Glossary

Anchor tenant

The first or main tenant in a retail or mixed development, whose presence is expected to draw other tenants and customers.

Anchoring

A negotiation tactic where the first number put forward sets the range the rest of the discussion tends to hover around.

Appreciation

An increase in a property's value over time, driven by market forces rather than improvements you make.

Auction

A public sale where buyers bid against each other and the property goes to the highest bidder, with no cooling off period in Victoria.

Body corporate

Another name for an owners corporation, the group responsible for managing common areas in a unit or apartment complex.

Borrowing capacity

The maximum amount a lender is willing to advance you, based on your income, expenses, debts and deposit.

Building inspection

A professional report on a property's structural condition, usually ordered before a buyer commits to a purchase.

Capital gain

The profit made when a property is sold for more than it cost to buy and improve, subject to tax rules.

Conditional approval

A lender's indication that finance is likely subject to conditions, such as a valuation or further documentation, being met.

Contract of sale

The legal agreement between buyer and seller setting out the terms of the property purchase.

Conveyancer

A licensed professional who handles the legal transfer of property from seller to buyer.

Cooling off period

A short window after a private treaty sale in Victoria, generally three clear business days, during which a buyer can withdraw, subject to exceptions.

Credit file

A record of your credit accounts and repayment history held by a credit reporting body.

Credit score

A number summarising your credit history, used by lenders as one factor in assessing a loan application.

Days on market

The average number of days properties in an area take to sell, a useful comparison point when reading an individual listing.

Deposit

The upfront amount a buyer contributes toward a purchase, with the balance usually borrowed.

Deposit bond

A guarantee that acts as a substitute for a cash deposit at exchange, with the full amount paid at settlement.

Discharge fee

A charge a lender may apply when a loan is paid out and discharged, including on refinance.

Equity

The portion of a property's value you own outright, being the market value minus what you still owe on the loan.

Exchange of contracts

The point where buyer and seller each sign the contract, usually making the sale legally binding.

Fixed rate

An interest rate locked in for a set period, so repayments stay the same even if market rates move.

First Home Owner Grant

A Victorian government payment for eligible first buyers of new homes under a set value threshold.

First Home Super Saver Scheme

A federal scheme allowing voluntary super contributions to be withdrawn for a first home deposit.

Genuine savings

Savings that a lender can see have been built up over time in your own account, rather than gifted or borrowed at the last minute.

Guarantor

A person, often a parent, who uses their own property as security to help a borrower qualify for a loan.

Holding costs

Ongoing costs of owning a property before you move in or rent it out, such as interest, rates and insurance.

Interest only loan

A loan where repayments cover interest only for a set period, so the amount owed does not reduce.

Lenders mortgage insurance

Insurance that protects the lender, not the borrower, generally required when a deposit is under 20 percent.

Loan to value ratio

The loan amount expressed as a percentage of the property's value, a key figure lenders use in pricing a loan.

Mortgage broker

A person who arranges loans with a range of lenders rather than working for a single bank.

Negative gearing

When an investment property's costs exceed its income, creating a loss that may be tax deductible.

Offset account

A transaction account linked to a loan, where the balance reduces the amount of interest charged.

Off the plan

Buying a property before it is built, with duty sometimes calculated on the construction stage at contract date.

Owners corporation

The body that manages common property in a subdivision, made up of the unit owners.

Pre approval

An indication from a lender of how much you may be able to borrow, subject to conditions and a property valuation.

Principal and interest

A loan where each repayment reduces the amount borrowed as well as covering interest.

Private treaty

A sale by private negotiation rather than auction, where a cooling off period generally applies in Victoria.

Repayment

The regular amount paid to a lender, covering interest and usually some principal.

Refinance

Replacing an existing loan with a new one, either with the same or a different lender.

Section 32

The Vendor Statement, a document the seller must give a buyer disclosing key information about the property.

Settlement

The day the balance of the purchase price is paid and the property legally changes hands.

Stamp duty

A state government tax on property transfers, also called land transfer duty in Victoria.

State Revenue Office Victoria

The Victorian government office that administers stamp duty concessions and the First Home Owner Grant.

Strata title

A form of ownership for units and apartments, used in some states, similar in effect to Victoria's subdivision of land.

Suburb profile

A summary of an area's characteristics and recent sales, useful for research but not a prediction of future growth.

Title search

A check of the property's ownership and any encumbrances, usually done by a conveyancer.

Unconditional approval

Full lender approval, given once all conditions, including a satisfactory valuation, have been met.

Valuation

A professional assessment of a property's worth, ordered by a lender to confirm the loan is adequately secured.

Variable rate

An interest rate that moves with the market, so repayments can rise or fall over the life of the loan.

Vendor

The seller of a property.

Vendor statement

Another name for the Section 32, the disclosure document a seller must provide a buyer in Victoria.

Victorian Homebuyer Fund

A Victorian shared equity style scheme requiring a separate application and income eligibility checks, not automatic.

Vacancy rate

The share of rental properties sitting empty in an area, a signal of supply and demand balance.

Yield

Rental income expressed as a percentage of a property's value, used to compare investment returns.

Zoning

Council rules setting out what land can be used for, which can affect a property's future potential.