Glossary

.25% DEPOSIT	Deposit paid to the agent on exchange of contracts with a cooling off period
BRIDGING FINANCE	Short-term finance that covers the gap between the purchase of a new property and the sale of an old property
CAPITAL GAINS TAX	A Federal Government tax on the monetary gain made on the sale of an asset bought and sold after September 1985
COOLING-OFF PERIOD	The amount of time either the buyer or seller has to change their minds in a private sale. Not applicable if you buy or sell at auction.
CRAA	Credit Reference Association of Australia, used by lenders to check credit history.
DEPOSIT BOND	A guarantee that can be used instead of having to provide a cheque for a 10 per cent deposit while waiting to settle on a property
EXCHANGE OF CONTRACTS	Formal handing over to the vendor of the purchasers signed contract in exchange for the vendor’s signed contract and at which time a deposit is paid
GUARANTOR	Someone who agrees to be responsible for another person’s mortgage in case of default
HOME EQUITY LOAN	A line of credit, where you have a designated credit limit, but have flexibility with the repayments
INTEREST-ONLY LOAN	The borrower pays interest only on the loan,instead of interest plus principal. The principal is repaid in a lump sum at the end of the term
MORTGAGE	Document recording that a property is security for the money borrowed to purchase it
MORTGAGE INSURANCE	Paid by you to the lender to ensure that the lender is covered if you default on your repayments
NEGATIVE GEARING	When the tax deductions from an investment property exceed the income the property generates, the investor has a tax loss to offset against their other taxable income
OFF-THE-PLAN	Buying a property prior to construction taking place
PRIVATE TREATY SALE	A real-estate agent finds a buyer without going to auction. A price is set and prospective purchasers can submit offers that are usually below the asking price
P & I	Principle and Interest loan - Repayment amount that both reduces the principle amount of the loan and pays the interest due.
REDRAW FACILITY	Feature of a loan that allows borrowers to access any additional repayments they have made
SETTLEMENT	Money paid in full in exchange for Title documents, keys and the right to take possession
STAMP DUTY	A State Government tax on financial transactions, calculated according to the sale value
STRATA TITLE	Individual owners of an apartment in a block containing a number of apartments hold a Strata Title covering their portion
TITLE DEEDS	Formal documents signifying ownership
TORRENS TITLE	The system of title that applies to most land in Australia
VALUATION	Report arranged by the lender to ascertain the value of your property