Glossary

A

Agreement in Principle

This is when your application for your mortgage has been approved by your lender, subject to further checks. These are likely to be checks on your income and the value of the property.

Amenity

A feature of the home or property that serves as a benefit to the buyer but that is not necessary to its use; may be natural (like location, greenery, water) or man-made (like a swimming pool or garden).

Annual Percentage Rate (APR)

Calculated by using a standard formula, the APR shows the cost of a loan; expressed as a yearly interest rate, it includes the interest, points, mortgage insurance, and other fees associated with the loan.

Appraisal

A document that gives an estimate of a property’s fair market value; an appraisal is generally required by a lender before loan approval to ensure that the mortgage loan amount is not more than the value of the property.

B

Base / Bank Rate

A Mortgage rates are determined by this. It is the interest rate at which the Bank of Ghana will lend money to other banks.

Borrower

A person who has been approved to receive a loan and is then obligated to repay it and any additional fees according to the loan terms.

Budget

A detailed record of all income earned and spent during a specific period of time.

C

Cancellation Clause

Proviso in contract or lease that confers the right to terminate obligations upon occurrence of the condition or contingency set forth in clause.

Capital Gain

Tax term involved with selling or exchanging a capital asset.

Completion

The final stage of the sale. At this time all the monies are passed over and the buyer has legal right to the property.

Condominium

An apartment or other unit, held in fee ownership, in which owners pay common charges for the maintenance of common areas.

Conveyancing

The legal transfer of a property from one owner to another via your legal representative/solicitor.

D

Debt Service

Annual monthly amount to be paid by debtor to repay borrowed money.

Debt-to-Income Ratio

A comparison of gross income to housing and non-housing expenses; With our in-house lender the monthly mortgage payment may be no more than 60% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 70% of income.

Deeds

The legal documents relating to the property - The document that transfers ownership of a property. They are usually held on your behalf by your mortgage provider.

Developer

One who improves land with buildings, usually on a large scale, and sells to homeowners and/or investors.

E

Equity

Interest or value that an owner has in his or her property over and above any mortgage debts.

Escrow

Written agreement between two or more parties providing that property be placed with a third party to be delivered to a designated person upon fulfillment or performance of some act or condition.

Escrow Account

A separate account into which the lender puts a portion of each monthly mortgage payment; an escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance,etc.

Exchanging

This is where you, the buyer and us, the seller exchange contracts. After the exchange, the sale is legally binding.

F

Fair Market Value (FMV)

The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fiduciary

Person who acts on behalf of another and transacts business or handles money regarding property not the persons own. The relationship is characterized by trust and confidence.

Fixed-Rate Mortgage (FRM)

A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Fixtures

Personal property attached to the land or improvements that become part of the real property.

Foreclosure

A procedure whereby property pledged as security for a debt is sold to pay the debt in the event of default in payment or terms.

G

Grace Period

Additional time allowed to perform an act or make a payment before a default occurs.

Guarantor

A person who guarantees that a loan will be paid, even if the buyer defaults on the repayments.

H

Home Inspection

An examination of the structure and mechanical systems to determine a home’s safety; makes the potential home buyer aware of any repairs that may be needed.

Homeowner’s Insurance

An insurance policy that combines protection against damage to a dwelling and its contents with protection against claims of negligence, inappropriate action that result in someone’s injury, or property damage.

I

Independent Financial Advisors (IFAs)

Known as IFAs, these professionals offer independent financial advice on all financial matters. They have knowledge of the whole market and can recommend the most suitable financial products, such as mortgages.

Index

A measurement used by lenders to determine changes to the Interest rate charged on an adjustable rate mortgage.

Insurance

Protection against a specific loss over a period of time that is secured by the payment of a regularly scheduled premium.

Interest

The percentage of a sum of money charged for its use.

L

Land Commission and Fees

The Land Commission is the government body that records who owns land and property in Ghana. You pay them a fee, through your solicitor, to register your ownership of your new property.

Lessee

Tenant.

Lessor

Landlord.

Lien

Right given by law to certain creditors to have their debt paid out of the property of a defaulting debtor.

Litigation

The act of carrying on a lawsuit.

Loan

Money borrowed that is usually repaid with interest.

Loan Fraud

Purposely giving incorrect information on a loan application in order to better qualify for a loan; may result in civil liability or criminal penalties.

Loan-to-Value (LTV)

The loan-to-value (LTV) ratio is a financial term used by lenders to express the ratio of a loan to the value of an asset purchased. The term is commonly used by banks and non-bank lenders to represent the ratio of the first mortgage line as a percentage of the total appraised value of real property.

Local Searches

These are carried out by your solicitor and reveal any changes that may effect your new home or the surrounding area, including any planning decisions and applications.

M

Management Company

A company who is appointed to take responsibility for the maintenance and management of all communal areas and shared services, like roads, streetlights, open spaces.

Market Value

The probable price a ready, willing, able, and informed buyer would pay and a ready, willing, able, and informed seller would accept, neither being under any pressure to act.

Marketable Title

A title which a court of equity considers to be so free from defect that it will enforce its acceptance by a purchaser.

Meeting of the Minds

Whenever all parties to a contract agree to the exact terms thereof.

Mortgage

A conditional transfer or pledge of real estate as security for the payment of a debt. Also, the document creating a mortgage lien.

Mortgage Banker

A company that originates loans and resells them to secondary mortgage lenders.

Mortgage Broker

A firm that originates and processes loans for a number of lenders.

Mortgage Commitment

A formal indication, by a lending institution that it will grant a mortgage loan on property, in a certain specified amount and on certain specified terms.

Mortgage Insurance

A policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan; mortgage insurance is required primarily for borrowers with a down payment of less than 25% of the home’s purchase price.

Mortgage Modification

A loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

Mortgage Valuation

When you apply for a mortgage the lender will normally insist on a survey before agreeing on a loan. They will asses the value and condition of the property.

Mortgagee

A lender in a mortgage transaction.

Mortgagor

A borrower who conveys his or her property as security for a loan.

N

Notice

The period immediately after the building work on your new home has finished in which legal completion must take place. We will let your Lawyers know when notice is served.

O

Offer and Acceptance

Two essential components of a valid contract; a meeting of the minds when all parties agree to the exact terms.

Offer to Purchase

Indication by a potential buyer of a willingness to purchase a home at a specific price; generally put forth in writing.

Origination

The process of preparing, submitting, and evaluating a loan application; generally includes a credit check, verification of employment, and a property appraisal.

P

PIT

Principal, Interest, and Taxes – the three elements of a monthly mortgage payment; payments of principal and interest go directly towards repaying the loan while the portion that covers taxes goes to the city for payment of property taxes.

Power of Attorney

A written instrument duly signed and executed by an owner of property, which authorizes an agent to act on behalf of the owner to the extent indicated in the instrument.

R

Ready, Willing and Able Buyer

One who is prepared to buy property on the seller's terms and is ready to take positive steps to consummate the transaction.

Real Estate Agent

An individual who is licensed to negotiate and arrange real estate sales; works for a real estate broker.

Real Property

Land, and generally whatever is erected upon it or affixed thereto.

Refinancing

Paying off one loan by obtaining another; refinancing is generally done to secure better loan terms (like a lower interest rate).

Rent to Own

Assists low- to moderate-income home buyers in purchasing a home by allowing them to lease a home with an option to buy; the rent payment is made up of the monthly rental payment plus an additional amount that is credited to an account for use as a down payment.

S

Semi-detached

A single family dwelling house built as one of a pair that share one common wall. Often, each house's layout is a mirror image of the other.

Often abbreviated to semi or semi-D.

Stamp Duty

This is a government tax on the sale of a residential property. You will pay this at completion. The amount varies dependent on the purchase price and increases in bands.

Standard Variable Rate (SVR)

The standard interest rate set by the lender that in most instances tracks the Bank of Ghana base rate or Treasury bill rate.

Surveyors Certificate

A property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc.

T

Title

Evidence that owner of land is in lawful possession thereof; evidence of ownership.

Title Deeds

The legal documents that set out the rights and liabilities that attach to the property and state who are the legal owners. You sign this and it is then sent to the Lands Commission for registration.

Title Insurance

Insurance that protects the lender against any claims that arise from arguments about ownership of the property; also available for home buyers.

Title Search

An examination of the public records to determine the ownership and encumbrances affecting real property.

Title Search

A check of public records to be sure that the seller is the recognized owner of the real estate and that there are no unsettled liens or other claims against the property.

U

Underwriting

The process of analyzing a loan application to determine the amount of risk involved in making the loan; it includes a review of the potential borrower’s credit history and a judgment of the property value.