B
Borrowing capacityThe maximum amount a lender is willing to lend you, based on your income, expenses, debts and the lender's own rules.Loans and lendingBuilding and pest inspectionAn independent inspection that reports on a property's structural condition and any termite or timber pest activity.Buying a propertyBuyer's agentA licensed agent who represents the buyer, not the seller, in a property purchase. They search, assess, negotiate and manage the purchase on the buyer's behalf.Buying a property
C
Capital gains tax (CGT)Tax on the profit made when you sell an asset such as an investment property, calculated as the sale price less the cost base.Tax and costsCapital growthThe increase in a property's value over time.Returns and marketsCash flowThe money left over, or the shortfall, after a property's rent is received and all its costs, including loan repayments, are paid.Returns and marketsComparable salesRecent sales of similar properties nearby, used to judge what a property is worth.Buying a propertyConveyancingThe legal work of transferring property ownership, done by a licensed conveyancer or solicitor.Buying a propertyCooling-off periodA short period after exchanging contracts when a buyer can withdraw from a residential purchase, usually by paying a small penalty.Buying a propertyCost baseThe total cost of acquiring and holding a property for capital gains tax purposes, subtracted from the sale price to work out the gain.Tax and costsCross-collateralisationUsing more than one property as security for a loan, so the properties are tied together with the same lender.Loans and lending
D
Days on marketThe average number of days properties in an area take to sell after being listed.Returns and marketsDebt-to-income ratio (DTI)Your total debt divided by your gross annual income. Lenders and the banking regulator use it to measure how stretched a borrower is.Loans and lendingDepreciation scheduleA report from a quantity surveyor that lists the deductions you can claim for the decline in value of a building and its fittings.Tax and costsDue diligenceThe checks you complete before committing to a property, to confirm it is what it appears to be and to uncover risks.Buying a property
E
L
Land taxAn annual state tax on the value of land you own, excluding your main residence, above a tax-free threshold.Tax and costsLenders mortgage insurance (LMI)Insurance that protects the lender, not you, if you default on a loan. It is usually charged when you borrow more than 80% of the property's value.Loans and lendingLimited recourse borrowing arrangement (LRBA)A special loan structure that lets an SMSF borrow to buy a single asset, where the lender's claim is limited to that asset.Ownership structuresLoan-to-value ratio (LVR)The size of your loan as a percentage of the property's value. It is a key measure lenders use to set risk and pricing.Loans and lending
N
O
Off-market propertyA property sold without being publicly advertised on the major portals. It is usually offered quietly through agents, buyer's agents or direct approaches.Buying a propertyOffset accountA transaction account linked to your home loan, where the balance reduces the loan amount that interest is charged on.Loans and lending
P
S
Self-managed super fund (SMSF)A private superannuation fund run by its members, who act as trustees and are responsible for complying with super laws.Ownership structuresServiceability bufferAn extra margin lenders add to the interest rate when assessing your loan, to check you could still afford repayments if rates rose.Loans and lendingSettlementThe final step of a purchase, when the balance of the price is paid, ownership transfers to the buyer and the keys are released.Buying a propertyStamp dutyA state government tax on property purchases, calculated on the price or value of the property.Tax and costsStrata reportA review of a strata scheme's records, covering finances, levies, repairs, disputes and building issues, for units and townhouses.Buying a property
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