Accrued Interest

Interest calculated but not yet added to the loan.

Amortisation 

Systematic repayment of a loan through regular installments over a period of time (e.g. Weekly, Monthly or Fortnightly). The Borrower plays the interest and part of the principal in each repayment.

Arrears

Amount that the Loan is overdue for repayment.

Auction

A way to sell where all the buyers are in one place and make bids (or offers) until only one buyer is still bidding. An auctioneer runs the auction. The person selling usually sets a reserve price and doesn’t have to sell if the bids are under that amount. If you buy at auction you’re committed to going through with the purchase – so you need to check everything out first and have your finance ready, including the money for your real estate deposit which is paid on the day.

Body Corporate

A group that all the owners in a block of flats or apartments belongs to. It deals with the running of the building and shared areas like stairways, garages and access ways.

Bridging Finance

A short term Loan so that you can buy your home while waiting for other money to become available (such as money from selling another place). Once the other money becomes available it’s used to pay back the bridging loan.

BBO / BEO

Buyers Budget Over …
Buyer Enquiry Over…
The seller is usually expecting a price 5-15% over BBO/BEO amount.

Capital Gain

The profit you make when the value of something you own goes up. If you buy something for $100,000 and it goes up to $150,000 – the extra $50,000 is your capital gain (also known as equity). Currently there is no tax on capital gains on your own home.

Capital Value 

You’ll see this term on your Rating Valuation (RV). It’s the value of your property, including land and buildings but not chattels (things like light fittings, carpets and curtains).

Capped interest rate

Where the interest rate can go up or down – but it can’t go over a certain level for set time.

Certificate of Title

This is the ownership paper for your property. It shows information about the land and house as well as the legal description of the land.

Chattels 

The removable items that come with your house such as carpets, curtains, light fittings and sometimes furniture.

Code Compliance Certificate (CCC) 

A certificate from your local Authority to say the building complies with the building act. Check all buildings and alterations have a certificate before you buy.

Company Title/Share 

A property title where owners of units form a company. It is difficult to raise finance against this type of title because a new owner has to be approved by all the existing owners. These types of titles usually sell at a discount.

Conditional Agreement 

An agreement with conditions that must be met before everything becomes final. Both the buyer and the seller can put conditions in the agreement. Buyers often ask for conditions about checking the Certificate of Title, and getting finance or a builders report for example.

Covenant 

If a covenant is recorded on the title for your property it means there is some legal restriction or agreement you have to keep. For instance your might have to pay for fencing, protect a native tree on your land, or can only build within certain restrictions.

Conveyancing 

The legal process when you buy or sell property – including the checking and registration of documents to transfer the ownership over.

Cross-lease

This is where there are two or more homes on a cross-leased property. All the owners own the land together and each owner leases the land their home is on from the others. All owners of the common land must agree before improvements such as paths, fences or building alterations can be made.

Depreciation 

This means how much the value of something goes down as it gets older or more worn. It’s a term insurance companies often use.

Disbursements 

These are costs, due to bodies other than the lenders or solicitors, which are incurred by the purchaser/borrower.

Discharge of Mortgage 

This is what happens when you’ve paid everything back. The mortgage is discharged so the bank’s name is taken off the title to your property and the Certificate of Title is returned to you.

Enduring Power of Attorney 

A legal document that gives someone you name the power to act for you if you need them to, for instance if you are in a serious accident and not able to look after things yourself. There are two types – one that covers your care and welfare, and one for property matters.

Easement

If an easement is recorded on the title for your property it means someone else has a right to use your property in a certain way – such as the right to run pipes or cables under your land, or to use a drive or path. Or you may have a right over someone else’s property.

Equity

The amount of an Asset really owned e.g. on a home worth $230,000 with a loan of $100,000, the equity is $130,000.

Fixed Interest 

An interest rate set for a fixed term. Penalties usually apply if the loan is paid out before the term expires.

Finance Date 

Date when all conditions on the offer must be met.

Floating Interest rate 

Where the interest rate can go up or down as the market changes. Sometimes called a variable interest rate.

Freehold 

This is the most common type of ownership. It means you own the land and house with virtually no restrictions on your ownership rights. Freehold is also commonly used to mean that you don’t own any money on the home.

Gearing 

The ratio of your own money and borrowed funds in purchase of a home or an investment.

Installments 

Regular fortnightly or monthly payments off your loan. Usually some money goes towards repaying the money you owe and some towards the interest on the loan.

Interest 

The amount you pay for the money you borrow. This is a percentage that is worked out each day on the amount you owe that day.

Interest Only Loan 

A loan where the principal is repaid at the end of the loan term and interest only is repaid during the term of the loan. These loans are usually short term, say 1 to 5 years.

Leasehold 

With this type of ownership you lease the land and pay rent to the landowner. You own the house but your use of the land may be restricted and your rent can go up. You can sell the lease when you want to move but you will need to tell the landowner first. You can get a Certificate of Title for your leasehold interest.

Lenders Mortgage Insurance

This insures your lender for the extra risk they take if they lend over 80% of the value of the property (the percentage may vary).

Loan to Valuation Ratio

The ratio of the amount lent to the valuation of the security. Commonly called LVR.

Low Doc or No Doc Loans                                                                             Also could be known as “self cert”. Commonly used for self employed people who do not have their financials readily available and self declare what their income is. No Doc – also known as asset lend where no proof of income is required – also used for bridging finance. Both options require the owner to have a minimum amount of equity or deposit.

Market Value

This is the price a home is likely to sell for. In the end it’s the amount a buyer is willing to pay.

Mortgage

The legal document that gives the lender ‘security’ – the right to sell your property if you are unable to pay your loan. It means the lender can hold your Certificate of Title until you repay the loan.

Mortgagee

The organisation that lends the money and holds the mortgage.

Mortgagor

You are the mortgagor if you have borrowed money to buy a home.

Mortgage Protection Insurance

This insurance protects you if you can’t pay your home loan. The insurance repays the loan if you die, or makes payments for you if you are redundant or can’t work due to serious illness for instance.

Mortgagee Sale

This is when the lender has to sell your home to get their money back because you can’t repay your loan.

Negative Gearing 

Where an investment is geared to produce a book loss. This loss can be deducted from other taxable income.

Possession

When you have paid for the home and have the right to move in. Early possession is when it’s agreed you can move in before settlement date – you might have to pay rent until then.

Principal 

The amount of money you borrow, before interest is added.

Principal and Interest 

A loan where both the principal and interest are repaid together on a regular basis, mostly by monthly installments (P & I).

Rateable Valuation

The valuation done for your Local Authority. They use it to set your rates. It gives you a general idea of the value of your property. It used to be called the Government Valuation.

Reducing Loan

With a reducing loan you pay a set amount off the loan each payment, plus interest. It means your payments are much higher at the beginning of the loan but go down as time goes on.

Sale and Purchase Agreement (S&P)

This is the contract between the buyer and seller of a property.

Security

When you get a home loan your home will be the security. This means the lender can sell the home if you can’t pay the money.

Settlement Date

This is the final stage when the property changes hands. It’s the bit when the money is paid, the new owner’s name and mortgage go on the title for the property, and the Certificate of Title and the keys are handed over. The day this all happens is called settlement day.Sole Agency

When a home is listed for sale with one real estate agency.

Strata Title or Unit Title

This is when you own part of a building, or airspace, instead of the land it is built on. This can relate to units, apartments and town houses. There is no lease, but each owner belongs to the Body Corporate, which manages common areas like stairways and lifts.

Table Loan

With a table loan you have a set payment each fortnight or month. At first most of the money goes towards the interest you owe – but as your loan starts to go down more of each payment goes towards repaying the loan itself.

Tenancy in common

This type of ownership is useful if you are buying your home with friends or relatives. You each own part of the property, and if you die your share goes to whoever you leave it to in your will.

Tender

A tender is when all interested buyers put in their offers (or bids) in writing for the seller to consider. A closed tender means offers must be in by a certain date and the open tender means there is no time limit. A tender can have conditions in it, unlike making a bid at an auction.

Term

This is the time you take your loan out for. Many home loans are for 25 or 30 years. It can also be how long your lease is for if you have a leasehold property

Unconditional

This means that the sale and purchase agreement made on a home has no conditions attached to it, or the conditions have been met. An unconditional agreement is legally binding on both the buyer and the seller. It means the home must change ownership on the agreed date for the agreed price.

Vacant Possession

This means that when you get ownership or possession of your home there will be no tenants living there, and no lease giving someone else use of the property.

Valuation

An independent assessment by a registered valuer of the market value of a home. A buyer may get one to help them decide what to offer (and they usually have to get one to get a loan). A seller may also decide to get one to help them decide what price they should accept for their home.

Vendor

The person selling the property.