Glossary of terms

Glossary of terms

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Table mortgage

A loan that is paid back by making regular payments of fixed amounts. Each payment pays back part of both the interest and the capital. Under a floating rate mortgage, when interest rates change, you have the option of maintaining the level of payment and varying the term of the loan or maintaining the term of the loan and varying the payment. Under a fixed rate mortgage you may elect to change the level of payment but there is usually a charge associated with this.

Glossary: interest
Money paid in return for the use of money. If the bank is using your money (in a savings account) they pay you interest. If you are using the bank's money (via a loan), you pay the bank money.
Glossary: floating rate
The rate of interest paid on a loan may be either a fixed rate or a floating rate. For a floating rate loan, the interest varies from time to time. If interest rates fall, then so does the amount you have to repay. Or you can choose to continue with the same level of repayment and reduce the term of your loan. However, if interest rates rise, then the opposite effect happens, either your repayments need to be increased or the term of your loan is extended.
Glossary: interest rates
The amount of interest you pay on a loan or are paid for an investment, usually expressed in a percentage.
Glossary: fixed rate
The rate of interest paid on a loan may be either a fixed rate or a floating rate. For a fixed rate loan, the interest rate is set at the date you take out your loan and remains the same throughout the term of your loan, irrespective of whether bank interest rates rise or fall.
Term deposit

Money deposited for a fixed term - usually between 30 days and five years. If you want your money back before the term is up you may have to forego a portion of your interest as a penalty.

Glossary: interest
Money paid in return for the use of money. If the bank is using your money (in a savings account) they pay you interest. If you are using the bank's money (via a loan), you pay the bank money.
Today's dollars

'Today's dollars' means that any amount you pay or receive in the future will have the same buying power as this many dollars today. For example, if you buy something worth $1000 now, in 10 years time, you would need $1220 ("nominal dollars") to buy that same thing (assuming 2% inflation). The $1220 nominal dollars in 10 years time is equivalent to $1000 today’s dollars. This means that the actual dollar amounts that you pay or receive are likely to be more than the figure quoted here, but it will have the same current buying power.

Glossary: Today's dollars
Glossary: inflation
Inflation - is the rate at which the prices of goods and services increase over time. The effect of this is to reduce the purchasing power of money. For example, if you could buy something with $1000 now, in one years time, you would need $1020 to buy that same thing (assuming 2% inflation).
Trustee companies

Companies that were originally established to manage a deceased individual's estate and trust funds. Trustee companies now actively manage money on behalf of clients.

Glossary: Trustee companies