Glossary of Common Property Terms
AAPR – annualised average percentage rate, sometimes referred to as the comparison rate.
Amortisation period – the length of time a loan is calculated over and repaid.
Appraisals/valuations – a written report of the estimated value of a property, usually prepared by a valuer.
BA – Building Approval.
Break costs – the fees incurred when a loan is paid off ahead of time.
Body corporate – an administrative body made up of all the owners within a group of units or apartments of a strata building. The owners elect a committee which handles administration and upkeep of the site.
Bridging finance – a short-term loan used to bridge the gap between buying a new property and selling an existing one.
Building approvals – the number of dwellings approved to be constructed in a given month, quarter or year.
Capital gain – the amount by which your property has increased relative to what you paid for it. For example, if you bought a property for $500,000 and it is now worth $650,000, you've made a capital gain of $150,000.
Cash rate/bank rate – the cash rate is the rate at which the Reserve Bank of Australia sets interest rates. The bank rate is the interest rate that banks offer and is above the cash rate to allow for a profit margin.
Cash flow positive – you have a cash flow positive investment if the incomings are more than your outgoings after tax-deductible items have been claimed. You receive more rent than your mortgage repayments, plus you are still ahead after taking into account items such as interest on the loan, maintenance, insurance, land tax, rates, etc.
CGT (capital gains tax) – the tax you pay when you sell an investment property if you've made a profit.
Conveyancing – the process that legally transfers property ownership from one entity to another.
Cooling-off period – a period of time given to the purchaser to legally withdraw from buying a property. The length of time varies in each of the states and territories.
Default - Failure to pay a debt by the due date.
Density – the level of occupancy in a given area, or the number of people permitted to reside in an area. For instance, inner-city areas are usually higher density than outer-suburban areas.
Depreciation – the decrease in value of an item (eg. a car or a property) over time.
DA – Development Approval
Equity – the difference between your mortgage and your property's value. If your home is worth $450,000 and you owe $150,000, then you have equity of $300,000.
Fixed rates – where the home loan is locked in at a specific interest rate for a specified term, usually one to five years.
Interest-only – only repaying the interest charged on your mortgage, not paying anything off the principal or amount owing.
Joint tenants – each owner has equal shares and rights in the property.
Land Tax - A tax payable annually in respect of the beneficial ownership of land, the rate of which is determined by the assessed valuation. Usually based on unimproved value of land.
Licensed Real Estate Agent - A Licensed Real Estate Agent may perform the activities in the conduct of a real estate business. He/she is licensed to hold responsibility for an agency’s legislative compliance activities.
Market Price - The price actually paid, or agreed in a contract to be paid, for an asset. It differs from market value in that it relates to an accomplished fact, whereas market value is and remains an estimate until proved. Market price may involve circumstances not normally included in market value.
Market Value - Market value is the estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing, wherein the parties had each acted knowledgeably, prudently and without compulsion.
Median - The middle number when data is arranged from lowest to the highest in sequence. If there are two median scores, they are averaged to provide the true median. The median is also known as the 50th percentile.
Mortgage Guarantee Insurance - Paid by the borrower to protect the lender against failure by the borrower to keep up mortgage repayments or to pay back the loan in full when it is due.
Open Listing - Where a vendor grants selling or leasing rights over a property to any number of agents on a non-exclusive basis. The first agent to procure a buyer ready, willing and able to purchase or lease the property on terms acceptable to the vendor receives the commission. Also known as a Common Listing, Simple Listing or Open Agency.
Planning Approval - Approval from the relevant authority to use property for a specified use.
Residential Tenancy Database - A risk management tool used by agents to identify tenants with a history of breaching tenancy rules.
Settlement - This is the final stage of the sale when the purchaser completes the payment of the contract price to the vendor and takes legal possession of the property.
Stamp Duty - The tax imposed by state governments on certain contracts (e.g. Contracts of Sale and Registered Leases). The amount of tax payable is calculated as a percentage of the contract value.
Strata Plan - The registered plan of a strata title property showing the boundaries of lots and unit entitlements. Pursuant to legislation on strata or unit titles.
Strata Title - (a) The formal ownership of property held within a strata plan where property is defined within horizontal and vertical boundaries; (b) A scheme of property ownership where each proprietor owns parts of a building and has joint rights with other proprietors over the land and other common areas.
Trust Account - A legislatively required bank account where monies are held by an agent for or on behalf of another person e.g. deposits, rental.
Vacant Possession - In real estate this refers to a right to possession of land or built-up property in respect of which there is no current occupant.
Valuation - Estimate of the value of a property normally obtained for the purpose of security for a home loan. Carried out by a registered valuer.
Valuer - A person who is: (a) registered / licensed / approved to carry out property or plant and machinery valuations under any State, Territory or Commonwealth legislation; and / or (b) a member of the Australian Property Institute who is accredited as a Certified Practising Valuer.