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First Home Buyer Glossary of Terms

Application Fee
A fee paid to a lender to cover costs of setting up the home loan. Sometimes free/waived.

Borrower
The person borrowing money from a lender.

Capital Gains Tax
The tax paid for the difference of price from when a property is bought to what when it was sold.

Cash Rate
This is the interest rate charged to banks on their loans by the Reserve Bank of Australia which impacts mortgage rates and repayments for a variable home loan.

Certificate Of Title
The official legal document of title, showing who owns the land and describes the land. The Certificate of Title will describe the area and location of the land, it will list the registered landowner as well as any mortgages or other interests that are on the land, including any easements, or building restrictions.

Contract Of Sale
A contract between the seller and the purchaser, for the sale of the property. This contract must be in writing.

Conveyancer
The company or person who will look after all the legalities that come with transferring the ownership from one person or company to another.

Conveyancing
The legal process of transferring title/ownership of a property.

Cooling Off Period
It's a window of time where you can change your mind and cancel your offer to buy without incurring any costs.

Credit Limit
The maximum amount of funds you can borrow from the bank or lender.

Credit Report or Credit Reference
A report of credit history, prepared by credit reporting agencies. A good credit history report is usually required before a lender will approve a loan.

Default
When you fail to make loan repayments by a specified date.

Deposit
The amount of money required to secure the purchase of a property. Sometimes non-refundable, but is taken off the purchase price when you eventually purchase the house/ at settlement.

Detailed Area Plan
Also referred to as DAPs these plans relate to the urban design and the overall look of a built area. It includes things like site levels, the location, orientation and design of buildings, vehicle access and parking, service locations and landscaping.

Easement
Is registered on the certificate of title of the property, it grants someone else the right to use part of your land for a specific purpose (which will be set out in the easement). Easements do not get wiped when property is transferred, when you buy a property the easements are included. Common easements include things such as a pathway or walkway being open to public which may be on your property, or access roads on your property to another property. Easements can also restrict you from building on your land. The conveyancer will find out all this information for you.

Equity
The difference between the market value of the property and the amount owed on the property. If the house is worth a lot more than the mortgage, then the equity is larger. Equity in your home can be used as security for future loans.

Grants
There are grants available in each state and territory of Australia to help certain home buyers fund their purchase. They are one off payments mainly for first home buyers. Check out these grants in our First Home Buyers Grants Guide.

Headworks
Infrastructure that's installed on a vacant block, so services like water, sewerage, gas, etc can be connected later on.

Home Equity
The difference between the value of a property and what is have left to pay on the property mortgage... This is the portion of a house that has actually been paid!

Interest Only Loan Repayments
When only the interest owing on a home loan for a set period of time is paid, leaving the principal amount untouched.

Loan Agreement
A contract between the bank/lender and the borrower which sets out the terms and conditions of the loan.

Lot, Block or Allotment
They're actually all the same thing and simply refer to a piece of land. Allotment or lot are traditionally used in new subdivisions and each lot has its own number which later changes to a street number. Lot is simply the shortened version of allotment.

Lot Number
There's often confusion between a lot number and a street address. A lot number is not a street address, it's a number used to identify an area often before any of the street names have even been decided. It can be found on the land title.

LVR (Loan-To-Value Ratio)
The amount that can be borrowed compared to the value of the house. e.g. if the LVR is 80% and the house is worth $100,000, then $80,000 is the maximum amount that can be borrowed. The other $20,000 usually comes from a deposit.

Low Doc Home Loan
For people who don't have the usual financial records, such as self-employed. Less documentation is required to apply for the loan, in exchange for the borrower taking out more security, usually mortgage insurance, higher deposits or even a higher interest rate.

Mortgage
The lender is given security over the property, by way of their name being registered on the Certificate of Title to that land. This stays on until the loan/mortgage is repaid.

Off The Plan
Property that you can buy ahead of time, based on images or blueprints, before it's actually built.

Practical Completion
When the construction of a block of land or house is completed as per the contract and building can commence on the block or moving into the new home!

Principal
The amount of money that has been borrowed, excluding the interest charged.

Progress Payments
These are part payments made to a builder as the home progresses. Instead of paying all the money upfront, the purchaser pays it in agreed instalments - Usually, a deposit is paid before the build starts, and then the first progress payment is made when the slab is poured.

Public Open Space
The variety of spaces within a community that everyone can enjoy for recreation, sport, play and socialising! Think parks and playgrounds, ovals and reserves or piazzas and squares.

Rear-loaded
This is when the garage is located at the back of the lot and you can access it by a rear laneway. Rear-loaded lots have no front driveways and garage doors are out of sight.

Refinance
Finding a new loan from the existing lender or a different lender. It involves paying the existing loan in full by getting a new loan from another. Usually done when a better rate is being offered from another lender.

Repayment Holiday
Some loans offer this service, it means that you can suspend the loan repayments for a period of time, if you are far enough ahead with your repayments. Interest still accrues during this period, and repayments after this period can be adjusted so you can stay on track to finish paying the loan on time.

Settlement
The process of finalising the exchange of property. Usually carried out by lawyers or conveyancers. This is when you have to pay the settlement amount (The purchase price minus the deposit already paid), in exchange for the certificate of title to the property with all the necessary changes made, and the keys to the property

Site Works
This is the process of getting land ready for building - it might include clearing, excavation or block levelling.

Stamp Duty
A tax charged by the government you have to pay when you are purchasing a property. This is an additional cost to the price of the home and is usually in the tens of thousands, there are different rates for every state, and also concessions available for certain home buyers, see them in our Stamp Duty Guide.

Strata Title
It means all the common, shared areas such as lifts, stairs, gardens, car parks and recreational areas (i.e. swimming pool) are jointly owned by everyone who owns property in the complex and you'll pay annual strata fees for the maintenance and management of those areas.

Term
Length of time in which the loan must be repaid.

Title
The official bit of paper which says that the land is owned by the purchaser! It means building can start.

Transit Orientated Development
When a new community is planned and designed around a transport hub such as a train station.

Torrens Title
It's the most common property ownership structure through which the ownership of property is transferred through registering the title with the relevant authority.

Transit Oriented Development (TOD)
When a new community is planned and designed around a transport hub such as a train station.

Vendor
The seller of the property.

Zoning
Zoning restricts what the land is able to be used for, and, while each state and territory has its own zoning codes they tend to fall into six basic categories; commercial, industrial, mixed-use, residential, public use and agricultural.