Property glossary

Borrowing capacity is the amount a lender decides you can afford to repay.

A building and pest inspection checks parts of a property the inspector can reach for visible faults and signs of timber pests.

A buyer's agent is a property professional hired to act only for the buyer.

Capital gains tax (CGT) is tax on a gain when you sell or otherwise dispose of an asset, such as a rental property.

Capital growth is a rise in a property's value over time.

A comparison rate combines a loan's interest rate with most fees and charges you must pay.

Conveyancing is the legal work needed to buy or sell property and transfer ownership.

A cooling-off period is a short time when a property buyer who qualifies can withdraw from a signed purchase.

Cross-collateralisation means using more than one property to back a loan or linked loans.

Days on market measures how long a property is advertised before the sale point recorded by the report.

A depreciation schedule lists a rental property's eligible building and asset costs and the tax deductions over time.

Due diligence is the work done to check a property and the sale terms before committing to buy.

Equity is a property's value less the debt backed by it.

Exchange of contracts is the step when signed sale contracts are swapped to make a property purchase binding, especially in NSW.

A guarantor loan is backed by someone who agrees to pay part or all of your debt if you cannot.

Holding costs are the ongoing costs of owning a property while you keep it.

An interest-only loan lets you pay just the interest for a set time, without paying back the amount borrowed.

Land tax is a state or territory tax on land that meets its tax rules, usually charged each year.

Landlord insurance is cover for risks linked to renting out a property.

Lenders mortgage insurance (LMI) is a one-off premium most Australian lenders charge when you borrow more than 80% of a property's value.

A loan-to-value ratio (LVR) is the size of your loan as a percentage of the property's value, as assessed by the lender.

Median price is the middle price when sales in a stated area and period are ordered from lowest to highest.

A mortgage broker helps you compare and apply for home loans from lenders they work with.

Negative gearing means an investment bought with borrowed money earns less than its tax-deductible costs, including interest.

An off-market property is offered to buyers without a broad public advertising campaign.

An offset account is a bank account linked to your home loan.

Positive gearing means an investment bought with borrowed money earns more than its tax-deductible costs, including interest.

Pre-approval is a lender's view of how much it may lend if its conditions are met.

A principal and interest loan has regular payments that cover interest and pay back some of the debt.

A property manager is a person or agency hired by a landlord to run a rental home under a written agreement.

A property valuation is a check of one property's value.

A redraw facility lets you take back some extra home loan payments made above the amount due.

Refinancing means replacing a current loan with a new one.

Rental yield measures annual rent as a percentage of a property's price or value.

A reserve price is the lowest price a seller sets for an auction sale.

A self-managed super fund (SMSF) is a retirement fund run by its members, who are responsible for it.

Settlement is the final step in a property purchase, when the remaining price is paid and the ownership transfer is completed.

Stamp duty is a state or territory tax on deals such as a change in who owns a property.

Strata title is ownership of a lot, such as a unit, plus a share in common property with other owners.

Vacancy rate is the share of rental homes that are empty and available to rent in a stated area at a stated time.