Acceleration clause: a clause under the mortgage contract that allows the lender to accelerate the debt so that the immediate repayment of the entire balance needs to be payable if you breach conditions of the mortgage

Acquisition costs: the total costs of acquiring a property, such as stamp duty, legal fees, valuation fees and the deposit

Additional repayments: additional funds paid off your loan in excess to your minimum monthly repayments

Agent: a person authorised to act on behalf of the owner in the selling, buying, renting or management of the property

Application fee: a fee paid by the borrower to cover the costs of establishing a loan

Appraisal: a written report of the estimated value of the property. Appraisal is commonly used in America, while Australians more commonly use the term ‘valuation’

Appreciation: how much the property has increased in capital value over time

Approved in principle: a bank has approved a loan based on your fundamental application information, such as your income and savings. It is also known as “pre-approval”

A-REIT: the acronym for Australian Real Estate Investment Trust (formerly known as Listed Property Trusts). An A-REIT is an Australian listed property trust that buys property and managed it on behalf of investors

Arrears: debits not paid by the due date, such as rental or mortgage payments

Auction: a sale conducted in public by an auctioneer, where a property is sold to the highest bidder of the day

Benchmarking: a benchmark provides a starting point for an investment to decide how an asset should be managed on an ongoing basis from the perspectives of both risk and return

Bid: a verbal or written offer to purchase a property at an auction

Body corporate: a legal entity manages the common property of a residential, commercial, retail, industrial or mixed-use property development. Also known as an owner’s corporation

Bond: a payment that rental providers can request at the start of a rental agreement

Borrower: an entity or person/s borrowing money

Break costs: a potential fee that may be applied if a loan is paid off early before its end date or transferred to a different loan

Bridging finance: usually a short-term loan that helps you to finance a new home before selling your current home

Building inspector: an authorised person responsible for checking buildings during and post-construction to they have been constructed in accordance with the associated provisions

Buyers agency/agent: a buyers agent represents a property buyer in negotiations with a real estate agent. It’s a service designed to save clients money, time and stress while minimising the risk of investment

Buyers market: where supply for property is greater than demand, forcing the market value average to remain low

Capital gain: any profit made from the sale of property

Capital gains tax: known as CGT. Tax payable on the capital gain made on the sale of an investment property

Capital gains tax discount: if you hold an asset for more than 12 months you may be eligible to receive the CGT discount, which is a 50% deduction on the CGT of the asset

Capital growth: the difference between the current market value of an investment and the price it was purchased for

Capital loss: any loss that incurs from the sale of a property

Caveat: a document that can be lodged on the Land Titles Register by anyone with a legal interest in a property, preventing the sale of said property without their knowledge

Commercial property: property intended for use by retail stores, office buildings, hotels or services establishments, rather than for residential dwellings

Commission: the fee or payment made to a property agent for services rendered

Conditions of sale: the conditions of a sales contract made between vendor and purchaser

Contract: A legally binding agreement

Contract of sale: A contract that expresses An agreement relating to the sale of property, which expresses the terms and conditions of sale.

Conveyance: a deed which transfers ownership of the property title from one person to another

Conveyancer: an individual conveyancing who looks after the legal work involved in the transfer of ownership of the property title

Cooling off period: a period after the contract is made when the purchaser may cancel the contract. This period varies by state in Australia (not applicable in WA)

Counter offer: a new offer made in reply to an unaccepted offer, usually with an increase in price or new terms and conditions

Certified Practising Valuer (CPV): an accreditation from the Australian Property Institute signifying an individual has the required education and experience to undertake comprehensive property valuations

Default: when failure to make a loan repayment by a specified date occurs

Deflation: a general decrease in the property market value

Deposit: a non-refundable percentage of the property purchase price paid by the buyer upon contracts being signed. This is usually 10%-20% of the purchase price

Depreciation: a loss in value due to deterioration, obsolescence, or both.

Display home: a building which represents a completed example of a dwelling, usually one which is being bought off-the-plan

Equity: the difference between the market value of the property and what is still owing on the mortgage

First home owners grant: an incentive from the federal government that provides first home buyers a one off payment

Fixed interest rate: an interest rate that remains unchanged for a set period of time

Foreign Investment Review Board (FIRB): a board which reviews any proposals for foreign investment in Australia and advises the government on the relevant policy

Gazumping: when a vendor agrees to sell a property to one party, but then sells it to another party offering a higher price

Gearing: also known as ‘leverage’. Gearing is a measure of the debt against the equity you have in a property

Grace period: a period in which a mortgage repyament becomes past due but before it goes into default. Most lenders provide for a specified grace period allowing a repayment to be made prior to entering into default, such as a warning period

Guarantor: a person who undertakes the responsibility to fulfill a contract if the main party becomes unable to do so

Holding deposit: an amount provided by a potential buyer to the seller or agent to demonstrate the buyer’s commitment to the property by a buyer. A holding deposit is not compulsory and is refundable if the offer is rejected

Interest: payment made by a borrower to a lender in return for the loan, made in addition to the principal repayments

Interest-only loan: when a borrower’s loan specifies the borrower need not make principal repayments. The repayments are for the amount of interest only, which has accrued over the length of the loan

Interest rate: the rate charged by a lender on a loan, expressed in the form of a percentage per annum.

Investment property: a real estate property which a person invests in to get a return on money

Land tax: a tax payable annually in respect of the beneficial ownership of land, the rate of which is determined by the assessed valuation and levied by state governments

Lease: in property, a lease refers to the agreement between a landlord and tenant allowing the tenant to reside in the property for a certain period of time at a certain price

Lease term: the period of time that the lease is subject to

Lender’s Mortgage Insurance (LMI): a premium paid by the borrower if the loan is more than 80% of the value of the property, to cover the lender if the borrower defaults. Also known as mortgage guarantee insurance

Liquidity: the ease of turning an asset into cash. Compared to stocks, property has low liquidity

Loan-to-value ratio (LVR): The value of the home loan compared to the value of the property

Market price: the price actually paid–or to be paid–for a property.

Market value: the estimated amount of an asset in reference to wider market performance

Mortgage: a written contract giving the lender certain rights over a specific property. Also known as a home loan

Negative gearing: when the income received from an investment property is less than the cost of the investment. If negative gearing occurs, you can deduct this amount from your taxable income thus reducing your total tax bill

Notice of termination: when either the landlord or tenant provides notice that they want to end the rental agreement and vacate the property

Off the plan: an off-the-plan investment refers to the purchase of a property that hasn’t been built yet, and has instead been purchased solely by seeing building plans

ONO: ‘or nearest offer’. A term used to describe the willingness to accept the closest offer to the asking price

Owners corporation: See body corporate

Positive cash flow: occurs when income from the property is greater than all the expenses (including interest, rates and taxes, repairs, etc.).

Private sale: when a property is put to sale by the owner without engaging with an agent

Property management: management of a property on behalf of the owner, including but not limited to the leasing of space, selection of tenants, collection of rent and so forth

Property manager: the person or firm charged with the upkeep and management of a property on behalf of the owner

Property portfolio: the collection of two or more investment properties owned by the same individual, company or self-managed super fund.

Rescind: to terminate a contract of sale

Reserve price: the lowest acceptable price fixed by the vendor

Right of first refusal: a right granted to a person to have the first privilege to buy or lease a certain real estate property, or the right to meet any offer made by others

Refinance: the act of obtaining new finance for something on different terms. Most commonly refinancing involves paying off an existing loan to take on a new, cheaper loan

Rental yield: how much cash a rental property generates as a percentage of the property’s value

Reverse mortgage: a mortgage over a residential property owned by a person of a certain age (usually over 55), where repayments are not required until the property is sold or the last homeowner dies

Seller’s market: the opposite of a buyer’s market. A seller’s market exists when the pressures of supply and demand are such that market prices can be listed at higher levels, giving sellers an advantage

Settlement: when the purchaser completes the payment of the contract price and takes legal possession of the property

Settlement date: the date on which settlement is expected to occur

Stamp duty: a standard duty levy or tax paid on the purchase of the property. Stamp duty is also known as land tax, and it varies depending on both the purchase price of the property and the state in which the property is purchased

Title: the form of real estate ownership

Vacant: a residential or commercial property that is not occupied

Vacancy rate: the rate of how many available rental properties are on the market in a given area at any one time divided by the total rental stock in said area

Variable rate loan: A loan in which the interest rate fluctuates.

Zoning: a method of urban planning in which a form of government divides land into areas called zones, each of which may have differing regulations to one another

Source: Forbes.com