Key Word Glossary

Assets: Items of value owned by an individual or entity.

Auction: A public sale of property to the highest bidder.

Borrower: The individual or entity that receives the funds and is obligated to repay the loan.

Cashflow: The movement of money into and out of a business or household.

Conveyancer: A licensed professional who handles the legal transfer of property ownership.

Credit: The ability to borrow money or access goods or services with the promise of future payment.

Credit Report: A record of an individual's credit history and financial behaviour.

Debit: A sum of money withdrawn from an account.

Depreciation: The decrease in the value of an asset over time.

Discharge & Discharge Form: The process of releasing a mortgage or the document used to release a mortgage.

Equity: The difference between the value of a property and the amount owed on the mortgage.

Equity Extraction: The process of accessing the equity in a property through a loan or other financial product.

Fixed Rate: A type of interest rate that remains the same for an agreed-upon period.

Genuine Savings: Savings held by a borrower that have been accumulated over time and not received as a gift or windfall.

Guarantor: A person who provides a guarantee to a lender for a borrower's loan.

Home Loan: A loan provided by a financial institution to help you purchase a home or property.

Income Statement: A financial statement that shows an individual's or entity's income and expenses over a specific period.

Interest: The amount charged for borrowing money, typically a percentage of the principal.

Interest Only: A type of loan where the borrower only pays the interest on the principal amount for a specified period.

Interest Rate: The cost of borrowing money, usually expressed as a percentage.

Investment Loan: A loan taken out to purchase an income-generating investment property.

Joint Tenants: Co-owners of a property with equal shares and rights of survivorship.

Land and Construction Loan: A loan that finances the purchase of land and the construction of a property.

Lender: The institution or individual that provides the funds for a loan.

Lending Guarantee: A promise to repay a loan if the borrower is unable to meet their obligations.

Lenders Mortgage Insurance (LMI): Insurance that protects the lender in case the borrower defaults on the loan.

Liabilities: Debts or financial obligations.

Loan to Value Ratio (LVR): The ratio of the loan amount to the value of the property being purchased.

Mortgagee: The lender who provides the mortgage.

Mortgagor: The borrower who pledges the property as security for the mortgage.

Negative Gearing: When the expenses associated with an investment property exceed the income generated.

Off the Plan: Buying a property that has not yet been built or is still under construction.

Offset Account: A transaction account linked to a home loan that can reduce the interest payable on the loan.

Overdraft: An extension of credit from a lending institution that allows an account to have a negative balance.

Payslip: A document issued by an employer to an employee detailing the employee's earnings and deductions.

Positive Gearing: When the income generated from an investment property exceeds the expenses.

Principal: The initial amount of money borrowed, excluding the interest.

Principal and Interest: A type of loan where regular repayments cover both the principal amount and the interest.

Private Sale: A property sale negotiated directly between the buyer and the seller.

Purchase: The act of acquiring property or goods by payment of money or its equivalent.

Redraw Facility: A feature that allows you to withdraw any extra repayments you've made on your home loan.

Refinance: The process of replacing an existing loan with a new one.

Repayments: The regular payments made to repay a loan, including both the principal and interest.

Savings: Money set aside and not spent.

Security: Collateral provided to secure a loan.

Settlement: The process of transferring property ownership from the seller to the buyer.

Solicitor: A legal professional who provides advice on property transactions and handles legal matters.

Split Rate: A loan with a portion on a fixed rate and another portion on a variable rate.

Stamp Duty: A tax charged on certain transactions, such as property purchases.

Strata Title: A form of ownership for multi-level apartment blocks and horizontal subdivisions.

Tax: A compulsory financial charge imposed by a government on individuals or entities.

Tenant: A person who occupies property rented from a landlord.

Tenants in Common: Co-owners of a property with distinct shares and no rights of survivorship.

Trust: A legal arrangement where a trustee holds and manages assets on behalf of beneficiaries.

Valuation: An assessment of the value of a property conducted by a qualified valuer.

Variable Rate: An interest rate that may change over time in line with market conditions. When the expenses associated with an investment property exceed the income generated.