Glossary

At Platinum Mortgage Securities, we like to make everything we do easy to understand.

This glossary complements our FAQs so be sure to read those as well for more information.

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Account Number
The number that a bank or other financial institution gives to a particular account. This number plus the BSB identifies that account.
AFSL
See Australian Financial Services Licence
Alternative Finance
Alternative finance refers to financial channels and instruments that have emerged outside of the traditional finance system such as regulated banks and capital markets. Examples of alternative financing activities through ‘online marketplaces’ are reward-based crowdfunding, equity crowdfunding, peer-to-peer consumer and business lending, invoice trading third party payment platforms.
AML/CTF Act
The Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act) covers the financial sector, gambling sector, bullion dealers and other professionals or businesses that provide services covered by the Act.
Annual Percentage Rate (APR)
The interest rate charged to the borrower, excluding expenses such as account opening and account keeping fees. The APR is the basic cost of your credit as a percentage of the total loan amount. A rate that includes all fees is known as a comparison rate.
ASIC
See Australian Securities and Investment Commission.
Asset
Something you own. It may be a financial item like money, bonds, shares or a bank account or physical item like a house, land or a car.
Asset Class
A category of investments with similar characteristics and market behaviours. Examples include cash, fixed interest, property and shares.
Australian Financial Services Licence
A licence given by ASIC that allows people or companies to legally carry on a financial services business, including selling, advising or dealing in financial products. You should only deal with licensed businesses as you are better protected if things go wrong and you will have access to free dispute resolution services. A licence does not mean that ASIC endorses the company, financial product or advice or that you cannot incur a loss from the investment. ASIC grants a licence if a business shows it can meet basic standards such as training, compliance, insurance and dispute resolution. The business is responsible for maintaining these standards. The ASIC Connect Professional Registers will tell you if the company or person holds an AFS licence.
Australian Prudential Regulation Authority (APRA)
The prudential regulator of the Australian financial services industry. It oversees banks, credit unions, building societies, general insurance and reinsurance companies, life insurance companies, friendly societies, and most of the superannuation industry. APRA is responsible for ensuring Australia has a stable, efficient and competitive financial system. It also provides statistics on the Australian financial sector.
Australian Securities and Investment Commission (ASIC)
The Australian Federal Government agency that enforces laws relating to companies, securities, financial services and credit, in order to protect consumers, investors and creditors.

Bankruptcy
A process for individuals to be legally declared as being unable to meet their debt obligations.
Beneficiary
Someone who will receive a benefit or asset in the event of the owner’s death. Beneficiaries of a super fund are the members, and their dependents (if the member dies).
Borrower(s)
People and their organisations to whom Platinum Mortgage Securities lends funds to on the primary security of registered first mortgages over real property.
Broker
A person who arranges a contract between you and, for example, an insurance or mortgage service provider. Brokers usually receive a commission or fee for arranging a contract.
BSB
A number that identifies a specific branch of a bank or other financial institution within Australia. The BSB number plus an account number identifies a particular account.
Building Society
Community-based financial institution usually owned by its members that offers traditional banking services like savings accounts and loans, listed on the APRA website as a building society. Also called a mutual building society. See also credit union.

Capital
For individuals, the money or other assets owned for the purpose of investing. For a company, the funds received from owners or investors to further its business objectives.
Capital Gain
The difference between what you paid for an asset (including buying costs) and what you got when you sold it (less selling costs).
Clear Out
A clear out occurs when your lender has not been able to get in touch with you, despite making reasonable efforts to contact you.
Co-Borrower
A person who borrows money jointly with you. Each person is responsible for the loan, so if one of you does not pay, the other person must pay the full amount.
Collateral
Property or assets you put up as security for a loan.
Commission
A fee paid to an adviser or salesperson as an incentive for selling a particular product. An upfront commission is based on the sale amount of the product. An ongoing commission is based on the balance of the account.
Comparison Rate
A rate that helps you work out the true cost of a loan. It includes the interest rate, and most fees and charges relating to a loan, reduced to a single percentage figure.
Compound Interest
Interest paid on the initial principal and the accumulated interest on money borrowed or invested.
Conflict of Interest
A situation in which someone in a position of trust has competing professional and personal interests which could make it difficult for them to remain impartial. For example, an adviser or broker may sell you a product that benefits them more than it does you.
Cooling-Off Period
A period of time in which you can get out of a contract for the purchase of goods or services, if you change your mind. The rules on cooling-off periods vary between states and territories. Details of a cooling-off period will be included in the contract, if the good or service has one.
Cost to Complete
The funds required to complete a development project.
Credit Contract
A document that contains the details of a loan, including the term, interest rate, fees and charges, and repayments. Credit providers must provide you with a credit contract.
Credit File
A file kept by a credit reporting agency that shows your credit history. Lenders access the information in your file to help them decide whether to lend to you. They can also record a default on your file if you make loan repayments late, or don’t pay a utility bill. Every time you make an application for finance an entry is recorded on your file showing the lender you applied to, the type of finance, the amount and the date. See also credit report and credit rating.
Credit Guide
Anyone engaging in credit activities (for example, by providing credit or credit assistance to you) must give you a credit guide. A credit guide will contain information about the lender, such as their license number and external dispute resolution process.
Credit Limit
The maximum amount a Lender will finance you under a loan or a credit contract.
Credit Rating
An assessment of the credit-worthiness of individuals and corporations, based on their borrowing and repayment history.
Credit Report
A report that details your credit history, including every time you have applied for credit or defaulted on a repayment. It is held by a credit reporting agency and a lender must ask you for permission to get this report. See also credit file.
Credit Reporting Agency
An organisation that collects and sells credit information on individuals and companies.
Credit Union
Community-based financial institution owned by its members that offers traditional banking services like savings accounts and loans, listed on the APRA website as a credit union. See also Building Society.
Creditor
A person to whom you owe money.
Crowdfunding
Crowdfunding is the practice of funding a project or venture by raising monetary contributions from a large number of people. Crowdfunding is a form of crowdsourcing and of alternative finance.

Debt Consolidation
When several loans are combined into one, with the aim of reducing repayments. Also known as loan consolidation.
Default
Failure to satisfy the terms of a loan obligation or failure to pay back a loan.
Default Fee
An amount of money that you may be charged if you fail to make a repayment when it is due on a loan or credit card.
Development Loan
A loan for the purpose of construction of residential or commercial properties or land subdivision.
Distribution Rate
The rate at which Distributions are made expressed as an annual percentage of the capital invested.
Distributions
Payments to Members by Credit Crowd Mortgage Securities through which Members derive income from the capital they invest in Sub-Funds.
Diversification
Spreading investments across a variety of different asset classes or within an asset class to reduce risk.

Effective Interest Rate
An annual interest rate that takes into account the effect of compound interest and fees. Also known as an effective yield or the annual percentage rate (APR).
Equity
The value of an asset such as your house or property, less any money owing on it.
Equity Investment
An investment where you buy and hold shares in a company or property from which you expect to receive income and capital gains.
Estate
All of a person’s assets, whether real property or personal property, and their liabilities or debts.

Fee for Service
An amount paid to a service provider such as an accountant, adviser or lawyer, for specific work, completed at your request, for your benefit. Different to a commission.
Finance Broker
A go-between who negotiates with banks and other credit providers to arrange loans on behalf of others. They must be licensed by ASIC or be an authorised representative of someone who is licensed. See ASIC lists for how to check for a licence.
Financial Adviser
A person or authorised representative of an organisation licensed by ASIC to provide advice on some or all of these areas: investing, superannuation, retirement planning, estate planning, risk management, insurance and taxation. Also known as a Financial Planner.
Financial Product
A facility that helps you to save, invest, get insurance or borrow money.
Financial Service
A service dealing with the management of money. It includes providing advice on financial products, dealing in financial products, making a market for financial products, operating a registered scheme or providing a custodial or depository service.
Financial Services Guide (FSG)
A guide that contains information about the entity providing you with financial advice. It should explain the financial service offered, the fees charged and how the person or company providing the service will deal with complaints.
Franking Credit
Your share of the tax a company has already paid on the profits you received as a dividend or distribution.
Fund Manager
Individual or organisation responsible for investing funds on behalf of a financial institution. See also investment manager.

General Authority
The authority given by the Member to Platinum Mortgage Securities if the Member wishes for Platinum Mortgage Securities to allocate the Member’s investment monies on the Member’s behalf.
Guarantor
A person who guarantees a loan for someone else. The guarantor is legally responsible for paying the other person’s debts if the debtor can’t pay them.

IM
See Information Memorandum
Impairment
A shortfall on the payment of Distributions or the return of Member’s capital.
Index
A statistical measure of change in the value of a market, asset class or industry sector. The value of an index increases or decreases with changes in the value of the underlying security or sector it’s measuring. For example, the ASX All Ordinaries.
Information Memorandum (IM)
The document provided to investors to inform them about the facts, risks and details of an investment opportunity.
Interest
Payment for the use of money over time. You earn interest by lending your money. If you borrow money, interest is the amount you pay to borrow the money. The rate of interest can be fixed or variable. It is usually calculated as a percentage of the amount lent or borrowed.
Investment
An asset bought with the aim of producing an income and/or an increase in value over time.
Investment Manager
Individual or organisation responsible for investing and managing the assets of others. See also fund manager or responsible entity.
Investment Platform
An administrative system for your investments. Platforms offer a range of investments and services, all in the one place. Reporting for all investments is usually in the one report.

Joint Account
An account with a financial institution that is in the name of more than one person. Any individual whose name is on the joint account can operate the account; but it is possible to restrict any withdrawals by requiring both people to sign.

Lender’s Mortgage Insurance
Lender’s mortgage insurance (LMI) is a type of insurance that protects a credit provider from borrowers not being able to repay their loan. LMI is usually a one-off cost to a home loan borrower, payable when the amount borrowed exceeds 80% of the value of the property. LMI does not benefit the borrower, it only protects the lender.
Lending Committee
A committee responsible for evaluating loans in accordance with the loan criteria set out.
Liquidity
How easily an investment or financial product can be converted to cash. Shares in large publicly listed companies that are regularly traded on the ASX (Australian Securities Exchange) are considered liquid assets, while direct property investments are less liquid, due to difficulties and time delays that may be experienced when buying and selling. Liquid markets have enough trading activity to allow both buyers and sellers to easily transact as they wish.
Loan to Value Ratio (LVR)
Means ‘loan to value ratio’ and is equal to the total loan amount divided by the property value – as assessed by an independent valuer. For Development Loans this ratio is calculated on an ‘as if complete’ basis. All other valuations will be calculated on an ‘as is’ basis.

Managed Fund
A managed fund is one type of ‘managed investment scheme’. In a managed fund, your money is pooled together with other investors. An investment manager then buys and sells shares or other assets on your behalf. You are usually paid income or ‘distributions’ periodically.
Managed Investment Scheme
Managed investment schemes are also known as ‘managed funds’, ‘pooled investments’ or ‘collective investments’. Generally in a managed investment scheme:People are brought together to contribute money to get an interest in the scheme (‘interests’ in a scheme are a type of ‘financial product’ and are regulated by the Corporations Act 2001) Money is pooled together with other investors (often many hundreds or thousands of investors) or used in a common enterprise A ‘responsible entity’ operates the scheme. Investors do not have day to day control over the operation of the scheme.
Management Costs
Amounts the Responsible Entity is entitled to derive from Sub-Fund Property for the proper performance of its duties in relation to that Sub-Fund.
Marginal Tax Rate
The highest rate of tax a taxpayer will pay on their income. Find out your marginal tax rate.
Marketplace Lending
See Peer to Peer Lending.
Maturity
The date on which a debt or investment and all outstanding interest payments must be paid in full.
Member(s)
A Member of the Fund, with such membership commencing only upon allocation of Application Money to a Sub-Fund.
Mortgage
A form of security (usually over real estate) that is used to secure repayment of a debt (usually a home loan).
Mortgage Backed Security
An investment in a collection of loans for which the lender holds a mortgage over the property the loan was used to purchase. The loans are written by a financial institution, then sold to an intermediary, who packages (or securitises) the loans into different groups, based on their level of risk. The packaged group of loans is then offered to investors.
Mortgage Broker
A person who matches borrowers to lenders and arranges mortgage contracts between the two parties.
Mortgage Investment
The loan, secured by a mortgage, into which a Sub-Fund’s capital is invested.

Net Worth
The difference between the total value of everything you own (assets), and the total value of all of your debts (liabilities).

Option
A contract between two parties that gives the buyer/seller the right, but not the obligation, to buy/sell an asset, at a set price, on or before a specific future date.

PDS
See Product Disclosure Statement.
Peer to Peer Lending
Peer to peer lending matches people who have money to invest with people who are looking for a loan. A more appropriate term for this practice is marketplace lending because an online platform, usually a website, is used to match investors with borrowers. The Australian Securities and Investment Commission (ASIC) mandates that P2P lending platforms must be set up as managed investment schemes. This means that online lenders must have an Australian Financial Services Licence (AFSL). In addition, platforms must comply with the Corporations Act when they provide their services.
Prepaid Interest
A portion of the loan principal retained and used to meet the Borrower’s interest obligations.
Principal
The original sum of money invested, or the amount borrowed or still owing on a loan.

Refinance
When you replace or extend an existing loan with funds from either the same or a different bank or financial institution.
Registered Investor(s)
An individual or entity whose Fund Application Form has been accepted by the Fund.
Responsible Entity
A licensed entity or body that operates a managed investment scheme.
Return
The amount of money your investment earns.
Risk
The possibility that your investment may fall in value or earn less than expected.
Risk Tolerance
The degree of uncertainty you are prepared to accept in relation to investment returns, in particular the extent to which you are prepared to experience a negative investment return while trying to achieve positive investment returns.

Secured Loan
A loan that is backed by an asset. The lender may sell the secured asset to get its money back if you cannot repay the loan. Opposite of unsecured loan.
Security
In relation to financial assets, a security is an investment such as shares or bonds which can be traded in financial markets.
Self-Managed Super Fund (SMSF)
A private super fund you can manage yourself. SMSFs are regulated by the Australian Taxation Office and can have one to four members. All members must be trustees to ensure they are fully involved in the decision-making of the fund.
Share
A share is part ownership of a company. Shares are also known as equities or stocks. Shareholders are entitled to dividends which represent their portion of the company’s profits.
SIM
Supplementary Information Memorandum.
SPDS
Sub-Fund Product Disclosure Statement.
Specific Authority
The authority given by the Member to Credit Crowd Mortgage Securities by which the Member chooses to invest in a specific Sub-Fund.
Statement of Advice (SOA)
A document that sets out the advice given to a consumer by their licensed financial planner or adviser. It must include the basis on which the advice is given, details of the providing entity, and information on any payments or benefits the adviser or licensee will receive.
Sub-Fund
A particular Mortgage Investment into which Members can invest, which is quarantined from other investments in the Fund.
Sub-Prime Loan
A loan given to a borrower who doesn’t meet the credit criteria for an ordinary loan. This may include borrowers with a poor credit history, low income earners and those with already high levels of debt. Sub-prime loans carry a higher interest rate because the risk of default is higher than that of a standard loan.

Tranche
A tranche is one of a number of related securities offered as part of the same transaction. In the financial sense of the word, each tranche is a different slice of the deal’s risk. All the tranches together make up what is referred to as the deal’s capital structure or liability structure.They are generally paid sequentially from the most senior (secured) to most subordinate (and generally unsecured).
Trustee
A person or company that holds or administers assets for the benefit of someone else.

Unitholder
Has the same meaning as a Member.
Units
A subdivision of the beneficial ownership of the assets in a Sub-Fund.
Unsecured Loan
A loan for which no asset has been used as security. The interest rate is usually higher than for a secured loan as there is a higher risk to the lender of not getting their money back.

Volatility
The extent to which the return on an asset fluctuates over time. It is measured by the rate at which the price of a security moves up and down. The higher the frequency of movement in the price of a security, the higher the volatility and the greater the risk.

Yield
The rate of return on an investment.

At Platinum Mortgage Securities, we like to make everything we do easy to understand.

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