We hope you find these articles helpful on your search for an investment property.

Speaking The Language

If your finding property jargon confusing, this glossary of terms will help.

Agents 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 existing property or block of land.
 
Annual Percentage Rate (APR) - The rate of the mortgage, made up of the interest rate, fees and charges that incur during the contract period.
 
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 mind 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.
 
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% deposit while waiting to settle on a property.
 
Exchange of Contracts - When the buyer and seller swap contracts.
 
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 land it sits on are owned indefinitely by the owner.
 
GST - A 10% 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 deposit based on the goodwill of the buyer to go ahead with the loan.
 
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 on the contract.
 
Interest-Only Loan - The borrower pays interest only on the loan, instead of interest plus principle. The principle 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 best loan for your needs from a selection of lenders contracted to the broker.
 
Mortgage Insurance - Paid by you to the lender to ensure 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.

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 ‘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 both buyers and sellers.
 
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 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 to 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.
 
This information has been prepared by Smartline Home Loans. This is only a general guide - not a substitute for professional advice. Santo Correnti Homes Pty Ltd does not guarantee the accuracy, reliability, or completeness of any information on this page, and will not be liable for any loss or damage suffered as a result of anyone's relying on this information. We recommend you obtain advice from your own financial, taxation or legal advisor before entering into financial transactions.