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Glossary of Terms

a
Adjustments
Amount of property taxes, council and water rates prepaid by the vendor and adjusted at settlement for amounts for which the purchaser will be liable.

Agent’s Commission
This fee (usually a percentage of the state price) is payable to a real estate agent for selling a house.

Amortization period
Time taken to reduce the value of the debt through payment of regular installments until the loan has been paid off in full. For Home Loans the maximum amortization period is 25 years.

Annuity
A payment at regular intervals of a certain sum of money for a term of years or during the life of an individual.

Appraised value
An estimate of the value of property offered as security for a home loan. The appraisal is undertaken for financial lending purpose and may not reflect the actual market value.

Architrave
A decorative molding around doors or windows.

Assets
Everything that a person or company owns or has a right to, from which a benefit can derive. Net assets are assets in excess of liabilities. Liquid assets are assets either in the form of cash or readily convertible into cash.

At call
Funds which can be withdrawn on demand or without notice.

Awning window
A window sashes that open out horizontally

b
Balanced Trust
Balanced Trusts invest in the broadest spectrum of investment markets, including shares, listed property trusts and government securities. The main advantage in making this type of investment lies in the flexibility afforded to their fund managers in being able to alter the investment composition of the trust in the light of changing economic and investment conditions to pursue the best results.

Blue Chip Stock
Shares in a well established company highly regarded in financial circles.

Body Corporate
A strata corporation incorporated in relation to land subdivided wholly or mainly for residential purposes under a law providing for strata, cluster, percent or other subdivision of land or whose issued shares give a right to occupy land for residential purposes. The Body Corporate usually has the responsibility for the management and upkeep of common areas of the property.

Brick veneer
A type of building in which a structural timber frame is tied to a single brick external wall.

Bridging finance
Short term finance used when buying and selling houses to cover the gap between receipt of funds from sale of existing house and the payment of funds to purchase another house

Building regulations
Designed to uphold the standards of public safety, health , and construction, these regulations are in place and have been formulated by responsible authorities to control the quality of buildings.

c
Capital gain
Profit from sale of a particular asset at a higher market price than it cost. Investors often buy for the sale of an expected increase in value of an asset rather than of the income it may generate during the time they own it.

Capital Guaranteed
An investment where your money (principal) is guaranteed safe, usually by a bank, government body ,or life insurance company.

Capital Growth
The increase in value of an asset or Investment i.e. the difference between the current values and the original purchase price( provided the result is positive, not negative)

Casement window
A window with sashes that open out vertically

Cash Management Trust
A unit trust where investors (unit holders) pool their money into money market instruments which are normally only available to professional investors with hundreds of thousands of dollars to invest in the money market. Cash trusts operate with a trust deed. a trustee overseeing activities and a management company responsible for the investment strategy.

Caveat Emptor.
Latin for “Let the Buyer Beware”. This means that buyer’s of goods (in this case, landed property) are responsible to examine the goods (the property being purchased) closely or read the fine print (to the contract) carefully before competing the purchase. Under common law this means that if someone is sold faulty goods he or she has no right to obtain compensation.

Ceiling joists
Parallel lengths of timber/steel which support the ceiling.

Certificate of Title
The document of title to the estate or interest in land. It sets out the Crown description of the land, proprietorship and shows any registered interests such as mortgagees, charges and caveators. It also shows any restrictive covenants and easements which affects the estate or interest.

Chattels
Chattels are personal property. These are two types-the first type are real chattels (building and fixtures) and the second type are personal chattels ( clothes furniture etc.)

Cluster Title
Each Cluster Title holder has a Certificate of Title which specifies ownership in terms of a particular area for which the owner is responsible and defines the common property. Unlike Strata Title, it does not subdivide “airspace”.

Commission
See Agent’s Commission

Common area
An area which is for use by many , not an individual. For example, home units have common areas such as stairs and
driveways.

Company Title
This Title applies when a company owns the whole of the property. By purchasing shares in the company , the purchaser obtains an entitlement to occupy a particular part of the property. See your solicitor before buying.

Compound Interest
Interest which is paid on accumulated interest as well as the original principal invested.

Contract Note
The first document signed on buying a house is sometimes a Contract Note, instead of a Contract of Sale. This document when signed by both parties, is as legally binding as a Contract of Sale and the buyer and seller should treat it with the same importance.

Contract of Sale
A written agreement which details the terms and conditions regarding the purchase or sale of a property. It is usually prepared by the vendor’s agent, solicitor or conveyancer.

Conveyancing
The legal process where ownership of real estate is transferred from one party to another.

Cornice
A horizontal decorative molding usually positioned where the wall meets the ceiling.

Consumer Price Index (C.P.I)
Measures the national inflation rate. The index is measured quarterly (December, March, June and September quarters) and reflects changes in prices (up or down) of a fixed “basket” or list of goods and services.

Cover note
This is a document giving temporary insurance cover over a property until a formal policy is issued by the insurance company.

d
Debenture
A type of fixed interest security, issued by companies (as borrowers) in return for medium and long term investment of funds. Debentures are issued to the general public through a prospectus and are secured by a trust deed which spells out the terms and conditions of fundraising and the rights of debenture holders. Typical issuers of debentures are finance companies and large industrial companies.

Deposit
An amount of money placed in trust or paid to the vendor directly as evidence of intention to buy. In most cases ,it is 10% of the purchase price.

Dividend
The share of profits distributed to shareholders of a publicly listed company.

Dividend imputation
A tax system, where dividends paid by a taxpaying Australian company to its shareholders, carry a credit for the tax the company has already paid on its profits. This means that shareholders receive a reduction to the tax normally payable.

Door jambs
The vertical sides of a door frame.

Drawdown
The disbursement of loan funds provided by the Bank.

e
Easement
A right that an individual enjoys over land belonging to another . e.g. rights of way, rights of light, right of support.

Eligible Termination Payment( ETP)
This is the term used to describe lump sum funds received when retiring or changing employment that can be rolled over into an Approved Deposit Fund or Deferred Annuity. ETPs can include payments from a superannuation fund, deferred annuity, commutation of an annuity /pension, unused sick leave and ‘golden handshakes’ .

Encumbrance
A legal claim on a particular property. e.g. easement or mortgage.

Equity
The part of an asset (house) which you own over and above the amount borrowed from the bank which has a mortgage over the house property.

f
Fibro cement
Building material made of compressed fibers cemented into rigid sheets.

Fitments
Built –in equipment such as the bath and stove.

Fittings
Things that can be removed from a property without causing damage to it, such as drapes.

Fixed rate loan
A loan priced at a fixed rate of interest for a set term. Interest rate and payments remain the same during the fixed term of the loan regardless of interest rate changes in the market.

Fixtures
Things that are affixed to and form part of the property. e.g. built –in air conditioning.

Footing
The footing supports the building on its foundation.

Foundation
The compact sand, gravel, hard clay or rock upon which the footings rest.

Franked Dividend
A dividend distributed by an Australian company out of profits on which company tax has been paid.

Freehold
Common term used for an ‘estate in fee simple’ This means that the proprietor of the land has absolute ownership of the property.

g
Gable
The triangular part of a building’s end wall which extends up to meet the two slopes of a roof.

Guarantor
A person/s who agrees to be responsible for the payment of another person’s debts.

h
Home units
A grouping of residential dwellings. They share common areas (e.g. gardens, storerooms) and are commonly registered under Strata Title.

i
Interest
The Lender’s charge for the use of funds or the return on deposited funds.

Interest Only Loans
A loan where the principle is paid back at the end of the term and only interest is paid during the term. These loans are usually for a short period of time; 1 to 5 years.

Inventory
A listing of items that could be included with a property, e.g. furniture, furnishings, dishwasher and other moveable items.

Investment Bonds
A lump sum investment product. Technically, an investment or insurance bond is a single premium lump sum investment, life insurance contract.

j
Joint tenants
A Joint Tenancy is a common way for two or more people to share an interest in land. A Joint Tenancy is one way of leaving property to a partner without incurring the costs and delays associated with a Probate application.
The most important implication of a Joint Tenancy is the right of survivorship. When one Joint Tenant dies, his or her share in the property is extinguished and is transferred to the surviving partner.

l
Laminated timber
Layers of timber glued and pressed together to increase rigidity or to use as bench tops or cupboard doors.

Land tax
Based on the property value, it is a State Government tax which is payable by the owners of the property.

Lease
An agreement between two parties under which one is a granted the right to use the property of the other for a specified period of time in return for a series of payment by the user to the owner.

Leasehold
The right to use and have exclusive possession (but not ownership) of real estate for a specified period and subject to the fulfillment of certain conditions as recorded in a lease agreement.

Lenders Mortgage Insurance
This type of insurance is taken out on both owner occupied and residential investment loans. It covers the Lender against loss arising from the borrower’s default on the mortgage payments.

Liabilities
Debts owed by a company or individual.

Loan Repayment Capacity
Your money fixed debt commitments divided by your monthly gross income expressed as a percentage.

Loan to Valuation Ratio
The amount of the loan financed as a proportion of the property value, expressed as a percentage.

LVR (loan to valuation Ration)
The ratio of the amount lent, to the valuation of the property.

m
Maturity
The date a debt or investment must be paid in full.

Manhole
An opening which permits access to the space between the roof and the ceiling, or below the floor.

Mortgage
A form of security for a loan usually taken over real estate. The Lender; the mortgagee has the right to take (repossess) the real estate if the mortgagor fails to repay the loan.

Mortgagee
The lender of the funds.

Mortgagor
The person borrowing money in the terms of the mortgage.

Multiple listing
This happens when a person selling a property gives it to more than one agent. The first agent who has a buyer ready. Willing and able to meet the price and the terms acceptable to the vendor, receives the commission for the sale.

n
Negative Gearing
A way of obtaining tax advantages through an investment where the deductible expenses (typically including interest) exceed the income derived from the investment.

o
Offer to purchase
A written offer of a specified price for a specified property. The offer may be firm (no conditions attached) or conditional (certain conditions apply).

p
Pension
A regular payment made to a person from a superannuation fund from the Department of Social Security or Department of Veterans Affairs.

Periodic Payment
When client’s bank etc. send funds by way of cheque on a regular basis.

Plan
This shows the ground plan design, elevation of house, number and size of rooms, kitchen, bathrooms laundry layout and position of the house on the land.

Principal
The capital sum borrowed on which interest is paid.

Principal & Interest Loan
A loan in which both the principle an the interest paid during the term of the loan.

Private treaty sale
Sale of property via an agent through private negotiation and contract.

r
Rafter
Part of the framework of the roof, the rafters slope down from the ridge to the eaves.

Redraw
Borrower is able to draw on pre-paid funds.

Refinancing
To replace or extend an existing loan with funds from the same institution to another.

Render
A coat of cement or plaster to brickwork or stone.

Reserve price
The minimum price a seller has specified he/she will accept at a auction.

Ridge
Usually horizontal, this is the peak of the roof where the top end of each rafter is attached.

Right of Way
A person may have the right to cross your property to gain access to their own property , or there may be a general pathway across the land. This is an example of an easement.

Rise and Fall clause
This clause may be contained in a building contract. It provides for an upward or downward contract price which correlates to the movement of prices , wages or other factors specified in the clause.

Rollover
The renewal of a loan facility or continuation of a deposit at each maturity date. Usually including a revision of the interest rates. (The term is also used to describe the transfer of Eligible Termination payments to an acceptable superannuation or rollover fund).

Roof pitch
The slope of the roof.

s
Sash
The frame in which a pane of glass is set to form a window.

Security
Something given or deposited as surety for the payment of debt. In the case of home loans the property which is to be brought with the loan money usually acts as the security.

Semi-detached
Two houses joined together with a common wall or walls; they are usually registered under Torrens Title. Settlement date The date on which the sale of the property is finalized ; money and security changes hands and the new owner takes possession.

Shareholder
A person who buys a portion of a public or private company’s capital. By doing so that person becomes a shareholder in that company’s assets and receives a share of the company’s profit in the form of dividends.

Shingles
Thin pieces of wood or other material set in overlapping rows to form a roof or wall cladding.

Sill
The horizontal section of material at the base of a window opening.

Sole agency
One agent or agency has the exclusive rights to sell a property.

Stamp duty
Revenue raised by governments on written instruments such as agreements, conveyances, transfers of land. When buying a home, the most common types of stamp duty payable are stamp duty on transfer of land and stamp duty on transfer of land and stamp duty on mortgage.

Strata Title
Most commonly used for flats and units , this title gives you legal ownership over a piece of property and also gives you a share in the company set up to look after the common areas of the flats or units you live in. It does not include “air space”.

Studs
The uprights in the wall of a building.

Superannuation
An investment vehicle which operates primarily to provide benefits for retirement. Superannuation savings are usually made through thrust funds and if these funds meet prescribed government standards they are eligible for tax concessions.

Survey
Shows boundaries of the land and location of the building.

t
Tenants in common
A Tenancy in Common is also a way for two or more people to own land together. However, the rule of survivorship does not apply to Tenants in Common. This means that if a person dies, that persons share of the property is dealt with by that persons Will and does not automatically transfer to the remaining partner.

Term
The time length of a loan.

Term Deposit
Money invested for a fixed term at a fixed rate of interest which applies for the duration of the deposit.

Title search
A search undertaken of records registered at the land titles office to confirm interests in land of a particular land property. A title search show interests such as proprietor, mortgagees, charges, and caveats. The search also reveals any restrictive covenants and easements which affect the estate or interest.

Torrens Title System
Title is under a system given the name of its South Australian author in 1858. The principles of this system are expressed in State Land Title and Real Property Acts and any act or acts amending or re-enacting them. This system gives a registered proprietor of an interest in land a perfect and unchallenged titles. Subject only to the encumbrances and conditions mentioned on the title certificate.

Townhouse
Detached or attached housing forming part of a cluster of homes sharing some common grounds. Normally has own private entrance and private areas. Can be single or multistory.

Transfer of Land
A document registered in the Land Titles Office which recognize and acknowledges change of property ownership. This is also noted on the Certificate of Title.

u
Uncommitted Monthly Income
Your available net income once all monthly expenses including loan repayments have been taken into consideration.

Underpinning
Supports placed under an existing wall to provide added strength.

Unencumbered
A property free of encumbrance, covenants, restrictions.

Unit Trust
A unit trust is an investment which operates under the unit principle enabling investors to share in a pool of professionally managed investments. The success of a unit trust depends on the expertise and experience of the management company which is responsible for the trust’s investment strategy. Common types of investment undertaken by unit trusts are property, shares ,mortgages ,and the Short Term Money Market.

v
Valuation
A report written by a registered valuer. detailing their opinion of the property value.

Variable Rate Loan
A loan for which the interest rate changes as conditions in the money market change.

Vendor
One who offers a property for sale.

w
Wall cavity
The space between the inner and outer sections of a wall.

z
Zoning
Zoning fall into many categories, the two most common being commercial and residential. Local Councils and/or Planning Authorities control the use of land and designate it as such.