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Glossary

AGENT’S COMMISION: The fee to the real-estate agent for selling the
property.

APPRAISED VALUE: Estimate of the value of
a property being used as security for a home loan. This is for lending
purposes only.

APPRECIATION: An increase in value of an asset such as an existing
property or block of land.

BODY CORPORATE: A corporation of the owners of units or townhouses
within a strata building. They form a self-elected council to manage
the block and maintain common areas.

BRIDGING FINANCE: Short-term finance that covers the gap between the purchase of a new property and the sale of an old property.

CAPITAL GAIN: Profit from selling an asset at a higher market price
than it cost.

CAPITAL GAINS TAX: A Federal Government tax on the monetary gain made on the sale of an asset bought and sold after September 1985.

CAVEAT: Notification placed on a Title to warn any purchaser that
someone else holds an interest in the property. This ensures it is not
sold without the consent of this third party.

CAVEAT EMPTOR: Latin for ‘let the buyer beware’. In other words, the
buyer has the responsibility to examine the goods being purchased.

CERTIFICATE OF TITLE: Records your ownership of a piece of property.

COOLING-OFF PERIOD: The amount of time either the buyer or seller has to change their minds in a private sale. This doesn’t apply if you buy or sell at auction.

COMMON PROPERTY: A part of the property that is for the use of all
tenants.

COMPARISON RATE: An adjusted interest rate that takes into account the lenders' fees and charges over the term of the loan.

CONVEYANCE: A legal document by which the ownership of property is
transferred.

CRAA: Credit Reference Association of Australia, used by lenders to
check credit history.

DEPOSIT BOND: A guarantee that can be used instead of having to provide a cheque for a 10 per cent deposit while waiting to settle on
a property.

EXCHANGE OF CONTRACTS: When the buyer and seller swap contracts of sale.

FITTINGS: Items that can be removed from the property, such as
furniture.

FIXTURES: Items that are part of the property, such as baths,
dishwashers and curtain rods.

FREEHOLD: This indicates that the dwelling and the land it sits on are
owned indefinitely by the owner.

GST: A 10 per cent consumption tax levied on the final consumer of the
goods or services.

GUARANTOR: Someone who agrees to be responsible for another person’s mortgage in case of default.

HOLDING DEPOSIT: A refundable goodwill deposit to show a buyer's intention to purchase.

HOME EQUITY LOAN: A line of credit, where you have a designated credit limit, but have flexibility with the repayments.

INCLUSIONS: Items included in the property, such as light fittings,
which should be listed in the contract.

INTEREST-ONLY LOAN: The borrower pays interest only on the loan,
instead of interest plus principal. The principal is repaid in a
lump sum at the end of the term.

LAND TAX: An annual tax paid to the State Government, calculated
according to the value of the property.

MORTGAGE: The document recording that a property is security for the
money borrowed to purchase it.

MORTGAGE BROKER: A broker helps find the right loan for your needs from a selection of lenders contracted to the broker.

MORTGAGE INSURANCE: Paid by you to the lender to ensure that the lender is covered if you default on your repayments.

NEGATIVE GEARING: When the tax deductions from an investment property exceed the income the property generates, the investor has a tax loss to offset against their other taxable income.

100 per cent OFFSET ACCOUNT: A savings account linked to your mortgage to reduce interest payable on the mortgage.

OFF-THE-PLAN: Buying a property prior to construction taking place.

OPTION: A legal method by which a purchaser may reserve a property for
a period of time under mutually agreed terms. This sometimes includes
financial penalties, so discuss with a solicitor before entering into
any option arrangement.

PASSED IN: When a property fails to sell at auction, it is said to be 'passed in’ at the highest bid.

PRIVATE TREATY SALE: A real-estate agent finds a buyer without going to auction. A price is set and prospective purchasers can submit offers
that are usually below the asking price.

REI CONTRACT: Standardised ‘plain English’ contract used as the basis
for home and land transactions. Can be amended with special clauses to suit buyers and sellers.

REDRAW FACILITY: Feature of a loan that allows borrowers to access any additional repayments they have made.

RESERVE PRICE: The minimum price that the vendor will sell the property for at auction.

SEMI-DETACHED: A house that shares a common wall with another house.

SETTLEMENT: Money paid in full in exchange for Title documents, keys
and the right to take possession.

STAMP DUTY: A State Government tax on financial transactions,
calculated according to the sale value.

STRATA TITLE: Individual owners of an apartment in a block containing a number of apartments hold a Strata Title covering their portion.

TERM: The length of a home loan, or a specific portion within that loan.

TERM DEPOSIT: A type of savings account where the size of the deposit,
the interest rate, and the length of time the money is deposited for, are all fixed.

TITLE DEEDS: Formal documents signifying ownership.

TORRENS TITLE: The system of title that applies to most land in
Australia.

VALUATION: Report arranged by the lender to ascertain the value of your property.

VARIABLE INTEREST RATE: A rate that varies in accordance with the rates in the marketplace.

VENDOR: The party offering a property for sale.

ZONING: Used by local authorities to control use of property. For
example, residential or retail.

CRACK THE CODE
A quick guide to real-estate advertising abbreviations.

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