Home buying terms glossary

A legally binding agreement that imposes restrictions or requirements, often for the benefit of another property/party. Can be positive (e.g., build and maintain a fence), or negative (e.g., prevent further subdivision). 

Often used to preserve the look and feel of subdivisions. Covenant Instruments (the details of the covenant) are registered on a property title.

The amount of the purchase price (commonly 10%) you pay on the day your sale and purchase agreement is signed or goes unconditional, depending on your situation and negotiations. 

If you win at an auction, you’re required to pay the deposit immediately (unless negotiated otherwise beforehand).

A legal right allowing a third-party (like a neighbour, a government entity, a trust, etc.) to use part of a property for a specific purpose, even though they don’t own it. Examples can be pathways, access to piping underground, etc. 

Easements are commonly used to ensure services can be provided to the property (e.g., right of way, right to drain water, convey sewage, etc.). Like a Covenant, an Easement Instrument (setting out the details of the easement) is registered on the property title.

An interest charge that can move up or down at any time, as determined by the lender, depending on market and lending conditions. 

Repayment amounts on the term loans may change with changes to the variable interest rate.

A geotechnical is a professional engineering study that evaluates subsurface soil, rock, and groundwater conditions to determine if a specific piece of land can safely support a planned building or infrastructure project.

A withdrawal from your KiwiSaver scheme which is used to assist getting the amount together for your deposit, if you're a first home buyer. 

Eligibility criteria apply, and you must have been a member of KiwiSaver for at least 3 years. You must leave at least $1,000 in your KiwiSaver scheme, and you can’t withdraw any Australian superannuation funds you may have transferred for the purposes of a first home withdrawal in New Zealand.

A type of ownership generally used when buying a building or apartment. In this case, while you own the building or apartment, you’re only leasing the land for a certain period of time. 

You need to pay rent for the land while you own the building, and there may be restrictions on your use.

A value showing the ratio of borrowing compared with equity in a property, generally shown as a percentage. 

For example, if you borrowed $480,000 on a property worth $600,000, the LVR would be 80%, with equity of $120,000.

See the Reserve Bank of New Zealand’s piece on LVR for more information.

A home loan linked to the balance of connected transactional accounts. The balance of these accounts is offset against the balance of the home loan. 

For example, a home loan of $600,000 offset by a transactional account with $100,000 in it means you’d only pay interest on $500,000. This reduces the amount of interest you’d pay. 

See our article about offset home loans for more information.

This is the outstanding balance of your loan. 

For example, if you want to buy a house for $600,000 with a 20% deposit (i.e., $120,000), you’ll borrow a principal amount of $480,000.

You’ll then need to repay this amount to your lender, with interest and fees.

The minimum price a seller is prepared to accept at auction. Once this is reached, the house will be sold in that auction to the winning bidder.

If a property is ‘passed in’, this means it failed to meet the reserve price (but there may be negotiations with the highest bidder afterwards).