AdjustmentsThe settlement calculation that splits council rates, water charges and owners corporation fees between seller and buyer, based on who owns the property for which part of the billing period.
AmortisationThe gradual reduction of a loan balance through regular repayments. Early in a principal and interest loan, most of each repayment is interest. The proportion shifts towards principal over time.
AuctionA public sale by competitive bidding. The contract becomes binding on the fall of the hammer, with no cooling off period and no conditions.
Break costAn amount a lender may charge when a fixed rate loan is repaid, refinanced or restructured before the fixed term ends. It is calculated on the lender's cost of unwinding the fixed rate, not on a set fee.
Building inspectionAn independent report on the physical condition of a property, usually covering structural issues and defects. A pest inspection covering timber pest activity is a separate report, often ordered at the same time.
Capitalised LMILenders mortgage insurance added to the loan balance rather than paid in cash at settlement. Reduces what you need on the day, and means interest accrues on the premium.
Comparison rateA single figure that combines the interest rate with most fees and charges, calculated on a standard loan amount and term so that products can be compared on a consistent basis. Because the scenario is standardised, it will not match your actual loan.
Conditional approvalSee pre-approval. An indication from a lender, subject to conditions including valuation and final verification. Not a commitment to lend.
Contract of saleThe legal agreement to buy the property, setting out price, deposit, settlement date, inclusions and any special conditions.
ConveyancerA licensed professional who handles the legal transfer of property. A solicitor can do the same work and can also advise on matters beyond the transfer itself.
Cooling off periodA statutory right to end a contract within a short window after signing. In Victoria it is three clear business days for most private sales of residential property, with exceptions including auctions.
CovenantA restriction registered on the title that limits what can be done with the land, for example a single dwelling covenant or a restriction on building materials. Disclosed in the vendor statement.
Default interestA higher rate of interest charged under a contract or a loan where a payment or settlement obligation is not met on time.
DepositUsed for two different things. The contract deposit is paid to the seller's agent on signing and held in trust. Your deposit in lending terms is the share of the purchase price you contribute rather than borrow.
DisbursementsCosts your conveyancer pays on your behalf and passes on, such as title searches, certificates and registration fees. Separate from their professional fee.
Dutiable valueThe figure land transfer duty is calculated on: the price paid or the market value, whichever is greater, adjusted in some cases for off the plan purchases and vacant land.
EasementA right for someone else to use part of the land for a specific purpose, most commonly drainage, sewerage or access. It usually restricts what can be built over that area.
EquityThe difference between what a property is worth and what is owed against it.
Fixed rateAn interest rate locked for an agreed term. Repayments do not move during that period, and features such as extra repayments and offset are often restricted or unavailable.
Funds to completeThe total amount you need available at settlement, covering your share of the price plus duty, fees and adjustments.
Genuine savingsFunds a lender accepts as having been accumulated by you over time rather than received as a lump sum. Definitions and acceptable substitutes vary by lender.
GuarantorSomeone, usually a family member, who offers security over their own property to support your loan. It creates legal obligations for them and exposes their property to the extent of the guarantee.
Interest onlyA repayment arrangement where only interest is paid for a set period, leaving the loan balance unchanged. Repayments increase afterwards because the principal is repaid over a shorter remaining term.
Land transfer dutyThe Victorian state tax on property transfers, still widely called stamp duty. Administered by the State Revenue Office and payable at settlement.
Lenders mortgage insurance (LMI)Insurance that protects the lender against loss if a loan defaults and the sale does not clear the debt. Paid by the borrower. It does not protect the borrower.
Loan to value ratio (LVR)The loan amount as a percentage of the property value, where the value used is the figure returned by the valuation the lender orders rather than the price paid, if the two differ.
Offset accountA transaction account linked to a loan, where the balance is deducted from the loan balance before interest is calculated.
Owners corporationThe body that manages common property in a strata scheme, funded by levies from owners. Formerly called a body corporate.
Participating lenderA lender authorised by Housing Australia to submit applications for the government deposit and shared equity schemes. Applications cannot be made outside this list.
PEXAAn electronic lodgement network used to complete property settlements digitally. Victorian settlements are conducted electronically, with limited exceptions.
Pre-approvalA lender's indication that it is prepared to lend up to an amount, subject to conditions. It expires, it is not final approval, and it does not guarantee funding for a specific property.
Principal and interestRepayments that cover both the interest charged and a portion of the amount borrowed, so the balance reduces over the loan term.
Principal place of residence (PPR)The home you actually live in. The term appears in duty concessions, grant conditions and land tax exemptions, each with its own occupancy requirements.
RedrawThe ability to withdraw extra repayments you have previously made above the required amount. Conditions and any fees are set by the lender.
Section 32 (vendor statement)The disclosure document a seller must provide before you sign, covering title, easements, planning, outgoings, services, owners corporation details and building permit information.
ServiceabilityA lender's assessment of whether you can afford the repayments, based on income, expenses, existing debts and an assessment rate that is higher than the actual rate charged.
SettlementThe moment ownership transfers, funds move and duty is paid. Keys are released once settlement is confirmed.
Split loanA loan divided into two or more portions, commonly one fixed and one variable, each with its own rate and features.
Subject to financeA condition negotiated into a contract allowing the buyer to end it if loan approval is not obtained by a specified date. It is not automatic and it does not exist at auction.
TitleThe register of legal ownership of the land, together with anything registered against it such as mortgages, easements and covenants.
ValuationAn assessment of what a property is worth, ordered by the lender. It may be an automated valuation model generated by the lender's system, a desktop valuation completed without attending the property, or a short form or long form valuation completed by a valuer who inspects it. The figure returned can come in below the contract price, and where it does, the loan is calculated on the lower figure.
Variable rateAn interest rate that can move up or down during the loan term, changing the repayment amount.
VendorThe seller.