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Glossary
Accredited Adviser
A professional qualified and authorised to provide financial advice.
Accrue
To accumulate or increase over time, such as interest or benefits.
Adverse Credit
A negative credit history that indicates a higher risk to lenders.
Amortisation
The gradual repayment of a loan through regular payments over time.
Annual Percentage Rate (APR)
The yearly interest rate charged on a loan, including fees and costs.
Anti-Money Laundering (AML)
Regulations and procedures to prevent the disguise of illegally obtained funds.
Appraisal
An expert assessment of the value of a property or asset. This is different to a valuation.
Appreciation
An increase in the value of an asset over time.
Arrears
Unpaid or overdue payments, typically on loans or rent.
ASIC (Australian Securities and Investments Commission)
Australia’s corporate, markets, and financial services regulator.
Assets
Resources owned by a person or business with economic value.
Australian Government Deposit Guarantee
A scheme that protects depositors’ money up to a certain limit in authorised institutions.
Authorised Deposit-taking Institutions (ADI)
Banks, building societies, and credit unions licensed to accept deposits.
Available Loan Amount
The maximum amount a borrower can access from a loan facility.
Balance
The amount of money owed or remaining in an account or loan.
Balloon Payment
A large, lump-sum payment due at the end of a loan term.
Bankruptcy
A legal process where a person or entity cannot repay outstanding debts.
Basis Point
One hundredth of a percentage point (0.01%), used to describe interest rate changes.
Borrower
An individual or organisation that takes out a loan.
Broker
A person or firm that arranges loans or financial transactions between lenders and borrowers.
Bridging Loan
A bridging loan is a short-term loan that helps cover the gap between buying a new property and selling an existing one. It provides temporary financing so you can proceed with a purchase before receiving funds from the sale of your current home. Bridging loans are typically interest-only and are repaid in full once the sale is complete.
Capital
Financial assets or resources used to fund investments or business operations.
Capital Gain
Profit realised from the sale of an asset above its purchase price.
Capital Gains Tax (CGT)
Tax payable on profits from the sale of certain assets.
Cash Flow
The movement of money in and out of a business or individual’s accounts.
Collateral
An asset pledged as security for repayment of a loan.
Conveyancer
A licensed professional who manages the legal aspects of buying or selling real estate, including preparing contracts and ensuring settlement is completed correctly.
Compound Interest
Interest calculated on the initial principal and also on accumulated interest.
Construction Home Loan
A loan used to finance the building of a new home.
Court Judgement
A decision made by a court regarding legal claims or disputes.
Credit Rating
An evaluation of a borrower’s creditworthiness.
Credit Reference Agency
An organisation that collects and provides credit information on borrowers.
Credit Report
A detailed record of a borrower’s credit history.
Credit Score
A numerical expression representing a borrower’s creditworthiness.
Credit Search
An inquiry into an individual’s or business’s credit history.
Creditor
An individual or institution to whom money is owed.
Creditworthiness
An assessment of the likelihood that a borrower will repay their debts.
Debt Consolidation
Combining multiple debts into a single loan or payment plan.
Debt Service
The amount of money required to cover the repayment of interest and principal on debt.
Deed
A legal document that conveys ownership or rights.
Default
Failure to meet the legal obligations of a loan agreement.
Depreciation
The reduction in value of an asset over time.
Disposable Income
The amount of money left after taxes and essential expenses.
Distributions
Payments made to shareholders or investors from profits.
Dividend
A portion of a company’s earnings paid to shareholders.
Downsizer
A homeowner who sells a larger property to buy a smaller one.
Due Diligence
The investigation and evaluation conducted before entering a transaction.
Early Repayment Charge
A fee charged for paying off a loan before its due date.
Earnings
Income generated from work, investments, or business operations.
Encumbrance
A claim or liability attached to a property, such as a mortgage.
Entity
An organisation or individual with legal and financial responsibilities.
Equity
The difference between the value of an asset and the amount owed on it.
Equity Loan
A loan secured against the equity in a property.
Escrow
A financial arrangement where a third party holds funds until conditions are met.
Establishment Fees
Upfront fees charged to set up a loan or financial service.
Exit Strategy
A plan to sell or dispose of an investment or asset.
Fair Market Value
The price an asset would fetch in an open and competitive market.
Finance
The management of money, including lending, borrowing, and investing.
FinTech
Financial technology companies providing innovative financial services.
First Home Buyers Grant
A government incentive to assist first-time homebuyers with purchasing property.
First Lien
The primary legal claim on an asset, usually held by the main lender.
First Mortgage
The first loan secured against a property, having priority over other claims.
Fixed Rate Home Loan
A home loan with an interest rate that remains constant for a set period.
Fixer Upper
A property requiring repairs or renovations, usually sold at a lower price.
Foreclosure
The legal process by which a lender takes ownership of a property due to loan default.
Guarantor
A person who agrees to repay a loan if the borrower defaults.
Guarantor Loans
Loans that require a guarantor to secure the borrower’s obligations.
Guaranty
A formal promise to fulfill another’s debt or obligation if they default.
Hard Asset
A tangible asset such as property, equipment, or commodities.
Home Equity Loan
A loan secured by the equity in a borrower’s home.
Home Loan Deposit
The upfront payment made by a borrower towards the purchase of a home.
Home Loan Rates
The interest rates charged on home loans by lenders.
Illiquid Asset
An asset that cannot be quickly converted into cash without loss of value.
Income Multiples
A method of calculating borrowing capacity based on a multiple of income.
Indemnity Policy
An insurance policy that compensates for loss or damage.
Inflation
The rate at which the general level of prices for goods and services rises.
Insolvency
The inability to pay debts when they are due.
Interest
The cost of borrowing money, usually expressed as a percentage.
Interest Cover Ratio
A measure of a borrower's ability to pay interest on debt.
Interest Statement
A document outlining interest charged or earned on an account.
Interest-Only Loan
A loan where only interest payments are made for a set period.
Intermediaries
Agents or brokers who facilitate financial transactions.
Investor
A person or entity that commits money with the expectation of financial return.
Joint Venture (JV)
A business arrangement where two or more parties collaborate, sharing risks and rewards.
Judicial Foreclosure
A court-supervised process to repossess property after loan default.
Know Your Customer (KYC)
Regulations requiring financial institutions to verify the identity of their clients.
Lender
An institution or person that loans money to borrowers.
Lenders Mortgage Insurance (LMI)
Insurance protecting lenders against losses if a borrower defaults and has a small deposit.
Leverage
Using borrowed capital to increase potential investment returns.
Lien
A legal right or claim against property as security for a debt.
Liquidity
The ease with which assets can be converted to cash.
Loan
Money borrowed that must be repaid, usually with interest.
Loan Extension
An agreement to lengthen the term of a loan.
Loan Repayment
Payments made to pay back a loan.
Loan-to-Value Ratio (LVR)
The ratio of a loan amount to the appraised value of the asset purchased.
Maturity
The date when a loan or financial obligation is due to be repaid.
Mortgage
A loan secured by real property.
Mortgage Brokers
Professionals who arrange loans between borrowers and lenders.
Mortgage House
A property subject to a mortgage.
Mortgage Pre-Approval
An initial assessment by a lender of a borrower's creditworthiness before formal application.
Negative Gearing
An investment strategy where costs exceed income, allowing tax deductions.
Net Return
The actual return on an investment after expenses and taxes.
Net Worth
The total assets minus total liabilities of an individual or entity.
Occupancy Rate
The percentage of rented or occupied units in a property.
Operating Expenses
Costs incurred in running a residential investment property.
Passive Investor
An investor who provides capital but does not actively manage the property.
Personal Liability
An individual's legal responsibility for debts or obligations.
Personal Loan
An unsecured loan granted to an individual based on creditworthiness.
Portfolio
A collection of residential investment properties owned by an individual or entity.
Portfolio Performance
The overall return or progress of a portfolio.
Prepayment
Paying off a loan or part of it before the scheduled due date.
Prepayment Penalty
A fee charged for paying a loan off early.
Principal
The original amount of money borrowed or invested.
Principal and Interest Loan
A loan where repayments cover both the loan principal and interest.
Private Finance
Funds raised from private investors rather than public sources.
Property Development
The process of improving or building residential properties for sale or rent.
Quitclaim Deed
A legal document transferring ownership rights without warranties.
Rates
Local government taxes on property.
Real Estate
Property consisting of land and buildings.
Real Estate Investment Trust (REIT)
A company owning or financing income-producing real estate, often residential-focused.
Refinance
Replacing an existing loan with a new one, usually to get better terms.
Regulation
Rules governing financial transactions and institutions.
Reserve Bank of Australia (RBA)
Australia's central bank managing monetary policy.
Residential Property
Property used primarily for housing.
Return on Investment (ROI)
The gain or loss generated on an investment relative to its cost.
Reverse Mortgage
A loan available to homeowners over a certain age that allows borrowing against home equity, repaid after the homeowner moves or passes away.
Risk vs Return
The trade-off between the potential risk and potential reward of an investment.
Risk-Reward Ratio
A measure comparing the expected returns of an investment to the risk taken.
Second Mortgage
An additional loan secured against a property that already has a mortgage.
Secured Lending
Loans backed by collateral.
Secured Loan
A loan guaranteed by an asset.
Self-Managed Super Fund (SMSF)
A superannuation fund managed by its members, often used to invest in residential property.
Senior Debt
Debt that has priority over other debts in case of default.
Short Term Loan
A loan with a short repayment period, often for residential purposes.
Shortfall
The remaining amount of the deposit or payment that a buyer owes at settlement when the initial payment is insufficient to cover the agreed purchase price.
Simple Interest
Interest calculated only on the principal amount.
Taxable Income
The amount of income subject to tax after deductions.
Tenancy
The right to occupy or use rental property under an agreement.
Tenancy Agreement
A contract between landlord and tenant outlining terms of occupancy.
Term Remaining
The time left until a loan or contract ends.
Title
Legal ownership of property.
Title Insurance
Insurance protecting against losses from defects in property title.
Transaction Costs
Expenses incurred during buying or selling property.
Trust
A legal arrangement where one party holds property for another's benefit.
Trustee
An individual or organisation managing a trust.
Underwrite
To assess and assume financial risk, typically by a lender or insurer.
Unsecured Lending
Loans not backed by collateral, based on creditworthiness.
Valuation
An assessment of the worth of a property or asset.
Withdraw
To remove funds from an account.
Yield
The income return on an investment, typically expressed as a percentage of the property’s value.
Zoning
Government regulation of land use and development in residential areas.