A – Z of Property Terms for Home Buyers

It’s common for property buyers and sellers to sometimes become overwhelmed and confused by all the real estate and mortgage terms used during the purchase or sale of a property in Sydney. So take a moment to read through these definitions, and get yourself up to speed.

Real Estate and Mortgage Terms definitions

Adjustable Mortgage: Where the interest rate is adjusted periodically by the lender. Some people prefer a fixed rate as the maximum amount payable can be budgeted for. Also known as a variable mortgage.
Amortisation: Where the loan is paid off in equal periodic payments, calculated to pay off the debt (principal and interest as well) at the end of a pre-determined period.
Body Corporate: The legal entity which represents the apartment owners when dealing with matters of the common areas of the apartment block in which they own apartments. The Body Corporate funds costs associated with the common areas through a quarterly levy on the apartment owners.
Buyers’ Agent: An agent who is paid a fee by a would-be purchaser to act exclusively for that buyer in their property search and subsequent purchase. Very few buyers utilise the services of a Buyers’ agent but it’s worth remembering that the selling agent represents the seller of the property rather than the buyer.
Certificate of Title: A page of the Register book specifying the ownership of a defined land parcel, and the lodged or registered interests or claims (encumbrances) against that ownership.
Chattels: Items that can be moved and are not considered to be part of the structure of the dwelling, for example, dishwasher, clothes dryer, microwave, mats and pot plants. If there is any confusion between the buyer and the seller about what stays and what goes these can be identified as a special condition in the offer and acceptance document.
Cooling off period: In some places cooling off period doesn’t exist. But where it does exist, it refers to a designated period – usually a few days – after the contract has been signed, where buyers have time to reconsider their choice and change their mind without penalty.
Counter offer: Is a rejection of an offer – it is a new offer which may be accepted or rejected.
Depreciation: The decline in value of a property due to either wear and tear on the property itself or changes in the value of the area (e.g. a block of units being built and overshadowing a house or street widening that increases traffic noise).
Discharge fee: The discharge fee is a one-time payment charged on the final payout of a loan.
Encroachment: The physical intrusion by a structure on the property of another person.
Encumbrance: An encumbrance is a lodged or registered interest in land by a person who is not the registered owner.
Encumbrances – Caveat: ‘Caveat’ means ‘beware’. This term is a warning to prospective buyers that another party has registered some form of right or interest in the property. Details of a caveat are written on a property’s Certificate of Title (such as money is owing on a property that is for sale).
Encumbrances – Easement: Gives a person or a company ‘rights of use or engagement’ over land owned by another. Usual easements are rights of way, easements for the flow of water over and through another persons land, and easements of support (for example, Water Corporation, Western Power, Main Roads WA, telecommunication companies).
Encumbrances – Restrictive covenant: This places some type of restriction on the use of the land. For example, to build a certain height or the land must be landscaped or buildings to be constructed only of brick. For the covenant to be lifted, consent must be obtained from the party named in the covenant or by a court order.
Encumbrances – Right of way: This means a section or strip of the property is for use either by the general public, or a restricted section of the community. It may be created by subdivision, specific transfer, or continued use over a period of years.
Establishment Fee: This fee covers the basic costs in setting up the loan from the initial interview to the loan drawdown.
Exit Fee: This fee is imposed by some lenders when the borrower refinances with another lender in the first few years of the loan. Some exit fees can be high, so make sure to research whether there is an exit fee for your chosen home loan in Sydney.

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