Real estate glossary of terms Australia

establishment fees	lending body fees which may or may not be charged to set up a loan.
ETIA	(Early Termination Interest Adjustments)
exchange of contract	the legal point of time when the vendor and purchaser swap documentation and start enquiries with a view to settlement.
F
FID	(Financial Institutions Duty) state duty on the receipts of financial institutions.
fittings	items that can be removed from a property without causing damage to it.
fixed interest	an interest rate set for an agreed term.
fixtures	these are items that would cause damage to a property if removed. Their removal must be stipulated in the contract of sale and any damage made good by the seller.
freehold	the dwelling and the land on which it stands is owned by the owner indefinitely.
free standing	a building which is unattached to any other and shares no common wall or walls with any other building.
frozen account	an account in which all transactions have been suspended.
G
garnishee	to legally divert a part or whole of someone’s money or property to someone else.
gearing	the ratio of your own money and borrowed funds in an investment.
guarantee	a promise made as bound by the terms of a contract.
guarantor	a party who agrees to be responsible for the payment of another party’s debts.
H
high start loan	a loan where the initial repayments are high and decrease over the term of the loan.
highest bid	the top price offered by a bidder at auction. If the reserve price is not reached and the property is passed in, the highest bidder is given the first option to negotiate with the vendor.
holding deposit	a refundable deposit based on the goodwill of the buyer to go ahead with the purchase.
home unit	otherwise known as a ‘flat’ or an ‘apartment’, a home unit is grouped with other residential dwellings and shares common areas (such as stairs and driveways) with the others.
I
ILR	(Indicator Lending Rate) the base rate on which interest rates for variable rate overdrafts and term loans are set.
inclusions	items included with the property eg light fittings, fridge, etc.
income statement	a statement of income and expenditure for a period, usually a year.
interest	the lending body’s charge for the use of funds or the return on deposited funds. See daily interest and monthly interest.
interest only	usually a short-term arrangement whereby payments are made on the interest only, not the principal.
interest only loan	a loan where the principal is paid back at the end of the term and only interest is paid during the term. The loans are usually for a short term of one to five years.
internal rate of return	a measure of the return on an investment (or loan) which takes into account the time value of money by showing the rate of interest at which the present value of future cash flows is equal to the cost of the investment or loan.
inventory	a list of items included with the property e.g. furniture, movable items, etc.
J
joint tenants	equal holding of property between two or more persons. If one party dies, their share passes to the survivor/s.
L
land tax	a State Government tax charged to the owners of any property over a stipulated value, unless it is their principal place of residence.
lease	a document granting a period of tenancy of a property under specific terms and conditions.
lessee	the person or company who, through signing an agreement, leases a property from its owner, known as the lessor.
liabilities	someone’s debts or obligations.
lien	the right to hold property as security against a debt or loan.
line of credit	a flexible loan arrangement with a specified ceiling to be used at a customer’s discretion.
loan security duty	mortgage stamp duty.
loan to valuation ratio	(LVR) the ratio of the amount lent to the valuation of the security (usually the house).
low start loan	a loan where the initial repayments are low and increase over time.
M
margin	this is the difference between the lender’s interest indicator rate (or other reference rate) and the rate actually charged to borrowers.
maturity	the date a debt or investment must be paid in full.
mortgage	a form of security for a loan usually taken over real estate. The lender, the mortgagee, has the right to take the real estate if the mortgagor fails to repay the loan.
mortgage offset	a non-interest earning account that is offset against a home loan to reduce the total interest payable.
mortgagee	the lender of funds.
mortgagor	the person borrowing money in the terms of a mortgage.
N
negative gearing	where the return on an investment is insufficient to meet the interest costs of the loan used to fund the investment.
O
offer to purchase	a legal agreement that details a specific price for the purchase of a specific property.
offset account	a savings account linked to your mortgage in such a way that the interest earned on your savings is applied to reduce the interest on your mortgage.
Old System Title	(common law title) consists of a ‘chain’ of the title documents stretching back to the original owner.
option to buy	a legally binding document which gives a person, for a fee, the right to buy something usually within a specific time frame at a specific price.
overdraft	a pre-arranged limit to which a person can exceed an account balance.
P
passed in	a property is ‘passed in’ at auction if the highest bid fails to meet the reserve price set by the vendor.
payee	the person or entity to which a cheque is payable.
plan	detailed illustration of a house that shows the internal layout and dimensions and the position of the house on the land.
principal	the capital sum borrowed on which interest is paid.
principal and interest loan	a loan in which both the principal and the interest are paid during the term of the loan.
private sale	the sale of a property without an estate agent.
private treaty sale	a property sale where the buyer negotiates on a price set by the seller.
property management	the act of looking after a property on behalf of its owner.
R
refinancing	to replace or extend an existing loan with funds from the same institution or another.
requisitions on title	a process by which the buyer requests additional information about the title of the property from the seller.
reserve price	specified minimum price acceptable to a seller at auction.
right of way	can be either somebody’s right to cross other property or a general pathway across your land.
rise and fall clause	a building contract clause that allows the final pricing to move up or down according to the fluctuations of material prices or wages.
S
search	an examination to confirm that a vendor is in a position to sell a property and that there are no encumbrances on it.
security	an asset that guarantees the lender their borrowings until the loan is repaid in full. Usually the property is offered to secure the loan.
semi-detached	two houses that share a common wall or walls.
settlement date	date on which the new owner finalises payment and assumes possession.
signatory	a person authorised to utilise an account.
stamp duty on transfer	a State Government tax assessed on the selling price of the property.
stepped	a stepped account is one in which different amounts of interest are paid on different portions of the account. e.g. 2 percent on the first $1,000 and 3 percent on the second $1,000.
Strata Title	this title gives you ownership of a ‘unit’ of a larger building which you may sell, lease or transfer at your discretion. Also entitles you to membership of the body corporate.
Stratum Title	a title that records your ownership of a ‘unit’ of a larger property. Unlike a Strata Title, the owner becomes a shareholder in the company that manages the common area, not just a member.
survey	a plan that shows the boundaries of, and the building position within, a block of land.
susceptibility report	shows likelihood of future pest infestations.
T
tenants in common	the equal or unequal holding of property by two or more persons. If one party dies, the property is divided according to law.
term	the length of a home loan or a specific portion within that loan.
term deposit	often called a fixed interest account - 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.
terrace	a style of attached house found in many older suburbs. In a row of terraces, virtually identical houses are joined one to another through common walls. Often two or more storeys in height.
title search	process to ensure that the vendor has the right to sell and transfer ownership.
Torrens Title	records your ownership of a piece of property. You are lawfully entitled to lease, sell or dispose of the property as you desire. Also known as Certificate of Title.
town house	usually a two storey dwelling registered under a strata title.
transfer	a document registered with the Land Titles Office that confirms the change of ownership as noted on the Certificate of Title.
U
unencumbered	a property free of liabilities, encumbrances or restrictions.
V
valuation	a report as required by the lender, detailing a professional opinion of the property’s value.
variable interest rate	a rate that varies in accordance with the rates in the marketplace.
vendor	party who offers a property for sale.
vendor statement	a statement by the seller to the buyer detailing material particulars regarding the property in question.
villa	an attached dwelling, one storey in height.
Z
zoning	local authority guidelines as to the permitted uses of land.