Get up to speed with real estate jargon

Real estate jargon can be a bit overwhelming when you're new to the property market. That's why we've put together a list of commonly used terms you'll come across when buying and selling real estate. 

Borrower 

The person who is borrowing money or receiving credit under a Loan Agreement.

Capital Gain

The monetary gain obtained when you sell a property for more than you paid for it.

Caravan

The agent that is marketing the property takes the rest of the salespeople in the office through the property so that they can familiarise themselves with the property and market the property to their buyers.

Caveat 

A document lodged with the titles office, by any person with a legal interest in a property, to ensure the property is not sold without their knowledge.

Chattels 

Any removable items that are sold with a home, typically carpets, light fittings, curtains, dishwasher etc.

Certificate of Title 

The official document of title showing ownership of the land described in it. The Certificate of Title describes the area and location of the land, it shows the registered proprietor (land owner) and all charges (mortgages) and other interests, (e.g. easements) affecting the land.

CMA

Comparable Market Analysis is the price comparison of your home with others that are currently for sale and those that are similar in size and location that have sold.

Conveyancing 

The process of legally transferring ownership of interests in land.

Conditional Contract 

A contract that is agreed to by the Vendor and the Buyer, but where one or more conditions need to be met, usually within a specified time period, by either or both parties, e.g. It is subject to the purchaser raising finance within a few days or subject to the lawyers consent of the title etc.

Contract

A legally binding agreement between two or more people. Contracts may be written, oral, partly written, or partly oral, or implied by a person’s behaviour. Contracts relating to land must be in writing.

Credit

The maximum credit allowed to a borrower on an account.

Credit Reference or Credit Report

A report prepared by a credit reporting agency which sets out the credit history of a person. A satisfactory Credit Reference is often required by a lender before approving a loan.

Debt Servicing Ratio

A measure of the borrower’s capacity to repay a loan. A lender generally calculates the Debt Servicing Ratio by taking into account a borrower’s expenses as a proportion of the borrower’s income.

Default

Failure to make a loan repayment by a specified date.

Deposit 

Money paid by one party to a contract to secure the performance of the contract by the other party. In a house purchase the deposit is the amount of money that is paid to secure the purchase of the house. The deposit is often payable to the real estate agent as the seller’s agent. It is important to find out what paying a deposit will commit you to, whether a deposit is refundable and, if so, in what circumstances.

Early Repayment Charge

When a fixed interest rate is repaid before the end of its fixed term a charge may apply.

Equity

The difference between the market value of a property used as security for a loan and the amount of the loan.

Establishment Charge

A fee paid by a borrower, usually to a lender, to cover the costs of processing a loan application.

Escape Clause 

This allows the Vendors to issue notice to a conditional purchaser that unless that purchaser confirms the sale as unconditional within a short stipulated time, then the vendor can proceed with another offer from another party.

Facility 

Another term used to describe a loan or credit availability.

Guarantee 

An agreement by which a person (guarantor) promises to meet the obligations of another person (borrower) on default. Lenders in some circumstances require a guarantee of the borrower’s obligations under a Loan Agreement.

Interest

An amount payable by the borrower to the lender as the lender’s recompense for making the loan. A borrower can choose to borrow on a fixed interest rate or a floating interest rate.

Interest Only Loan Agreement

A Loan Agreement under which the borrower makes no principal repayments during the loan term, but must repay the whole of the principal on loan maturity. During the term of an Interest Only Loan Agreement, payments of the amount of interest accruing on the loan will usually be required at regular intervals.

Lease 

A contract under which the owner of a property (lessor or landlord) grants to another person (lessee or tenant) the right to exclusive possession of the property for an agreed period, usually in return for rent.

Liabilities

The outstanding debts you owe.

LIM

Land Information Memorandum - a report which can be requested from your local authority which provides information regarding the property - things like consents, rates owing, drainage and building plans.

Loan Agreement 

The contract between the lender and the borrower that sets out the loan terms and conditions. These will include amount, repayment obligations, interest rate, and the security required. It is important to read the Loan Agreement carefully, and it is wise to get legal and financial advice, before it is entered into.

Mortgage

A security over property given to the lender for the repayment of principal and the payment of interest on the loan. A mortgage over land is registered or noted on the Certificate of Title to that land. The party that has the benefit of the mortgage (usually the lender) is called the mortgagee. The party giving the mortgage by charging his or her property is called the mortgagor.

Out Clause

This allows the Vendors to issue notice to a conditional purchaser that unless that purchaser confirms the sale as unconditional within a short stipulated time, then the vendor can proceed with another offer from another party.

Passed In

A property is passed in at auction if the highest bid fails to meet the vendor’s reserve price.

Possession Date

The day the purchasers take occupancy of the home, normally when the ownership of the property transfers and the balance of the purchase price is paid to the vendor.

Principal 

The amount that has been borrowed. Interest is generally payable on the Principal outstanding from time to time.

Refinancing

The repayment of an existing loan from the proceeds of a new loan. A refinancing could involve repaying one lender and borrowing from another lender.

Registration

The process following settlement, by which legal title to property is transferred into the name of the purchaser. With a land purchase, this is done through the Land Transfer Office. Where the land purchase is secured by a mortgage, the lender that has the first mortgage will hold the Certificate of Title following registration of the land into the name of the purchaser.

Repayment Holiday

A period during which loan repayments are suspended. During this period interest still accrues. Payments are generally adjusted afterwards so that the loan is still repayable within the original time period.

Revolving Credit Facility / Line of Credit

A loan or Line of Credit which allows the borrower to repay and re-draw funds, up to the agreed credit limit.

Sale and Purchase Agreement

A contract between a seller (vendor) and a purchaser for the sale and purchase of property. A Sale and Purchase Agreement for land must be in writing.

Settlement

The process by which a sale and purchase of property takes place. It is commonly done by lawyers and involves the payment of the purchase price (less any deposit already paid) in exchange for the Certificate of Title, a transfer document, and a release of previous charges over the property. Keys to the property are usually either handed over to the purchaser or his/her lawyer at settlement, or able to be picked up from the estate agent immediately following settlement.

Subject to Finance

A condition inserted into a contract, for the benefit of the purchaser. This makes the contract subject to the purchaser’s confirming that they have raised finance within a certain amount of time.

Term

In relation to a loan, Term means the period from the making of the loan until the loan must be repayable. Sometimes ‘Term’ can also mean a defined period that is shorter than the whole of the loan Term (e.g. Fixed Interest Term).

Unconditional Contract

A contract for the sale of a specific property that the vendor and purchaser has agreed upon that has no conditions, or if any conditions they have been confirmed as being met, and therefore constitutes a sale.

Vacant Possession

When ownership is transferred from the sale of a property there will be no tenants living in the property, or leases giving someone else use of the property.

Vendor

The seller of a property.

Contact one of our salespeople if you're looking to buy or sell.