credit Limit
The maximum amount of credit that a bank will extend to a borrower.
Credit Record
This can be established through a search with the Credit Bureau (Singapore) Pte Ltd (CBS), which maintains a record of an individual’s credit history with participating financial institutions.
Daily-Rest
Also known as daily-reducing, the interest will be calculated on the outstanding principal at the start of each day.
Debt Servicing Ability
Financial institutions will look at the Debt Servicing Ratio (DSR) of the customer – the ratio of affordable repayment based on gross financial commitments.
Deferred Payment Scheme
This is a scheme where the purchaser makes the initial payment, normally up to 20% of the purchase price within 8 weeks and the balance amount would only be due upon Temporary Occupation Permit (TOP) being obtained from the relevant authorities.
En-Bloc Sale
A collective sale allowing the owners of a property to come together and sell the whole property collectively in hopes of fetching a higher price as compared to selling the respective units within the property individually.
Exercise of Option
Should the purchaser decide to proceed with the purchase, the purchaser would be required to exercise the option granted by placing an additional deposit which would constitute a legally binding agreement on both parties for the sale and purchase of the subject property.
