Agent: Someone who acts on behalf of another person or organisation. For example, a real estate agent acts on behalf of a landlord or owner when leasing or selling a property.

Amortisation period: Also known as the loan term. It’s the agreed length of time that a borrower has to repay a loan. It’s set during the application and approval process.

Appraised value: The estimated value of a property being used as security for a loan.

Asking price: The listed price of the property. The owner may be willing to negotiate so this may not be the selling price.

Assets: Money, property or goods owned.

Auction: A public sale where a property is sold to the highest bidder.

Body corporate: All the unit owners within a strata building. The owners elect a council responsible for the management of the building and it’s common areas.

Breach of contract: Breaking the conditions of a contract.

Break costs: Penalty charges for ‘breaking’ or ending a fixed term loan before the agreed date.

Bridging finance: A loan used to cover the finance gap that can happen when a buyer purchases a new property before selling an old one. Higher interest rates are usually charged for this form of finance, and it has to be paid back after an agreed time.

Building approval: This is the first stage of building a home on land where the approval has been made by the council that the land can be built on.

Building inspection: An inspection generally carried out prior to the purchase of a property to ensure the building is structurally sound. Contracts of sale can be made subject to the satisfactory building inspection.

Building line: The uniform distance, usually from a road, behind which buildings must be erected.

Building regulations: Legal or statutory rules set up by a local council to control the manner and quality of buildings in its jurisdiction. The rules are generally designed to ensure public health and safety as well as acceptable standards of construction.

Capital gains: The financial or monetary gain obtained when an asset is sold for more than its original price.

Capital gains tax: A federal tax on the monetary gain made on the sale of an asset bought after September 1985. The tax does not apply to the gains made on the sale of an owner-occupied residence, so it generally applies only to investment properties.

Capped loan: A loan where the interest rate cannot exceed a set level for a period of time but, unlike fixed rate loans, can fall.

Caveat: A caveat lodged upon a land or property title indicates that a party, that is not the owner, claims some right over or interest in the property.

Certificate of title: A record of all current information relevant to a particular property or piece of land, including:

• Current ownership details.
  Any registered encumbrances or caveats.
  Lot or plan details.
  A lender usually holds this document as security. Once the loan is fully repaid, the Certificate of Title is returned to the borrower.

Chattels: Chattels are items of personal property, such as clothing, appliances and furniture. In real estate terms chattels are usually movable items which may be included in the sale, such as furniture.

Commission: The fee or payment made to a real estate agent for services.

Contract of Sale: A written agreement outlining the terms and conditions for the purchase or sale of a property.

Conveyance: The transfer of property ownership and changing the title of a property from the seller’s name to the buyer’s name.

Conveyancing: The legal process for the transfer of ownership of real estate.

Cover note: A guarantee of temporary property insurance before the implementation of a formal policy.

Creditor: A person or organisation who is owed money.

Debtor: Someone who owes money to someone else.

Deed: Another word for title. It’s a legal document that states all information regarding the ownership of a property or piece of land.

Deposit: An amount paid by the buyer at the time of exchanging the contract for sale. It acts as a commitment to buy. Normally a minimum of 5-20% of the total purchase price is required.

Deposit bond: A guarantee from a financial institution that a deposit will be paid to a seller. It’s useful for buyers with savings in a term deposit because it can be offered at the time of exchange – instead of a cash deposit. Which means the buyer doesn’t have to break the term deposit and lose any interest accrued. The buyer must pay the full purchase price of the property, including the amount of the deposit, at settlement. In the event that buyer does not settle on the property the seller will be paid the deposit amount by the financial institution.

Disbursements: Miscellaneous fees and charges incurred during the conveyancing process, including search fees and charges paid to government authorities.

Disposable income: A person’s remaining income after all known expenses, such as loan payments and bills, have been met.

Easement: A right to use a part of land owned by another person or organisation, for example to access another property.

Encroachment: When a building overhangs someone else’s property, or a fence is built over the dividing line between two properties.

Encumbrance: An outstanding liability or charge on a property.

Equity: The amount of a property actually “owned” by the owner. It’s the current value of a property less the amount still owed on its mortgage. Equity usually increases as the principal of the mortgage is paid off. Market values and improvements to the property can also affect equity.

First home owners grant: A grant from the Federal and State Governments. It was introduced as compensation for the increased cost of housing after implementation of the Goods and Services Tax (GST) on 1 July 2000. It’s only for buyers that have not previously bought property in Australia.

Fittings: Items not intended to be removed from a property when it’s sold, for example fixed carpets, lights, curtains and stoves.

Fixed rate: An interest rate that applies to a loan for a set term. Both the interest rate and loan repayments are fixed for the agreed term, regardless of any interest rate variations in the home loan market. The agreed term is usually anywhere between 1 and 7 years.

Freehold: Complete ownership of a property and the land that it’s built on.

Guarantee: A contract to pay someone else’s debt if they don’t pay it.

Guarantor: A person or organisation that agrees to be responsible for the payment of a loan – if the actual borrower defaults or is unable to pay.

Holding deposit: One weeks rent on the property applied for which secures the perspective tenants interest.

Home equity: The amount of a property actually “owned” by the owner. It’s the current value of a property less the amount still owed on its mortgage. Equity usually increases as the principal of the mortgage is paid off and when property market values increase.

Home loan: The funds borrowed to purchase a property. The property acts as security for repayment of the loan. The lender holds the title or deed to the property. It’s also known as a mortgage.

Instalment: The regular payment that a borrower agrees to make to a lender.

Interest: The amount charged for the money borrowed from a lender.

Interest only loan: A loan where only the interest is paid for an agreed term, usually 1 to 5 years. The principal is then repaid over the remaining term of the loan by the conversion of repayments to principal and interest.

Interest rate: The percentage of the loan amount, used to calculate the interest to be paid for a loan.

Introductory loan: A loan offered to new borrowers at a reduced rate for an introductory period – usually 6 to 12 months. It’s also called a discounted or honeymoon rate.

Investment property: A property purchased for the sole purpose of earning a return, either in the form of rent or capital gain. The owner does not live in the property.

Joint tenants: Equal holding of a property between two or more people. If one party dies, their share passes to the survivor or survivors.

Land usage: Determined by zoning regulations residential, industrial etc.

Lease: An agreement between a property owner and a tenant. It allows the tenant to occupy and use a property for a set period in exchange for a set rent.

Lender mortgage insurance (LMI): Insurance which covers the lender if a borrower defaults on a loan and the sale of the property doesn’t cover the outstanding debt. It’s usually required for the loans the lender considers more risky. For example, when the amount borrowed is over 80% of the property value. Only the lender is covered by this insurance. It offers no protection to the borrower.

Line of credit loan: A flexible loan arrangement with a specified limit to be used at a customer’s discretion.

Lump sum repayments: Additional ad hoc repayments, made over and above the minimum loan repayment required.

Maintenance: The expenditure required to keep a property in an efficient operating condition.

Maturity: The date when a debt must be paid in full.

Maximum loan amount: The maximum amount that can be borrowed. It’s based on a borrower’s disposable income, deposit, and the purchase price of the property.

Minimum loan amount: The minimum amount that can be borrowed.

Minimum repayment required: The amount a borrower is contractually obliged to pay each month, in order to repay a loan within an agreed term.

Mortgage: The funds borrowed to purchase a property. The property acts as security for repayment of the loan. The lender holds the title or deed to the property. It’s also known as a home loan.

Mortgage broker: A person or organisation offering to organise or sell loans on behalf of a group of lenders.

Mortgage registration fee: A State Government charge for the registration of a loan. Because the property acts as security for a home loan, the government requires a home loan to be registered so that all claims on a property can be checked by any future buyers of that property.

Mortgagee: The lender of home loan funds.

Mortgagor: The owner or owners of the property offered as security for a loan.

Multiple listing: System of selling the property through many agents. The buyer pays only one commission. This goes to the agent who lists the property on an official multiple listing form and is shared between the first agent and the agent who actually finds the buyer.

Passed in: A property is ‘passed in’ at auction if the highest bid fails to meet the reserve price set by the seller.

Portability: Allows a different property to be substituted as security for an existing loan. Useful if you are buying a new home but don’t want to set up a new mortgage.

Property management : A real estate agent manages properties for landlords ensuring the property complies with legislation and regulations at all times, selecting tenants, collecting rents, arranging maintenance and so on.

Public liability: The insurance taken by companies and private individuals to protect themselves against claims made by members of the public, who might be injured in some way on the property.

Refinance: To switch mortgage providers and arrange a new loan for the same property.

Reserve price: At an auction, this is the minimum price acceptable to the seller of a property.

Restrictive covenant: Land is sold with, perhaps, the covenant that only one home can be built upon it or that the home must be built at a specified cost or height.

Searches: Research carried out, prior to the settlement of the property, to confirm information about the property. Searches are usually arranged by a solicitor.

Settlement: Completion of sale. When the balance of the contract price is paid to the vendor and the buyer is legally entitled to take possession of the property.

Stamp duty: A State Government tax based on the purchase price of the property. It’s also payable on mortgages in some states. Each state and territory has different rules and calculations. To estimate the amount of stamp duty you may have to pay, use our stamp duty calculator.

Strata title: The most common title associated with townhouses and home units. It acts as evidence of a unit’s ownership. In a strata plan, individuals each own a small portion of a strata building such as a unit – which is identified as ‘lot’ on the title. All owners in a strata plan share common property such as external walls, windows, roof, driveways, foyers, fences, lawns and gardens.

S.T.C.A: Subject to council approval

Sub-lease: A property which is already leased is leased again, but not for a longer period that the unexpired part of the original lease

Tenants in common: A form of agreement often used when friends or family purchase a property together. It details the equal or unequal holding of property by two or more people. If one person dies, their share passes according to their Will or the law, rather than to the owner of the other share.

Term: The duration of a loan, or a specific period within that loan. This is usually written in months for example, 360 months equals 30 years.

Title deed: Document disclosing the legal description and ownership of a property.

Title fees: Charged by a state or territory’s Titles Office for title searches, property ownership transfers, the registration of new mortgages and the discharge of old ones.

Transfer: A document registered with the Titles Office that confirms the change of ownership or a property.

Valuation: A written analysis of the estimated value of the property prepared by a qualified valuer.

Variable rate: A rate that goes up or down depending on money market interest rates.

Without prejudice: These words, used during negotiation, mean that any suggestion or plan put forward cannot be used as evidence later if the negotiations fall down.

Zoning: Local authority guidelines for the permitted use of the land.