Home loan jargon

Agent's Commission
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 cash for the 10% deposit on a property purchase.

Equity

The difference between the value of your home and the amount that is owed on your home loan.

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
Freehold land is land that is not leased from the Crown (government).

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

Guarantor
A promise by a third party to meet a borrower’s payment obligations if they are unable to pay. It is often secured by the guarantor’s own property.

Holding Deposit
A refundable goodwill deposit to show a buyer's intention to purchase.

Home Equity Loan
A loan which allows you to access the equity that you have built up in your home.

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

Interest-Only Loan
The borrower only pays interest on the loan over a pre-determined period, e.g. 5 years, instead of interest plus principal. At the end of the period, the loan usually reverts to principal and interest for the remainder of the loan’s term.

Land Tax
An annual tax paid to the state government, calculated according to the value of the property.

Lender's Mortgage Insurance
Paid by you to the lender to ensure that the lender is covered if you default on your repayments and they suffer a monetary loss if they have to sell your home, e.g. the sale price is insufficient to cover the home loan debt. If this occurs, the insurer will then approach the borrower for the difference.

Line of Credit
A transaction account that has a credit limit attached to it. The borrower can generally withdraw funds at any time, up to the credit (or facility) limit. There is usually no fixed repayment schedule however the borrower is usually required to make payments to at least cover the interest and fees on the loan.

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.

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 home loan which can help to reduce the amount of interest payable on the loan.

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.

Strata Title
The concept of ‘layer upon layer’ - lots, stacked one on top of the other, e.g. a block of units. Each unit relates to a ‘lot’ in the Strata Plan.

Term
The length of time over which a home loan is repaid, generally 25 or 30 years.

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.

Transfer of Land Duty
A state government stamp duty on property purchases calculated on the purchase price.

Valuation
A report which details 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, e.g. residential or retail.

Crack the Code

A quick guide to real-estate advertising abbreviations.

ACAir Conditioning

BIRBuilt-in robe (wardrobe)

BVBrick veneer

DbleDouble

DFDouble-fronted

DepDeposit

EnsEnsuite

EntrEntrance

GrgeGarage

HtgHeating

IntInternal

LgeLarge

LngeLounge

LULock up

OFPOpen Fire Place

ONOOr Nearest Offer

OSOff-street

PkgParking

RLARear Lane Access

ROWRight of Way

RmRoom

SBSolid Brick

SCSelf-contained

SemiSemi-detached House

SFSingle-fronted

SqmSquare Metres

StyStorey

UCUndercover

WBWeatherboard

WTWWall-to-wall

 

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