Real Estate Jargon Busters
Depreciation – The wear and tear on a building or fixtures, which you can claim on your income tax if your property is for investment and built after July 1985. You will need a quantity surveyor to prepare a schedule of depreciation on your property to calculate how much you can claim.
Fittings: Items not intended to be removed from a property when it’s sold, for example fixed carpets, lights, curtains and stoves.
Freehold: Complete ownership of a property and the land that it’s built on.
Gazumping: When a seller accepts an offer from a buyer but then proceeds to formalise the sale of the property to another buyer with more favourable terms.
Joint tenants: Equal holding of a property between two or more people. If one party dies, their share passes to the survivor or survivors.
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’s 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.
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.
Negative Gearing – Borrowing money to buy an investment property and the cost of owning that property (interest repayments, rates, repairs etc.) is more than the income received from rent. In other words, you make a loss, which can be claimed against your income tax.
Off Plan – Buying a dwelling, usually an apartment, before it is built.
Passed in: A property is ‘passed in’ at auction if the highest bid fails to meet the reserve price set by the seller.
Reserve price: At an auction, this is the minimum price acceptable to the seller of a property.
Searches: Research carried out, prior to the settlement of the property, to confirm information about the property. Searches are usually arranged by a solicitor.
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.
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.
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.
Torrens Title – When a purchaser owns both the house and the land on which it is built. This is the most traditional form of home ownership in Australia.
Transfer: A document registered with the Titles Office that confirms the change of ownership or a property.
Valuation: A professional opinion of a property’s value.
Zoning: Statutory descriptions of the allowable uses of land as set out by local councils or planning authorities.
Comparison Rate calculated on a secured loan amount of $150,000 for a term of 25 years. WARNING: This Comparison Rate is true only for the example given and may not include all fees and charges. Different terms, fees and other loan amounts might result in a different Comparison Rate. Fees and Charges Apply. Terms and Conditions are available on request.