Glossary > The Letter G

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The Letter G
Saber Finance know the finance world is full of terms, phrases, buzz words and jargon.

On this page we explain,
Gazumping > Gearing > Green Card > Gross > Ground Rent > Guarantor

Gazumping
Gazumping is the term used to describe a situation in which the seller of an asset accepts a fresh offer, having already accepted another lower offer from another potential buyer.

Property Gazumping.
Gazumping is the term is used to describe when a second offer for a property gets accepted, when a first offer has already been agreed in principal. In most property sales three groups of people are involved these are sellers, buyers and agents. The sellers want the highest price possible, the buyers want the lowest price and the agents work for a commission so the higher the price the higher the commission. These three groups of people want different things and this can lead to conflict such as gazumping.

Buyers and Gazumping.
The buyer finds the property they want, make an offer and verbally agree on the price with the seller. Sometime later, the agent says another buyer wants to buy the property - someone else offered more money. The original buyer has been gazumped. The buyer may be given the chance to match or better the increased offer or get no chance because the home is sold and have not been asked if they would be prepared to pay more.
Buyers should be careful not to offer too low a price. Understand that the lower the price offered, the higher the risk that another buyer will offer more and gazump. If it is at all possible try to meet the sellers, it is hard for sellers to gazump if they meet the buyer and like them. Buyers can count on nothing being certain until the exchange of contracts. Between the time the sellers verbally agree to sell and the time they sign the contract, lots of things can happen.

Sellers and Gazumping.
When selling property it is only natural to want to sell to the buyer who offers the highest price. But what if the seller verbally agrees to accept a price from one buyer and then another buyer offers a higher offer. The seller may not have realised, at the time of receiving the first offer, that someone else was prepared to pay more.
For the seller this is a difficult ethical dilemma. It is easy to say morally that sellers should honour their word. In practice it is not that easy, should the seller still be bound to honour their word and lose thousands of pounds? The seller has no legal obligation until the contract is signed.

Agents and Gazumping.
When agents are employed by sellers, they have a duty to get the best price and to protect the value of the sellers property. The agent also has to inform the seller of a second offer for a property even after a first offer has been verbally accepted.
If an agent does not pass on an offer to a seller, the agent could be in professional trouble.
The agents do not own the property they sell. They are just paid agents - the people in the middle of the transaction. The agent should inform the seller they have no legal obligation until the contract is signed.
For more info, try the property section.

Gearing
Gearing is the term for the percentage of your borrowing relative to your assets. This is a term used when involved with investment trusts.
Gearing is the opposite of your estate, simply the sum total of your liabilities, minus your assets. That is every thing you owe, minus what you own. Gearing is often refered to as a percentage figure. If you own a home worth £100,000 and you have £50,000 outstanding on it, your gearing is 50%.

Green Card
A green card is a document which provides evidence that you have at least basic vehicle insurance cover in your home country. A green card is not a legal requirement to drive in other countries, nor is the card insurance cover in itself.
The green card can be a useful document because it is readily recognisable by law enforcement officers and can save you time and trouble if you need to produce evidence of insurance while travelling abroad.
Insurance wanted? Browse our comparison tables to find insurance providers.

Gross
Gross refers to a payment of some income without the deduction of tax. If an investment payment, the investors must take the responsibility for any tax due to the Inland Revenue.

Ground Rent
The ground rent is the sum of money paid to the landlord or owner of a property by a tenant or leaseholder for inhabiting the property. The ground rent will be set when the lease is first granted, and may provide for increases in it's amount as the years pass.
Are you a tenant after finance? Try tenant loan lenders best buys to find cheaper finance.

Guarantor
A guarantor is a person or group that provides security for a finance product, be this through cash or providing the lender with additional security. A guarantor undertakes that he will repay a debt incurred by another person to a creditor if that person cannot or will not pay their indebtedness.
In the case of co-guarantors each guarantor will be fully liable for the total outstanding amount. It is up to the guarantors to resolve their respective obligations between themselves. When becoming a guarantor remember you are fully liable for the outstanding amount, so caution is advised before agreeing to help finance others.

Guarantors and Property Buying
Often nowadays due to the increasing house prices a property buyer may find lenders unwilling to lend them a mortgage loan sufficient to cover the value of the property. They may even be turned down on their mortgage application perhaps because of a problem credit rating. In this case the buyers parents could become guarantors on their mortgage loan and thus enable them to step on to the property ladder. Or the parents could look at equity release to raise the shortfall in funds required from their own properties equity.
For info on property finance, try our information sections.

If you are in any doubt about any financial product or term we recommend that you seek advice from a financial advisor.

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