Recent Buying Selling Lifestyle
Recent Buying Selling Lifestyle
Buying

Property jargon explained

18-Jul-2017
Written by Ashley Blake
You’ve purchased a property or are just about to sign on the dotted line, let the celebrations begin! But before you pop the champagne and post a pic to Instagram of you jumping in front of the signboard, it pays to have a sound understanding of all the unfamiliar words that you will start to hear alot of! Cash rate, mortgage insurance, owners corporation, offset account…these are just a few of the words that will be flung around left right and centre during the life of your loan. But what do they all mean?

Below is a list of the most commonly used A – Z terminology which are bound to pop up.

ARREARS - An outstanding or overdue amount

BODY CORPORATE - All the unit owners within a strata building. The owners elect a council responsible for the management of the building and it’s common areas

CASH RATE - The official cash rate (OCR) is the term used in Australia and New Zealand for the bank rate and is the rate of interest which the central bank charges on overnight loans to commercial banks

DEPOSIT BOND - A guarantee from a financial institution that a deposit will be paid to a seller. It’s useful for buyers with savings in a term deposit because it can be offered at the time of exchange – instead of a cash deposit. Which means the buyer doesn’t have to break the term deposit and lose any interest accrued. The buyer must pay the full purchase price of the property, including the amount of the deposit, at settlement. In the event that buyer does not settle on the property the seller will be paid the deposit amount by the financial institution

EASEMENT - A right to use a part of land owned by another person or organisation, for example to access another property

FIXTURES - 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

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

HOLDING DEPOSIT - A refundable deposit demonstrating the goodwill of the buyer to proceed with the purchase

INTEREST ONLY LOAN - A loan where only the interest is paid for an agreed term, usually 1 to 5 years. The principal is then repaid over the remaining term of the loan by the conversion of repayments to principal and interest

JOINT TENANTS - Equal holding of a property between two or more people. If one party dies, their share passes to the survivor or survivors

LENDERS 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 INSURANCE - Protects the lender against a loss should the borrower no longer be able to afford their loan repayments and the Guarantor (if any) is unable to meet the liability

NEGATIVE GEARING - Where the income from an investment property is insufficient to meet the interest costs of the loan used to fund the investment property

OFFSET ACCOUNT - A non-interest earning account where the balance is offset against the home loan to reduce the total interest payable

PRIVATE TREATY SALE - A private treaty sale is where a house is offered for sale at a negotiated price. The normal practice is for the vendor to set a price, and the buyer negotiates with the seller until a mutually agreeable price is reached. Unlike an auction, the potential buyers do not know what others may be offering for the property

REFINANCE - To switch mortgage providers and arrange a new loan for the same property

STAMP DUTY TRANSFER - A State Government tax based on the value or purchase price of the property

TORRENS TITLE - Torrens Title is the name given to the system of registration of ownership and dealing with property. Under this system, title to a property is established by a statutory title issued by the Registrar General. It is the most common form of residential property ownership. You are lawfully entitled to lease, sell or dispose of the property as you desire

UNIFORM CONSUMER CREDIT CODE (UCCC) - This is the legal framework that governs the relationship between borrowers and lenders

VENDOR - A party who offers a property for sale

ZONING - Statutory descriptions of the allowable uses of land as set out by local councils or planning authorities

It may seem a little overwhelming as all this terminology is probably very foreign to you, however the Team at Newton Real Estate as well as your solicitor or conveyancer will always be on hand to explain any questions you have regarding your new purchase. After all, it is one of the biggest, investments you will ever make!

SOURCE – Aussie Homeloans

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